By Yann Kostic from the December 2016 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 compound over forty or more years. But the later you start saving, the harder it gets to accumulat a nest egg with which you’re 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 long-term 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.
Yann Kostic is an Investment Advisor (RIA) and Money Manager with Atlantis Wealth Management. Yann specializes in retirees (or soon to be), self-reliant women and expats in Mexico. Atlantis Wealth Management has relationships with international custodians allowing multiple foreign currencies in a single account. Yann splits his time between the Lake Chapala area, Manzanillo and Central Florida. Comments, questions or to request his newsletter, “News you can use” contact him at yannk@atlantisgrp.com, in the US at (321) 574-1521 or in Mexico, (376) 106-1613
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