Common Mistakes and Pitfalls When it Comes to Retirement Planning

Episode Transcript

Speaker 1 (00:00):
And our phone lines. They are open to you right

(00:02):
now at six oh eight three two one thirteen ten.
That's six oh eight three two one thirteen ten. Get
you right on the air with our retirement planning professionals
from Class Financial DOFGY. You can learn more about Class
Financial on their website class financial dot com. That's Class
Klaasfinancial dot com. Fantastic website and resource. If you haven't
had a chance to check that out, I would definitely

(00:23):
urge you stop on by today. While you're there, sign
up for the weekly Market Pulse newsletter. It's a nice
weekly email well snapshot of what's been going on in
the Market's also linked to the most recent podcast. Again
that available to you at Clausfinancial dot com. And they're
telephon umber for the office right here in Madison six
oh eight four four two five six three seven. No
charge for that initial get to know Your appointment at
Claws Financial will be complimentary to you again their number

(00:44):
six oh eight four four two five six three seven.
And joining us this week our CJ. Closs and Eric Schwartz. CJ.
How you doing this morning?

Speaker 2 (00:52):
I'm doing great, Sean?

Speaker 3 (00:53):
How are you?

Speaker 1 (00:54):
I'm doing really good? Eric? How have you been my friend?
Not too bad?

Speaker 3 (00:58):
How are things going on with to you?

Speaker 1 (00:59):
Sean can't other than the stuff in the air eye
that is so bizarre, but that's for another day. Otherwise
doing great, doing great. So we're gonna be talking this week.
This is for folks that say, I wonder what they
talk about on COSS Financials, Money and Motion. I wonder
what the program's generally about. They'd probably say retirement And generally, yeah,

(01:20):
we talk a lot about retirement on retirement planning, but
often talks about very nuanced areus this week we are
actually talking specifically retirement planning, and we're gonna be talking
about pitfall. So it's going to be a really, really
informative program you You're definitely gonna want to take notes
and pay very close attention for a couple of reasons.
One a program will be exciting and engaging in a
lot of great information for you. But also, if you

(01:41):
pay close attention, you'll have a chance to win a
fantastic prize. With the Class Quiz question the week, our
friends from Class Financial have provided a twenty five dollars
gift card to I hop tell you a little bit
later on the program, how you can win that prize.
Little tip as mentioned, listen closely to the program just
about every show, the question and answer come up during
the program, And before we get to this week's conversation
about some of the pitfalls and how to avoid them,

(02:04):
let's actually look back at last week's program get the
class quiz question Leak can answer there as well.

Speaker 3 (02:10):
Yeah, so last week our question was what is the
maximum a forty five year old employee can contribute to
their four oh one K plan in twenty twenty five.
Now this does not include any employer contributions, and Scott
Fromuana Key knew that the correct answer was twenty three thousand,
five hundred and that is if you are under the

(02:31):
age of fifty and thirty one thousand dollars if you
are over.

Speaker 1 (02:34):
And last week's was not a true or false, which
Scott fine work their good work on getting that. Of course,
you can be like Scott just by paying attention to
the program getting to exactly how you can win a
little bit later on the show. As mentioned, of course,
phone lines are open six o' eight three two one
thirteen ten. That's six o' eight three two one thirteen ten.
If you have questions for Eric and CJ, our retirement
planning professionals from Class Financial, love to have you join

(02:57):
us this morning. So as we kind of get back
and do a little bit of a deep dive into
things into retirement planning, we're going to be unpacking eleven
pitfalls that can derail your golden year. So CEJ, let's
find let's talk about ways to kind of steer clear
of these common mistakes.

