John very good to see you. Today we are talking through five retirement investing mistakes that we should all avoid. A financially secure and happy retirement doesn't just happen, it takes a lot of planning and of course, modifications as we get older. So we're gonna walk through some mistakes and the first mistake is: Not Having a Plan.

Yeah, and I harp on this all the time. Folks, if you don't have a plan, then really how do you know you're making progress? You don't have anything to benchmark it on. And the success of a plan is not only having some confidence that your money will last throughout your retirement, but it's also having a plan for those catastrophic events that unfortunately will hit us. Right, whether that's market loss, huge tax rate increases, long-term care events, death of a spouse, we need to have a plan for that. I'm a big, big fan of the 80/20 principle in that 20% of the most important stuff is what adds the most value. Both that 20% is in the plan. The plan is what brings everything together, your income, your investment, your taxes, and your healthcare. So you need to have a plan.

Second mistake: Forgetting to Account for Inflation.

Yeah, I don't think that's a problem these days Erin. How could you not forget about inflation? It’s been on our doorstep for the last couple of years. However, prior to the inflation that we talked about years ago inflation is coming and it’s coming with a vengeance. The big problem was, especially for a lot of “do-it-yourselfers”, they weren't really taking into account proper inflation rates, they were saying listen “inflation is low, so we're just going to kind of go with the rates that are now”. You have to account, and we account for inflation rates that are about half a percent higher than the historical average. Because we really want to stress test against these rising costs in retirement. Remember inflation is the most insidious tax known to man because it erodes your purchasing power. So if you're not planning on, you know, the cost of goods and services being more in the future, then you're setting yourself up for a higher degree of failure.

Third mistake: Not Working Now to Create Tax-Free Income in Retirement.

Folks, as the famous CPA, Ed Slauve would say, taxes are on sale. As a matter of fact, he's been hammering this over almost the last decade. And we have now less than 24 months, less than two years until the tax cuts and Jobs Act expires. Folks you have a window of opportunity, start planning and looking at the tax liabilities in the future. Right because we have now $34 trillion in debt. It's a math problem folks. Taxes have to go up, I just need from an advanced tax planning conference this last week. And the belief is that within the next couple of years, we could see it 37% tax bracket go and possibly as high as the 53% bracket. Taxes are historically at low rates, right? Take advantage of it, and even more so this is your ability to control it. You can choose your tax bill at a rate that is acceptable to you right now. So by making the Roth conversions or Roth contributions, you understand what your tax bill is going to be and why no one likes paying taxes. I'd much rather pay the tax now than later.

Mistake number four: Investing too Conservatively, especially if you have a long time horizon.

Yeah. And speaking of time horizon, I think a big mistake that a lot of people focus on is the one-, three-, or five-year return. Folks if you’re investing in retirement, retirement is a 30-year time horizon. So you can't sit on the sidelines, especially if you're withdrawing a good portion of those funds. You have to have a defined understanding of how much risk you can take on, your risk tolerance, and your risk capacity. Because you can't be in cash your whole retirement that's been the worst asset class over the course of investing. So don't have all your eggs in that conservative basket.

And the other side of that coin, though, is investing, no I’m sorry, is taking on too much risk as you near retirement.

Yeah, and this actually is the more common issue, right? People come from their 401K's where they were invested more aggressively, and you have the ability to invest more aggressively in your employer account for a couple of reasons. Number one, most importantly, your livelihood doesn't depend on those bad investments, right? You have a salary. Number two, if you're 401k loses money, you still have the ability to make contributions less than those blows and you're actually doing what's called dollar cost averaging. So there's a little bit of overconfidence for pre-retirees or new retirees. It's important not to have too much risk in retirement. That's something we always focus on from the get-go with our clients again, risk tolerance, how much you yourself can stomach but also risk capacity, how much mathematically or that you can take on to have a successful retirement. And really, Erin, the magic sauce is taking the fourth issue and the fifth issue and finding a balance between the two. Right. You don't want to get all the heights of the S&P 500, don't keep up with the Joneses and try to match that ticket. The real true success for retiree investing is getting a reasonable rate of return, but avoiding the major market loss.

Exactly. Well said. John if somebody has questions about anything that we've covered? Or if they would like your help to develop a plan, what's the best way to reach you?

Yeah, well, we always encourage financial literacy. So visit our website www.gosecurus.com. We have a ton of information, educational videos, podcasts. While you're on the website, if you have any questions or you want to schedule an hour-long vision and clarity complimentary consultation, you can go to the Contact Us Tab and access our calendar from there. If you'd like to do things the old-fashioned way, give us a call at the office, at 858-935-6210, ask for Emily and she will get you on my calendar.

John, thank you very much.

Thank you, Erin