In a recent article in The Peterborough Examiner, Jim Scantland, a Canadian investment expert, was quoted as saying that "...you definitely need to talk to a professional about money so you have enough in retirement." According to him, those who retired in the next few decades will need from $750,000 to $1 million in savings going into retirement in order to maintain their current lifestyle, including a nice house, a new car, travel, and the everyday luxuries they now enjoy.
Unfortunately, Mr. Scantland says, individuals today make the same six mistakes over and over when planning their retirement. He has developed a seminar entitled The Six Mistakes Retirees Make with Their Finances (and How to Avoid Them) to educate participants as to how to avoid these mistakes.
The mistakes are:
- Wrong time horizon. Rather than focusing on from now to retirement, the span must be expanded to at least age 85.
- Not covering your risk. Most people save for a healthy retirement. Money must also be saved for extra health care and long-term care, which is becoming more and more prevalent as the population ages and health care costs skyrocket. Medicare does not cover long-term health care expenses until the individual's assets have been consumed.
- Not understanding the markets. A properly diversified portfolio with a long-term view is wise investment strategy. To be avoided is being caught up in the type and buy high and sell low.
- Buying that "hot" investment. These are too risky for those close to retirement.
- No asset allocation. Again, a well diversified portfolio that includes stocks, bonds, mutual funds and guaranteed income certificates, and international markets is the way to go.
- Paying too much tax.
- Not having a proper estate plan. A "bonus" mistake that Scantland throws in is one of the most important from the perspective of possible heirs. In order to maximize the size of an estate and to minimize taxes, it is essential to have an up-to-date will with power of attorney and trusts, if needed. It takes a long time in the US to see an estate through probate, increasing the legal expenses considerably. Revocable family trusts avoid probate.
Source: www.thepeterboroughexaminer.com/ArticleDisplay.aspx?e=1166715.
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