Among the Cypress Senior Center’s August workshops, financial advisor Mike DePaul spoke to a group of about 20 attendees about the most common blunders one makes during retirement or end of work years.
The seminar was part of the center’s monthly offerings on various issues affecting today’s seniors. DePaul, a financial advisor with a private firm was there as part of the non-profit group, Society for Financial Awareness, for which he volunteers his time.
DePaul said that his initial reason for getting involved in the group was because his own grandparents had fallen victim to some bad financial advice.
He admitted that had he taken a few minutes to look into their financial plan, much of the problems could have been avoided. Now he hopes to spare other people from similar mistakes which he finds to be more common than realized.
“We need to have some sort of financial strategy in place,” DePaul told the group.
The most common blunders, according to DePaul:
- Not having a financial strategy
- Overconfidence in investing skill
- “Saving” money in the bank
- Believing all bonds are safe
- Lack of Tax Planning
- Outdated Estate Plan
- Procrastination
DePaul said the biggest demon of the list would be procrastination, because it enhances all the other mistakes, particularly, the Estate Planning. DePaul said that if you have an Estate Plan that was done last year, it is out of date.
While bonds have a reputation for being safe, DePaul warns that some have liquidity issues and that individual bonds can falter if the company were to file for bankruptcy. Even municipal bonds should not be given unquestioned faith.
Two other key points for seniors would be to miscalculate their required minimum distribution from retirement plans. Failure to withdraw at least the required minimum could result in a penalty of up to 50 percent of the deficiency, according to DePaul. Also, without proper planning, up to 85 percent of a person’s Social Security income could be subject to taxes.
Other key points would be getting a handle on cash flow. Knowing how much is coming in and how much is going out is vital. It cannot be a guess, DePaul warns. Debt should be paid down as it is killing our country, he added. And retirees should look into a setting up a living trust. Probate is the secret word for lawyers fees for the state, DePaul said.
For more about the Society for Financial Awareness, visit www.sofausa.org.