Speaker 2 (03:15):
Yeah, exactly, Sean, you mentioned it, but we are are
kind of niche or our focus as a financial planning
firm is all around retirement planning. Now, we work with
people across the age spectrum, but our average client I
believe is right around sixty six or sixty seven years old,
which just means that we are really really well versed
in things like distribution planning and sustainable distributions and Medicare

(03:39):
and social Security. And furthermore, when you operate in this
space over fifty years or so, like we have, you
also identify some clear pitfalls. And so some of those
pitfalls that can derail you or what we call golden
years or just think your retirement years are the items
we're going to be covering today. So let's begin with

(04:01):
kind of pitfall or mistake number one that we commonly
see people making in retirement, and that would be number one,
being overly aggressive in your portfolio late in your career.
So imagine markets have done well for you over the
last thirty forty years as you've been working, feeling really

(04:21):
good about how much return you've received by taking on risk,
You understand that risk, you feel fairly diversified, and this
is all good, like good, good good, But then you're
getting a year or two before retirement and you just
kind of say, ah, whatever, markets you know rewarded me,
it's all going to work out in the end anyways. Well,
for those who don't know, there's this concept called sequence

(04:44):
of returns risk, and it has to do with basically
the impact of negative returns in your portfolio early in retirement,
and does that impact vary compared to say, an impact
of the same magnet tude midway through your retirement, And
believe it or not, there's just kind of some numeric

(05:06):
phenomenons that occur, and we could show you the math
on this if you ever wanted to see it. But
the numeric phenomenon is if that market correction or severe
decline happens early in your retirement where you need large
distributions from your portfolio, it can have catastrophic effects to
the longevity of your portfolio. Okay, the risk of running

(05:27):
out of money. So mistake number one to avoid is
remaining overly aggressive in your portfolio later in your career
without slowing down to assess your need for income. Now,
mistake number two would be ignoring health insurance costs. So
Eric can attest this is probably the greatest, single, greatest

(05:48):
driver to when people retire. Now it's not always because
people aren't assessing the cost. It's more just because it's
an annoyance. And so what I mean here is that Medicare.
For those who don't understand Medicare, we've done entire shows
dedicated to the topic. By all means, listen back to
our podcasts and just do a little Google search to
find our old versions of the Medicare specific shows. But

(06:12):
Medicare typically kicks in for Americans at sixty five under
most circumstances, So if you're retiring prior to sixty five,
you have to figure out what you're going to do
for health insurance to cover that gap. And as there
can attest it's typically people don't want to retire until
sixty five because of that component part alone. Dealing with
the Affordable Care Act, or dealing with COBRA, which is

(06:33):
just this extension of your group health insurance, or trying
to jump onto a spouse's plan, jump onto the VA.
These are different things that could apply to you, but
it just gets tricky. So what we would say is,
if you're going to retire quote unquote early, which would
be before sixty five or before Medicare kicks in, you're
just going to want to pause and figure out what

(06:54):
your strategy is. And I some people go, it's all
the same, it doesn't matter. Let me be clear with you,
be a little more pointed. We have people who have
plenty of money who retire early and pay less than
fifty bucks a month for a low deductible health insurance
plan through the Affordable Care Act. We have other people

(07:16):
who very well to do retire early but didn't plan
appropriately and are paying over one thousand dollars a month
for a high deductible health insurance plan. So I don't know.
You tell me, does it pay to plan? Is there
a difference between those numbers? You get the idea it matters,
you do want to slow down and make sure you

(07:37):
understand the component parts that are going to impact that
health insurance cost before medicare.

Speaker 1 (07:42):
Talking this morning with CJ. Closs and Eric Schwartz. They
are our retirement planning professionals from Class Financial Prime Time.
If you've got a question, love to get you on
the air right now at six'oh eight three two one
thirteen ten. That's six oh eight three two one thirteen ten.
Gets you on the air with CJ and Eric. Of
course talking this week about some of those retirement Pitvall's
working through eleven of them. We got number one, number two,

(08:03):
and then of course I will look to number three
or just a moment, I got a guess that, you know,
making mistakes around planning for taxes. That's got to be
a big one as well, isn't it.

Speaker 3 (08:12):
Eric. Yeah, this is a space where we see people
making mistakes kind of at any stage of life, but
looking specifically at retirement, we see plenty of them as well.
So I'm going to go through our mistake number three here,
which is having some tax blind spots and specifically in

(08:33):
retirement when we look at taking large withdrawals from retirement savings.
Maybe you want to pay off a mortgage, or you know,
an auto loan, or you just want to take out
a large distribution for a down payment. People often forget, Yeah,
you have that large retirement account right there that you

(08:53):
can draw off of. But when a lot of times
when you take money out of those accounts, you're paying
taxes on it. Right if you have a pre tax
retirement account, you are paying taxes on those dollars, and
that can bump you into a higher tax bracket. That
can increase your tax bile income to the point where
it impacts your Medicare premiums, which we'll talk about here
in a moment. So just understanding that while you do

(09:17):
now in retirement, have access to your retirement accounts, and
they can be very tempting sitting there a large balance,
but there are tax implications to actually drawing dollars out.

