3 reasons people retire broke
A retirement expert, Wayne Rothe, gives the following three reasons people retire broke:
We don’t invest:
The number one reason for our failure to achieve our financial goals is our refusal to invest. Fear is the biggest reason we don’t invest; we’re afraid of losing money. You have to understand what risk is – and what it’s not. It’s not market ups and downs. Assuming that you have the time to wait it out, market volatility can be your friend. If there is money that you won’t need for years, then market drops are opportunities to buy into a rising tide at reduced prices. Investment markets and financial planning are complex. Most of us don’t understand them so we often own low-yield instruments such as GICs (guaranteed investment certificates), where we’re pretty much guaranteed to lose purchasing power year after year.
We bail:
You’ve invested – but now what? Don’t expect a smooth ride; investment markets don’t work that way. A friend of mine was persuaded to buy shares in a highrisk sector mutual fund and over a few months his investment tumbled and he sold. Many people would benefit from a good investment advisor to help them invest appropriately, ignore the noise and keep focused on the long term. Markets go up far more often than they go down, and the ups are bigger than the downs. Corrections of 20 per cent or more occur roughly every three years. If you can stick it out through the bad times the reward comes when the inevitable recoveries occur.
Bad decisions:
“You and I are always one stupid decision away from wrecking a retirement dream,” Chris Hogan writes. “One bad risk on a single stock, one afternoon of day trading, one impulsive hour in the showroom of a luxury car dealership — all it takes is one moment of letting your guard down to undo years of hard work. Always measure the long-term impact of these kinds of decisions, and keep your guard up against stupid!” Note that over the course of a few decades several terrible decisions can compound to scuttle a retirement dream.
Retirement Quote
“If you want to win at the retirement game, you’ve got to take control of the behaviours that might keep you from investing.” – Chris Hogan