By Brett Gottlieb
Retirement is often seen as a finish line, one we tirelessly work toward our entire working lives. But retirement isn’t the end—it’s the beginning of a new phase of life. So yes, it’s incredibly important to prepare well for this milestone, but there are also important decisions to be made after you are no longer working. In all our years of helping our clients navigate to and through retirement, we’ve come across many retirement pitfalls. We’re here today to help you avoid them!
1. Leaving Your Job too Soon
Sometimes continuing to work for an extra couple of years can yield great benefits for several reasons. If your income is at its highest, which is often the case in the later working years, you may increase your Social Security benefits, since your benefit amount is based on your 35 highest-income years. Also, if you have a retirement plan with your employer, make sure you understand how the timing of your retirement may affect the benefits you receive.
2. Spending Your Nest Egg too Quickly
Many retirees like to think about the early years of retirement when the rewards for decades of hard work pay off. Travel, sightseeing, volunteering, and spending time with grandchildren commonly come to mind as activities we look forward to. While there is nothing wrong with enjoying the well-earned fruits of retirement, we generally encourage our clients to take a conservative approach to budgeting and deciding on major purchases in the earlier retirement years, especially because a period of adjustment is necessary.
3. Withdrawing Income Sources in the Wrong Order
Once you have stopped collecting a salary from your employer (or stopped actively working in your business), your income streams change shape. We advise our clients to plan ahead and think about the sequence in which they draw from their different retirement income sources, such as pension plans, Social Security (your benefits or your spouse’s), investment portfolios, part-time jobs, business ventures, royalties, or any other income sources available. For instance, if you delay drawing Social Security benefits until age 70 and draw on other sources first, you will increase your benefit amount. Other factors, such as capital gains tax, can also come into play with certain investments, so it’s important to look at the full picture.
4. Failing to Plan for Medical Expenses
One of the most common reasons seniors file for bankruptcy is medical expenses. Various studies have estimated healthcare costs after age 65 ranging from $169,000 to $404,253. Managing healthcare expenses is not simply a matter of saving enough, but also putting in place the right mix of insurance coverage and utilizing tools such as health savings accounts (HSAs), and fully utilizing Medicare benefits.
5. Neglecting to Reevaluate Your Financial Plan
Throughout all stages of life, you should review your financial plan every two to three years or whenever you face a major life change. Your investments and risk level need to be appropriate for your stage of life. For example, when your children graduate from college, you can reallocate money that you were putting toward their education to your retirement. Or, if your spouse decides to scale back at work, your plan needs to be adjusted accordingly.
Our team at Comprehensive Advisor knows that planning for retirement can be overwhelming, so we’re here to remind you that you’re not alone. Helping our clients create the foundation necessary for a fulfilling retirement is our top priority. If you’d like to discuss how our firm can help you plan for these retirement risks (and others) and guide you on the path to financial well-being, email us at info@ComprehensiveAdvisor.com or call (760) 813-2125 to schedule a no-obligation conversation.
About Our Advisors
Brett Gottlieb is the founder of Comprehensive Advisor and a financial advisor with nearly two decades of industry experience. He graduated from California State University-Chico with two bachelor’s degrees in Business Administration and Economics. Brett is Life Insurance licensed in several states. He is passionate about guiding his clients on retirement income planning, helping each client pursue their specific retirement goals and defending the assets his clients have worked so hard to achieve. Brett is a California native and currently resides in San Elijo Hills with his beautiful wife and three children.
With a combined experience of over three decades in the financial services industry, our advisors hail from some of the largest independent broker/dealers and banking institutions in the country. They have dedicated their professional careers to creating personalized financial solutions for individuals and families who seek successful retirement planning and currently offer investment advisory services through AE Wealth Management, LLC. Our advisors take a common-sense approach to the planning process and work with clients to create a retirement road map to help ensure their assets are protected and they receive the income needed to enjoy their future. Based in Carlsbad, California, they work with clients throughout San Diego County and beyond. Learn more by connecting with Brett on LinkedIn or email them at info@ComprehensiveAdvisor.com.
Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Comprehensive Advisor are not affiliated companies. C.A. Financial & Insurance Services, CA Ins. Lic. #6000262. Comprehensive Advisor, LLC is an independent financial services firm that utilizes a variety of investment and insurance products. This material is intended to provide general information and is believed to be reliable, but accuracy and completeness cannot be guaranteed. Neither the firm nor its representatives may give tax or legal advice. Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc. generally refer to fixed insurance products, never securities or investment products. Insurance and annuity product guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company. 00999901 – 8/21
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