Investing In Retirement and 3 Big Mistakes to Avoid (Video and Slides)

(My ROUGH notes from the presentation)

Investing In Retirement

Investment Policy

A coherent set of guidelines for managing financial assets that are in line with your goals and the realities of the investment markets. 

This policy will provide overarching guidance on the implementation of: 

-Asset allocation

-Portfolio management, and

-Investment strategy

It should cover: 

-Risk tolerance

-Have a realistic rate of return based on your risk tolerance. 

Your Investment Policy

-Serves as the basis for developing, administering, and reviewing an ongoing program of investments.

-Think of your investment policy like a ‘compass’ that keeps you pointed toward your higher goals, and as a tool to drown out the noise and fear tactics of the financial media. 

-2017 was one of the calmest years for the stock market of the last 5 decades. 

-But, a normal year has about 50 moves of 1% or more in the market, or about 1 per week. 

There are times when investors lose their sense of direction.

-The Dow Jones has dropped 300 points!  Maybe I shouldn’t be investing in stocks? 

-The stock market has risen 15% in the last year, why do I have half my portfolio in bonds? Shouldn’t I shift more to stocks now? 

This is exactly why you should, and we do with clients establish a written Investment Policy Statement (IPS) so that when turbulent times come, we can go back to your IPS and remember why we are investing the way we are. 

The purpose of the investment policy is twofold: 

  1. To provide a foundation of goals, time horizons, and constraints on which the portfolio is constructed; and provide a basis for review, performance evaluation, and adaptation to changing conditions.

The only thing that is constant is change -Heraclitus

When you have a proper investment policy in place, and changes come, you have your compass to refer to before you make any irrational decisions. 

A sound investment policy is realistic, has a long-term perspective, and is clearly defined. 

3 Big Mistakes Investors Make in Retirement

They let FEAR be the dominant emotion when it comes to making decisions on what to do with their nest egg.

-They are worried about running out of money so instead of working with a qualified investment advisor that can deeply help them understand your risk tolerance, timeline and retirement funding needs, they put WAY too much money in an insurance product like an annuity. 

Annuities have the benefits of downside protection, but very limited upside. They will claim 2-4% returns but you have to remember there are fees that are subtracted from that many times over 1% that aren't explained very clearly in the annuity contract. 

You also lose control of the money. Say you put in 50% of everything you have, now you no longer have that money if there was an emergency or you needed medical care. All you get is your monthly payment. And most of the time those payments don’t increase with inflation. Over time those payments don’t keep up with inflation and you get less and less with your money each year. 

They OVERPAY for investment expenses. 

Large-Cap Stock Funds: 1.25%

Mid-Cap Stock Funds: 1.35%

Small-Cap Stock Funds: 1.40%

Foreign Stock Funds: 1.50%

Bond Funds: 0.90%

This would give you an average fee of 1.28% 

This may not include additional fees like 12b-1 fees that are hidden deep in the paperwork that can be .25%-.75% PLUS any front/rear loads that the broker takes as a commission. If they also charge you for investment management, the average fee 

This is typically ONLY for investment management. Or very basic financial planning. 

The average investment portfolio fees at Keep It Simple Financial Planning? 

Portfolio fee: .10-.30%

Management fee: .65-.95%

Technology fee: .20%

They try to do it all on their own. 

Most people think that financial planners only offer advice on investments or insurance. 

-while this is true for the majority of people calling themselves ‘financial advisors’ 

-there SO much more to get your retirement plan RIGHT


-Social Security timing (easily a 6-figure decision)

