Monday, October 4, 2010

Costly retirement mistakes. Giving money to your adult kids is one.

Fidelity Investments, among the largest money/investment management firms in the world, offers regular articles on its Web site that are important to those of us near or at retirement. Today's post, called "Four Costly Retirement Mistakes" provides analysis based on research of mistakes many of us make with retirement planning. For me these mistakes ring true, especially for women. What are they? Here's what Fidelity says:

Mistake No. 1 We underestimated our health care costs in retirement. Insurance coverage beyond Medicare, plus out-of-pocket costs can add up to an estimated $450,000 for the average 65-year-old woman over her life time, which can extend into her 90s. A retirement budget needs to account for that expense.
Mistake No. 2. Giving too much to adult children. Women are especially guilty of this because by nature we want our children to be happy. But will they be happy when we show up at their doorsteps at age 75, broke without a job? It's up to us to take care of our own long-term future before we try to help the kids buy a car.
Mistake No. 3. Being too conservative with our retirement savings investments. Fidelity recommends an online planning tool at www.smartmoney.com that can help us decide how much we need in savings to retire. Bottom line: The only way to get there is to be invested in equities either through good equity mutual funds or individual growth and income stocks. Studies show that women in particular are too conservative with their investments and stick with bad advice or weak strategies much too long. We need to take charge, take some risk and meet our goals, married or unmarried.
Mistake No. 4. Defining what you will do in retirement. Is travel a big goal? If you don't have a plan, you may end up shopping too much out of boredom, Fidelity says. Make sure you know how you'll use your "free" time and how much that new hobby might cost. For the article, click here.

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