IRA & Retirement Planning Mistakes: Don't Fall Victim To Bad IRA And Retirement Plan Advice

By Denise N. Bates


Clint Eastwood playing "Dirty Harry" warns, "A man's got to know his limitations." This advice is particularly appropriate for financial planners and advisors who are giving advice beyond their expertise. Though I am biased because I have over 27 years of technical expertise in the IRA and retirement plan area, the lack of knowledge in this area can cost clients hundreds of thousands or even millions of dollars.
[Retirement Planners]


There are a few things to consider when you are planning for old age. You have to reach a decision with regard to the income you will need in order to live a comfortable life as a retiree. You should take into account the medical expenses and vacations that you will have while reducing costs such as your child's education and rental fees if you own a house at the same time. You should also determine the amount you need to regularly save at this very moment in order to reach your goal. In case you do not have enough yet, you can start small with what you have at the moment. It will also benefit you to select the plan that will help you achieve your requirements. Also, it is advisable for you to invest a certain amount of money on a monthly basis in order to enjoy a healthy life as a retiree. Lastly, start saving money now. This will be one of the best suggestions that you will ever get in your life.

For example one advisor had both a father and son as clients. The father died leaving his IRA to his son. The advisor promptly transferred the IRA from the father's name to the son's name? Sounds o.k. to you? But it isn't o.k. If you transfer an inherited IRA to a non-spouse beneficiary without a special designation like "inherited IRA of Dad for the benefit of Son" you cause immediate income tax acceleration for the IRA beneficiary. So rather than having the ability to stretch an IRA or defer taxes for forty years, the son had to pay the taxes on the entire IRA distribution the year after his father died. Using reasonable assumptions, this mistake cost the son one million dollars over his lifetime.

Both Spouses Need to be Involved.The life expectancy for the average American man is around 76 years while the life expectancy for average American woman is around 81 years. That means the average woman can expect to be on her own for four to five years in retirement. Medical experts estimate that 50% of Americans over age 85 suffer from conditions like Alzheimer's disease that leave them unable to manage financial matters.This is why both spouses need to be active in the retirement planning process.There is a strong possibility that one of you will not be able to manage the retirement investments at some point. There is also a possibility that both of you might not be able to handle the finances at some point.

Not long ago, I was talking to a registered investment advisor or what is known as a financial planner. No, it wasn't mine rather I met the individual in passing at the local Starbucks. In talking about all the ongoing educational requirements and all the new regulations in that financial sector I realized how difficult it was for the practitioners to deal with their clientele.

The basic information for all your bank, brokerage, retirement and other financial and investment accounts. This includes the name of the institution, the institution's contact information, the account numbers, passwords and user names for online account access and the addresses of any websites used to access or monitor the accounts.The location of all paperwork related to retirement planning including wills, legal documents, insurance policies, annuity policies, prospectuses, checkbooks, etc.How to access all of the investment and bank accounts. If you have an IRA, 401k, money market account, brokerage account or CD both spouses should know how to access it and withdraw money. If you have a life insurance policy with cash value both spouses should know how to access it and borrow money.

The basic information about all the insurance policies and annuities you have. Both spouses should know the names of the insurance companies they hold policies with and know how to contact them. You should have a list of all the policies and numbers written down.If you use any sort of financial advisor or retirement planner spouses should meet with that individual. Both of you should know how to get in touch with that person and know what financial decisions he or she is making.Legal Considerations.It is not just enough to know where all of the money and paperwork is.

Of course, the financial advisor can indeed advise against it, but there is no way they can stop the individual from making a stupid decision or investing in a bad financial vehicle. It happens all the time. Worse, often these folks get themselves into trouble, lose a huge amount of their money, and then they call a financial advisor to help them fix everything. Unfortunately, often it becomes too late, and they just don't have enough money in their nest egg to retire on schedule or live comfortably in that retirement.If they only have a little bit of money left over after a bad financial hit, often the financial consultant doesn't even want to deal with them because the cost of compliance in taking on a new client is just too great, and there's not enough commission or fees to make it worth their while. Be sure to be honest with your strategic retirement planning expert. Indeed I hope you will please consider all this and think on.




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