Whether you’ve just recently retired, or it’s coming up in the next few years, it’s possible you may be feeling some financial uncertainty regarding your readiness for retirement. Before making any major decisions, here are five big retirement mistakes to avoid.
Mistake #1: Neglecting Your Emergency Fund
A little preparation now can go a long way when unexpected events occur. From a health emergency to car repairs, you never know what surprises may come your way in retirement. As you continue saving and preparing for financial independence, don't forget to plan for the "what if" scenarios that may pop up unexpectedly.
Mistake #2: Making Unnecessary Withdrawals
Withdrawing from any retirement accounts early could mean big tax penalties and less income in retirement.
Additionally, the money you withdraw from a traditional IRA will still be subject to income tax. And to avoid robbing your future retirement, you’ll want to develop a plan to replace that lost income in the coming years. If you’re struggling to cover expenses, talk to your financial advisor about other options you may want to take first. Look into what relief programs your state or local government offers, tap into your emergency fund if necessary and reevaluate your budget.
Mistake #3: Making Emotionally-Driven Investment Decisions
From social media posts to advertisements and news outlets, we're often bombarded by news that could affect your investment decisions.
After absorbing info day in and day out, it’s nearly impossible to not let it affect your decisions about money. If there's something scary on the news, should you drain your portfolio and stuff it under the mattress? Do you need to look at rebalancing assets amidst this market volatility? Working with an investment advisor can bring an objective, scientific and education-based perspective to the question of what to do with your assets. Together you can focus less on the world around you and more on your individual goals as you head into retirement.
Mistake #4: Forgetting to Reassess Your Current Budget
Have things changed since you last made your monthly budget? Maybe you used to commute to work, and now you’re working remotely. Or you used to spend every Friday at happy hour with friends, now you enjoy a quiet evening at home. It’s very likely that your daily habits, and what you spend money on, will change when transitioning toward retirement.
Reevaluate what your spending has been like over the past several months and determine if there are any opportunities to put more toward your savings or other goals.
Mistake #5: Ignoring Legislative Changes
It's important to stay on top of legislative action and changes that may have recently happened or could be impacting your retirement in the coming years. These have the power to impact your taxes, withdrawals and estate planning strategy. Your financial advisor can help keep track of ongoing legislation and keep you and your portfolio up-to-date and prepared for potential changes.
We work with retirees and pre-retirees to develop retirement strategies and determine if things need to be adjusted. If you're feeling anxious about your upcoming transition toward retirement, working with a financial advisor can help ease your concerns.
This content is developed from sources believed to be providing accurate information, and provided by Twenty Over Ten. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.
The commentary on this website reflects the personal opinions, viewpoints and analyses of the Ascend Investment Partners employees providing such comments, and should not be regarded as a description of advisory services provided by Kesler, Norman & Wride, LLC dba Ascend Investment Partners or performance returns of any Ascend Investment Partners Investments client. The views reflected in the commentary are subject to change at any time without notice. Nothing on this website constitutes investment advice, performance data or any recommendation that any particular security, portfolio of securities, transaction or investment strategy is suitable for any specific person. Any mention of a particular security and related performance data is not a recommendation to buy or sell that security. Ascend Investment Partners manages its clients’ accounts using a variety of investment techniques and strategies, which are not necessarily discussed in the commentary. Investments in securities involve the risk of loss. Past performance is no guarantee of future results.
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