Retirement | Live a Life By Design

The One Secret to Retiring Successfully

Posted on October 16, 2020October 16, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

We are asked many questions about the strategies to retirement and enjoyment of life. This article will reveal the secret success criteria that many of our clients have implemented over the past 20 years to change their lives. Let’s think about the word “retirement” for a moment. Too often the word has negative connotations to individuals who are ill prepared for the next phase of life. Others see the word as an opportunity to begin a new hobby, career or volunteer service life. What is your understanding of the word “retirement”?

Most of our challenges in life give us opportunities to exercise our philosophy toward the pending decision. There are many inclinations to a decision and the result you choose may have life-altering consequences. Wouldn’t you want to tip the scales of success in your favor on this type of decision? Of course! If you were to find a method of decision-making that supported greater probabilities of success, you would use that method for all decisions.

Sadly, immediate wisdom is not bestowed on us humans. No, we learn by the old-fashioned method of trial and error. However, if you were to seek out someone to assist in your resolution process that had experience and specialized training in the area of retirement planning, you could attribute that person’s wisdom as your own.

The one secret to retiring successfully is to change your philosophy of life. I know this sounds like an indomitable task, but it does not have to be. For example, there are, at least, two options for every decision in life – positive and negative. You could think like some people that hate to pay income taxes. However, when I frame it in the context of what their income had brought them in terms of life, family, charity and other aspects of their choosing, they quickly see the difference in philosophy I hold toward paying taxes. Am I saying you should throw a party because you pay a significant amount of taxes to the government? Sure, if you want. Hey, this is America! Do what you wish with you own time, talent and treasure.

Your philosophy toward investing for your future requires that you look through the lenses of potential and desire. Do not retire to simply quit working. This philosophy will produce poor long-term results. Instead think of the contributions you could make to your community, church or other civic groups that require your expertise to continue supporting constituents.

We use the term “reFIREment” to describe the next phase of your life. To us this is a new beginning with excitement and vigor. By changing your philosophy toward retirement, you will find yourself changing your investment philosophy. Think about the joys and/or challenges you wish to, or may, experience after your career. If you desire to travel, relocate to another state, start another career – all have funding needs that must be addressed during your work life. By defining your ultimate purpose in life, through a sound philosophy, you will be empowered to fund your retirement in a manner that allows you to accomplish a more rewarding life. Your outlook for the future will be much brighter and more positive when you have a plan that focuses on something other than “not working”.

Seek out help if you are unclear on how to define your future in monetary or philosophical terms that give you the greatest opportunity for success. A retirement specialist can serve many roles for your family. The best resources you will receive from a Certified Financial Planner™ professional are independent, tailored planning and honest feedback on the best approaches to reach your goals. You have far more to contribute to the world. Do not stop giving just because your work life has converted to your beach life. See you on the golf course!

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Eliminating the Top Three Fears of Pre-Retirees

Posted on August 14, 2020August 17, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

Retiring is a big step in life for most people. Along with this new lifestyle comes the fear of the unknown. You do not have to be subject to these fears if you simply follow the process outlined in this article.

Let’s identify three fears causing the greatest concern for pre-retirees. First, most people have enjoyed a career where they receive consistent paychecks and benefits. At retirement, there is a sudden realization that the ever-flowing money and benefits immediately stop! You don’t have to feel this way if proper planning has been performed. For example, if you have saved properly in your employer retirement plan, a series of consistent payments can be established to provide you a lifestyle you desire. Proper assumptions must be considered when establishing this stream of cashflow to confidently assuage the underlying fear of “running out of money”.

Why would you work so hard all of your life to simply exist in retirement? I am pretty certain that no one listed “barely survive” as a retirement goal! Start saving for retirement early and you will reap the benefits of living a life you desire.

The second fear of pre-retirees is the unknown cash needs of other family members while the retiree is enjoying life. When planning and analyzing the needs of the potential retiree, it is critical that you consider the needs of other family members you have supported during your career. What I am referring to is the “sandwich” generation. Some individuals are not only caring for their retirement needs but the needs of their parents and/or children (hence the name, “sandwich” generation). Challenges to the traditional family structure have been monumental in the past two decades. In years prior, the retiree had only their existing household to care for during the period after employment. Now, the retiree may be called upon to assist in college funding, caring for an elderly parent, etc. The world is a different place today and these considerations should be given some thought during the planning process.

