Some Critical Retirement Investment Mistakes That You Can Avoid

Apr 26, 2016 | Blog, Retirement

Before hanging up your worker hat for good, it’s critical that you’ve saved and invested correctly. After all, your savings and investments become your paycheck in retirement. However, the plight of retirees falling short of their retirement goals has been well-covered in the press.

Starting to save and invest is a good starting point, but that’s often not enough – there are some investment mistakes that retirees need to avoid to have a successful and comfortable retirement:

Ignoring longevity

The average life expectancy of Americans has hit a record high, and is expected to keep rising. While this is great news overall, it can become a problem in retirement. Many fall short of their retirement goals because they only plan for a few years of retirement, while their golden years actually end up lasting for decades.

You can avoid this investment mistake by accounting for longevity in your investment portfolio. For instance, a 65-year-old woman has a 53% chance of living to age 85 and a 32% chance of living to age 90. Although each situation is unique, rather than accounting for a time-horizon of a few years, most women should have an investment plan that will allow for decades of income.

Not taking advantage of tax efficiency

It seems counterintuitive, but what you earn isn’t what’s important for retirement: it’s what you keep. Your after-tax dollars are what will keep you sustained in retirement, so it’s a major investment mistake to overlook tax-efficiency. Thankfully, there is an assortment of retirement investment vehicles that offer tax advantages.

Roth IRA, for example, allows your wealth to grow tax-free. Unlike many other investments, your initial contributions are taxed, and then any growth or earnings are free from federal taxes. This is one of many smart options that can harness the combined of power of tax-free growth with compounding.

Want to learn about more investment mistakes to avoid in retirement? 

At LexION Capital, we’re fiduciary advisors who will always act in your best interests – retirement or otherwise. We will work one-on-one with you to understand your specific needs and we’ll work with you to help you reach your retirement goals. Are you interested in learning more about how LexION Capital can help you create and keep your wealth? Don’t hesitate to reach out to us today.

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