Podcast Episode 349: Getting Out of Your Own Way

Financial planning for retirement is a crucial process that requires a strategic approach to ensure long-term security. All too often, however, people will get in their own way and make mistakes that were completely avoidable. In this week’s podcast, we’re going to talk about the most common examples of this with the guidance of Eric Hogarth, CFP®.

The first place where we see this quite frequently is in the ups and downs of the stock market. It’s not easy for individuals to navigate the emotional pitfalls of greed and fear that often influence investment decisions. These emotions can lead to chasing after financial benchmarks or making hasty choices that are detrimental to one’s retirement goals. Understand what your target needs to be and stick to a plan that helps you achieve that.

Another common misstep in retirement planning is allowing short-term tax savings to overshadow the importance of long-term financial stability. A narrow focus on immediate tax benefits may result in missed opportunities for tax-free growth in the future, such as not considering the advantages of Roth conversions. It’s essential to align one’s retirement plan with their personal financial needs, rather than being swayed by short-lived gains.

Then there’s the decision-making spectrum, where some people will make decisions on a whim and others will overthink things to the point where they don’t do anything at all. Knowing who to listen to and who to trust helps you make timely and thoughtful decisions, because both ends of this spectrum can have a negative impact on your future.

Professional financial advice plays a critical role in avoiding these pitfalls. Just as one would not self-diagnose a medical condition or undertake a major home repair without expert advice, managing one’s financial journey toward retirement demands specialized knowledge. Attempting to time the market or following speculative advice from non-professionals can lead to significant losses, as we’ll point out with a real-life story in this episode.

A well-crafted financial plan should simplify the complexities of retirement planning. By focusing on clear and attainable objectives, individuals can avoid overthinking and procrastination that often lead to inaction. Trusting in professional financial guidance allows for a tailored approach to retirement planning that takes into account the unique aspects of one’s financial situation, and most importantly, allows them to get out of their own way.

Here’s some of what we discuss in this episode:

• Getting caught up in the greed and fear cycle of the stock market and chasing more money than you need to.

• Why people make bad investment choices just to save money in taxes in the short-term. 

• People will leave too much money in cash because they put off making a decision on what to do with it.

• Are you overthinking your financial plan to the point that you fail to make decisions at all?

• Don’t blindly trust financial advice from people who aren’t financial professionals.