To alleviate this fear, consider allocating a certain amount of funds to be invested in a manner that provides for these needs. Are there assets of your parents that may have considerable value but no cash flow capabilities? If so, perhaps selling the property would provide sufficient support for your parents’ futures. If not, this special fund would give you confidence that your retirement is secure while also meeting your obligations you desire to undertake for your family members.

The third and final fear of pre-retirees is the rising cost of medical care and its negative impact on their retirement assets. This is a tough one for most people. Proper medical care is necessary to allow you to enjoy the highest quality of life in retirement. However, with medical care rising approximately 6% per year for pharmaceutical and physician visits, a significant ailment could wreck your well-planned future. Consider utilizing Medicare Programs to your advantage. For example, it is critical that you consider a supplemental plan to your Medicare Parts A and B coverages. The remaining 20% of inpatient costs would be a material burden on your assets and cashflow if you were required to pay it out-of-pocket. There are many types of supplemental plans that cover various levels of support. Analyze them and consult an expert for guidance to select the proper plan for your needs.

If you are concerned about the rising cost of prescription drugs, and are enrolled in Medicare, consider the Medicare Part D Program. You may find sufficient coverage for your needs for a small premium each month. One caveat to this plan is that you will be penalized for enrolling in a period after you are initially qualified at age 65. For example, after your 65^th birthday, you are eligible to enroll in Medicare Part D.

However, your health is great and you don’t expect a costly amount of prescriptions. Then the unimaginable happens – at age 68 you experience a significant health event that requires expensive medication each month. You quickly enroll in Medicare Part D at the next enrollment period and realize that your monthly premium seems higher than you remembered at age 65. The difference in rates is the late enrollment penalty calculated at 1% of the national base beneficiary premium assessed each month from your originally qualified enrollment date to the month you enrolled in the program. In our example above, 36 months had lapsed from the date of the originally qualified enrollment date for the individual which means the monthly premium penalty would be 36%. As a result, your monthly premium for Medicare Part D coverage would be 36% higher than the national premium. As you can see, this penalty can become material rather quickly.

There are many factors to consider prior to retiring. We have a saying we use with our clients, “You retire for the first time only once. Don’t make a lifetime mistake when you do so.” Retirement planning is a process that should be addressed in advance and, to provide the greatest probability for success, consult a professional that specializes in retirement planning. Life is meant to be lived, not feared.

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Three T’s of Successful Retirement Planning

Posted on July 24, 2020July 24, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

Making a major life decision is not to be approached in a haphazard manner. Many people underestimate the impact of retirement on their lives and have “buyer’s remorse” once the process is complete. How can you experience a more positive and proactive outcome to retiring? Simply follow the “3 T’s” outlined below and you will gain tremendous confidence and control over your new phase of life.

Establish a Team

The first “T” is to establish a team. Many aspects of life allow you only one opportunity to get things right and this is one of them. Financial, estate, cash flow and tax considerations must be addressed in the process of planning to retire. Often clients come to our office for a meeting about their retirement and certain elections chosen by the individual are irrevocable. Elections in the format in which you will receive your retirement benefits, Medicare and Social Security Benefits and other critical lifestyle choices may have lifelong ramifications. You should consider assembling a team consisting of, at a minimum, a CPA, a Certified Financial Planner™ practitioner, an estate planning attorney and your spouse or significant other. Why do you wish to include your spouse/significant other? Do you know how your relationship may be changed by each of you spending the majority of your day together? It is critical that you listen and coordinate your plans for retirement with your team.

Timing

The second “T” is timing. When is the best time to retire? How can you maximize retirement income by electing benefits offered by your employer, SSA Benefits and other support income during your retirement years? The key to properly timing your approach to launch into this next phase of life is to understand the qualitative issues and work to resolve them to your benefit with similar gusto as you do your quantitative needs. Emphasis is generally given the monetary issues of retirement only to realize your plan failed to consider the importance of emotional issues about the changing lifestyle you may find yourself. Work with your wealth advisor to determine if you have addressed all facets of retirement and the timing is in your best interest.

Transition

The third and final “T” is for transition. Successful individuals that transition smoothly to and enjoy retirement are those that understand their time is more valuable than their wealth. Purpose is required of each of us to live a fulfilling life. Why would you wish to devote most of your early life to work and career only to be miserable after your leave employment? That, to me, is not success. However, the person who understands that she has talents, time and treasure to devote to others may find a more rewarding experience in the retirement phase. Consider your plans to travel, join civic groups, devote your time to education in other fields of interest, etc. You must understand that with today’s medical advancements, you may spend as many years in retirement as you did in your career. With that in your mind, wouldn’t you feel more confident knowing that you addressed the Three T’s of Retirement Planning?