Speaker 1 (09:30):
Now.

Speaker 3 (09:30):
Another tax blind spot or mistake we see people making
is not fully understanding their required minimum distributions. This is
a topic we love to talk about on the show.
A lot rmds begin at age seventy three for most
folks who are retired right now. Depending on the year
you were born, so you know, some people are earlier.

(09:51):
Some people may actually not even have rm ds until
seventy five. But a lot of people don't realize that
these mandatory withdrawals from from pre tax retirement accounts in
for one case, they're taxable, and they can push you
into a higher tax bracket. And if you've actually failed
to take an R and D, it can result in
a ten to twenty five percent penalty, and that is

(10:14):
on the amount that you were supposed to withdraw from
your retirement account based on your R and D for
the year. Social Security this is another space that people
misunderstand the tax code. So often people will say to me, well,
I'm pretty sure that my Social Security benefits aren't taxable.
This is another thing we've talked about on the show,

(10:35):
and they are absolutely taxable. So up to eighty five
percent of your Social Security benefit can be taxable, and
that depends on something called your combined income, which is
your adjusted gross income plus any non taxable interests that
you received throughout the year plus one half of your
Social Security benefit. So the more income you have from

(11:00):
sources beyond social Security, the closer you're going to get
to that eighty five percent number. Now, just a quick
note in the state of Wisconsin, here we do not
tax Social Security benefits, but again the federal government will
tax up to eighty five percent of the amount that
you receive. Another space in tax blind spots is people

(11:22):
passing up the opportunity to do ROTH conversions. So we've
talked about this before as well, converting funds from a
traditional IRA to a ROTH IRA before required minimum distributions begin,
and this is often most opportune in low income years,
maybe in the early part of retirement. This can help

(11:45):
you reduce your future r and ds in your overall
tax liability. But if you just if you just kind
of convert dollars and you just pick a number out
of the air and say, I'm going to do you know,
thirty thousand dollars this year, and you don't do any
planning around it or think ah at a time, you
can run into those issues we were talking about earlier,
with large withdrawals impacting your tax bracket, impacting your Medicare premiums,

(12:10):
and so we want to make sure we're being much
more strategic around it than just saying I'm going to
pick a number this year. State taxes, so I mentioned here.
I mentioned here a moment ago that state of Wisconsin
does not tax Social Security, but people often overlook the
impact of state income taxes because it's just I think

(12:30):
they look at it as small compared to their federal
tax liability. But this is still something you want to
consider in retirement, especially here in Wisconsin, as it relates
to not only your ordinary income from your retirement accounts
or your pension, but also in the case of capital gains,
So when you're selling positions that have gained value, you

(12:55):
pay a federal capital gains tax, and then you also
do have some tax do at the state level. Last
thing I want to talk about in tax blind spots
this is something called the Medicare IRMA surcharges. So I've
been kind of referencing this as we go along, and
I know IRMA sounds like the name of a very
nice lady, but it is actually a Medicare We refer

(13:20):
to it as a Medicare penalty, so it stands for
the income related monthly adjustment amount. And what this means
is once you are on Medicare, if your income exceeds
certain thresholds, you actually will pay more for your Medicare premiums,
so you're getting the same coverage, but you are just

(13:40):
paying higher premiums, which is why we refer to it
as a penalty. And the penalty doesn't actually come until
two years later, so people often forget, Like you know,
two years later, they'll get their their letter from Social
Security that tells them what their Medicare premiums are going
to be, and they're like, hey, why are these double
or whatever it might be. So we want to watch

(14:03):
out for our taxable income thresholds and make sure we're
not causing problems on your Medicare premium.

Speaker 1 (14:09):
And I thank you Eric for keeping it clean there.
I don't I have a feeling they'd probably say more
than hey what are these?

Speaker 2 (14:15):
Yeah?

