Mistake #1: Failing to Plan for Longer Life Expectancy
As we have already established, women generally live longer than men. For that reason it is especially important to use investment strategies that balance a sustainable withdrawal rate with the right measure of risk, and that take inflation into consideration. Balancing these factors is critical to help you don’t run out of money before you run out of life.
Mistake #2: Failing to Plan for Healthcare Expenses
Another factor that has to be considered when it comes to having a longer life expectancy is that long-term care is expensive. In 2010, the average costs for assisted living was more than $38,000 a year, according to the annual Genworth Cost of Care Survey. The annual cost of a private room in a nursing home was nearly $75,000, and home health aides averaged $19 per hour. According to the Canter for Retirement Research, retirees can expect to spend 29% of their annual income on healthcare by 2020.
It is critical to include healthcare planning in your long-term financial planning. Major medical expenses can easily wipe out retirement savings; however there are many strategies that retirees can pursue to prevent this from happening. With our assistance, you can make plans to help ensure that your medical needs are taken care of without adversely impacting your retirement lifestyle or becoming a financial burden on your family.
Johnson, Richard et al. Will Health Care Costs Erode Retirement Security? Boston Center for Retirement Research. http://crr.bc.edu/briefs/will-health-care-costs-erode-retirement-security/
Mistake #3: Making Emotional Investment Decisions
Emotional decision-making can wreak havoc on the most carefully designed investment plan when markets swing. Many investors lost money in the mortgage-meltdown crash of 2008. Some may have cashed out near the bottom, fearing that the markets themselves were collapsing, and may still have their money sitting on the sidelines.
A 2011 study by benefits company Aon Hewitt showed that baby boomers are especially at risk of making emotional investment decisions. Study results showed that those nearing retirement become more averse to risk, and are prone to bailing on the market during declines. The problem is that these are the investors who have the most to lose by making poor investment decisions.
One of the major benefits of working with our firm is that it is our job to act as the voice of reason when emotions run high. When major investment decisions are only a click away, many investors give in to emotional decision-making and could pay the price for their short-term thinking. When markets decline, remember that we are always available to answer questions, provide reassurance, and show you the opportunities that volatile markets provide.
Mistake #4: Not Considering Seeking Professional Advice
In a study conducted at Yale and Princeton, psychologists gave undergraduate students questionnaires asking how they compare with their classmates in a variety of skills and tasks. For example, one question asked: “Are you a more skillful athlete than your average classmate?” The overwhelming majority of students responded that they are above-average athletes, drivers, dancers, students, and so on. Obviously, not all of them can be above average, but their self-perception led them to believe it was so. The same issue of over-confidence exists among investors. It was easy in 1999 and 2000 for investors to delude themselves about their investing skills when a few lucky stock picks quadrupled overnight. However, consider how many of these genius investors were able to save their portfolios during the bear market that followed?
We educate our clients on the opportunities that market turbulence sends our way and keep them focused on their long-term goals, not on short-term gyrations. As financial advisors, we spend our careers charting courses through turbulent markets and it’s our job to stay on top of ever-shifting economic, financial, and legal issues so that our clients don’t have to.
LEAVING A LEGACY FOR FUTURE GENERATIONS
One of the rewards for hard work, effective wealth management, and prosperity is the joy of providing for your loved ones and the causes close to your heart. In our business, we have found that as couples move into retirement, they begin to think more practically about the legacy they leave behind. Women are increasingly responsible for the final disposition of family assets, so it is important to discuss in advance your family’s estate planning goals.
One of the greatest gifts you can leave is a life well lived and full of love that serves as an example to others. As you take steps toward controlling your financial destiny, remember that the women in your life will look to you for support in their financial lives and let that journey be part of your legacy as well. A great goal is to leave the world, and the people in it, a little better than when you got here.
Footnotes, disclosures and sources:
Securities and advisory services offered through National Planning Corporation.(NPC) Member FINRA, SIPC, and a Registered Investment Advisor. Trilogy Financial Services and NPC are separate and unrelated Entities.
Opinions, estimates, forecasts and statements of financial market trends that are based on current market conditions constitute our judgment and are subject to change without notice.
This material is for information purposes only and is not intended as an offer or solicitation with respect to the purchase or sale of any security.
Investing involves risk including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss in periods of declining values.
Opinions expressed are not intended as investment advice or to predict future performance.
Past performance does not guarantee future results.
Consult your financial professional before making any investment decision.
Opinions expressed are subject to change without notice and are not intended as investment advice or to predict future performance.
All information is believed to be from reliable sources; however, we make no representation as to its completeness or accuracy. Please consult your financial advisor for further information.
These are the views of Platinum Advisor Marketing Strategies, LLC, and not necessarily those of the named representative or named Broker dealer, and should not be construed as investment advice.
About Your Columnist
Windus Fernandez Brinkkord is a featured columnist for Women Taking Charge, the official blog of Connected Women of Influence, where she covers the intersection of women in business and managing their investments and taking charge of their financial future. Currently, Windus is Senior Vice President of Investments with Trilogy Financial Services, a financial services company that focuses on helping business owners and individuals build and manage wealth.