Many people make mistakes with their retirement finances because they pay too much attention to the financial media, especially cable television shows. The goal of most financial media isn’t to educate. It’s to attract and retain viewers, which they generally do by stimulating emotions, especially fear and excitement, advises Bob Carlson, editor of Retirement Watch.
That’s why many people look for the next big investment, sometimes called ten-baggers because the investor wants to earn 10 times the original investment or more. Doing the opposite often is the key to managing retirement finances successfully.
Good financial management requires dispassionate thinking and decision-making. When managing retirement finances, boring is good. Instead of trying to find the next Nvidia Corp. (NVDA), focus on the nuts and bolts of retirement finance.
As the football coaches say, work on basic blocking and tackling. It would be great to find a big investment early and ride it to huge gains. But a surer and less risky way to increase financial independence and security is to make better decisions about lower-profile issues.
Take Social Security at the right time. Choose Medicare coverage to minimize out-of-pocket spending. Minimize income taxes. Manage your IRA and distributions from it to maximize after-tax cash flow. Be sure your risk exposures are backed by the right amount of insurance. Know how you’ll pay for any long-term care you might need. Of course, be sure your estate plan is complete and up-to-date, including an advance medical directive and financial power of attorney.
You don’t see cable television stations inviting many people to talk about these issues on their shows. But together they’ll deliver big benefits to your bottom line with little or no risk. Be more boring, and you’ll be more secure.
