Many tech-savvy financial gurus post about the financial dos and don’ts online: Don’t run up your credit card, don’t make hasty financial decisions, and stick to a budget. While those are certainly good financial rules to live by, they won’t necessarily prepare you for a well-funded or well-rounded retirement.
Establishing good financial habits, like keeping a budget and refraining from running balances on your credit cards, is helpful, most likely, your wealth management plan needs a bit more nuance. A qualified and trusted financial advisor knows that and will try to make sure that your wealth management plan leads to a great retirement.
At Pathway Financial Planning, we want all our clients to have the tools needed to propel them into the retirement they deserve. Below, we look at the top three financial mistakes that we see—and aim to fix—when meeting our clients.
1. Not Understanding the Importance of Diversification
Not understanding diversification and how it will help you plan your wealth management plan in retirement is one of the biggest mistakes we see our clients make. Of course many people understand that investment diversification is an important strategy in theory. However, many people do not act accordingly and invest heavily in one industry or type of investment.
True diversification is a risk management strategy. When properly implemented, it is designed to reduce risk and taxation, while maximizing long-term profits by mixing a wide variety of investments and asset types in your portfolio.
2. Not Developing an Income Plan in Retirement
A well-developed retirement plan should include the following types of income: guaranteed income, such as a pension or Social Security, and investment income, such as real estate or income from your retirement account.
Aside from the types of income, you also need to think about the timing of your retirement withdrawals. You likely know that you can start withdrawing Social Security at an earlier age; however, if you delay taking benefits until you are 70, your benefit amount will increase. This should be a huge consideration because it can impact your taxes, the sustainability of your income over a long period of time, and the surviving spouse’s ability to maintain their standard of living.
There are other timing and tax implications of withdrawing certain investments at different times that could affect your investment and retirement strategy too. It is a good idea to outline a coordinated income plan with your financial advisor that takes into account these considerations.
3. Believing That Financial Planners Are too Expensive
While there are certainly financial advisors who work exclusively with high-net-worth clients, many financial planners, like us, believe that developing a comprehensive wealth management plan with a trusted financial advisor is a critical step that should be available to everyone.
It is important to remember that proper financial planning can save you thousands in the long run, and while it may cost you a bit of money up front, investing in yourself now is investing in your future. As the old saying goes, “If you think good advice is expensive, wait until you see the cost of bad advice.”
We Can Help
Whether your retirement is just around the corner and you need to make some minor tweaks to your wealth management plan, or you are just beginning your retirement planning journey and need a trusted financial planner to help you create a new plan, Pathway Financial Planning exists to help you pursue your financial goals. We strive to prioritize our clients’ financial needs so that our clients can prioritize what they love most. Please call or email us at 765-698-5121 or firstname.lastname@example.org to set up a meeting.
Ben Harvey is president and senior financial planner at Pathway Financial Planning, Inc., an independent, comprehensive financial planning firm that prioritizes the client, each and every time. He is recognized as a Retirement Income Certified Professional (RICP®) by The American College of Financial Services.
Ben spends his days staying on top of what’s going on in his clients lives, coordinating the financial planning process, helping people identify their goals, and evaluating whether they are on track. He designs and implements customized strategies all as part of the proprietary process, The Path to Purpose FORMula™. Ben has 15 years of experience in the financial industry, including years as a loan officer, trust officer, and financial advisor. He has industry experience in business management, retail lending, financial estate planning, comprehensive financial planning, and wealth management.
Outside of work, Ben enjoys spending time with his wife, Mandy, and their children, Cooper and Claire. They are active in their church, and especially love traveling, hosting friends and family, going to amateur sporting events (especially high school basketball and swimming), and experiencing different cultures. On occasion, you can find Ben playing golf, sometimes in amateur tournaments, which he credits for teaching him patience. He will also tackle the occasional home improvement project, read non-fiction, and watch documentaries. Through experience and “honey-do lists,” Ben has learned to never start a project he’s not ready to finish. To learn more about Ben, connect with him on LinkedIn. You can also register for his recent webinar, Retire with Purpose: An Easy Strategy to Simplify Your Distributions.