Allard LTD. CPA & Financial Services

(952) 895-0895

Retirement Read Time: 4 min

Navigating Retirement Pitfalls

Much is written about the classic financial mistakes that plague start-ups, family businesses, corporations, and charities. Some classic financial missteps have been known to plague retirees, too.

Calling them “missteps” may be a bit harsh, as not all of them represent errors in judgment. Either way, becoming aware of these potential pitfalls may help you to avoid falling into them in the future.

Managing Social Security. Social Security benefits are structured to rise about 8% for every year you delay receiving them after your full retirement age. Is waiting a few years to apply for benefits an idea you might consider? Filing for your monthly benefits before you reach your full retirement age can mean comparatively smaller monthly payments.1

Managing medical costs. One report estimates that a healthy couple retiring at age 65 can expect nearly $208,000 in out-of-pocket medical expenses during the course of their retirement, even with additional coverage such as Medicare Part D, Medigap, and dental insurance. Having a strategy can help you be better prepared for medical costs.2

Understanding longevity. Actuaries at the Social Security Administration project that around a third of today’s 65-year-olds will live to age 90, with about one in seven living 95 years or longer. The prospect of a 20- or 30-year retirement is not only reasonable, but it should be expected.3

Managing withdrawals. You may have heard of the “4% rule,” a guideline stating that you should take out only about 4% of your retirement savings annually. Each person’s situation is unique but having some guidelines can help you prepare.

Managing taxes. Some people enter retirement with investments in both taxable and tax-advantaged accounts. Which accounts should you draw money from first? To answer the question, a qualified financial professional would need to review your financial situation so they can better understand your goals and risk tolerance.

This article is for informational purposes only and is not a replacement for real-life advice, so make sure to consult your tax, legal, and accounting professionals before modifying your investment strategy for tax considerations.

Managing other costs, like college. There is no “financial aid” program for retirement. There are no “retirement loans.” A financial professional can help you review your anticipated income and costs before you commit to a long-term strategy, and help you make a balanced decision between retirement and helping with the cost of college for your children or grandchildren.

1. Social Security Administration, 2021
2. HealthView Services, 2021
3. LongevityIllustrator.org, 2021

The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. It may not be used for the purpose of avoiding any federal tax penalties. Please consult legal or tax professionals for specific information regarding your individual situation. This material was developed and produced by FMG Suite to provide information on a topic that may be of interest. FMG, LLC, is not affiliated with the named broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security. Copyright FMG Suite.

Share |
 

Related Content

The Ivory Tower Changes Wall Street

The Ivory Tower Changes Wall Street

Thanks to the work of three economists, we have a better understanding of what determines an asset’s price.

Should You Invest in Exchange Traded Funds?

Should You Invest in Exchange Traded Funds?

There are hundreds of ETFs available. Should you invest in them?

Recognizing the Challenges of Custodial Care

Recognizing the Challenges of Custodial Care

The goal for most, when planning for retirement, is to ensure financial independence and never run out of money.

 

Have A Question About This Topic?







Thank you! Oops!

Attract Better Employees with Better Benefits

In a good economy, smart business owners know that a benefits package needs to fan a candidate’s excitement for joining...

Do You Know the Whole Life Story?

Change comes at us from every angle as people update and upgrade everything from their diets to their devices, seemingly every day.

Financial Hacks for Millennials: Student-Debt

Here are seven ways to reduce that debt and live more confidently.

View all articles

A Look at Systematic Withdrawals

This calculator may help you estimate how long funds may last given regular withdrawals.

Annuity Comparison

This calculator compares a hypothetical fixed annuity with an account where the interest is taxed each year.

Potential Income from an IRA

Estimate your monthly and annual income from various IRA types.

View all calculators

Protecting Those Who Matter Most

The importance of life insurance, how it works, and how much coverage you need.

Investment Strategies for Retirement

Investment tools and strategies that can enable you to pursue your retirement goals.

5 Smart Investing Principles

Principles that can help create a portfolio designed to pursue investment goals.

View all presentations

The Business Cycle

How will you weather the ups and downs of the business cycle?

Retiring the 4% Rule

A portfolio created with your long-term objectives in mind is crucial as you pursue your dream retirement.

Coaches

Coaches have helped you your whole life, in ways big and small. We’d like to be one of them.

View all videos