By Yann Kostic on the July 2019 Edition
It’s easy to make financial mistakes when you’re young, because you can generally recover from them over time. Unfortunately, the same can’t be said as you approach retirement, when you’ll have less room for error. With that in mind, here are five mistakes that are easy to make heading into, or during, retirement.
Waiting too long to start saving
If you save aggressively in your twenties, those gains will com-pound over forty or more years. But the later you start saving, the harder it gets to accumulate a nest egg with which you are comfortable.
Not saving enough
Some of us are disciplined savers who live below our means and put away a good amount for retirement. Most of us are not. Indeed, the savings rate today is around 6%, about half what it was in the 1960s. So, as you approach retirement, it’s a good idea to make do with less and save more.
Ignore tax consequences
Every dollar you pay in taxes is a dollar you could have potentially saved and invested. So consider tax-advantaged accounts, such as 401(k) plans and individual retirement accounts (IRAs).
Being too aggressive
Being too aggressive late in your retirement can be disastrous, and it’s easy to do when we’ve saved too little.
Many investors try and compensate for a lack of savings and low returns on safer investments such as cash and bonds by taking on more risk.
Being too conservative
On the other hand, having too little in riskier investments can also be disastrous. Stocks are usually the best longterm growth vehicle, but other investments can fall into this category as well real estate, for example, and commodities. Regardless of how you take on risk, you’ll likely need at least a little, depending on your time horizon more when it’s longer, less when it’s shorter.
The takeaway: don’t make mistakes now that will affect your lifestyle later.
Note: This material has been prepared for informational purposes only, and is not intended to provide financial advice for your particular situation.
Yann Kostic, MBA and Tom Zachystal, CFP, are Presidents of their respective As-sets Management firms, both US-Registered Investment Advisors (RIA). Tom is the San Francisco Financial Planners’ Association President. Tom and Yann cater to US expats in Mexico and worldwide. Comments, questions or to request his newsletter, “News you can use” contact him at firstname.lastname@example.org, in the US at (321) 574-1 529 or in Mexico, (376) 106-1613.