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Should I Change My Investment Approach In Retirement?

Posted on February 7, 2020February 6, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

While accumulating assets for retirement, many people utilize an employer retirement plan that allows consistent contributions while investing in a growth model. Their approach is to maximize the matching contribution from their employer and, perhaps, assume more risk than they would otherwise assume because of continued contributions. Let’s review the process of investing during retirement and the differences one will encounter throughout the distribution phase of the portfolio.

The most prevalent concern of any retiree is running out of money. To confront this fear, most retirees make the most critical mistakes with their investments. First, to seek safety in the portfolio, the retiree will change from a balanced portfolio of equities and bonds to a bond-dominant portfolio. Thinking the cash balance approach secures their cash during the contraction of the markets, the larger peril to the portfolio is the lack of participation in the expansion phase of the market cycle. In layman’s terms, the rate of return on most bonds will not be sufficient to maintain the retiree’s purchasing power during retirement. Rising costs of living expenses such as medical care, housing, food and other basic needs will preclude the portfolio from providing excess cash flow to the retiree unless the total portfolio is significant.

To resolve the concern of running out of money, we work with our clients to develop a sound investment approach that addresses inflationary pressure, periodic cash distribution requirements and market risk. One of the most effective tools to combat risk is to diversify. At the time of retirement, many of our clients will participate in an economics lesson. Albeit a short lesson, we simply ask, “how would you feel to be out of money and healthy?” This question is one that causes their face to wrinkle and the eyebrows to furrow. Typically, the answer given us is “I would not feel comfortable at all!”

Obviously, we knew their answer but the exercise is one that makes them confront what risk truly is in their lives. So many people believe risk to be simply the loss of principal in their account. However, the greatest risk is outliving your means of support to where your longevity is not rewarded with peace and tranquility but rather anxiety. Our independent research has proven that most retirees sleep better at night knowing they will not be subjected to the need for family or state support. Independence is the reward for investing properly.

Seek out the advice of an independent financial advisor that specializes in retirement planning. You deserve a specialist for this phase of life just like your cardiovascular surgeon if you have health issues with your heart. If you have questions regarding your financial future, why not gain assurance that you are making the right decisions for your family? A visit with a Certified Financial Planner™ practitioner may give you the confidence you need to live your life in a manner you desire instead of simply existing.

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Post-Retirement Considerations

Posted on January 31, 2020January 30, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

Nursing home costs in the United States can easily top $70,000 per year! Assisted living centers may cost as much as $4,000 per month for a one-bedroom private-pay facility. We discuss these lifestyle changes as part of our planning process for retirees. It is not always a popular subject to broach with newly-retiring people because they think of it as a negative. However, as specialists in retirement planning, we believe in educating our clients about all facets of the future that they might control.

Let’s think about the options and find a few methods of mitigating these possible future costs. For one, by maintaining an active lifestyle and sensible diet, one may escape these options or, at least, delay them. Many of our clients have seen the impact on their families’ and friends’ budgets from admissions to a nursing home. These facilities are of great assistance when transitioning our loved ones that experience a period of life in which continual support is warranted.

Another option to utilizing these types of facilities is to accumulate sufficient funds that will allow you to remain in your own home with assistance provided by nurses’ aides and other medical providers. This option appeals to most of our clients that may simply have mobility issues and cannot provide for all aspects of their daily lives. We evaluate each client’s capabilities to accomplish their activities of daily living (ADL) and assist them in analyzing the impact of potential nursing care in their future financial planning budgets.

The six routine activities of daily living are: eating, bathing, getting dressed, toileting, transferring and continence. Each of us participate in these activities daily. To lose your capability to perform one of these activities may not be the deciding factor to start searching for an alternative to remaining in your home. However, when you lose the ability to conduct three or more of these activities, it is critical that the family consider nursing providers in the home of the individual or seek a nursing home.

To determine the appropriate level of support for a loved one, it is critical that the level of care replaces the daily activities that are not being performed by the individual. It may mean that you simply require an aide in your home for twelve hours per day. As the person’s abilities become more impaired, additional support and possible relocation may be needed.

