6 Mistakes Retirees Make With Their Money

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Mistake #1 Ignoring Change

Retirement is changing. We are living longer and retiring earlier. No one in the history of human kind has lived as long as you – and ended up in such great shape. Unfortunately all those extra years require extra money. And what will the power bill, grocery bill, gas bill, and so on cost 10 years from now? Certainly more than today. We can not ignore inflation in our financial plan.

Mistake #2 Future Long Term Care Costs

North America’s aging population means increased strain on our health-care system. As our population ages, a greater number of retirees will need long-term care and at the same time our tax base is shrinking. There will be fewer working-aged people to support the health care needs of retirees. As the health system pulls back services, under the weight of increasing demand, it is important to evaluate your family medical history, adult-care facilities and home care costs to determine if there is a need for long-term care insurance. What plans have you made for when you need long-term care? How much additional money will you need to cover the cost? What does it cost in your area for Long Term care, whether in your home, or in a Nursing Home. Where will this money come from? Explore long-term care insurance.

Mistake #3 Buying Hot Funds & Stocks

Wealth isn’t determined by investment performance, but by investment behaviour.

6 Mistakes Retirees Make With Their Money

Mistake #4 Taking Unnecessary Risk

All too often the investor is enticed to buy an investment promising high returns. Risk and return operate like railroad tracks. They run exactly parallel to one another. Anything that promises great returns with little risk is likely to derail you. No matter how high or low the desired return the level of risk runs parallel with it. The question you must ask yourself is “what kind of journey do I want in my retirement years?”. Remember Warren Buffet’s 2 rules of investing: Rule #1 Never lose money. Rule #2 Don’t forget Rule #1.

Mistake #5 Assuming Taxes won’t plague your Retirement

Even after retiring you may still face a considerable tax burden. We are among the most highly taxed people in the word. Tax-advantaged investment income such as dividends, or annuities, can reduce the taxes on your investment income. Explore income-splitting opportunities.

Mistake #6 Not Going For Regular Checkups

Like medical checkups, financial checkups are important, to make sure that your portfolio is functioning properly. Periodic checkups can prevent future financial problems and surprises.