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Buffalo, NY 14215-1421

Top Ten Retirement Mistakes

1. Planning for an average life expectancy.

For a 65-year-old couple, there is nearly an even chance that one of them will live to age 90 or beyond. Individuals should plan for living well beyond the average – to age 95 or even 100 – especially those in good health. For non-smokers in excellent health, there is almost one in three chance that women will live to age 95 or beyond and one in five chance that men will live to age 95 or beyond.  1

2. Failing to adequately account for inflation.

Even at mild inflation, you lose about 1/3 of your purchasing power every 10 years. With today’s longer life expectancies, you need a strategy to at least double and possibly triple your income during retirement or you will be forced to decrease your standard of living. 2

3. Not understanding RMD tax trap.

Forced Required Minimum Distributions from IRAs, 401(k) plans, 403(b) plans, and 457(b) plans at age 72 (73 if you reach age 72 after Dec. 31, 2022) can force retirees into a higher marginal tax bracket and cause up to 85% of their Social Security to be taxed.  3

4. Not having investments properly diversified.

Most people work their whole lives toward a comfortable retirement! Proper diversification is one of the best strategies for protecting your assets.  Diversification can be thought of as spreading your investment dollars into various asset classes to add balance to your portfolio. Although it doesn't guarantee a profit, it may be able to reduce the volatility of your portfolio, and increase your probability of achieving your goals. 4

5. Withdrawing from growth investments in down years.

If you have to withdraw money from growth oriented investments during the inevitable “down” years, the odds are overwhelming that you will not be able to recover your original principal over the short or long term.

6. Not being financially prepared for a Long-Term Care needs.

A significant need for long term care is the biggest risk to a retiree’s nest egg. You must have a strategy to deal with this potential risk. 5

7. Withdrawing too much income from your investments.

Studies indicate that anything higher than a 5% withdrawal rate has a high degree of depleting all assets before average life expectancy. You might run out of money!

8. Not rolling over employer retirement plans to an IRA.

By consolidating your assets and rolling your former employer’s retirement plan to an IRA you can gain greater investment control, give yourself and your beneficiaries the potential for more guarantees and greater account protection as well as allow your beneficiaries significant advantages for continued tax deferral after your death. 6

9. Using average rates of return.

It is quite common to see individuals and their advisers using average rates of return when doing retirement projections. What most people don't understand is that these average returns are based on a "buy and hold" scenario. If an individual was withdrawing from this same investment, his or her return could be dramatically different from the "buy and hold" return.

10. Not having a plan to accomplish your goals.

Most people don't understand how complex retirement planning really is. People don't plan to fail, they just fail to plan. Having a well thought out retirement plan can greatly improve your retirement.

If you think you or someone you know may be making some of the mistakes listed above, feel free to contact the office today at 716-862-0500 to schedule a free phone consultation to discuss the issue in more detail and what type of solutions may be available to you.


1 JP Morgan Guide to Retirement 2023 - Slide 4

2 https://www.bls.gov/cpi/factsheets/purchasing-power-constant-dollars.htm

3 https://www.irs.gov/retirement-plans/plan-participant-employee/retirement-topics-required-minimum-distributions-rmds

4 https://www.nasdaq.com/articles/the-importance-of-diversifying-your-retirement-portfolio

5 https://aspe.hhs.gov/reports/what-lifetime-risk-needing-receiving-long-term-services-supports-0

6 https://www.kiplinger.com/article/retirement/t032-c000-s002-pros-and-cons-of-rolling-your-401-k-into-an-ira.html

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