Five Retirement Planning Mistakes to Avoid!

 Avoid common retirement planning pitfalls! George Jameson, CFP®, founder of Capital Wealth Group shares the five biggest mistakes people make and how to build a plan that actually works for you. 

 Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.

Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.

This is for education only.It is not tax, legal, or investment advice. Before  acting on any information consult your tax, legal, or investment advisor.

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Capital Wealth Group is a Fee-Only Advisory Firm located in Columbia, SC , serving clients locally in South Carolina and North Carolina and virtually nationwide.

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Transcript

George Jameson: 0:19

Hi, I'm George Jameson, certified financial planner and founder of Capital Wealth Group in Columbia, South Carolina. If you're listening right now, you're already ahead of most folks. You're thinking about retirement, while many people aren't, but here's the catch. Being interested in retirement planning isn't the same thing as being good at it. Today, I'll share five big mistakes I see all the time. Avoid these and you'll be way ahead of the game. So mistake number one, starting with the investments instead of the plan. This one's everywhere. Should I put my money in so-and-so mutual fund, or what about this ETF or that ETF? Should I buy stocks? How about Nvidia or Tesla or whatever stock I'm buying? These dividend stocks, great yields for retirement. I've been watching videos on selling options or buying puts, and I think I can retire early that way. Now, these are all fine questions, but they're the wrong first questions to ask. It's like asking what tools you'll need before you even know what you're building. Are you building a tool shed in your backyard or a skyscraper? The answer changes everything. Investments are just tools. You first need to know the plan or blueprint. So like the lifestyle you want to live in retirement, the income, that lifestyle will require. Your sources of guaranteed income, your tax situation, your tolerance for risk, so you won't sell at the wrong time. Only then can you start picking the right investment tools for your job. Otherwise you risk investing in the wrong things for the wrong reasons, and even worse, drifting from investing into gambling. And I've seen too many people do exactly that. Now let's move on to mistake number two, believing there's a magic tax move everyone should do. A common mistake is thinking there's one silver bullet tax move for everyone. Always do Roth conversions or never do Roth conversions or never convert above the 12% bracket, or traditional 4 0 1 Ks are dumb because taxes are going up and so on. If you've ever been in the comment section of any financial video or Facebook group, you know, people get, very dogmatic about this. Here's the reality. Tax planning isn't a one size fits all. It depends on your account mix, income timeline and whether your future tax rate will be higher or lower than today's. Roth conversions, traditional contributions, capital gains, harvesting. These are all just tools, not a plan. Take two people who look identical on paper, both are 45, both earn 150,000 a year, both max, their workplace 401k plan. Client A currently has very little in pre-tax accounts for them deferring taxes now with traditional contributions probably makes sense. They can draw strategically in retirement to keep their taxes low. Client B on the other hand already has a very large amount in pre-tax balances. Future RMDs could force big taxable withdrawals, pushing social security into taxation and triggering Medicare surcharges. For them, a mix of Roth contributions now and targeted Roth conversions later could make sense and be the smarter play. My point is don't follow blanket rules. Like always do Roth conversions. Never do Roth conversions or never convert above the 12% bracket. Sometimes paying a bit more tax now avoids paying a lot more later. Other times the reverse is true. Your numbers, not someone else's should drive your tax plan. Now, mistake number three, binging retirement content without building a plan. This is a big one. The most common mistake I see is people watching, reading and listening to tons of retirement stuff, but never actually putting a plan into place. Here's the problem. You can end up knowing a little bit about everything but not actually moving forward. It's like walking around Lowe's, buying all kinds of tools never building anything. That would be me. I do have a lot of tools that I don't always use. One day you're watching social security videos. The next day it's Roth conversions, then bond liners, then annuities, then how to buy and sell options, and so on. You're collecting a bunch of ideas, some good, some bad, but not making any progress. Then all these videos and podcasts can get very confusing with all the conflicting information out there. And then you get stuck waiting for the so-called perfect time or perfect move. So here's my advice. So whether you're a D Iyer and do the investing yourself, or you hire a financial advisor, you need to work with a professional to put together a plan. Then a pretty good plan you actually follow will beat the perfect plan you never start, you probably won't perfectly time the market. You probably won't start Social Security at the optimal time. You may, you won't get every Roth converting exactly right if that makes sense for you. But you'll be way better off if you have a plan in place and start implementing that plan now. Now, mistake number four. Creating a plan that only works if everything goes right. Some people make beautiful spreadsheets, assuming 9% returns two and a half percent inflation and zero surprises. But real life doesn't always work out like that. First off, with my clients, our assumptions are much more conservative. But you also need to stress test the plan either way. Markets will drop, inflation does spike as we know. Health issues may arise, your expenses will most likely fluctuate and plans change. That's why I stress test every plan I create with my clients. Here's some of the things we ask. What if the market drops 20 or even 30% right after you retire? What if one spouse passes away early? What if healthcare costs double? Stress testing helps you find and diffuse those ticking time bombs before they go off. So let's move on to mistake number five, letting fear run the plan. So on the flip side, some people make every decision out of fear. They keep everything in cash or cash alternatives, like treasuries because the market's going to crash any day or they put all of their retirement savings expensive annuities or even worse insurance products they don't necessarily need. Now, don't get me wrong, for the right person, right reasons, and the right amount, certain annuities can make sense as part of your overall retirement plan. Those who are more conservative have a lower risk tolerance, sometimes like to use income annuities to cover their basic living expenses. Always be careful when someone tries to sell you an annuity, or even worse, a life insurance product as part of a retirement plan. In fact, if they try to sell you a life insurance as part of a retirement plan, just run the other way. A good retirement plan should prepare you for risk. It should have levers you can pull if things go wrong, but the goal is not to eliminate every possible bad outcome. That's impossible. The goal is to take smart calculated risk that give you the best shot at living the retirement you've worked so hard for. So to recap, the five big mistakes I see are number one, starting with investments instead of the plan. Number two, believing there's a one size fits all tax strategy. And then number three. Consuming endless content without building a framework or plan. And then number four, making a plan that only works if nothing goes wrong. And then five, letting fear, not facts, drive your decisions. We live in a time where more retirement information is available than ever before, and most of it is free. But reading, listening and watching about retirement is not the same as doing the planning. You may not need another video or article. You need a plan one built around your goals, your numbers, and your timeline, and whether you build it yourself or with the guidance of an advisor. Once you have that framework, all the information you consume will make more sense and actually move you forward. So that's all for today's episode. If you found this helpful, I'd love it if you'd share it with a friend who's also thinking about retirement. Again, I'm George Jameson, CFP, founder of Capital Wealth Group in Columbia, South Carolina. If you're ready to start building your retirement plan, we can set up a free, no obligation conversation and for the do it yourselfers. I also offer one-time retirement plans, which include cashflow analysis, income distribution strategies, tax planning, insights you can implement yourself, and so on. Thanks for listening. Have a great day and happy planning.