4 More Retirement Mistakes to Avoid....

6. Not maximizing Social Security benefits.

Social Security should be thought of as an additional retirement asset, much like your 401k, and Election Timing can often be the difference of over $100,000 in lifetime benefits for a married retired couple. Most retirees elect Social Security as soon as possible, which is usually a mistake. Coordinating your Social Security benefits to begin at your retirement date is often not the optimized election option. 

7. Too much investment risk. 

Often, clients say that they have a high risk tolerance, so want to take more risk in their portfolios. The truth, however, is that risk tolerance is only one of three risks that should be considered in retirement planning. One must also consider the risk required, or the amount of risk needed to combat future inflation in the portfolio. The third and final point to consider is risk capacity, or how much of the assets can be lost before retirement security is jeopardized.  All three of these risks need to be considered when building a stable retirement plan.

8. Relying on hypothetical returns.

Hypothetical returns are often used when evaluating financial plan assumptions. Financial plans and financial calculators often illustrate a flat assumed rate of return, not one that fluctuates like expected market returns. Using more realistic returns that fluctuate in value and illustrate losses is important to show, because level rates of return are not realistic and can create false levels of confidence. Moreover, they can lead to misinformed decisions using unrealistic averages.  A focus on volatility is likely more important than average rates of return. In other words, given two portfolios with the same average return, the one that experiences lower volatility outperforms over time.

9. Not focusing on the Big Picture.

Comprehensive financial planning is more than just maximizing investments. It's coordinating your investment portfolio with other important factors, such as your overall income plan and your tax plan which will ultimately decide your benefits.