Global View Investment Blog

Close to Retirement? Seven Spooky Financial Blunders You Should Avoid

This Halloween season, we will look at seven spooky blunders you can avoid making with a comprehensive retirement plan produced by financial experts.  

A retirement plan is not merely an option—it's imperative for ensuring long-term financial stability. A failure to plan can lead to financial blunders that have the potential to undermine your quality of life during your later retirement years. 

But let's face it: the road to a secure retirement can be littered with financial pitfalls that can be downright frightening. We've all heard retirement horror stories of costly mistakes that turned someone's dream into a nightmare with no simple solution. 

From poor investment choices to neglecting estate planning, these blunders can have a lasting impact on you and future generations of your family.

At Global View Investment Advisors, our team of fiduciary investment advisors in Greenville, SC, understands that you have worked diligently to build your wealth. It is now time to protect it. As fee-only financial advisors who take pride in our fiduciary responsibility, we have your best interests at heart. After all, our core purpose is the achievement of your financial goals.

Planning is not just a good idea; it's a financial necessity.


Financial Blunder #1: Ignoring Tax Implications

One of the biggest financial blunders you can make is not paying close attention to tax planning during retirement. Every dollar of tax is one less dollar you have for your personal use.  

Many people focus solely on saving and investment but overlook the impact taxes can have on their overall financial well-being. This oversight can result in significant, unexpected tax liabilities, ranging from short-term capital gains to withdrawing money from various retirement accounts to the timing of Social Security payments. 

The tax implications can eat into your assets and may even force you to withdraw more money than planned to cover excess taxes.

Taking a proactive approach to tax planning can substantially affect how much money you retain and how efficiently you use your resources. This involves not just knowing the basics of income tax rates but also understanding the tax implications of various investment options, the benefits of tax-deferred accounts, and the importance of timing when taking distributions. 

Your goal should be to minimize your tax burden through all acceptable means, such as strategic sales decisions, choosing tax-efficient investments, and taking distributions. 

Remember, it's not just about how much you make but how much you get to keep after taxes.


Financial Blunder #2: Lack of Estate Planning

Believe it or not, estate planning is for more than just the ultra-wealthy. Anyone with assets, children, or specific wishes for healthcare decisions should get their estate in order. 

Wills, trusts, durable power of attorney, and healthcare directives are the building blocks of a solid estate plan. These essentials are necessary to avoid leaving your loved ones with legal entanglements and potentially missing out on several tax benefits that could protect your assets. 

It's not just about what happens after you're gone; it's about making certain choices now that can profoundly impact your financial well-being and peace of mind as you and your spouse get older.

It's wise to consult with a local fiduciary financial advisor if you need clarification about where to begin. These professionals are legally bound to act in your best interest, offering unbiased advice solely based on your needs, goals, and circumstances. 

They can help you understand how estate laws might affect your assets, ensure that you're maximizing tax advantages, and even guide you through complex matters like selecting beneficiaries or establishing a trust. 

Your legacy is too important to leave to chance; a fiduciary advisor can help you understand your choices and make the right decisions. 


Financial Blunder #3: Overlooking Diversification

The classic adage, "Don't put all your eggs in one basket," rings true, especially regarding your investment strategy. The risk of concentrating your assets in one company or asset class should be viewed as a hidden risk. It is there, but you can’t see it until too late. 

For example, a concentrated investment may expose you to a singular risk that impacts your entire portfolio. Unlike a diversified portfolio, the risk only impacts part of your portfolio.  Essentially, you’re betting big on one stock or sector of the economy. If that investment fails to perform, it impacts your assets disproportionately.

This is where the concept of diversification comes in, acting as a risk management strategy. Diversifying your portfolio across various asset classes—stocks, bonds, global investing, and real estate—can help create more of a balanced risk-reward profile. 

By spreading out your investments, you're not just minimizing risk but also positioning yourself to benefit from the positive returns that are produced by multiple investments in multiple industries. 


Financial Blunder #4: Misjudging Inflation

Ignoring inflation is akin to allowing a silent thief to infiltrate your financial security over time. While the immediate consequences may not seem significant, the long-term erosion of your buying power can be staggering. 

The money you've diligently saved and invested today may not stretch as far as you think in the future, leading to a shortfall in achieving your financial goals, be it retirement lifestyle or financial security late in life. 

A financial advisor in Greenville, SC, can help you develop a plan that produces the returns you need to offset the erosive impact of inflation.


Financial Blunder #5: Emotional Investing

Falling prey to emotional investing can sabotage your portfolio's performance and the achievement of your financial goals. 

Decisions made in the heat of the moment—driven by fear, greed, or any other strong emotion—rarely align with a disciplined financial plan based on objectivity. Emotional investing can cause you to make the wrong decisions most of the time. For example, you buy the markets are up and sell the markets are down. A rational investor does the opposite (buy low and sell high). 

Maintaining a disciplined approach and sticking to a well-thought-out financial plan is crucial, even when market volatility stirs your emotions. Trusting historical data over gut feelings and seeking professional advice when needed is your best safeguard against making investment choices that are based solely on emotion.


Financial Blunder #6: Failing to Plan for Healthcare Costs

Failing to plan for rising healthcare costs in retirement, in particular, the latter years when costs are double or triple what they are now, can be a financial nightmare that you don't want to impact you. Rising medical expenses can erode your savings far more quickly than you might imagine, jeopardizing your financial well-being when you need it most. 

Smart strategies like Health Savings Accounts (HSAs), long-term care insurance, and factoring healthcare into your overall retirement plan are not just options; they are minimum necessities. 

By working with a financial advisor in Greenville, South Carolina, you can devise a robust healthcare planning strategy that accounts for both expected and unexpected costs, enabling you to navigate your physical well-being during all of your retirement years.


Financial Blunder #7: Neglecting to Update Your Financial Plan

Neglecting to update your financial plan is akin to driving a car without a destination or a roadmap for reaching that destination. You would never do that, and your financial well-being is no different - you need a destination and a map for getting there.

Retirement planning without a map is much more difficult than a cross-country trip without a map. There are a lot more bumps and crossroads that require informed decisions. Plus, retirement is particularly difficult because it may last 30 or more years with no definite date for reaching your destination.  

Operating on an outdated financial plan could mean missed opportunities or, worse, realizing too late that you're not as financially secure as you thought.

In Greenville, SC, a trusted fiduciary can serve as your financial advocate, keeping you up-to-date to navigate crucial twists, turns, and stops along your financial journey. Regularly reviewing your financial plan with our team can help you adapt to life's changes and take advantage of opportunities as they present themselves. 

It's like getting a regular check-up for your financial health, helping to catch small issues before they escalate into something more challenging. So don't let an outdated plan hold you back; make sure your calendar includes dates to meet with your financial planning expert on a regular basis.

If you’re ready to focus on your retirement goals this Halloween season, connect with us to schedule an introductory conversation.

Erin Milner

Written by Erin Milner

Erin works as a paraplanner alongside our Advisors in managing client relationships and special financial planning needs, including retirement transition, education, and estate planning. Erin began working in the financial advisory business upon graduating from the University of Georgia with a BS in Financial Planning in 2015. She competed in the National Financial Planning Student Challenge in 2014. Erin is a member of the Financial Planning Association. She volunteers at Habitat for Humanity as a Financial Assessor.

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