- \ Gerard Gruber
- February 24, 2022
It’s clear that this is no longer your father’s retirement. For the most part, our parents did not have to contend with increasing retirement costs and expanding longevity. Many didn’t have to rely solely on their own assets for...
It’s clear that this is no longer your father’s retirement. For the most part, our parents did not have to contend with increasing retirement costs and expanding longevity. Many didn’t have to rely solely on their own assets for lifetime income sufficiency. To put it another way, they had a little more margin for error in planning their retirement than their children and grandchildren. Today, the need to secure a comfortable retirement that can last 30 years or more leaves no room for error, especially if mistakes are made along the way that could compound over time. That is why it is more important than ever to avoid the common mistakes many people make when planning their retirement.
Retirement Planning Mistake #1: Not having a clear vision of retirement
Retirement Planning Mistake #2: Underestimating retirement costs
Retirement Planning Mistake #3: Focusing on investment performance instead of risk
Most people don’t find out until it is too late that they have very little control over their investment performance. It is very difficult to predict the movements of the markets, let alone know how any particular stock will perform at any given time. Yet, many investors remain fixated on investment returns, which can detract them from what they should be focused on – managing risk. Risks are more certain, which means they can be managed. For instance, we know for certain that the stock market will go down at some point and that inflation and interest rates will increase. With that certainty, you can arrange your assets in a way to protect against those risks.
Retirement Planning Mistake #4: Not knowing where you are in relation to your goal
If there is one thing we have learned over the last decade, it’s that the economy and the markets can change very quickly. If you experienced the pandemic-induced shutdown of the economy and the steep market crash of 2020, you also know your financial circumstances can change rapidly. For many people, their retirement targets moved, but they didn’t make the necessary adjustments. That’s why you can’t set and forget your retirement plan. Instead, you should take frequent snapshots of your financial circumstances and where your stand in relation to your goals.
Your retirement plan should be adjusted based on your evolving needs and priorities. When done regularly, the adjustments are typically small, just enough to keep you on track. When you always know where the target is, you’ll know if your aim is true.
It’s never too early to plan for retirement. In fact, the longer you wait, the cost of your retirement increases, and you have less margin for error. With a sound plan, you’re less likely to make critical mistakes that can derail your retirement dream.
This information is for general purposes and is not intended to provide specific investment advice or recommendations. Opinions, estimates, forecasts, and statements of financial market trends are based on current market conditions and are subject to change without notice. Individuals should always consult their own financial or tax advisor regarding their specific situation before acting on any information provided. Harbor West and Geneos Wealth Management, Inc. do not provide tax or legal advice.
Securities and investment advisory services offered through Geneos Wealth Management, Inc. Member FINRA/SIPC