All of these retirement planning sins can set you back from achieving important goals. If you have a nagging feeling that you could be doing a better job of retirement planning, check out these seven offenses and learn how to get back on track. Team RetyrSmart
Deadly Sins of Retirement Planning
When retirement planning becomes complicated than you originally thought, it’s important to get help. Being prideful and going it alone leads to irrational decisions. A professional such as a Certified Financial Planner can help with your individual retirement plan. “Someone not doing this full time will be less likely to spot trouble,” says Larry Luxenberg, managing partner and chief investment officer of Lexington Avenue Capital Management. Examples of trouble spots are asset allocation and portfolio diversification. “When an amateur gets these wrong,” Luxenberg says, “it could spell the difference between a comfortable retirement and a much delayed one–or worse.” So swallow your pride when it comes to building a long-term portfolio, and get help if you know deep inside that you need it.
Envy drives people to compete with others and can thwart a retirement plan. “Driving new cars, acquiring a home in a fashionable neighbourhood….to keep up with their friends are sure-fire ways to minimize your retirement saving potential,” says Mark Petersen, CPA, CFP, and vice president of affluent wealth planning for Carson Wealth. Competing may also transfer to investing. Making risky bets and stock picking could lead to a financial disaster. The better course is to forget whom you’re envious of in the short term and invest in broad categories of asset classes to minimize your risk.
Don’t let anger cloud your judgment when leaving a job. Often, irrational decisions are made in the heat of anger. Leaving a job without sufficient planning could wreck retirement savings. “You may be living off that savings if your job search takes longer than expected, and voluntarily leaving employment may disqualify you for receiving unemployment benefits,” says Petersen. If you have to leave, it’s best to do it amicably.
It’s not unusual for investors to get greedy and chase returns, often to their detriment. “Once a stock or new investment vehicle starts moving, it’s tempting to jump on board,” Luxenberg says. “Your friends and family are all making great money at it. Why not you?” Unfortunately, most people wait until the trend is well-established before they plunge in. “Most investors buy the right things but do it at the wrong time, and that’s enough to sink a portfolio,” he says.
Sloth represents laziness, and laziness is not a good trait in investing. “Most investors don’t spend enough time on their retirement planning and don’t review their options sufficiently enough,” Luxenberg says. You have to do your homework, know your options, and determine which are best, he says. Once you have a plan in place, it’s important to stay on top of your investments through your retirement years.
Gluttony is a cousin to greed. And being overly greedy in the market tends to lead to investment failures instead of successes. It’s much better to be goal-oriented. “People who have goals often strive to reach them,” says Randy Warren, chief investment officer of Warren Financial. “Just wanting to make more money is not really a goal. That’s gluttony. .. If you are goal-oriented, it will affect your investing strategy. So you may not need to shoot for the moon in terms of investment returns.”.