One of the primary reasons that people come to us as financial advisers is to find out if, and when, they can retire. And you know something? Often times, just the very thought of retirement can cause worry for people… and this can leave them overwhelmed and under-prepared. I’ve seen people both old and young making different mistakes when it comes to their retirement planning, but the biggest mistake I often come across is this: they’re starting their retirement planning too late.
Many people say that you should start investing early, and saving early, because you don’t want to miss out on the benefits of compounding and dollar-cost averaging. And yes – that much is true. But what about starting your retirement planning early? That’s something I don’t hear people talk about nearly enough.
Someone in their late 60s, who’s just retired or is about to retire, does have options available to them – but often times not nearly as many options as they might have had if they’d come to see us just a few years earlier. Maybe they’re already taking their Social Security; maybe they’ve got most of their money in tax-deferred accounts, and they’re staring large RMDs right in the face; maybe they’ve already moved their money out of their company’s 401(k) plan. In some cases, they could be making exactly the wrong move. If they’d come to see us earlier, maybe we would have recommended postponing taking their Social Security, or doing some Roth conversions to help avoid the sting of those RMDs, or keeping some of their money in the 401(k).
Of course, these situations are hypothetical, and everyone’s case is different. But if you make the mistake of waiting too long to plan for retirement, it might be too late to do the proper tax planning, too late to make changes to your pension, and too late to make a plan for Social Security. And yes – waiting just a couple of years too long can make a big difference in your planning strategy.
So the bottom line is this – waiting too long to start could do some real harm to your retirement plan. Give us a call and talk with one of our Lucia Capital Group advisors about your own individual situation, and let’s just see where you stand. We’re here to help.