Rusty Miller

American Liberty Financial Network

10 Retirement Planning Mistakes and How To Avoid Them

Avoid these 10 common mistakes, and a solid retirement becomes a reality:

1. Not planning.

Most Americans don't have a good idea of how much they need to save for retirement. Simple planning can help put in perspective how much money is needed for retirement. Guesswork is an error.

2. Retiring too early without a solid plan in place.

We all dream of retirement and spending our time as we see fit, but making that life-changing decision without fully understanding the consequences can be an error. Early retirement could also mean accessing Social Security before receiving the maximum benefit. Once Social Security is selected, it cannot be changed. Working even a few years beyond what you've planned can pay a surprisingly large bonus in retirement security.

3. Not understanding life expectancy tables.

More than 60% of Americans live longer than they expected. At age 65, a woman can expect to live to an average of 85 and a male about age 82. It is important to know that those estimates are based on averages, and your actual personal life expectancy could be longer.

4. Job searching at an older age.

Thinking that finding a part-time job or re-entering the workforce later in life if income is needed is extremely difficult.

5. Not saving enough money.

We have become a nation of spenders and not savers. Compared to other cultures and countries, the U.S. lags in the percentage of funds saved. A recent government report showed the average U.S. household has managed to save just over $60,000 toward retirement. The average contribution to a working saving plan is 7.5 percent of salary, not enough to accomplish the needed future retirement goals.

6. Risk: Not understanding how risk can affect future results.

Exposure to unseen market trends out of most people's control can result in poor performance, just as retirement approaches. Exposure to the volatility of stocks is too great as retirement approaches and not reallocating to safety and security promptly. About 1 in 3 investors approaching retirement age had more than 80 percent of their account balances in the wrong asset allocation, according to a report completed in 2008.

7. Premature use of qualified money.

It is estimated that 45 percent of workplace retirement plan participants cash out their 401 (k) balances when they change jobs rather than roll them over to a new plan or a self-directed IRA. Taxes and fees can be a huge detriment to the retirement planning process.

8. Not understanding or ignoring annuities.

Annuities are the only financial product available that can provide income for any period, even a lifetime. Not using these products can adversely affect the need for income over a long period.

9. Health expense risk.

Not adequately considering future health costs can significantly affect retirement planning. Health costs have increased rapidly, and not setting aside a percentage of retirement income can severely damage future needs.

10. Not being informed.

Knowledge is everything when it comes to proper retirement planning. Make every opportunity to become as informed of your options as possible, and always seek professional tax and legal advice. When a financial planner or agent makes a recommendation, make sure a second opinion is requested. Be careful and be informed.

Rusty Miller picture

Rusty Miller

American Liberty Financial Network

1201 Barnhart Rd.

Troy, Ohio 45373

(877) 677-4506

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