-Medicare plan selection 

-Estate and Tax planning

-Pension decisions 

-Business planning

-Creating additional income streams

-Tax reducing distribution strategies for your retirement accounts

-Roth conversions for tax-free investments later

-Business/encore career planning



3 Common Social Security Mistakes - Transcript

[00:00:01] Good morning guys just out taking the dog for a walk. Just thinking today about what I can give you to help you out. And I think the first thing is oh shoot there's a train coming. Let's get a shot of this train here. OK that was cool. So, I've been getting a lot of questions lately about about Social Security and when to take it. So a couple of big mistakes people make when taking Social Security. One is to take it as soon as they qualify you know take it to 62 can be a really bad idea. It could cost you hundreds of thousands of dollars long term. It can be good to take it at 62. If you have some health issues on the other hand because at the end of the day you may get more payments from Social Security but taking a 62 versus waiting until 70 can be probably about 45 percent difference in your overall payout. And that's for life. So that could hit six figures very easily. Usually the break even point is somewhere between 12 and 18 years on taking early versus delaying. So for example if you were going to live to or if you waited till 70 right so may take you until 82 to break even. But then if you live to 92 you're going to make a whole lot more money long term or have a lot more money that's coming in which means you draw less on your assets. 


[00:01:35] So what if you don't feel like you have enough money? So here's mistake number two. People take early Social Security because they don't want to touch their retirement investments. In all honesty it may actually be better to pull from your 401k or IRA instead of taking your retirement invest excuse me to take in Social Security because if you delay so security pass retirement age you're going to get 8 percent per year. And so that may even be a little bit higher before retirement age. So 8 percent per year is a very good return. And that's for life. So that's hard to get from your investments when you're in retirement especially since you want to take a little bit lower risk in those retirement years. Mistake number three is not taking the right strategy. The claiming strategy going to give you the best payoff. So say for example you're married. OK. A lot of times it makes more sense to take the spousal payout now or earlier and then wait until you're 70 or full retirement age to take the primary earners pay out. So these days sometimes it's the man sometimes as a woman. Things have changed in these recent years. But whoever is going to have the higher payout should wait and delay for as long as they can. Up until age 70 so those are three mistakes that I see people making a lot. So hopefully you're not going to do those and if you're thinking about taking that I helped you maybe delay if you want to get some exact numbers because you could actually program all these numbers and calculate them on. OK. What's it going to be if you take early pay out. What's it going to be if you wait. 


[00:03:07] And when is the best point to take that you don't want to just have it be a random decision. And you also don't want to rely on a Social Security office that can be mistake number four the social security administration gets things wrong all the time. So you want to make sure you do your own analysis. We can definitely help you out with so if you want help getting your Social Security situation mapped out. Let me know. Feel free to send me an e-mail Or you can book a call with me at And we'll spend 45 minutes figuring out where you're at and then we'll share it with the next best. We'll be OK. Talk to you soon. Have a great day. 

In this interview with my friend and health coach Jen Seregos, we talk about planning for healthcare in retirement. Please share this with a family member that needs to see this!!!

In this interview with my friend and health coach Jen Seregos, we talk about planning for healthcare before and in retirement. Some of the topics we cover are Health Savings Accounts, saving on taxes, wealth planning, long-term care insurance and the costs of poor health in retirement. Please share this with a family member that needs to see this!!

A Roadmap to Retirement

If life is a journey, retirement is the destination where one hopes to enjoy long-awaited rewards for years of hard work. Yet, like any other life goal, a comfortable retirement doesn't just happen, it requires careful planning. And to date, most Americans are slow to take action.

Projections show that the majority of today's mid-career workforce need either to save more now or work beyond normal retirement age to have enough money for retirement. Looking ahead, it's estimated that a 45-year-old with a current household income of about $80,000 will need to save $1.2 million in financial assets to maintain his or her lifestyle if planning to retire at 65.

These projections--along with predictions of the continued dwindling of Social Security and pension benefits-- indicate that retirement planning has become an absolute necessity.

Consider the following as you map out your own retirement plan.

Determine Your Destination and Itinerary

Planning for your retirement offers all of the excitement of preparing for a great vacation. This is your time to explore dreams and lay plans to make them come true.

Your retirement plan should reflect anticipated lifestyle changes as well as your financial objectives. Keep in mind that you will probably have more time on your hands during retirement than you've ever had in your adult life. Try to develop some interests now that will offer you a sense of fulfillment and usefulness during your retirement years.

