What does THE worst retirement plan I’ve ever seen look like? What should you avoid when you craft your retirement plan? Once you make certain decisions—there’s no going back. You need to understand the choices you’re making and how it will impact your future. 

In this episode of Retirement Made Easy, I share a story about the worst retirement plan I’ve ever seen. I explain what makes it so cringe-worthy—including the SIX mistakes that were made—and what you should do instead. 

You’ll want to hear this episode if you want to avoid costly mistakes:

• [1:52] Mistake #1: Excluding your spouse from planning
• [5:16] Mistake #2: Single-life annuity pension option
• [8:05] Mistake #3: Making the wrong social security election(s)
• [9:43] Mistake #4: Relying on a possible inheritance 
• [13:16] Mistake #5: Withdrawing too much from your retirement plan
• [16:37] Mistake #6: Choosing the wrong beneficiary

Mistake #1: Leaving your spouse out of retirement planning

In this story, we’ll change the man’s name to George. George is 72 years old and his wife is 8 years younger (64). She wasn’t present at the meeting with me, and I asked why. George said “My wife doesn’t need to know anything about retirement. She trusts me 100%.” That’s the #1 problem. It’s a HUGE mistake: both spouses need to know the ins and outs of what’s going on in case something happens to the other person. Plan your retirement with your spouse.

Mistake #2: Choosing a single-life annuity option for your pension

When George told me he was collecting a monthly pension, I asked: Is it a 100% survivorship pension? Is it a 50% survivorship? Turns out, he chose the single-life annuity option, which means he receives $2,500 a month for the rest of his life—but upon his death his wife gets nothing. To make matters worse, George doesn't have life insurance either. Why is that a problem? Listen to find out!

Mistake #3: Taking social security benefits too early

George claimed his social security benefit immediately at 62. He then encouraged his wife to start taking her benefits at age 62. Doing so means they claimed the lowest benefit possible simply to get it right away. By taking his benefit early, George also lowered the survivor benefit. Why is that important? If there is a big age gap between spouses, you want to make sure the younger spouse is provided for. If George had delayed taking his benefits, it would’ve provided his wife a higher survivor benefit. Instead, he greatly reduced her potential survivor benefit. 

Mistake #4: Relying on an inheritance that may never come

Many of George’s poor choices all hinge on the assumption that his wife’s wealthy mother would leave her an inheritance. But you cannot count on an inheritance to make your retirement plan successful. I’ve seen countless examples of people who thought they were going to get a large inheritance—and ended up getting very little. 

George’s mother-in-law is 92. She could eat through any inheritance money paying for long-term care. What if she changes her will and gives her wealth to charity? What if he dies before his mother-in-law? What if he needed long-term care and his wife has nothing? Listen to hear what he should’ve had in place for protection.

Mistake #5: Overspending your retirement money

George and his wife were withdrawing north of 9% per year from their retirement accounts. They should only be withdrawing 4–5% per year to live on. They were withdrawing double what they should be. Why does it matter? They run the risk of running out of money. Even worse, most of the money was going towards country club memberships. He was 100% over-spending—all because he was relying on an inheritance for his wife. But when your money is gone, it’s gone. 

Mistake #6: The wrong beneficiary

While I was looking through George’s paperwork, I noticed something odd and asked: “I thought you said your wife’s name is ‘Nancy’—why is someone else's name listed as the primary beneficiary on these statements?” Who was the beneficiary? His ex-wife. If something happened to him, ALL of his retirement accounts would go to his ex-wife.

There’s a lot to be learned from the mistakes that George made when planning for their retirement. Listen to the whole episode for the full discussion—and what you need to do differently. 

Resources & People Mentioned

• 2020 Tax Planning Guide
• Secret Sauce to Retirement

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
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