Welcome back to our continuing series, The 10 Beliefs. We’ve outlined the seven most common mistakes we see people make in planning and saving for retirement. In our last post, our first belief, we told you that you should not settle. Now we’re going to walk you through the second belief, that you should not follow generic advice.
If you missed a post, or would like to start at the beginning, scroll to the bottom of this post for a complete listing.
Belief #2 - Throw Out All That Generic Advice And Rules Of Thumb
There's a lot of one-size-fits-all advice out there. But the truth of the matter is that kind of generic advice should be called one-size-fits-none.
Most of the one-size-fits-none advice out there doesn’t fit your specific situation. Instead of helping secure your financial future, using advice like this might leave you ill-prepared for retirement. As a result, too many people spend too many sleepless nights worrying about their money or blindsided by a dwindling account balance because the generic advice they followed gave them a false sense of security.
But it’s not our fault. Take the beloved four percent rule, for example. They tout it as the withdrawal rate that “experts” consider to be safe. And I mean, come on…
It’s called a rule. We’ve been brought up to follow the rules, so why wouldn’t this one be true? Plus, we hear it everywhere and for some people, it does work. Why shouldn’t we believe it…?
But let me ask… Who are the experts that endorse this rule? As a financial advisor who has over a decade of experience, I sure don’t.
Here’s somethings you need to consider:
1. How long are you going to live? Because the most important part of a retirement savings is making your money last through the end of life. If you retire at, say sixty-two and expect to live to seventy-six the amount you can spend per year is a little different than if you expect to live to be close to one-hundred. The 4 % rule doesn’t account for this.
2. What if you haven’t saved enough and can’t survive on four percent? If you’re following the 4 % rule and think you’re okay (because you’re “following the rule” made by “experts”) you could end up blindsided.
3. Or, what if you could survive on six percent and be more than fine? Why sacrifice when you don’t have to.
We use Custom Financial Blueprints to determine how much our clients can spend in retirement and perform Periodic Financial Check-ups to make sure that life’s changes haven’t impacted their Blueprint. The two together are designed to give our clients true peace-of-mind in retirement.
Have you settled for less than you deserve? Are you following advice that is specific to you and your situation? We believe to have the best chance of obtaining and maintaining your dream retirement, you need to do both. If you do, you can finally stop worrying about money. That's actually Belief #3. You can read that here.
You can also grab all of the mistakes and beliefs in a free download. Grab it here.