Put together a retirement wish list. Where do you want to live?  What do you want to be doing? How often will you entertain?  Travel? What hobbies and other interests do you want to pursue?   Of course, if you have a spouse, you'll need to include his or her activities and plans as well.

What's It Going to Cost?

Now that you have a good idea of what you want your retirement to look like, you need to devise a plan to make it a reality. Determine the amount of yearly income you'll need to maintain your standard of living--usually estimated to be 70% to 80% of your income for the year prior to your retirement. Figure in a yearly inflation rate of approximately 3-4%.

Add to this amount any additional expenses from your wish list--for example, a yearly cruise, or buying a second home.

What's the Best Way to Get There?

Contemplating accumulating the amount necessary for a comfortable retirement stops a lot of people right in their tracks. There's no way around it, you have to save to pave the road for a smooth retirement.

Of course, the sooner you get started the less you have to save on a yearly basis. If you're under age 40, saving at least 10 percent of your yearly income should provide for a comfortable retirement.

If you're like most people and waited until past 40 to get started, you're going to need to put away as much as 15% to 20%.

Like any other savings plan, your retirement savings plan should be diversified among a number of financial vehicles to cushion the impact of economic fluctuations. Remember, your entire lifestyle at retirement will be determined by how well your savings are managed.

There are as many options to choose from as there are financial products, but your choice should be based on the safety of principal, accumulation and tax advantages.

Take advantage of any company-sponsored pension plans or other tax-deferred retirement programs like IRAs (individual retirement accounts). The money held in these tax-deferred retirement plans represent the majority of U.S. retirement assets.

If your employer offers a 401(k) plan, you've got a terrific way to store up dollars tax-free--contribute the maximum. The maximum for 2018 is $18,500. At least make sure to get whatever match your company offers.

Prepare for Detours

Without adequate medical protection, health care costs could completely wipe out your retirement savings. Consider some form of Medigap insurance to cover expenses not covered by Medicare. You may also want to explore health insurance plans that provide coverage for long-term health care.

What to Do When You Get There

If you've planned well, you should be doing all the activities you had hoped for on your wish list--but the journey isn't over yet. At KIS, we recommend creating your ‘retirement calendar’ and getting ALL the things you want to accomplish on a calendar, with dates, and a financial plan to achieve.

You still need to keep an eye on your financial assets. Your post-retirement plan should have less emphasis on accumulation and more focus on growth and income. Again, tax savings is a key factor to consider in choosing post-retirement financial vehicles. Set up yearly reviews with your financial advisor to ensure that your financial plan will continue to generate the income you need to maintain your desired standard of living throughout retirement.

We believe everyone should have a financial advisor to guide them through the retirement planning process. There is too much on the line to get retirement planning wrong. If you haven’t selected an advisor yet, or your advisor will only help you with insurance or investments, here are just a few of the additional services Keep It Simple Financial Planning can offer to help you retire with confidence:

Help you determine your ‘walk away’ date. Having a specific date when you can walk away from your employment brings confidence and peace.

The best strategy to maximize Social Security. Generally, if you expect to live past 78-80 it is better to delay taking Social Security past 62. However, almost half of recipients take payments at 62. This can cost you over 6 figures of lost benefits.

Help you design a properly risk-adjusted portfolio that will provide for you over the long term. Many folks have a large fear of running out of money. Because of that, they put too high of a % of their savings in high fee/low return financial products when they would have been better off with a very conservative portfolio.

Work with you on an ongoing basis to achieve goals and confidently maintain your desired lifestyle. The one thing in life that’s guaranteed is that things will change. With all the crazy things going on these days, staying on top of your financial situation is more important than ever.

Help you create a comprehensive financial plan. Whether you’re 10 years away from retirement, or you’ve already left work full-time, if you don’t have a plan, then you may be planning to fail. Creating a comprehensive financial plan will help you see the gaps in your financial situation so that you can fill them before any problems arise.

If you would like help, guidance or even just to get complete clarity on where you’re currently at financially, I’m here to help. All you have to do is go to, and you will be taken to my calendar page so that you may schedule a time that works best for you.

