MISTAKES RETIREES MAKE
THAT CAN RUIN THEIR FINANCES

     Retirees make the transition into retirement without personal experience. How can you do it right? How can you avoid making a devastating mistake that can leave you in misery or financially destitute for years? The key to avoiding mistakes is to begin learning and planning well ahead of retirement. This gives you time to think through all the new issues you will face as a retiree. Advance planning can help you to avoid mistakes and allow you to transition into retirement successfully.

     There are many areas you need to plan to avoid making mistakes. Start saving early. Review your retirement goals and savings objectives years ahead. Meet with a retirement planner and evaluate their advice and suggestions. Talk to others who have retired and evaluate what they are doing. Complete an estate plan. Avoid estate taxes. Use a living trust to protect your assets should your health fail later. Never, never, never put your children's names on your savings, property or investments as a joint owner. If they get a divorce, face a lawsuit or IRS lien, your assets are fully exposed. There are better ways to avoid this problem. Living trusts may also help to separate the liability of children and still allow them to bypass probate and manage your financial affairs should you become disabled. As a trustee of your trust your children will not pass any personal liabilities to you. The trust provision against alienation provides protection for your assets when children are involved with your estate.

     Other mistakes can be spending too much money on non-essential purchases after retirement, failing to have long-term care insurance and procrastinating on addressing all these areas of planning.

     The biggest mistake many retirees make is failure to invest their retirement funds wisely. Many retirees are too conservative with their total retirement funds while others recently have had too much money in the stock market. For example, if you live to age 100, you may have 30 or 40 years ahead of you. If all your retirement funds are in bank savings, bonds or tax-free municipals you may find that your retirement "nest egg" is also retiring. Recently we visited a widow who had all her money in fixed assets and tax-free municipals. Her $500,000 in assets had declined from age 72 to approximately $383,000 at age 80 and yet she was not spending any of her principal. The value of her portfolio was simply eroding as the stock market continued to grow and as Greenspan continued to increase interest rates during the 90's. Recently, due to the recession interest declined to the lowest rates in 40 years. Now we are again poised for Greenspan to begin raising interest rates and clients holding long term bond funds may again suffer losses in their principal. The fluctuation of principal in bond funds could create a loss of retiree assets. The key is to protect your principal first, avoid stock market risk by using a form of indexing that protects your principal and still allows you to earn competitive rates with no risk of your principal.

     The key is to get with a retirement planner and plan out a very diversified investment program. You need to build safety into your program with diversification in classes of assets that provide the opportunity to grow over time. There are many investment trends and opportunities today. Diversification is the key to long-term safety of investments. Follow the old rule - don't put all your eggs in one basket. We also suggest that you request our free report entitled, "8 MISTAKES RETIREES MAKE THAT CAN RUIN THEIR FINANCES AND HOW TO AVOID THEM" in the free report section of this web site (click here).

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