HOW TO FAIL IN RETIREMENT: 5-Easy Steps

We often discuss our clients' plans for "settling down for retirement." Of course, there's so much that goes into these conversations.

Today, I want to empower you with a clear strategy for saving for your sunset years. Having a well-defined plan can give you a sense of control and confidence as you navigate your retirement journey.

More to the point, I'd like you to avoid some mistakes I've seen a few clients make over the years. A good strategy will fix most problems but is much easier to handle when you see them coming in advance.

Note: None of this is specific advice for your situation. These are general principles, and every person's circumstances will differ slightly.

But that said, it's good to be aware of these tendencies...

Even a single misstep in managing your retirement funds could lead to significant penalties as you age, both financially and emotionally. It's crucial to be vigilant and avoid these common mistakes we've seen people make over the years.

Obsessing about market losses (or gains).

Focus on your long-term needs, not the daily ups and downs of the DJIA (Dow Jones Industrial Averages). Catastrophic events and long-term healthcare needs can cause as much damage to your nest egg as a shaky market.

• >As a Real Estate Investor (REI), consider long-term health insurance.
• >Also, consider "Umbrella Coverage" for your insurance products.
• >REI is a smoother ride than DJIA, plus you are getting other people to pay your mortgage.
• >Consider a Property Manager to deal with your investments.

Forgetting about inflation and taxes.

Your retirement savings may be much smaller than you think when you start factoring in the rate of inflation and the taxes you'll have to pay when you start drawing out of it.

• >As an REI, you usually have much better places to put your money than into an IRA (Individual Retirement Account).
  • But having a Self-Directed IRA is brilliant if you can invest in real estate.
•      A Roth IRA can be Self-Directed, PLUS it grows tax-free (Lots of Restrictions).
• >Remember that you will no longer enjoy most of the deductions you claimed before retirement, which may mean a higher tax bracket.

Not saving in the last years before retirement.

For some, a handful of years left before you retire doesn't mean you should go ahead and buy that new Lexus. Some people can build up substantial savings in their last five years of work because they get serious about saving and investing.

• >Real estate investment is a 'long-game’ that offers stability and growth over the years. Increasing your portfolio is a prudent way to secure your present and future financial well-being.

Believing you can withdraw more than you really can.

If you rely on average annual returns on your investments to determine how much you can withdraw, you could draw down your retirement fund faster than you should. Average returns are seldom steady. A safe rule of thumb: Count on a 3 percent withdrawal rate.

• >As an REI, you have been building a relatively predictable passive cash flow. Thus, you are not drawing down the fund.

Not planning for a long life.

Despite the dramatic rise in life expectancy in recent decades, many still underestimate how long they'll live. If you're not thinking about longevity, you could tap out your savings much faster than you should. Look at the figures and add at least a few extra years as you plan.

• >One of the many excellent benefits of real estate investment is that rent and leases adjust with inflation.

REIs are poised to sail into retirement with relative stability and a marvelous hedge against inflation. The only thing to remember is to get plenty of fiber in your diet and consider two-step verification (2FA or multi-factor authentication) on all critical online accounts.

BE THE ROAR not the echo®

Warmly, Janet, The Tax Wizard