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Fiscally Fit: How to Avoid Common Money Mistakes and Make Retirement Planning EASY

We all make mistakes when it comes to money. Have you ever spent hundreds on an item you had to have – but then never used? Have you gone through the checkout line at Target and, thanks to impulse shopping, been shocked at the final tally? Money mistakes like these are natural and forgivable - we’re only human, after all.

When it comes to retirement planning, however, mistakes can have a very real and lasting effect on your long-term savings (and overall financial well-being). The first step to overcoming your money mistakes is to recognize them. Here are some of the most common pitfalls we see among our retirement planning clients:

1) Failing to Find a Fiduciary

Unfortunately, not all financial advisors prioritize what’s best for you. In fact, the majority will put their personal profit above yours. Conflicting financial advice negatively impacts Americans, costing them billions of dollars each year.

Using the wrong type of advisor will cost you money and create stress. The only way to be sure your advisor is acting in your best interest is to use a financial advisor acting under fiduciary duty. When you’re seeking retirement planning advice, ask the advisor if they are a “broker-dealer,” or “registered representative.” Any of these designations means they receive commissions based on the products they sell, and you should be wary.

2) “The Hot Dog Problem”

A hot dog may taste great, but do you know what's inside? This very same principle is at work every day in the financial and retirement planning business. Expensive financial products are often intentionally complex and confusing. Confusion leads to apathy, and therefore many of us commit to financial products without a clear understanding of all the internal costs.

Investing might seem scary or uninteresting to you, but you need to peel back the layers and gain an understanding of what your advisor is selling you. Otherwise, you risk being taken advantage of.

3) Trying to Beat the Stock Market

The truth is, no one, not even your financial planner, knows what the market will do. Even with sleek financial products that promise big returns, beating the market is unlikely.

Instead of working against the odds, take a practical approach. Start small and be consistent. Funnel savings into your retirement plan on a regular basis, and don’t freak out when the market goes up or down. Stick to your plan and stay invested.

How to Build a Nest Egg the EASY Way

Now that you know the common money mistakes to avoid, you’re on your way to building a bigger retirement nest egg – and making it EASY. Here’s what that means:

Explore

Explore your money history, including your attitudes toward money and investment. Without even realizing it, you have a collection of money messages received over the years from your parents, your community, and society. These messages affect your financial planning philosophy in a big way – because how you do money is how you do life.

Take some time to explore the life priorities that shape your spending and saving choices. Explore your values and vision for your retirement - not what your friend’s retirement may look like or what you think you should have.

Architecture

Now that you’ve examined your perceptions, goals, and objectives for your money, give shape to them by creating a structure for your personal retirement plan. Designing a solid financial blueprint will help you secure your future.

The architecture of a solid financial plan is:

  • Long term
  • Backed by professional advice
  • Aligned with your personal and financial goals

A fiduciary financial advisor can help you create a new retirement investment plan or evaluate your current one. And since they’re acting under fiduciary responsibility, you can rest assured they’ll create a plan that works for you.

Step by Step

Even the most solid plan is useless if you don’t act on it. Take clear action steps to implement your plan and help get you from here to there. Some concrete action steps may include:

Yawn

The “Yawn” concept is simple. When the market goes up – yawn. When the market goes down – yawn. In other words, take the emotion out of your investing. Kim Curtis, a Certified Financial Planner and fiduciary advisor at Wealth Legacy Institute, says sound investing should be boring. This “who cares” attitude towards market fluctuations is the best way to keep a cool head in the face of market changes, and makes it easy to build wealth.

2020 Denver Retirement Guide

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