117 // 5 Mistakes Retirees Can Avoid with Ryan Shepherd

Now is a great time to talk about retirement planning with the market being up; people feel more confident engaging in that conversation.


There are five common mistakes retirees make, be it those eying retirement or just recently retired.


First one?


Not having a plan.


Every decision you make impacts the outcome of another issue.


You gotta have some base-case scenario; otherwise, you just make it up as you go.


It’s surprising how sensitive retirement planning is to your date- working for a couple more years or working part-time can really change your outcome.

On the other side of the spectrum, some clients wait too long to retire, and there are a couple of reasons for this…


Either they don’t know that they can, or they just really enjoy what they’re doing.


We have to remind clients that there is something they were looking forward to.


People think that retiring too late is not a mistake because they never actually rehearsed that mistake.


They really rehearsed the retiring too early mistake.


So they delay retirement as if someday they will magically feel confident, but retirement planning is what gives you that confidence.


You have to decide what your unique, sufficient amount is where you can stop working and begin to experience what you want.


Every year there will be a reason not to. The key is that retirement planning means that even if those things happen, you’re still okay.


The second mistake…


Claim social security too early and forgo a higher, better benefit for your family.


It’s important to reflect on the value of social security benefits.


Retirees do collect earlier than they should, and there are typically three reasons for that…


They are not fully aware of benefits, they understand the math but underestimate their own longevity (age), and the last one has to do with misconceptions around social security funding;


This fear of going bankrupt and “will there be anything left for me?”


We run the numbers, so mathematically it’s obvious, but they think about it differently.


If you die at 70, you will not even care if you didn’t take the benefit early, but if you live to 112, you’ll need that social security.


This leads us to the third common mistake…


Clients tend to underestimate healthcare costs.


Retirees usually exclude healthcare altogether because it was never a significant item showing up on their credit card.


But long-term healthcare is a big unknown.


We have to assume that (particularly in a couple) the odds of one person having significant medical/hospital stay costs are high.


There needs to be a plan for something to go wrong, and the plan has to account for that and still be okay.


Mistake number four…


Retirees tend to avoid risk in their portfolios.

When you go into capital preservation mode, the irony is that that can be detrimental to your retirement planning.

If you start with a more balanced risk approach, you never have to make that choice.

This is where a trusted advisor can help so much. The emotional side of making decisions is critical.


They’ve never done it before, but we’ve done it as a company with so many people.

And lastly, the fifth one…


Retirees tend not to practice retirement.


They set a date, quit the workforce cold turkey, and with no idea what retirement looks like.


Spend a couple of weeks and act that out-live as if you are retired.

You’re used to all your purpose and identity filled by your professional title and status and image, and then you walk into this void where you’re just you…

People are so unprepared for that.


The key is to create a visual of this being a transition rather than a hard stop.


A glide path leads to a smoother landing.

Retirement is already an abrupt enough change.

If you magnify that by making permanent wholesale changes (like relocating), you create a deeper disruption.

Planning and rehearsing eases that tension.

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