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3 Reasons People Fail in Retirement

Let me share with you a very simple piece of advice: Don’t follow the crowd and drown in retirement.

Unless they make significant changes in their lives, many of your neighbors might not make it in their retirement years.  The reason is that your neighbors are prone to repeat the same mistakes committed with other major financial decisions in their lives.

So why can people fail to live a happy retirement?  Here are 3 reasons:

  1. People lack a game plan for retirement.

    People who do not see their problem or fear their problem will not seek proactive solutions.  Many of your neighbors often lack a game plan for retirement because they are living in denial of the problem.

    That might explain why at least 1 in 3 Americans have zero savings for their future after working, according to Money magazine [1].

    These unfortunate Americans resemble the proverbial ostrich that puts its head into the ground.

    “Hope is not a strategy.”  Consider building a relationship with someone who cares about you and your financial health.

  2. People do not save enough for retirement.

    Even with some savings, nearly 1 in 2 Americans will struggle after their careers end, according to the Center for Retirement Research at Boston College.[2]

    Consider the sad and sober reality of this number.

    Would you want to flip a coin and hope it comes up “heads” to figure out if the rest of your life might bring happiness?  You have worked too hard in life to simply leave your future to the wind.

  3. People mismanage the money that they have invested.

    How does this happen?

    1. People work hard to save a lot of money. Yet, they invest it in the wrong way like many of your neighbors do. Dalbar, a national research institute, has shown that the average American investor does a terrible job of managing their own investments [source].
    2. People damage their retirement with poor spending habits. Some examples include:
      1. Pay too much in taxes that they might have otherwise saved with prudent planning.
      2. Wasting money on the wrong spending priorities – for example, buying a new car when they might have saved on a solid used vehicle.
      3. Spending far outpaces savings – some of your neighbors simply forgot or never learned how to implement a realistic budget.
    3. People are too hasty to gift money to their heirs:
      1. They give money too early and lose out on potential future income and returns.  We see this often when parents spoil their adult children to everyone’s harm.
      2. The donors can afford to gift to their heirs while they are alive. However, even though the donors have good intentions with their gifts, the money they give is not used for the purpose they had intended.  For example, donors might want to pay for their grandchildren’s college education.  However, the parents insist on getting the money.  Later, the donors find out that the children spent the money on something else. Prudent estate planning can help you reduce this risk.

 

Conclusion: Are You Ready?

If you are prepared, congratulations.

You are far ahead of many of your neighbors. However, you might still benefit even more with the help of a competent advisor.

If not, it is never too late to get help.

 

Schedule appointment

 

 

1. Elyssa Kirkham, “1 in 3 Americans Has Saved $0 for Retirement”, Money, March 14, 2016 on http://time.com/money/4258451/retirement-savings-survey/ accessed on June 25, 2018.
2. “National Retirement Risk Index”, Center for Retirement Research at Boston College on http://crr.bc.edu/special-projects/national-retirement-risk-index/ accessed on May 31, 2018.

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