If you have made retirement planning a priority, then congratulations! You've taken the first steps toward a stable financial future. But while you're diligently saving for retirement, remember that there are plenty of missteps you can make along the way. Be aware of these common retirement planning mistakes, so that you're on guard against certain pitfalls that often affect retirees.
​
Don't forget your contribution deadlines. Opening an IRA is smart step toward valuable tax advantages. But you won't realize those advantages if you forget to fund your IRA before the deadline each year! Always make your annual contributions by April 15 of the following year, so that you can set aside more money for retirement while deferring taxes until later.

Investigate 401(k) fees. When you first established your 401(k) fund, you made selections that matched up with your needs and risk tolerance. But periodically, you should review these selections to make sure they are still in line with your priorities. Take a closer look at expense ratios, in particular. Sometimes it does make sense to choose options with higher expense ratios, but in many cases there are options with lower ratios that will still help you accomplish your goals.

Be careful about reverse mortgages. Sometimes a reverse mortgage is the right choice for retirees, but only under very specific circumstances. In many cases, these arrangements are a big mistake. Before taking such a drastic step, consult with us about other options to fund your retirement.

Don't rush to choose a retirement community. There are some great retirement living options out there, but some of them are unfortunately owned or managed by people who are less than scrupulous. When touring various retirement communities, try not to be swept away by all of the luxuries presented to you by a fast-talking salesman. Often the low sticker price you are quoted does not reflect the true cost of living in the community. Many costs are hidden by maintenance fees, association fees, and so on. Make sure you are aware of all fees associated with the community before moving in.

These are just some of the possible pitfalls you will face in retirement. Sadly, older people are often targets for those who would take advantage of your life savings and desire for stability. Working with a trusted financial advisor can help you develop a safe plan for your future, and avoid mistakes that can cost you significant sums of money. Call our office to schedule an appointment, and we can discuss ways to help you achieve your goals safely.

15171 - 2015/12/10

Part of our job is to help client develop positive financial habits, so they can build a more stable future. But there are also plenty of “negative” habits that we should at least mention, so that you can avoid engaging in them. These three bad financial habits can have a terrible impact upon your financial stability.

Spending more than you make. Many people are spending more than they make, and they don't even realize it! If you review your bank account records and credit card bills from the past few months, you might see what we mean. Are you using credit cards for many of your purchases, intending to pay off the balances? Do you pay off the balances each month? Many people are spending hundreds more than they make each month, and their debt is snowballing. If that sounds like you, you need to redefine your priorities and get your spending back in line with your paychecks.

You aren't paying yourself first. When you make decisions about your spending, you probably place expenses into certain mental categories: “must haves”, “nice to haves”, and “don't needs”. Unfortunately, many people put retirement savings into the “nice to have” or even “don't need” category! Saving for retirement is not a luxury; it's a necessity for everyone, and belongs in the “must have” category right alongside food and shelter.

You don't discuss financial priorities with your spouse.Even if you set a budget or decide to make saving for retirement a priority, do you know if your spouse is on board with your plans? Setting goals together is the best way to ensure that you reach them. Otherwise, your differences in priorities can cause some unpleasant surprises in the future. Talk about retirement on a regular basis, and make sure you and your spouse are on the same page.

For more help setting a budget, saving for retirement, or setting goals for your future, call our office to schedule an appointment. We can help you identify your goals and establish a plan to achieve them.

​15172 - 2015/12/10 

When you think of retirement planning challenges, you might think of people who face high tax rates, a lack of funds, or the infamous problems within the Social Security system. You might even be thinking of the fact that most people are living longer lifespans these days, or that inflation will seriously impact your purchasing power on a fixed income.

Yes, these are all very real concerns. But the number one challenge to your retirement is probably something much more simple: Procrastination!

Despite all of the challenges listed above, and widespread awareness of them, Americans are still falling behind on their savings goals. A recent survey by Bank of American and Merrill Edge discovered that while 59 percent of American workers set a retirement savings goal in 2015, less than a third of those people actually reached their goal!

Clearly, people know what they need to do, but they're procrastinating on actually getting it done. Why? For many people, it boils down to their decision-making process. As the report states, “External economic pressures and debt they deem worthwhile, such as home or car debt, may be to blame for derailing financial goals, and that people with the most time to save seem to be the most impacted”.

Sure, sometimes we're all going to experience a financial emergency that derails our savings plans. But in most cases, according to the report, people who are able to save for retirement still aren't doing it! Despite many warnings about the future of retirement in this country, many Americans still aren't concerned about saving for the future. Quite a lot of us are still taking on debts or spending money, rather than setting a budget for saving and sticking with it.

So what is the takeaway lesson here? Don't procrastinate! Start saving for retirement early in your career, and contribute the maximum allowable amounts to your retirement fund each year. But if you are getting a late start, you can still maximize your savings and plan for a stable future. Call our office for an appointment, and we can show you ways to get back on the right track.

​ 15173 - 2015/12/10

Giving money to a favorite charity feels good and makes the world a better place for everyone. But it can also serve as a valuable income tax deduction! As the end of the year approaches, now is the time to assess your charitable donations, get your records in order for tax time in the spring, and make last-minute donations in order to increase the size of your deduction.

Investigate before giving. Before writing any checks, check to make sure a charity isn't a scam. Even if the charity is legitimate, you should check to be sure their priorities are in line with yours. For example, you might want to give money to an autism charity, but do you want to fund scientific research or help families who have autistic children? Research your chosen charity to make sure your money goes toward goals you truly value.
​
While you're researching...make sure you can actually deduct that donation. Some organizations are granted a “tax exempt” status, but this simply means that they don't have to pay taxes on the money they collect. This status does not mean you can claim your donations as a tax deduction! You should specifically be told that donations are “tax deductible”, or else you might not be able to claim them.

Gather your receipts. If you have kept receipts for all charitable donations throughout the year, start gathering them now. Taking this step will prevent hang-ups in the spring when you file your taxes. If you didn't collect receipts for your donations, check your debit and credit card statements. You can also use these as proof of your giving, although it will take some time to comb through them and find each item. Highlight them now so that you won't have to search at tax time.

Research your deduction limits. The IRS intentionally sets these limits high, to encourage more charitable giving. Most people never hit their limit. But just for your information, you can give up to 20 percent of your gross income to private charities, and up to 50 percent to public ones.

Make it easier on yourself next year. At the beginning of the year, set a budget for your charitable donations (perhaps based on your income and the deduction that you need to claim). If you establish a payment system using a single credit or debit card, you won't have to worry about collecting receipts anymore. If you still need to collect receipts, set aside a folder in your filing system so that gathering records will be easier in the future.

If you need help creating a financial system that works for you, call our office and we will be happy to help you. 

15174 - 2015/12/10