To best plan a successful retirement, many choose to work with knowledgeable and experienced financial planners; there are four common mistakes many individuals make that can cut into their retirement income
Many individuals choose to work out the complicated aspects of retirement planning with financial planners to better ensure more successful golden years. In addition to accumulating enough funds, people planning to retire also need to calculate their debt, figure their insurance needs, factor inflation, sort out other sources of income and think about how to protect their investments. Here are four common mistakes people make with these items.
1. Not paying off debt before retirement. Financial planners will typically advise against retiring with any form of revolving debt, such as credit cards or mortgages. Monthly payments such as these will rapidly slash savings. Additionally, they are paying for past expenditures that include interest. More and more Americans are entering traditional retirement years with heavy debt and are unable to meet their personal goals.
2. Not purchasing the proper amount of insurance. Individuals 65 and older are eligible for Medicare but they will still have additional medical costs that are not covered by this plan. Depending on the insurance plan, many items are not included, such as deductibles, premiums, eyeglass coverage, hearing aids, coinsurance, or long-term nursing in home care for longer than 100 days.
3. Not properly accounting for inflation. Spending power will slowly be decreased as inflation progresses. Luckily, there are some items that can be taken advantage of to avoid this, such as Social Security, some annuities, and pensions that are adjusted annually to account for inflation. Treasury Inflation-Protected Securities (TIPS) are a government bond that ensures a rate of return that exceeds inflation. These items can be discussed with financial planners.
4. Relying on a sole source of income. When retirement planning, many financial planners will recommend having four to six sources of income rather than depending on only one. Diversifying allows retirees to avoid losing all their income if one source does not produce. There are guaranteed sources such as Social Security, pensions and annuity payments. Others common sources are 401(k), IRA, CDs, personal investments, cash investments, rental properties and royalty income.
FinancialPlanners.net offers a free service that connects people with knowledgeable and experienced financial planners to help people better secure their fiscal future. Financial planners can assist clients with retirement planning, 401(k) rollover, estate planning, and portfolio management. To find a retirement financial planner that will help you secure your fiscal future, visit FinancialPlanners.net today.
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