are you making one of the top three mistakes that we see people consistently
making in the years leading up to retirement hi I'm Troy Sharpe CEO of Oak
harvest Financial Group I'm a certified financial planner professional host of
the retirement income show an author of the forthcoming book core four I want to
thank you for trusting us with your money the first mistake that we see
people consistently making is not understanding the investments inside
their 401 K and making bad decisions the problem is that you only have two tools
you have a stock mutual fund and a bond mutual fund now the bond mutual funds
have been one of the worst performing and most inefficient tools over the past
five year period so if we look at the largest bond fund out there this is the
AGG almost 58 billion dollars in assets are invested in this and over the past
two years it's went down in value over the past five years it's went down in
value one of the biggest mistakes that we see people making is they want to be
conservative and protect their retirement money but the only option you
have to be conservative or more conservative inside your 401k tends to
be a bond mutual fund like this one when we look at target date funds so many of
you have target date funds inside your retirement account and these are you'll
see it'll say target date fund 2020 2030 or 2040 conventional wisdom says the
closer we get to retirement if we expect to retire in 2020 we should be in this
fund but you see this fund has 47 percent of the money allocated to an
investment that hasn't made any money over the past few years as you get down
to the 2030 fund you're still at 30% bonds in the 2040 fund is 16% bonds so
one of the big mistakes we see are is people are being too conservative inside
their 401 K and the difference between being conservative and having the right
allocation could be the difference of living on a hundred thousand dollars a
year in retirement or maybe seventy thousand a year
okay the second big mistake that we consistently see people making is not
contributing enough money to the tax-free portion of the 401 K so your
401 K actually has two portions it has the tax deductible
and tax-deferred side but it also has a tax-free side so what we want to do
leading up to retirement is we want to start to create what we call positional
flexibility here where we have your 401k and when money comes out of that you
have to pay income taxes but if income taxes are higher in the future that
means you'd have less retirement income you want to start to position to have
this tax-free bucket so in years where taxes may be higher we can take from
this bucket in years where taxes are lower we can take from this bucket but
by building positional flexibility with respect to the tax impact of your future
income decisions you're creating a much better opportunity for success in the
long run when it comes to retirement planning and then the third mistake that
we see is people simply going it alone having a guide to help you understand
the nuances and the subtleties that come along with making these decisions to
prepare for prepare your money for your future is extremely important if we want
to get in shape we hire a trainer we have a guide to help us workout and eat
healthy going through school you know we have teachers we have guides that help
progress us through the education system and become more educated adults the
biggest challenges that we face today in retirement is that we're living much
longer so having a guide to help you understand the nuances the subtleties
that go into investment planning your 401k the tax impact of different
decisions you know the decisions that you make today are going to determine if
you live on a certain level of income or less income in retirement it takes a
professional so I encourage you to find someone who works with retirement and
understands how to help you make these decisions thanks for watching we're all
about helping you make better decisions with your money so hit the like button
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