Podcast Episode 375: 5 Common Retirement Planning Mistakes We See
One of the benefits of working with an experienced financial advisor is being able to lean on their years of working with retirees to help you avoid the same mistakes that many other people have made. We shared five of the most common planning missteps on our latest episode of Money Wisdom with Nicholas J. Colantuono, CFP®.
1. Ignoring Future Tax Implications
One of the most overlooked aspects of retirement planning is the future tax implications of your retirement savings. Many people assume they’ll be in a lower tax bracket when they retire, but this is rarely the case. Tax-deferred accounts like 401(k)s and IRAs are “ticking time bombs” that can push you into a higher tax bracket during retirement. Understanding and planning for these tax implications is crucial for a successful retirement.
2. Starting Social Security Too Early
Another common mistake is starting Social Security benefits too early. While it might be tempting to start collecting as soon as possible, doing so can result in significant penalties if you’re still earning income. Every retiree needs a well-thought-out plan for Social Security to maximize your benefits and avoid unnecessary penalties.
3. Focusing on Returns Instead of Income
Many people continue to focus on investment returns even after they’ve retired, but the game changes once you’re no longer earning a paycheck. The primary focus should shift to generating a steady income stream to support your lifestyle. We always discuss the importance of having different buckets of money doing different things—some focused on growth and others on income generation.
4. Taking Advice from Friends and Family
While friends and family may have good intentions, their financial advice may not be suitable for your specific situation. What worked for them might not work for you. It’s essential to seek tailored advice from a certified financial planner who understands your unique needs and circumstances.
5. Being Too Aggressive or Too Conservative
Finding the right balance in your investment strategy is crucial. Being too aggressive can expose you to unnecessary risks, while being too conservative can result in missed growth opportunities.
While these are just five of the most common mistakes, there are many more potential pitfalls in retirement planning. Make sure you work with a financial advisor to help ensure you’re on the right track for retirement.
Here’s some of what we discuss in this episode:
• Why you can’t ignore the future tax implications of your retirement savings.
• What considerations you need to make before you decide when to take Social Security.
• Don’t focus on returns rather than income during retirement.
• Why you shouldn’t be taking financial advice from your friends and family.
• People will swing way too far one way or the other when it comes to risk.
Information presented in our podcasts is considered current as of the created date. Over time, some information presented may become stale. We recommend you consult with your Financial Professional before making any changes based on information contained here.
Johnson Brunetti is a marketing name for the businesses of JB Capital and JN Financial.
Investment Advisory Services offered through JB Capital, LLC. Insurance Products offered through JN Financial, LLC.
The guarantees provided by any type of insurance contract are based on the claims-paying ability of the insurance company.
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