One of the greatest ramifications of assigning a loved one to a nursing home is the emotional effect on the person. Too often this process is decided without input from the impaired person and the children simply need some relief from the care being required of them. Those of us deciding the fate of any person must consider the infirmed person’s wishes and desires. These decisions are some of the most difficult to make. By keeping the person informed of each step and soliciting their acceptance with the process, you may experience a better transition.

These types of decisions can have a significant impact on your retirement plans. Seek out a Certified Financial Planner™ practitioner who understands all aspects of retirement. It is too important of a decision to simply guess.

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How to Confidently Prepare for Retirement

Posted on January 24, 2020January 24, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

If you are like most individuals, considering the scope of the changes from an active career to retirement brings anxiety and a sense of loss. As specialists in retirement planning, we guide our clients in the process to, and through, retirement to provide confidence in the outcomes for their lives. One method in which we bring confidence to the process is by addressing an individual’s four biggest financial concerns about retirement: 1) paying for healthcare; 2) saving enough money for retirement; 3) liquidating indebtedness; and 4) creating and maintaining consistent, predictable income streams in retirement.

Healthcare costs are one of the most expensive areas of living for retirees. As we age, our healthcare costs may rise. One of our clients is suffering ill health in retirement and her medical expenses average more than $6,000 per month! Proper planning for healthcare expenses is critical before you retire. Not only do you suffer physically but the potential for significant cash need for healthcare may jeopardize the quality of life and the longevity of your assets to sustain you. Analysis of the probabilities for genetic health issues as well as capabilities for current physical activity of the individual will need to be addressed.

Saving for retirement is an area of life that is often delayed until it is almost too late to help the individual substantially. Too often individuals treat their employer retirement plan as a savings account and funds “emergencies” in life with plan loans. I believe this is tremendously detrimental for the long-term viability of their retirement assets. Emergencies can be mitigated by establishing a responsible budget each year and transfer extraordinary expenses to insurance coverages. For example, if you have a home, which is often one of the largest assets of a family, you should maintain adequate replacement value insurance on the property. Failing to do so could result in the family experiencing an exorbitant damage requiring more funds that are maintained in the family reserve account.

Eliminating or reducing indebtedness prior to retirement will provide an individual a higher annual discretionary cash flow. We have assisted many of our clients in a plan to reduce or eliminate debt prior to transitioning to retirement. It is inconceivable to plan for all potential perils and hazards in life but you will experience a more confident retirement by maintaining little or no debt while retired. Again, budgeting is the key to success for debt management.

Without consistent, predictable cash flow streams, your retirement will feel more like a burden than a reward. The secret to adequate cash flow streams in retirement is to start saving early in life and structure a retirement lifestyle that is within your means. Where we have witnessed this challenge is when someone retires without a thorough plan of execution and overspends during the first few years of retirement. The family is now in distress and substantial, critical work must be performed to remedy the situation.

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Relocation Considerations for Retirement

Posted on January 10, 2020January 8, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

One of the most difficult decisions in retirement planning is to relocate. If you reside in a state that has a high income tax rate, sales tax rate and/or ad valorem tax, it may be something to consider. During the retirement phase of life, your savings must last beyond your lifetime. To ignore the cost of living could be the difference between truly enjoying a lifetime of income and experiencing worry at a time in life that you shouldn’t.

A recent study of individual taxation by state yielded some not-so-surprising news. California, Hawaii, New York, Connecticut and Illinois are the highest taxing authorities on individuals. These states are currently seeing an exodus of its citizens to lower cost of living states. To eliminate 15% of your tax liability by simply relocating to Texas or Florida, states without individual income tax assessments, may provide the additional savings needed for your savings to last to lifetime.

Another area of consideration is property tax. If a state does not assess an income tax on individuals, it will, in most cases, utilize an ad valorem, or property tax, to generate revenue needed to fund the state’s functions. For example, some people consider moving to Texas due to its absence of individual income tax assessments. However, in most of the counties contiguous to the Dallas metroplex, the rate of assessment for property taxes creates more of a tax burden than one would pay by remaining in Oklahoma.

Personal property tax is another consideration when relocating in your retirement years. States have begun to assess sales tax on automobile purchases versus the excise tax previously charged for such transactions. It may take some of the joy out of your new purchase when you realize the bill from the state could be as much as $5,000!

Lastly, two of the necessities of life are utilities and food. When considering relocating, the cost of meals and household utilities should be considered. In extreme temperature climates such as experienced in Alaska, the cost of food and utilities, compared to Oklahoma, are very expensive. Due to the lack of fruit, vegetable and dairy production facilities and farms, these important staples of life must be flown into the location. The costs of delivery cause extremely high retail costs for consumers.

