Market Advisory Group: The Biggest Mistakes Investors Make Before Retiring

WICHITA, Kan., Jan. 30, 2018 /PRNewswire/ -- If decisions about where and what to invest in are keeping you up at night, it's no wonder: retiring today has gotten more complicated. Our great-grandparents retired with a pension and an amount from Social Security with the confidence that their income needs would be guaranteed. Any earnings their investments made were like icing on the cake.

Today, pensions have gone the way of the dinosaur, Social Security benefits are under threat and investors are left to figure out things on their own using the money in their retirement and brokerage accounts. Through no fault of their own, we're seeing people make dire mistakes when it comes to the allocation of these resources. Given today's longer life expectancies and the volatility of a global market, it's even more important than ever before that you do the right thing at the right time with the money you're relying on for retirement.

Here are the biggest mistakes we see investors making, along with a suggestion about what you can do instead to make sure that you don't run out of money before you run out of life.

MISTAKE #1: Not Understanding What You Own

There are many different ways you can be charged commissions and fees inside of an investment but typically speaking, you pay those fees whether the account earns money or not. Too many investors keep their account statements sealed in a drawer because they're either too afraid to look or they don't understand what they're looking at. Here's the thing, though: just because you're not looking at the bad news doesn't mean it goes away.

High fees create an unnecessary drag on your returns and may prevent you from reaching your retirement goals. As fiduciaries, we've even seen some situations where, after adding up all the fees paid out over a period of years, there were more fees charged than what the consumer earned. Don't keep your head in the sand. Get a second opinion. Ask a fiduciary professional to walk you through the fees you're paying on the investments you own and find out if you have better options.

MISTAKE #2: Not Knowing How Much Risk You're Exposed To 

It's been said that convincing investors to stay in the market is the horsepower that drives the market. The more investors, the more the market grows. It's easy to make money in the market when the markets are going up, the question is, how much of that money will you get to keep?

There are several adages — such as buy and hold — that don't necessarily apply to the investor who is at or near the time of retirement. If you are five or fewer years away from your full retirement age, for example, then you might be in what we call the retirement red zone. This is the time in your life when losing money matters the most; make a fumble now, and it could negatively affect the earning power of your portfolio over the long term. Instead of focusing on risk and growth, protect what you have before it's gone.

MISTAKE #3: Not Having a Plan

A lot of people hear the term "protection" and instantly jump to the conclusion that they won't earn any returns. This couldn't be further from the truth. Having a plan in place is the process of coordinating the different aspects of a portfolio — including taxes, Social Security and Medicare decisions — along with your market investments to seek both growth and protection. This is how you can get a cohesive strategy with minimal fees and less risk for maximum returns. 

If you've worked multiple decades to get your nest egg to where it's at now, then you'll want to take steps to ensure that what you need for retirement is protected. Protect first, grow second and build a plan around your goals. Do that and you'll be able to achieve what we want for our all clients: peace of mind.

Are you paying too much in fees? Worried about your exposure to risk? Ready to get your retirement ducks in a row? Schedule your complimentary consultation by filling out this simple form and one of our advisors will be happy to get back to you. We take this step seriously, as it is crucial that you understand your current situation based on facts, not persuasion or sales pressure. We look forward to helping you avoid these mistakes so that you can enjoy the retirement you deserve.

Investment advisory services offered through Foundations Investment Advisors LLC, an SEC-registered investment adviser.

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