STUDIO CITY (CBS) — Planning for the “Golden Years?”
Julia Valentine visited the KCAL9 studios Tuesday to talk about her book, “Joy Compass: How to Make Your Retirement the Treasure of Your Life.”
She is also the founder of JoyCompass.com – a site dedicated to helping those approaching or in retirement better prepare for, design and enjoy their retirement years.
6 mistakes retirees commonly make with their finances
1. Take financial advice from friends and family over that of professionals. Even the most well-intentioned and insightful advice does not replace that of an investing expert, accountant or other retirement finance authority to aide with critical decision making that will impact the entirety of your life, for the rest of your life.
2. Underestimating inflation. If your nest egg is not earning enough to stay ahead of inflation and taxes, your retirement lifestyle is likely to get scrambled well ahead of its time. It’s key to establish the appropriate blend of risk and return necessary to maintain short-term purchasing power in working toward your long-term goals.
3. Withdrawing too much money early on in retirement and running out of resources later on in life. Surveys show that the typical American is not knowledgeable about health care costs, life expectancy, income needs, and other risks.
4. Lacking a financial plan that includes estate planning, budget, etc. for both the short and long term to avoid problems and capitalize on all financial opportunities. According to the National Association of Unclaimed Property Administrators, state treasurers currently hold $32.9 billion in unclaimed bank accounts and other assets. According to the U.S. Department of Labor, $850M in 401(k) assets go unclaimed each year.
5. Failing to adjust the asset allocation of investment vehicles in your portfolio with time (i.e., “stage of retirement” relative to life expectancy), and having an inappropriate mix of investments for one’s lifestyle goals, timeframes and risk tolerance.
6. Failing to educate oneself about financial scams – 1 out of 5 Americans over 65 has been a victim of a financial scam, according to the Washington-based non-profit Investor Protection Trust. More than 7.3m seniors are taken advantage of financially through inappropriate investments, high fees or fraud, at a cost of more than $2.6 billion a year. Four in five cases are not reported, according to the MetLife Mature Market Institute Study, March 2009.
With a whopping 10,000+ baby boomers turning 65 each day, the number of Americans in or approaching retirement – and heading into a financial disaster – is downright shocking. Equally unnerving is that most Americans actually admit to being unprepared for retirement, with the majority unsure of how much money they will need in retirement, also operating without any kind of plan or intention. Most concerning, over one third of Americans have NO retirement savings whatsoever!
The 2010 Wells Fargo Retirement Fitness Survey
1. 72% don’t have any idea how much they will be able to spend or on what.
2. 67% don’t have a written plan related to their life expectancy or how long their savings will need to last.
3. 37% of all respondents (43% of respondents age 60 to 69) aren’t sure or can’t estimate how much money they will need during retirement.
4. The typical respondent is not knowledgeable about health care costs, life expectancy, income needs, inflation, the future of Social Security, and the many other risks that retirees face.
5. Only one out of every three Americans has a written, detailed plan for how they will manage their finances during retirement.
6. 65% believe they should be saving more and could save more if they made some minor changes in their spending habits and had help in the form of financial advice.
7. Eight out of every ten respondents say they would be motivated to save if they were told the specific amount of money they will need during retirement.
8. The growing use of automatic enrollment during the past 10 years has been a contributing factor in helping young people start saving for retirement at an earlier age.
9. 32% (34% male, 29% female) are excited and look forward to retirement. 38% (39% male, 37% female) never think about retirement. 27% (23% male, 30% female) are worried about retirement due to financial stress or worry.
10. Three in Four Americans Expect to Work through Retirement Years;
11. Average Americans Woefully Underfunded, with Less Than 7% of Desired Retirement Nest Egg Saved;
12. 20-Somethings Least Confident in Stock Market and 40-Somethings Most Stressed.