Although Hawaii may be the land of paradise many of us enjoy on vacation, the cost of living on the islands is very high compared to other states. Recently, we enjoyed a stay on Oahu and the cost of a gallon of milk was $7.99! If you are raising kids in your family, it may be cheaper to buy a cow.

It is important to consider many aspects when thinking of relocating during retirement. Cash flow is the ultimate factor coupled with your ecological requirements. One of the lowest costs of living states is Tennessee but you may wish to see the beautiful ocean shore each day. Trade-offs are a part of our lives. Rate the most important factors for you before undertaking a move to another state.

If you have questions as to how you can create a lifetime income plan, contact a Certified Financial Planner^TMpractitioner to assist in the analysis so that you can make the best decision for your family’s needs.

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Big Changes Affecting Your Retirement

Posted on January 3, 2020January 2, 2020 by Jimmy J. Williams, CPA/PFS, CFP®

A couple of bills containing significant changes to retirement planning were signed into law by President Trump on December 20, 2019. We will provide just a few of the sweeping changes that affect most of us planning or currently in retirement. The Setting Every Community Up for Retirement Enhancement Act of 2019 (commonly referred to as, “The SECURE Act of 2019) is effective for tax years beginning January 1, 2020.

If you are reaching the age of 70-1/2 and anticipated taking a distribution from your IRA, or suffer a penalty, the Act extends the date of required minimum distributions to age 72. When the present age of 70-1/2 was applied to IRA distributions, U.S. citizens were living fewer years, on average, than they are now. By increasing the age of required minimum distributions to age 72, the federal government has deferred revenue for another one and a half years which allows continued growth of the retirement funds. Many of our clients do not need or desire the distributions required under previous law. However, the penalty for failing to withdraw the IRA funds was more costly than the effective tax rate applied to the distribution. In other words, it was far cheaper to simply take the distribution and pay the tax bill.

The Act has closed a very effective generational planning strategy used by many people. No longer can your IRA be utilized for multi-generational planning (i.e., your grandchildren could have benefited from a “stretch” IRA strategy in the past). Under the provisions of the Act, the non-spouse beneficiary, or any beneficiary more than 10 years younger than the IRA owner, must take the full IRA value by the end of the tenth year after the death of the IRA owner. Of course, taxation will occur at a much sooner date than previously recognized due to the distribution occurring within ten years of death of the IRA owner.

Congress and President Trump have expressly acknowledged that children require families to spend money for housing, clothing, food, etc. Another relief item for individuals adopting or birthing children is the use of $10,000 of your employer-provided retirement plan assets without penalty. Although the participant will be required to pay income tax on the distribution, the 10% penalty for early withdrawal will not subject the family to additional burden.

IRAs can be confusing for individuals. To assist you with helpful information, please go to Compass Capital’s Resource Center and watch one of our instructional videos. If you have any questions regarding your particular retirement plan facts, seek out a Certified Financial Planner practitioner and CPA that specializes in families just like yours.

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Last-Minute Retirement Planning Ideas

Posted on December 20, 2019December 20, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

When you look at the calendar and realize another year has passed, it is time for a few more strategies to enhance your retirement account. Some of these actions may seem simplistic in nature but investing is not as difficult as many people would like you to believe. Investing in a diversified portfolio and rebalancing periodically is about as simple as any process can be for protecting your future.

Before you leave the office for the holiday season, consider reviewing your current portfolio within your employer-provided plan. 2019 has been a year of significant market growth in the United States. Record highs have been reached this year and this is a good result for most equity investors. With such growth in a diversified portfolio it is likely that your risk level within the portfolio has increased, too.

To maintain the acceptable level of risk you originally desired at the onset of your portfolio development, it is critical to sustain the original allocation. This is accomplished by rebalancing your portfolio based on one of two methods: 1) time; or 2) asset class. This example is purely for educational purposes. When the portfolio was originally established, you may have chosen a 50/50 equity to fixed income allocation. Considering the markets have been very positive on your portfolio and your allocation has expanded to 60% equities. Based on the current allocation, you are now experiencing a greater level of risk than you desire.

