In a blog post on DailyFinance.com, retirement expert Daniel Solin outlines the 10 worst mistakes a retiree can make. Some of them, you can save your clients from, but others you may be at risk of making yourself.
- Overconfidence in your investing skills. Anyone can fall victim to ego.
- Using a “market beating” broker or adviser. You know better. “Markets are random and efficient,” Solin writes. “Tomorrow’s news sets prices. No one knows tomorrow’s news.”
- Fleeing to safety. “Inflation at its historical rate of 3 percent can destroy a ‘safe’ nest egg. At that rate, $100 is worth no more than $56 over two decades,” Solin writes.
- Believing all bonds are safe. Solin recommends low-cost index bonds.
- Being tempted by ETFs. Solin warns retirees to avoid ETFs because of the chunk commissions take out the return. The bid-ask spread, the difference between the market price for buying an ETF and the cost of selling it, is another drawback, Solin writes.
- Ignoring immediate annuities. Variable annuities and equity-indexed annuities have given immediate annuities a bad reputation, Solin writes.
- Retiring too early. After 2008, many would-be retirees simply can’t afford to do it.
- Not having a current will. If your clients don’t update their wills, their assets will go into probate based on the most current version.
- Remarrying without a prenuptial agreement. Later in life, your clients are probably worth more than when they first married, and have more assets to protect. “Prenups can protect one spouse when the other is strapped with financial obligations like college tuition, child support, and caring for elderly parents,” Solin writes.
- Taking Social Security too soon. The longer your clients wait to take Social Security benefits, the bigger the check will be.
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