Speaker 1 (14:15):
Yeah, exactly, probably thanks, we can't say on the air
when they open up that envelope. Really important guidance this
morning from our retirement planning professionals, Eric Schwartz and CJ. Closs.
Of course they come to us from Class Financial online
Coss Financial dot com. That's Class k l Aasfinancial dot com.
And Eric, I know one of the groups you work with,
our folks with pensions, and you want to be very

(14:36):
careful there as well. Don't you.

Speaker 3 (14:38):
Yeah, that brings us to mistake number four, making what
we would call like a hasty pension decision. So we've
talked a lot about pensions in the past as well,
but when it comes to retirement, a pension is a
great tool to have to build your retirement income plan.
But you have a lot of choices when it comes
to how you draw the pension out. You might have

(15:01):
the option for what we call a single life annuity,
which is a monthly benefit for the remainder of your life,
but if you have a spouse, they would would not
benefit from that pension in the event that you passed away,
So it pays as long as you live, but as
soon as you pass away the benefits end. You could

(15:22):
also choose what's called US joint and Survivor annuity, which
offers a reduced payment compared to the single life annuity,
but your spouse receives benefits after your death. Right, So
you agree in the you know, in the early retirement
years and basically as long as you're live, you agree

(15:42):
to take a lower monthly amount in exchange for the
promise that if you pass away and your spouse is
still living, they will receive benefits for the rest of
their life. Finally, you have the option to do a
lump sum payout, which provides you know, a large sum
of cash, but you want to make sure that you're

(16:03):
you're thinking about what you're going to do with that
in terms of maybe rolling it over to an i
RA in comparing that that financial benefit to what you
could receive in some sort of annuity payment arrangement. You
need to be able to evaluate the pros and cons
of each of those, and our main message here is

(16:25):
just slow down. A pension is a huge decision when
you're trying to decide how you're going to how you're
going to collect that, and I mentioned a single life
annuity and a joint and survivor annuity. There are many
variations in between. So work with an advisor, someone that
you could trust to make the right decision here and
don't don't jump to any decisions right away.

Speaker 1 (16:47):
Talk this morning with Eric Schwartz and CJ. Closs. They
are our retirement planning professionals from Class Financial online. Class
Financial dot com. That's Coss k l a A s
Financial dot com. Great website and resource. Learn more about
COSS Financial. They're telephone numbers eight four four two five
six three seven. No charge for that initial get to
know your appointment tech loss Financial. It will be complementary

(17:07):
to you. Again, they're number six oh eight four four
two five six three seven. We'll continue our conversation with
Eric and CJ. We will do that next as Money
in Motion with Coss Financial continues right here on thirteen ten.
WIBA joined this morning by CJ. Closs and Eric Schwartz.
They are our retirement planning professionals from Claus Financial. The
website Coss financial dot com. That's spelt coss k l
aas financial dot com. There itself a number six o

(17:29):
eight four four two five six three seven. No charge
for the initial gets to Know your appointment tech loss Financial.
It will be complementary to you. Talking about and going
through eleven pitfalls when it comes to retirement planning odds.
Before the break, talked about some pension decisions and hastily
made ones and mistakes that can be made there. Eric,
what about I'm speaking of mistakes that can be made

(17:51):
a lot of companies have a matching opportunity there and
sometimes people don't take advantage of that, do they?

Speaker 3 (17:59):
No, you're right, they don't. Chant and that's mistake number
five for us today. So leaving your company match on
the table. So, if you have a retirement plan four
one K, four H three B, whatever it might be,
through your employer, and they offer to match a percentage
of what you put in or a percentage of your income,
and you're not putting money in there, you're not getting

(18:20):
the match. You're just turning down free money. Okay, So
maximize your contributions to your employer's retirement plan to capture
the full company match. So your employer will contribute a
certain amount of money to your four to one K
based on how much you contribute. So for example, it's
usually expressed as a percentage of your salary. Maybe it's

(18:40):
three percent or even five percent. But let's look at
an example here. If your company offers a four percent match,
they will contribute four percent of your salary for every
dollar that you contribute to your four oh one K. Now,
some companies will match dollar for dollar, while others will
do like a partial match, so they'll match half of

(19:02):
what you put in up to a certain amount. But
the match is often subject to a vesting schedule, so
you need to stay with the employer a certain number
of years to receive the benefit before it's fully yours.
But the most important piece here is if the if
the employer says I will match five percent or I'll

(19:22):
match every dollar you put in up to five percent,
and you only put in two, while you're missing three
percent of your salary that your employer would match if
you just put that that extra money in. So mistake
number five leaving your company match on the table. Make
sure you are fully maximizing those retirement contributions from your employer.

