Date: August 24, 2020

2 Retirement Planning Mistakes That Can Have Major Long-Term Effects

We all make mistakes, but when it comes to retirement planning, there are 2 common oversights that, if not addressed early, can have major long-term effects on your future.

At Paradigm Financial Advisors, we know how devastating mistakes can be for families, especially when retirement is nearing and there’s less time to make up any big losses. We also know that many times, the mistakes made could have been avoided.

Mistake #1: Putting Off Your Retirement Planning Until ‘Later’

There are many reasons people procrastinate on planning for the future, and none of them are good. Some common excuses are:

  • “I don’t have the time to do it right.” In reality, retirement planning doesn’t have to be a major undertaking and often times requires less time than you think.
  • “I don’t know where to start.” Step 1: Contact a financial advisor.
  • “I’m young, so it’s not necessary yet.” Actually, the earlier you start the better! Compound interest and time are two major assets on your side that should not be overlooked.

The problem with putting your retirement planning off until later is, “later” sometimes never comes. Or it comes when you’re just a few years from wanting to retire and you can’t afford to.

Here’s a fact that may surprise you:

After an initial meeting with a trusted financial advisor, retirement planning typically takes five hours per year. Not per month or per week. Can you spare an extra five hours per year to secure your future? When you consider what’s at stake, that’s not a lot of time at all.

These five hours break down like this:

  • 1 hour every six months talking with your financial advisor, who should help keep you on track and avoid expensive mistakes
  • 1 hour over 3 weekends periodically to check in and make sure you are sticking to the plan and still on track for your goals

Doesn’t sound too bad, does it?

Whether you handle your financial planning yourself or get help from a financial advisor, the sooner you start, the better prepared you will be to reach your goals.

It’s never too early to start planning for your future. Contact Paradigm Financial Advisors and get the conversation started.


Mistake #2: Working With the Wrong Financial Advisor

Unfortunately, many people assume that all financial advisors are the same. But they are not. Anyone can use the title of “financial advisor.” So here are some other important characteristics to look for:

Fiduciary: There are currently no limits or regulations on who can call themselves a “financial advisor.” The person you’re talking with might be an experienced, credentialed, independent expert. Or they might simply be a product representative, trained primarily to sell you certain products. How can you tell the difference? Ask if they are willing to act as your legal fiduciary, and get the answer in writing. Fiduciaries are legally required to put your interests first.

Fee-Only: Commissioned “advisors” are paid to sell you products. While they might give you quality financial advice, they only get paid when they sell products, so there is a significant conflict of interest. To avoid those conflicts, look for a fee-only financial advisor.

Experience: In addition to hiring a fiduciary, be sure to find out a prospective advisor’s qualifications, experience and credentials before engaging (or continuing to work with) anyone. You can’t afford to trust your money to someone who doesn’t know how to protect it and manage it properly.

Expertise: Along with investing experience, you’ll benefit from an advisor who specializes in your specific needs. For example, does the advisor work with business owners, understand tax strategies or work on estate planning? This is where a recommendation can go bad. While a financial advisor may have worked for a family member, friend or colleague, he or she may have other concerns and issues that you don’t.

Paradigm Financial Advisors is a fiduciary financial advisory firm with 100 combined years of experience. To learn more about our specialties and the services we provide, click here.

Many people hire financial advisors without being aware of these distinctions. This can be dangerous!

Before you choose a financial advisor to work with, ask questions. If you are already working with a financial advisor, ask about the above characteristics at your next meeting. A quality financial advisor should appreciate and understand your concern. Any advisor who is not willing to discuss these issues may be providing you with a valuable red flag.

How to Get Started

It’s never too soon to start planning for your future. In fact, it’s vital that you act now and not later. If you don’t have a financial advisor yet, or if you’re not sure you are working with a financial advisor who is right for you, contact Paradigm Financial Advisors and get the conversation started.

At Paradigm Financial Advisors, we know you need to do your research to find the right financial advisor. That’s why we offer a complimentary financial checkup, so you can see if we’re a fit for you. There’s no pressure and no obligation. If it’s not a fit, you’ll walk away with new insight into your financial situation and get some ideas on how to best achieve your goals.

The purpose of the checkup is to take a look at your entire financial picture and identify areas of concern or vulnerability. We’ll look at your income, pension, Social Security, investments, taxes and other parts of your financial situation. Then we’ll give you some tips on how you can improve your situation. At the same time, you can find out if we can be of help to you.

Paradigm Financial Advisors was one of the first fiduciary firms serving business owners, professionals and families in the greater St. Louis area. We bring financial planning, investment management, estate planning and tax planning together to help you and your family achieve your financial goals.

Once you have a financial plan, it doesn’t mean your work is done. Remember the annual reviews and occasional check-ins to review your plan and make sure you’re still on track with your goals.

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Jim Reding

Jim is CEO and Managing Member of Paradigm Financial Advisors LLC.