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“Take Emotion Out of It" and Other Bad Retirement Planning Advice You May Be Tempted To Follow

It’s easy to feel overwhelmed with well-meaning advice in today’s world, thanks in no small part to the internet and social media. We’re bombarded with advice and wisdom that sometimes seems contradictory.

Retirement planning, in particular, is one area where mountains of advice can really pile up. Regardless of your age, it’s easy to feel anxious about your retirement.

For many, it can be tempting to latch onto financial advice, especially when it comes from trusted sources and especially when it sounds like straightforward common-sense.

Not all retirement planning advice is good advice. Let’s take a look at some common phrases that are best ignored.

“Take Emotion Out Of It”

Emotion is a natural part of the decision-making process. You may consider yourself the most rational person in the world, but like it or not, your emotions still play a crucial role in how you navigate the world -- retirement plan included.

Your retirement plans, in fact, are largely based on your emotions. Here are some retirement goals that may resonate with you:

  • ‘I want to travel the world and explore new places’
  • ‘I want to spend more time with my family and friends’
  • ‘I want to learn a new skill or hobby’
  • ‘I want to support and become involved with social projects I care about

Do any of these sound familiar? They are all emotional decisions, connected to your desires and dreams. At Wealth Legacy Institute, our Planning for LIFE Experience™ approach is designed to help you organize your retirement goals taking your emotions and values into account.

Treating your retirement savings as though its completely separate from your feelings can cause you to feel frustrated and confused. It could also lead you to make poor decisions by trying to attain unspoken emotional needs.

Attitudes toward money are intimately linked to identity, and trying to ignore that relationship is asking for trouble.

“Buy Low, Sell High”

‘Buy low, sell high’ might seem like Stock Trading 101. If you had to take just one piece of financial advice, this would be a serious contender?

It isn’t that simple, though. According to wealth manager Ben Sherman, ‘buy low, sell high’ rarely works well in practice because, once again, people are at the whim of their emotions. It’s psychologically difficult to sell a stock when it’s still rising and buy one when it’s falling.

The financial world is littered with these kinds of aphorisms, and most of the time simple soundbites are poor foundations for a big decision.

Instead of basing your retirement plan on one-size-fits-all advice, a much better option would be to work with a personal financial advisor. These are professionals who understand investment and savings and can help you put together a strategy that works for you.

A fiduciary advisor is one of the best investments you can make when it comes to your savings, and it’s worth knowing where to start. If you’re based in Denver, good financial advisors easy to find if you know what to look for.

"Follow the 4% Rule when Saving for Retirement"

The 4% rule is the well-established idea that retirees can generally withdraw 4% of their savings each year and their plan will remain safe and sustainable.

This was solid wealth management advice for some time, but it’s now a little dated. In fact, the creator of the rule actually revised the figure to 4.5%.

In reality, the amount you can safely withdraw will depend on your own circumstances. Some estimates hover around 6%, but there are no hard and fast rules when it comes to retirement saving, and it’s generally wise to be wary of any simplistic promises.

Instead, work with a fiduciary financial advisor who has your best interests and your personal needs in mind. Together, you can create a retirement plan to let you live the lifestyle you want for as long as you need.

“You Only Need to Save Enough for a Decade or Two”

In the past, it was generally accepted that most retirees would only need to fund another decade or two. Any savings that extended significantly beyond this would be a waste of money, as you likely wouldn’t be around to spend them.

This is no longer the case and here are some reasons why:

  • A hundred years ago the average 50-year-old could expect to live about another 20 years. Today, that number is 33 years.
  • Unexpected expenses related to health can really stretch retirement savings. Today, people tend to live far longer with chronic illnesses and disabilities. This is great news since they can often enjoy a good quality of life for many more years, but it also comes at a cost.
  • You may want to leave behind a financial legacy for our younger relatives. Saving just enough for our own retirement would make this impossible.
  • It’s not uncommon today for people to reach retirement age while their parents are still alive. Caring for aging relatives may well be an important consideration when it comes to your retirement plan.

“A Cautious Approach is Always Best”

Conventional financial wisdom usually recommends that older people play it safe with their investments and avoid any risky ventures. Of course, there are many scenarios where this holds true, and taking excessive risk is never a good idea.

Ultra-cautious approaches like avoiding the stock market, are also harmful. To get the best results from your savings, it’s best to sprinkle in at least a little risk. This is another area where a good personal financial advisor can help you work out how much risk you’re prepared to tolerate and build a plan that suits you. From Boston to Denver, financial advisors can be found everywhere and can be crucial in putting together the right retirement plan.

Saving enough for a comfortable retirement free of money worries is a task that you will probably devote many decades to. Retirement is a big transition, and the number of options and potential directions can feel paralyzing.

This can leave us feeling a lot of pressure, and popular advice can seem reassuring and helpful. One of the most important things to keep in mind is that retirement planning is highly personal. The path you take will be unique to you, and cookie-cutter financial advice is rarely enough in the long run.

Don’t waste your valuable time pursuing the wrong advice. Wealth Legacy Institute can help you put together a plan that works for you. Contact one of our fiduciary advisors to get started.

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