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Six Unexpected Threats to Your Retirement Plan

Six Unexpected Threats to Your Retirement Plan

March 14, 2018

When you think of things that could devastate your retirement savings, you probably imagine a personal disaster, a natural catastrophe, or a recession. While these events could significantly impact your portfolio, they are largely out of your control. The real threats to your retirement plan are the little-known behaviors that could affect the retirement you have diligently worked for. Here are some ways you could run into retirement trouble:

1. Misjudging Your Retirement Income Needs

You may be proud of yourself for amassing a nest egg. But even if you have half a million or a million dollars saved, it may not be enough. If you plan to retire in your early or mid-sixties, your retirement savings will need to carry you through 30 years or more. Not to mention, you will encounter additional expenses along the way, such as healthcare costs, home maintenance, and taxes.

One way to help avoid financial anxiety in retirement is to set up contingency funds to cover the unexpected and work with your financial professional to map out various retirement scenarios to see what your savings can handle. Then, find ways to maximize your savings to give yourself a buffer.

2. Putting All Your Eggs In One Basket

Diversification is one of the most talked about investment strategies for a reason: it helps manage the risk of your investments during market volatility. While you can’t eliminate risk from your portfolio entirely, you can cushion the blow if things go south. If you put too much of your money into one stock or even one sector of the economy, you put yourself in danger of losing your retirement savings.

Working with a professional, evaluate your portfolio’s current allocation to determine if it needs to be rebalanced or diversified. Consider mixing up your stocks with global exposure and alternative investments. Look at the big picture of all your accounts, including employer-sponsored ones, and ensure you are diversified across the board.

3. Ignoring Your Long-Term Strategy

Have you ever taken the time to create an investment philosophy based on your goals, personality, and risk level? If you have, do you stay true to your strategy or do you let your emotions take over when the markets go wild? The reality is that markets fluctuate every day. If you try to beat the market and get swayed by the daily headlines, not only will you give yourself unnecessary stress, but acting on your emotions could damage your savings.

A 2015 Dalbar study shows how playing the market leads to under-performance. Buying high and selling low due to panic lowers your overall return and may jeopardize your nest egg. What should you focus on instead? Maintaining a long-term perspective and a disciplined approach and refusing to ride the emotional roller coaster.

4. Forgetting To Take Required Minimum Distributions

If you are 70½, you must begin taking required minimum distributions (RMDs) from your traditional IRA and employer-sponsored retirement accounts. It doesn’t matter if you need the money when you reach this age, you must still adhere to the RMD rules. What happens if you don’t follow through? The IRS will charge you an excess accumulation penalty of 50%! That can significantly harm your retirement savings amount.

As an example, if you are required to withdraw $5,000 and don’t, you will owe a whopping $2,500. That’s an unnecessary and avoidable loss. Depending on how much you have in an emergency fund, you may even be forced to use your retirement savings to pay the penalty, further damaging your future financials.

5. Health-care

“When you have your health, your health care costs in retirement will be high. And when you do not have your health care, those costs will be even higher.” – Augusten Burroughs.

Unfortunately, health care is the number one thing we see derail some of the best retirement plans. According to HealthView Services, a software company that projects healthcare costs, the average 65-year old couple could pay $490,000 in total health related costs throughout retirement. The bottom line is that Medicare doesn’t cover expenses such as dental, vision, prescription, hearing aids and related exams, and/or long-term care expenses for chronic conditions or disabilities.

Our recommendation is if you are nearing 65 or older, or have parents that age, spend some time with a health insurance professional to review your Medicare a, b, c, and d’s. We have partnered with Buursma Agency to provide this resource. Please contact Kurt Buursma or Jim Boerkoel of Buursma Agency at or 616.392.2105.

Last, long term care policies have changed drastically over the years and there are some hybrid policies that we feel are worth the research. As part of your financial plan, this is an area that we will address and research.

6. Taking Advice From The Wrong Sources

When you don’t partner with a trusted financial professional, you put your money in a dangerous spot. At every point in your life, you need to work with an advisor who will help you create a personalized retirement roadmap and work through various retirement scenarios, not just focus on performance.

An advisor can provide you with guidance and advice that you can’t put a price on. At DeLong & Brower, P.C., we want to help you find financial organization and independence and live life well. We work with you to establish a retirement strategy that is custom designed for your needs. Let us help you retire when you want and with a sound plan. Call us today at 616-394-0500 or email for a no-obligation consultation.

About Joel

Joel Johnson, AIF® is an Investment Advisor Representative with DeLong & Brower, P. C., a Holland, Michigan accounting, retirement consulting, insurance, and financial services firm. He specializes in providing comprehensive wealth management and retirement plan consulting for individuals, families, retirees, and business owners. Along with more than 15 years of industry experience, Joel is an Accredited Investment Fiduciary®, a Chartered Federal Employee Benefit Consultant, and a Certified Business Adviser/Consultant through Crown Business and Crown Financial Ministry. To learn more, visit