A timely reminder of three easily avoided retirement mistakes is offered up by advisor Jason Hull, who U.S. News and World Report describes as a candidate for the CFP certification and a Series 65 license holder.
Hull, proprietor of Hull Financial Planning, notes that a quick check of a client’s investment accounts isn’t going to truly answer the question of whether or not they have the appropriate mix of assets to see them through to retirement. Here are usually the reasons why:
1) They’re including their house in their assets.
Hull often hears people describe their net worth in a conversation like this: “I have a $200,000 house and $800,000 in investments, so I have a net worth of a million dollars.” The problem with this description, he says, is that your house cannot independently generate income except in a reverse mortgage, which has its own twists.
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“Basically, owning a home free and clear eliminates the need for you to have housing expenses—save, of course, for property taxes, insurance, and home maintenance costs. If you were to sell your house, then you’d need to use the money that you generated to create a stream of income to pay for your subsequent living arrangements, whether that means buying another house, renting one, or moving into an assisted living facility.”
2) They don’t include Social Security and pension payments as part of their fixed income.