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Mike Loo, MBA

Vice President of Investments


“We’re Not Here to Be The Richest, We’re Here To Be The Most Prepared” (Forecasting Potential Pitfal

| September 16, 2017
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When it comes to retirement, most people think the goal is to save up as much as possible and retire with the biggest nest egg. It’s like the young couples who pour thousands of dollars and countless hours into planning the wedding of their dreams- without giving any thought to the marriage that comes after.

Retirement is not all about money, just as marriage is not all about the wedding. Being well-prepared for retirement, and the potential pitfalls that come with it, goes way beyond just the finances.

Prepare For Retirement Mentally

You may expect a financial advisor to only focus on finances, but I would be short-changing you if I did. Mental preparation is almost as important as financial preparation when it comes to retirement.

Your Retirement Goals

A lot of people retire from something, not to something. Retirement has to be more than just not working. What are you going to do? If you haven’t thought of something meaningful to do with your time, you will end up bored, frustrated, and unfulfilled, no matter how much money you have.

Retirement can be one of the most satisfying seasons of life if you have the right focus. Wealth is not what will lead to a sense of fulfillment, though. A happy retiree is one who focuses on personal goals, not returns.

Your Legacy Goals

What do you want people to say about you when you are gone? Would you like your funeral to just be people talking about how rich you were? Or, is it deep relationships and special shared memories that you want mentioned?

As long as you are alive, it’s never too late to start building the legacy you want to leave. Retirement can be an opportune time to strengthen relationships and create memories that will live on after you are gone.

Advantages of Having a Written Plan

You don’t want to spend your retirement years worried about money or how you will handle unexpected events. Having a written retirement plan that covers various possible situations can bring a sense of peace and security to your retirement years.

When the unexpected happens or things don’t turn out the way you wanted, you don’t want to make unwise decisions because you got carried away by emotion. Having a written plan can anchor you in emotionally turbulent times and serve as a guide for navigating an unknown future.

Prepare For Retirement Financially

Once you are mentally prepared for retirement, you can focus on finances. There are two sides to being financially prepared for retirement. The first, and most widely recognized, is saving. Hopefully, you have been doing that for some time now.

The second, and commonly overlooked, side is recognizing potential pitfalls and preparing for them. Understanding and addressing these pitfalls ahead of time can go a long way in compensating for a smaller-than-desired nest egg. Here are some of them:

Potential Pitfalls

  • Underestimating Expenses. Many people have no idea how much they spend or will be able to in retirement. Understanding how much you spend, and making adjustments, can have a great impact on how long your nest egg lasts.
  • Not Tracking Cash Flow. As with expenses above, many people aren’t even sure where their money is coming from in retirement. Without a budget, you will not know what money you have, where it is going, or how long it will last.
  • Ignoring Taxes. Whether you withdraw money from a traditional IRA or a Roth IRA will make a big difference in how much you have left in your hands after taxes. There are a lot of strategies available to help minimize your tax burden in retirement, and ignoring them will cost you.
  • Playing It Too Safe. If you are looking at a 30-year retirement, having your entire nest egg in a savings account is akin to giving several percent of it away each year to inflation. You need to understand your time horizon and invest your money accordingly.
  • Failing To Maximize Social Security. You can claim your Social Security benefits any time between age 62 and 70, but your benefit amount will change depending on when you file. Married people have the extra consideration of spousal benefits. When you choose to file for Social Security can make a difference of thousands of dollars.
  • Death Of A Spouse. When your spouse dies, it could affect your Social Security benefit and pension payments. You also might have to hire help around the house or a caregiver to make up for what the deceased spouse used to do.
  • Forgetting The Needs Of Others. Those with disabled children usually plan for them, but how about your parents or other relatives? Have you considered how their financial needs will affect your retirement spending? It is important to recognize situations that may arise in retirement where you will be called upon to help a loved one financially.
  • Assuming Things Will Happen A Certain Way. One of the only guarantees in life is that things are constantly changing. If you base your entire financial plan on a certain outcome or market return, you could be in trouble. You need to look at various possible situations and have a plan for each one.
  • Not Having A Written Plan. As mentioned above, having a written plan will give you peace of mind and help guide your decisions when the inevitable changes come. Lack of planning is a major cause of poor financial decisions.

How I Can Help

Are you prepared for these retirement pitfalls? If not, I can help. I would love to sit down with you to review your current financial situation and your goals for retirement. We can analyze various scenarios and come up with a plan for each. I can help you develop a written plan for your retirement that addresses each of the pitfalls named above.

If you want to be prepared when you reach retirement, call my office at (949) 221-8105 x 2128, or email me at michael.loo@natplan.com. Together we can discuss your goals for retirement and what you can do now to be financially prepared to achieve them.

About Mike Loo

Mike Loo is an independent financial advisor with more than 20 years of experience in the financial services industry. His mission is to provide a meaningful impact on the lives of clients and the people they care most about, help them make educated decisions with their money, and build a strong financial foundation for both themselves and their next generation.  Mike is committed to meeting a high standard of excellence, taking the time to listen to clients’ needs, and designing strategies that aim to help clients save money and reduce debt. He seeks to fit a client’s investments into their life and educate them so they’ll understand their investments. To learn more about how Mike may be able to help, connect with him on LinkedIn, call his office at (949) 221-8105 x 2128, or email him at michael.loo@natplan.com.

The opinions voiced are for general information only. They are not intended to provide specific advice or recommendations for any individual and do not constitute an endorsement by NPC. To determine which investments may be appropriate for you, consult with your financial professional. Please remember that investment decisions should be based on an individual's goals, time horizon, and tolerance for risk. NPC does not provide tax or legal advice.

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