Talk soon, 


Updating Your Will Can Contribute to a Relaxing Retirement 

Whether you are decades or months away from retirement, it may be prudent to review your will whenever there is a significant change in your family circumstances or finances. To stay current, revisit your will at least once every five years to help ensure your estate tax strategies are on track, and that your assets will be distributed according to your wishes. 

Seek Counsel

Legally, you could draft a will on your own. However, it is recommended that a will be drawn up by a lawyer. The reasons include the inherent complexity of estate planning and that states have different standards and often require specific language for a will to be deemed valid. If you draft your own, have your will reviewed by a lawyer so you can be assured that all statutory requirements are met. 

A married couple may draft a will jointly or separately as individuals. Separate wills may help specify who owns what property. The portion of your estate covered by a will includes tangible assets, such as your home or car, as well as intangible assets, such as savings accounts held in your name. (Property owned jointly with right of survivorship will pass directly to the surviving owner, while other assets, such as life insurance death benefits, will automatically pass to your designated beneficiaries.) 

Be Thorough

Whenever you update your will, the new document should include the date, a statement revoking all previous wills, provisions for trusts (if any), names of guardians and alternates for minor children (if necessary), and specific bequests. 

A specific bequest calls for the transfer of a particular piece of property to a named beneficiary, while a general bequest does not specify from which part of an estate the property is to be taken. Be sure that the updated and signed document also includes your full name, a statement that the document is a will, and the names of the executor and substitute executor. 

Once you have reviewed and updated your will, make copies for yourself and family members, or others who may need the information. Be sure the original is kept in a secure place, such as a bank safe-deposit box or lawyer's office. Also, make sure your family and friends know where the will is located. Once these tasks are completed, you can feel confident, knowing that your wishes will ultimately be fulfilled. 

An Alternate Pension Strategy

Consider this scenario: You are about to retire and are offered a pension of either $3,000 per month during your lifetime or $2,500 per month over the lifetimes of both you and your spouse. If you are married, taking the lower amount may initially seem like the best choice to help ensure continued income for your spouse should you die first.

However, there is another strategy that may allow you to select the higher monthly pension benefit, while still providing income for your surviving spouse. This alternate pension strategy involves coupling the higher monthly pension benefit with a life insurance policy. If you predecease your spouse, the policy’s death benefit will help provide a supplemental source of retirement income to offset the loss of your pension benefit (which will end at your death). This approach offers a number of advantages:

o You and your spouse receive added monthly income from the higher pension benefit. You can use a portion of these funds to pay the premium on the life insurance policy. As long as you keep an adequate life insurance policy in place during retirement, your spouse will have a source of retirement funds if you should die an untimely death.

o A life insurance policy can help provide you and your spouse with a ready source of cash for emergency or other needs. Some life insurance policies accumulate a cash value, in addition to providing a death benefit. These cash values accumulate on a tax-deferred basis. The insured can borrow against the cash value during his or her life, generally at a minimal cost, although an unpaid loan will reduce the death benefit amount. Policy withdrawals are not subject to taxation up to the amount paid into the policy. Policy loans and or withdrawals will be taxable to the extent of gain if the policy is a Modified Endowment Contract (MEC). Access to cash values through borrowing or partial surrenders can reduce the policy’s cash value and benefit, increase the chance the policy will lapse, and may result in a tax penalty.

o Life insurance provides a source of funds for your surviving spouse. Policy cash value or death benefit proceeds can be used in whatever manner your surviving spouse chooses, such as for a source of supplemental income.

However, this type of pension strategy requires disciplined management to achieve the desired results. First, you may not qualify for life insurance, or premiums may be higher than anticipated.

Also, your life insurance policy may not perform as anticipated or may lapse if the premiums are not paid. Second, a lump-sum death benefit must be properly managed to yield the anticipated income. Your surviving spouse must be able to reinvest the death benefit for retirement income with the risk that the investment may not perform as anticipated or may produce less income than required. There is an additional risk that your spouse may outlive the death benefit income or that the death benefit may “over fund” your spouse’s needs.