Speaker 1 (19:43):
Talk this morning with Eric Schwartz and CJ. Closs. They
are our retirement planning professionals from Coss Financial telpho number
six soh eight four four to two five six three seven.
No charge for that initial get to know your appointment
tech costs financially, it will be complimentary to you. Again,
they're number six oh eight four four to two five
six three seven. Real quickly before we get to CJ. Eric,
are there some limits that folks need to know about
when it comes to those contributions, when it comes to

(20:06):
those those plans, are those those matching?

Speaker 3 (20:10):
Yes, Actually we talked a lot about those last week.
Now that you mentioned it, maximum level that you can
contribute to your employer retirement plan. It does depend on
your age, but in twenty twenty five that limit is
twenty three thousand, five hundred if you're under fifty, thirty
one thousand if you're over fifty, and if you are
specifically aged sixty two sixty three, you can put away

(20:33):
about thirty four thousand, seven hundred and fifty dollars.

Speaker 1 (20:36):
Great, great guys there you mentioned. Of course, we've talked
great depth about that stuff. If you head on over
to classfinancial dot com you can listen to that podcast
as well. Sign up for the weekly Market Pulse newsletter.
So ceja, I got to guess we kind of work
our way through some of these mistakes. Many folks don't
know the best time to begin their Social Security benefit
or of course there's other folks are thinking they're just

(20:58):
going to keep working in definitely, and that can be
a mistake, can't it.

Speaker 3 (21:03):
Yeah.

Speaker 2 (21:03):
Yeah, So we're going through, you know, kind of top
mistakes we see as retirement planners. And you know, as
you as you heard Eric talking about there just a
moment ago. One of these areas is taxes, which covers
so much. But but again, I really encourage everybody if
you're not picking up on all of this, by all means,
call our office and we can meet with you, or
just go back and listen to this podcast, because we're

(21:25):
touching a lot of pretty critical elements where we see
big mistakes. But you're right, Sean. One of those areas
us becomes kind of misunderstanding social security, or said another way,
would be drawing social security before you fully understand it.
So again, we've done entire shows dedicated to each one
of these mistakes, and I would say we've done entire

(21:46):
shows to sub sections of each one of these mistakes.
So social Security for those who don't know, And by
the way, when I say social Security is actually like
four or five different core parts of it. There's SSDI,
there's there's retirement benefits, there's survivor benefits. There's a lot
of different parts of Social Security. But I'm just focused
on Americans who have a retirement benefit through Social Security.

(22:11):
The earliest you can typically draw your own retirement benefit
or even off of spouses is at age sixty two.
The latest you can draw is age seventy, and I
shouldn't say that the latest you can draw is age
seventy and then delayed retirement credits end at age seventy
or above. And then there's this age right in the
middle called your full retirement age that is somewhere between
sixty six and sixty seven for all Americans currently, So

(22:34):
again think sixty two, sixty seven, seventy. These are the
three key ages relative to social security that you should
be aware of. The question is when do I draw?
Today's show is focusing on mistakes, so I unfortunately can't
go through a full evaluation of when you should draw.
That is a personal discussion, not to mention, it has
a lot of tentacles attached to it around things to consider.

(22:57):
If you're interested in that again, call our office or
go to one of our other podcasts where we discuss that.
But of course that leads the mistake number seven, which
is relying on indefinite work, or maybe not even indefinite work,
but work beyond the typical age. So what do I
mean by this? Well, Eric and I often will hear

(23:18):
something like the following, Hey, life has thrown me some curveballs,
and like, I just I haven't saved enough, but it's
not a big deal, Like I'll just work forever.

Speaker 1 (23:28):
And I know people.

