7 Preventable Mistakes the Soon-to-Be Retired Often Make and How to Avoid Them

My team at Keen Wealth has seen retirement play out just about any way you can imagine. We've celebrated with folks as they've clocked out for the last time. We've seen photos of dream vacations, new homes, and new grandbabies. And we've used our comprehensive planning process to help folks adjust to some major challenges, recalibrate the best path forward, and keep progressing toward long-term goals.

Unfortunately, we've also seen folks fall short of their retirement goals, often because they tried to "go it alone" at the start of their retirement transitions. If 2024 is going to be the year that you finally retire, talk to your loved ones and your advisor about how you can steer clear of these seven preventable retirement errors and set up your Golden Years for success.

1. Lack of Coordination

Are you retiring before Medicare eligibility at age 65? OK, what's your plan for buying and paying for health insurance?

Will you work part-time in retirement? Great, how's that going to affect your taxable income?

Do you have a large nest egg that you want to protect for the next generation? What does your estate plan look like?

These are just some of the individual pieces of a retirement plan that have to be carefully coordinated into a complementary whole. A good financial advisor can "quarterback" these critical decisions with health care professionals, CPAs, and your legal team.

2. Underestimating Longevity

As a new retiree, hopefully, you’re excited about the trips you have scheduled, the hobbies you’re going to dive into, and all the extra time you’re going to have with friends and family. But your retirement plan needs to balance today’s fulfillment with tomorrow’s needs. COVID-19 will likely be just a blip in positive longevity trends. If you eat well, exercise, and check in with your doctor regularly, you have a good chance of enjoying decades in retirement. Picture yourself in your 80s, 90s, or even 100s. Where do you want to be living? Who is going to take care of you? And what kind of financial support will you need?

3. Lacking a Withdrawal Strategy

Tools like the 4% Rule and Monte Carlo simulations tend to grade retirement withdrawal strategies as “pass” or “fail”: either withdrawing X% from your assets every year will exhaust your nest egg before you pass, or it won’t. But there’s a lot more to a solid withdrawal strategy than sustaining your nest egg for a decade or two. How and when you spend your assets will affect your taxes, the cost of your Medicare premiums, your monthly budget, claiming your Social Security benefits, and even your estate planning. Sequencing your spending and determining withdrawal rates are critical annual decisions that have to be managed with an eye toward your long-term security.

4. Ignoring Advanced Healthcare Directives

No one likes thinking about what the end of their life will be like. But you have a responsibility to yourself and your loved ones to create legal documents that ensure you receive the care you want if and when you are unable to speak for yourself.

In addition to your Advanced Healthcare Directives, work with your advisor and attorney to make sure your estate plan includes:

• Last Will and Testament, which outlines your last wishes and explains how you want your estate to be distributed to your heirs and any other beneficiaries, such as charitable organizations.

• Power of Attorney authorizes someone you trust to act on your behalf while you’re still alive in the event that you are incapacitated or unable to make decisions.

• Living Will designates a person to be in charge of making important medical choices on your behalf if you are unable to.

Without these documents, your end-of-life care and the distribution of your assets after you pass could fall to the courts. Please don't let that happen.

5. Failing to Review Beneficiary Designations

This is an item on our annual checklists at Keen Wealth. As you age, your financial goals and your relationships with causes, charitable organizations, friends, and family are going to evolve. For example, leaving everything to "the good kid" might have seemed like a good idea 10 years ago. But now, maybe you are convinced that naming a professional trustee of a trust and including other beneficiaries, including perhaps a charity or two, would be more efficient and avoid family squabbles. Or maybe you'd like to charge your now mature and established kids with the management of a family charitable organization? It's always possible to make these kinds of adjustments to keep your estate plan in sync with your wishes, as long as you make time to review your beneficiaries and the rest of your plan annually.

6. Failing to Communicate with Family

Of course, if you change your estate plan without telling your kids, you might be leaving hurt feelings and unanswerable questions behind. Likewise, friends and family might not react well if you retire and, out of the blue, sell the family home and move across the country. We often advise folks to "limit surprises in retirement." That includes keeping your loved ones in the loop about your plans. At Keen Wealth, we consider it an honor to help folks facilitate these conversations.

7. Not Having a Tailored Investment Strategy

The reason that "rule of thumb" investment strategies like the 4% Rule may not be the best option for everyone is because they overlook the most important retirement variable: you. Your specific goals, challenges, family situation, healthcare needs, and assets don't fit into any one formula. You need a comprehensive financial plan that's as unique as you are so that you can achieve your unique vision of an ideal retirement.

Whether you’re about to retire or hoping to get more from retirement in 2024, my team at Keen Wealth can help you avoid common mistakes and work towards better results. Make an appointment to visit our new offices and let’s start personalizing and improving your plan.

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About Bill

Bill Keen is a financial advisor with over 30 years of industry experience. As the founder and CEO of Keen Wealth Advisors, a registered investment advisory firm, he focuses on providing personalized retirement planning designed to help people thrive before and during their retirement years. With a passion for educating others, Bill regularly blogs about retirement planning, hosts the podcast Keen on Retirement, and has contributed to Forbes, U.S. News and World Report, Reuters, Wall Street Journal’s Market Watch, Yahoo Finance, and other publications. Based in Overland Park, Kansas, Bill and his team work with clients throughout the greater Kansas City area and across the nation. To learn more, connect with him on LinkedIn or visit www.keenwealthadvisors.com.

KWMG, LLC’s dba Keen Wealth Advisors (“company”) is an SEC Registered Investment Advisor located in Overland Park, KS. The company and its representatives may only conduct business in those states where registered or where excluded/exempt or from licensure. For registration information please contact the SEC or the state securities regulators for the states where the company is notice filed. A copy of the company ADV is available upon request. Advisory services are only offered to clients or prospective clients where the company and its representatives are properly licensed or exempt from licensure. No advice may be rendered by the company unless a client service agreement is in place. This information is not intended to be investment advice or construed as a recommendation or endorsement of any particular investment or investment strategy and is for illustrative purposes only. Clients and prospective clients must consider all relevant risk factors involved with each strategy, including costs or fees, and their own personal financial situations before trading.

The views outlined in the book, Keen on Retirement Engineering the Second Half of Your Life, are those of the author and should not be construed as individualized or personalized investment advice. Any economic and/or performance information cited is historical and not indicative of future results. Economic forecasts set forth may not develop as predicted.

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