By performing the task of rebalancing (i.e., selling your equities and buying more fixed income) you are keeping your level of risk in line with your original target. This strategy is the basis for most theories of portfolio design and risk acceptance. However, you must possess a degree of discipline that does not become greedy when times are good and fearful when the economy is contracting. As an anecdote, we often inform our clients that they must “be fearful when others are greedy and greedy when others are fearful.” The stock markets are auction-based markets. Someone must be selling something for someone to buy it. This belief applies to new issues when a company desires to “go public”. The issuer of the stock is asking for a certain price (i.e., Initial Public Offering Price our IPO) and the public may desire to buy at that price.

Another yearend strategy we recommend is a review of the individual assets classes within an allocation. For example, small cap stocks performed excellently in 2017 and declined in performance in 2018. However, in 2019, the asset class is, once again, performing well. I am not saying that you should own small cap mutual funds. As an illustration, you should review each of the different assets classes and determine the inherent risk within your portfolio.

To help our clients control the amount of risk within their portfolios, we developed a system that “stress tests” their holdings and overall allocation. By analyzing the risk of the portfolio, the investor can be more comfortable knowing their portfolio is not invested at levels of risk that cause them worry. Also, we believe diversification must be achieved in market sectors and geographically to control the risk component.

If you are confused by some of the language in this article, don’t let it keep you from moving forward to protect your future security. You may wish for someone to “stress test” your holdings, asset allocation and project potential for your future. Seek out a Certified Financial Planner™ practitioner and CPA that can help guide you through the confusion and help you reach your goals in a non-emotional and logical manner.

For additional, free information about managing your portfolio in a manner that allows you to sleep at night, go visit the Compass Capital Management website. You will find a wealth of information to help you navigate life!

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3 Mistakes Most People Make With Their Retirement

Posted on November 15, 2019November 15, 2019 by Jimmy J. Williams, CPA/PFS, CFP®

During my thirty year career of guiding individuals to realizing their retirement goals, I have reduced the most critical of mistakes people commit when accumulating retirement assets in their employer’s plan. These mistakes can be overcome and people have a higher probability of reaching their intended goals.

Mistake #1: Making Decisions through Fear

Investing should be performed with a clear mind and thoughtful research being the driver for change. Too often people accumulating for retirement commit the mistake of making changes to their retirement plan account after the negative impact has occurred. This is the equivalent of turning on the hydrant and spraying water on your house after the structure has completely burned to the ground.

We believe everyone should self-assess their goals for retirement. These goals should be attainable. For example, everyone uses the same phrase when thinking about investments: “High return on my investments with no risk.” This, of course, is a fantasy. Risk is present in every facet of life including your employer-provided retirement plan.

To correct for this mistake, learn to keep calm during temporary market disruptions. With the volatility of our current markets, you would be buying and selling all the time and miss the opportunities to meet your goals for long-term growth.

Mistake #2 – Timing the Market

One of our clients informed us that a former colleague of his was constantly buying and selling in his Thrift Savings Plan. His friend thought this approach would prevail for better growth in his account. However, just the opposite has been proven true by economists and researchers of behavioral finance. To believe a long-term perspective can be maintained with such a short-term approach to finances is not a valid one.

To overcome this mistake, each investor should realize he doesn’t possess all of the knowledge of the market and may turn his retirement plan assets into a speculative investment. This does not have to be the case. We firmly believe proper allocation and diversification of your portfolio will keep risk at acceptable levels while obtaining long-term potential for your assets.

Mistake #3 – Borrowing from Your Retirement Savings

As individuals it becomes difficult for us to look at this bucket of money and experience struggle in our lives. Instead of adjusting our lifestyle and budgeting within our means, we use loans from our retirement plans with the understanding that we are “borrowing from ourselves so it isn’t hurting my account”. The fallacy of this statement is that you’re, in fact, providing for a shortfall in your retirement account during possible peak earnings or growth seasons.

Your plan will require interest to be paid on your “loan”. The rate of interest is usually lower than your market returns and the smaller payments returned to your account may grow but your overall compounding effect will be diminished.

The overall solution to these critical mistakes is to ask for advice from someone that can hold you accountable to a plan that you design for your future. We serve as an advisor as well as life coach for our clients. To be that calming voice of assurance when you are making progress or the soft correction needed when you attempt to deviate from your plan allows us to help you achieve success on your terms.

If you are concerned about your current ability to reach your retirement goals in your TSP, IRA, 401(k) or other employer plan, contact a CPA/PFS or Certified Financial Planner™ practitioner for a complimentary consultation. You may find the answers you need.