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Personal Perspective


By November 1, 2012No Comments

Although many people think that the real danger to their retirement comes from not having enough money or Social Security when the time comes, financial planners say that a far greater risk is making mistakes that squander the resources you have when you leave the workplace. Terence L. Reed, CFP, author of The 8 Biggest Mistakes People Make with Their Finances Before and After Retirement, offers this advice on avoiding four of the most common mistakes:

  1. Put your plans in writing. If you’re married or with a partner, be sure that they contribute equally. Retirement isn’t a do-it-yourself project. Written plans are less likely to overlook key elements. Be certain to address every aspect of retirement, such as spending, allocation of expected retirement benefits from pensions or Social Security, provision of insurance, and plans to live or travel.
  2. Be realistic about your willingness to take risk. Sure, the stock market has been crazy. But does that mean that it’s time to put everything into CDs or that jar buried in the backyard? Be realistic about what returns you need, and the type you can expect. Highly aggressive investors aren’t likely to turn into lovers of bonds — however, highly conservative investors can’t assume that they’ll win the lottery. Keep your needs and investments in balance with your other sources of income.
  3. Don’t close the door on Long Term Care insurance. If you stay healthy, you can buy coverage even into your 80s; however, it’s more affordable to lock in the premiums as early as possible. According to health experts, people 65 and older have a 40% chance of spending an extended time in a nursing home. Now is a good time to consider how you can best afford that potential cost.
  4. Don’t assume that you’re too old for (or no longer need) Life insurance. Life coverage is not just for growing families. For example, you can use a Life policy effectively — even at the higher rates common to older age groups — for charitable bequests. If you’re healthy, the premium will almost always be less than the death benefit, thus increasing the amount you can leave at your death beyond what you could leave in your will, providing funds to care for a special needs child or grandchild, or freeing your surviving spouse from huge medical bills or housing costs.

Our insurance professionals would be happy to help with your retirement planning risk needs. Give us a call today so you can relax tomorrow.