Speaker 2 (23:29):
Are kind of joking when they say that, but they're
kind of serious. And I certainly think that if you
got laid off or had a health issue, that you
could probably repurpose yourself and do something to generate some income.
But our concern is the following that, while it's kind
of a joke, it's also some level of almost like
haziness in people's planning because they feel like they're behind,

(23:52):
and therefore they would rather shove their head in a
hole and not just assess the risk and assess what
they need to do, and just kind of say I'll
work forever, not knowing what could potentially happen there. So
listen from somebody who does this for a living, meaning
I work with people way before retirement, in retirement, through retirement, death,
to the next generation and the generation thereafter.

Speaker 1 (24:14):
You get the idea.

Speaker 2 (24:15):
I have the blessing of getting to see all of
these phases. This whole idea that you're going to work
indefinitely or just work until you're seventy or seventy five
doesn't happen very often. Saying you can't it just doesn't
because typically either a health issue an energy issue, and
energy meaning like your personal energy or the employer says

(24:37):
I'm done, and I know some of you are going well,
but I'm a high paid salesperson. They wouldn't do that.
That tends to happen as well, So who knows. I'm
not predestining you. I'm just saying, be cautious of that
being a core part of your financial plan. We would
suggest sit down with a good financial advisor, a good

(24:58):
retirement planner to actually assess the gap between what you
have and what you need, so that maybe you can
just save a little bit extra and not have to
rely on the uncertainty of future work.

Speaker 1 (25:10):
What about the kiddos there, CJ. Let's bring them into
this conversation.

Speaker 2 (25:15):
Yeah, yeah, great, great points. So that leads to mistake
number eight, which is prioritizing kids or kids education over retirement. Again,
I get it. I have three young children.

Speaker 1 (25:27):
I used to.

Speaker 2 (25:27):
Speak more I'll say brashly about this, just like why
would you ever do that? Well, now I have children,
and now I speak a little bit more patiently about it.
What I would say is it doesn't change the harsh reality.
And the harsh reality is there's a subset of people
that we work with who will say, oh, little Johnny
or little Susie, like wherever they can get into school,

(25:48):
whatever their dream is, We're just here to support them.
And Eric and I go, uh, what if they get
into Notre Dame that's like eighty five thousand dollars a year.
That will wipe you out. You will not be able
to retire. And they're like, we'll figure it out. Eric
and I go, what do you mean, Like, explain to

(26:09):
me what you mean by will figure it out. So listen, everybody,
I get it. I have one child in college right now,
I have another one who's in her sophomore year of
high school. I get where this comes from. I'm around
all the parents that the dance things, the soccer things
who say this stuff, and I have to often in
my personal life keep my mouth shut because they're not

(26:30):
asking my opinion. In my professional life, I get to
go on the air and tell you my opinions. So
what I would say to you is, don't say those
kinds of things to your kids. Don't say it's an
open check book, because if you do that, you run
the risk of prioritizing your children over your own retirement.
Here is every single time what we hear from from

(26:51):
kids of parents who do that. Here's the following. They
become adults of their own and they go if I
had only known what my parents were doing, I would
have never applied to that school. So is that another
way your kids when they grow and see you in
poverty or not able to retire because you put them
through an expensive school, all they will say is like

(27:12):
I was a kid, I didn't know, but I would
have never wanted to put my parents in that kind
of financial ruin. So be cautious, everybody. I'm focusing on education,
but this could be other things as well, like paying
for private you know, tutors and everything through the nose
and not saving for your own retirement. Find some balance.
I love when you're generous with your kids, I'm not

(27:33):
anti that, but find some balance to make sure that
you can both retire and provide something for your children's future.

Speaker 1 (27:40):
Great perspective this morning talking with CJ. Claus and Eric Schwartz.
They are our retirement planning professionals from Class Financial to
website class financial dot com. That's k l aa S
Financial dot com. The tell what number six oh eight
four four two five, six three seven Take it down
the home stretch? Do the class quiz question. We can
also get number nine, ten and eleven. We will do that.
Next has Money in Motion with Class Financial continues right

(28:02):
here on thirteen ten Wiba joined by our retirement planning
professional CJ. Closs and Eric Schwartz. Of course they come
to us from Class Financial online Clossfinancial dot Com Telpha
number six So eight four, four, two, five, six, three seven,
talking this week about when it comes to retirement planning,
Eleven pitfalls that can derail your gold in years. Left
off at number eight talking about kiddos. What about Eric?

