A Crash Course in Retirement Planning

Written by CFB Blogger. Posted in Blog

It’s pretty much a given that to achieve a secure retirement, you must work both hard and smart, save your money and make wise investments. (Of course, it also helps to be born into or marry into a wealthy family, but that’s another story.) Crain’s Wealth asked three investment advisers for the common mistakes they see their clients make in retirement planning. The experts are Bill DeShurko, founder of 401 Advisor, a registered investment adviser based in Centerville, Ohio, and a Covestor portfolio manager; Daniel Beckerman, president of Beckerman Institutional, a registered investment adviser in Oakhurst, New Jersey, and a Covestor portfolio manager and Ron Surz, president of PPCA Inc., a registered investment adviser in San Clemente, California, and a Covestor portfolio manager. Here we paraphrase some of their guidelines: From Bill DeShurko: DeShurko avers that since most investments are not good at serving multiple purposes, you need to decide just what you want to do with your money [and what you want your money to do for you] and invest for that objective; options include assets to generate income or for conservative growth, as well as the money you use for speculation. He also states that, “High-net-worth investors typically max out 401(k) and other traditional tax-advantaged savings vehicles and are pitched other tax-advantaged alternatives. [however]… most tax deferred vehicles gains become taxable as ordinary income when withdrawn – for retirement or more likely at death if passed to a non-spouse. Examples of tax-deferred vehicles are fixed interest rate or variable annuities, which are mutual-fund-like investments. Other wise words from DeShurko: One thing that should have been learned from the financial crisis is that you cannot have so much money that Wall Street won’t screw you. Just because an investment is an exclusive opportunity and only for the wealthiest clients, there is no guarantee of success. Many wealthy people die without proper estate planning, with the result of leaving that wealth going to pay taxes and otherwise being wasted.” “…if you don’t have the ability to evaluate the investment, avoid it. Hedge funds, private transactions – investments directly into restaurants, real estate, golf courses, and currency futures are investments that generally fall under the ‘alternative investment’ category. Investors will know when they have to sign documents attesting to their net worth and/or income.” These are not necessarily unwise investments, but if you can’t evaluate the efficacy of the investment, do not invest in it. Do not fall for the diversification line, either. “Buying crappy, expensive investments is not productive no matter how much they ‘diversify’ your portfolio,” DeShurko maintains. From Daniel Beckerman: Beckerman states that many people plan on retiring too early. Besides that paycheck, working can provide a sense of purpose. You should continue to work, even if on a part time basis, or volunteer with an organization that is near and dear to your heart or mind. He also feels that under-saving for retirement is very common. You may be forced to retire due to health issues and you may need to rely on your investments earlier than you had planned. He adds, “With all of the costs involved in buying, owning, and selling real estate, people are better off renting unless they really know a location well and have thought out their long term plan.” From Ron Surz: Surz maintains, do not default investment decisions in your 401(k) to your employer selections. “Some employers may have incentives to pick high-priced, unsuitable investments that could cost you hundreds of thousands of dollars over time.” He continues, your financial adviser should be a fiduciary since fiduciaries are legally bound to serve in your best interests. “If you have an adviser who is not a fiduciary advising you on retirement strategies, you run a higher risk he or she will put you into high-priced on inappropriate investments.” If you find yourself facing retirement with too much debt and not enough savings, you may be considering filing for Chapter 7 or Chapter 13 bankruptcy. This could be the perfect time for you to get a clear picture of your retirement years. Filing personal bankruptcy with the knowledgeable attorneys from Client First Bankruptcy could show you the way to eliminate your debt and allow for greater retirement savings. You’ve worked hard, you deserve to live your Golden Years the way you want. Call us toll-free at 800-383-6004 Monday thru Friday 8:30 a.m. – 6:00 p.m. Central Time. And please log onto www.clientfirstbankruptcy.com for important bankruptcy info anytime. Client First Bankruptcy has no relationship with any of these financial advisers or their firms.