Third, if you waive the spousal provision, your spouse may lose benefits provided in conjunction with a pension, such as health insurance or cost-of-living adjustments, and may be unable to independently obtain them. Finally, the issuance of a life insurance policy is subject to underwriting and is not guaranteed, whereas with a pension, you can be a smoker or in poor health and still receive benefits. For assistance with your situation, be sure to consult a qualified financial professional.

America’s Changing Vision of Retirement

Retirement planning is a primary reason for long-term saving, and when people think about retirement, finances are often the focus. However, it is important to also look at the non-financial aspects of transitioning from the world of work to the world of leisure. Specifically, lifestyle changes and self-esteem issues associated with the loss of your professional identity may create difficulties. As you’re preparing strategies for your future well-being, give some thought to the kind of retirement you envision for yourself. 

Consider the following questions: What do you find fulfilling? What gets you out of bed in the morning? What are your strengths and weaknesses? Do you work well as part of a team, or do you thrive on solitude? Do you have a lot of physical energy, or do you prefer a more sedentary pace? Do you have a hobby you always wanted more time to pursue? Don’t be afraid to think outside the box. This informal self-inventory may hold the key to your vision for retirement.

Challenging Conventions

The concept of retirement in America is changing. Traditionally, retirement has been idealized as a leisurely phase of life, a reward for the many years of working and raising children. This concept is based on the assumptions that people will enjoy themselves in retirement, and that work, as we commonly know it, is the province of younger generations. However, is this concept realistic for those of us still years away from retirement, and if it is, is it what we really want? Rethinking retirement means reexamining conventional ideals to determine whether they apply to today’s reality and what we envision for ourselves. 

Intrinsic to the conventional notion of retirement are significant assumptions about work, money, and retirement standards of living. For previous generations, work was thought to be something you did for about 45 years (until roughly age 65), and then, suddenly, you never had to (or wanted to) work again. A company pension, Social Security, and some savings generally provided enough income for funding a comfortable lifestyle in retirement, including leisure, travel, and recreation.

If that’s what you want for your retirement, there is nothing wrong with pursuing that goal. However, for some, work is too much a part of their sense of “self” to be suddenly cast aside. Moreover, with so much of their daily lives centered around work, some people have difficulty imagining their life without that structure.

Furthermore, changes in employer-sponsored retirement plans (i.e., the decline of defined benefit plans and the rise of defined contribution plans) have altered our expectations about retirement funding. The responsibility has shifted from employer to employee, which means that an individual’s long-term saving for retirement must now be factored in with other savings objectives, like purchasing a house or funding a college education for children, and ongoing financial responsibilities. 

Finally, the traditional concept of retirement is based on the belief that one’s standard of living will be sustainable in retirement, and it may be for some. For others, however, it may be more practical to ask what standard of living can be maintained based on projected resources. This type of approach might help you see what is realistic (and what may be unrealistic) in your situation, and it may help you set more realistic retirement priorities. For some people, downsizing their standard of living in retirement may be acceptable. For others, however, maintaining the same standard of living during retirement as during their working years may be the goal.

Consider Phased Retirement  

As you consider the traditional concept of retirement, you may discover that it doesn’t meet your needs. Phased retirement is a term coined to describe a range of employment arrangements that allow an employee who is approaching retirement to continue working, usually with a reduced workload, in transition from full-time work to full-time retirement. Many individuals may want to continue some form of work, such as consulting, job-sharing, mentoring, or providing back-up management. Mentoring, in particular, enables an individual to transfer a lifetime of learning and experience to a friend, relative, or younger colleague. Aside from money earned from continued work, phased retirement may help you maintain a feeling of involvement in the world and may provide a sense of purpose. 

For some, phased retirement may be an option. For others, it may be a necessity. For still others, phased retirement may provide structure to daily life and the opportunity to explore other activities while maintaining a meaningful role within an organization, the community, or society in general. What’s most important, however, is to define your vision of retirement in a way that makes sense to you and is realistic considering your goals and resources.