(28:23):
Another area when it comes to retirement planning, let's kind
of get into those areas that that we should be avoiding.

Speaker 3 (28:29):
Yeah, so mistake number nine here is excessive portfolio withdrawals.
So overspending in early retirement can deplete your savings and
cause problems for you down the road. So make sure
that you're aiming for a sustainable withdrawal rate. So a
good rule of thumb is you know to start somewhere
between four and five percent of your portfolio annually. Of course,

(28:51):
this depends on your age and your financial situation and
a lot of other things, but there's a good spot
to start. But this is a particularly harmful mistake because
of something actually CJ mentioned earlier, which is this idea
of sequence of returns risk. So these excessive early retirement
withdrawals can become a really big problem when you're withdrawing

(29:13):
large amounts during a market downturn early in your retirement.
Even if markets recover later, which we would expect they would,
your smaller portfolio has less potential to rebound, right, So
that would increase the risk that you actually outlive your money.

Speaker 1 (29:29):
And a lot of.

Speaker 3 (29:29):
Early retirees these days might need to fund thirty to
forty years of retirement because people are living longer, and
excessive early withdrawals can actually drain your savings that was
meant to last a whole lot longer than it may
end up doing. And finally, by drawing a lot of
dollars out earlier in retirement, you just have reduced compounding.

(29:51):
So you're withdrawing too much early and that reduces the
potential of your remaining assets to grow, and that's just
undermining the long term viability of your portfolio. So make
sure we are being responsible with the amount we're drawing
out of your retirement account early in your retirement years.

(30:13):
Especially but the other end of your retirement years, so
not your early years, but your later years. That's where
we come to mistake number ten, which is neglecting long
term care planning. Long term care costs can be huge CG.
And I say this all the time, and it's never
anything people want to think about, and it's generally a

(30:36):
space where people will make jokes about, oh, I'm never
going to go into a retirement home. You know, I'll
come up with another solution and whatever that might be.
But people love to avoid this. But avoiding it doesn't
make it go away, and failing to plan for potential
long term care needs can devastate your retirement savings. So

(30:59):
I'm not saying everybody needs long term care insurance or
anything like that, but make sure you understand how it
works and what strategies you can implement to protect some
of your savings from the cost of long term care.
So don't avoid this because it's coming for everybody. Our
final mistake number eleven here is not having a formal

(31:23):
retirement plan. Okay, so many people have a kind of
a vague idea of how they want to retire, but
they don't really ever take too much time to think
about it or put it down on paper, so to speak.
But putting together a formal retirement plan, it allows you
to kind of visualize your goals. Most importantly, it allows
you to track your progress. And then tracking your progress

(31:47):
that allows you to actually adjust as you need to
as you move through your retirement years. And you know
this would include like your income needs, where that income
is going to come from of you know, good look
at your budget and your goals. So just remember proactive
planning is the key to a successful retirement. And if

(32:08):
you need a place to start, give us a call.

Speaker 1 (32:11):
Great data, make that start that conversation. Make that call.
I get his pig phone. Gave a call Costs Financial
teleph number six oh eight four four two five six
three seven. Want to hold on to that's telephone number
as well. It's time now for the class quiz question
the week. It works like this, just a moment, I'll
ask you the class quiz question leak. You'll then have
thirty minutes from the today's program to call the Class
Financial office right here in Madison at six oh eight
four four two five six three seven. If you are

(32:32):
on the first call, correct answer, you'll win this week's prize,
which is a twenty five dollars gift card two I OP.
This week's class quiz question leak Is this true or false?
Choosing a joint and survivor annuity option on your pension
will allow your spouse to receive benefits after your death.
Is that true or is that false? Telephone number six
oh eight four four two five, six three seven. Don't

(32:54):
forget as well. It's Cross Financial Office right here in Madison.
No charge for that initial get to know you appointment
that class financi It will be complimentary to you again.
They're number six O eight four four two five six
three seven CJ. Eric. It's always great chatting with both
of you guys. Enjoy this beautiful day and we'll talk
real soon.

Speaker 3 (33:10):
Thanks Sean, Thanks Sean.

Speaker 1 (33:11):
Doctor Greer comes your way next right here on thirteen
ten WIB eight