As year-end approaches, many retirees are faced with an array of financial choices that can benefit their portfolio this year and into next. Given the current state of the economy, many retirees are paralyzed by their fear, and subsequently are ignoring their portfolios. This is the biggest financial mistake I see retirees make – and it’s potentially creating bigger financial problems down the line which could be resolved by implementing some basic strategies.

Here are the three things every retiree needs to examine in their portfolio before the year’s end:

1. If taking income, it needs to be guaranteed. The three primary sources of guaranteed retirement income are social security, annuity income and pension benefits. No matter how safe something appears, if it’s not guaranteed, it does not count. For example, Lehman Brothers was considered so safe that banks, institutional investors, and individuals throughout the country invested in their bonds as a “safe haven” where they could earn a little bit extra interest over Government bonds. We saw what happened there, as Lehman’s collapse left investors holding the bag. Insurance companies, on the other hand, offer fixed annuities. They guarantee your principal and pay you interest each year. Fixed annuities are guaranteed by the State Guarantee Association, which is very similar to FDIC, but administered through the States.

2.Eliminate unnecessary portfolio risk. Why take risk if you don’t have to? So many retirees are hanging on to their 401(k) hoping to recoup losses they’ve experienced over the past few years. At this stage of their lives, this is a high-risk strategy. The money can be used to invest in “safer” avenues.

3. Watch out for upcoming tax increases. Now is the time to get IRA dollars into more tax-efficient vehicles. With government deficits running at record highs, it’s only a matter of time before tax rates increase. But today, retirees have the opportunity to reposition those dollars into more tax-efficient vehicles like Roth IRAs and Life Insurance. Repositioning those dollars today at lower tax rates can save the typical retiree thousands of dollars in tax over time.

Michael Reese, CFP, CLU, ChFC, is president and founding principal of Centennial Wealth Advisory LLC in Traverse City, Mich. Reese has been assisting his clients achieve their financial objectives since 1995. He holds over a dozen licenses and designations and is an instructor of the “IRA College,” a class for financial advisors who want to learn more about tax planning with IRAs. For additional information, visit www.cen-wealth.com.

Centennial Wealth Advisory, LLC is a Registered Advisory Firm with the State of Michigan. This news release is for information only and is not an offer to sell or invest in securities. Please refer to all appropriate prospectuses prior to any investment. Investments can, and do, lose money.