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The best of the worst
August 19, 2013
I did a radio show recently on the 10 worst money moves for near-retirees. If you want the full list, here’s a link to the show, but here are the “best” of the worst—the worst three money moves that those approaching retirement can make:
#1 Doing things the “same old way”
When it comes to investing, using the “same old, same old” approach is not a good idea. This is probably the most common mistake that I encounter when counseling people in this position, and, to some degree at least, it’s understandable. You have had success with this in the past, why change now? The reason that the investment strategy that got you to retirement isn’t necessarily going to work is simple: things have changed! Remember that you are no longer putting money in, you are taking money out, and the market/economic environment is different. The investor’s needs have evolved, as well. Even if you’ve succeeded in the past, it does not mean that it still makes sense for you to invest the same way.
#2 Claiming Social Security without a strategy
When it comes to claiming social security, you have got to have a plan. There are so many different approaches and claiming strategies, as well as financial, social, personal and professional considerations to take into account when deciding how and when to claim, that going into it blind without consulting an experienced professional is just foolish. Failing to be strategic could end up costing you and your family a significant amount of money.
#3 Trying to make up for lost time
A number of pre-retirees will try and make up for lost time, often by taking on more risk. This is especially prevalent when the stock market is doing well, as people tend to see a positive market and want to get a piece of the action. The reality check is this: you have already missed the run-up, and trying to jump in now is the financial equivalent of locking the barn door after the horse has bolted. Taking on more risk closer to retirement is exactly the opposite of what you should be doing, and those who take that approach have far more to lose than to gain.
