Mistakes to Avoid, Especially During Retirement

Today we're going to be discussing mistakes to avoid, especially during retirement. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting. If you'd like more info about what you hear during the show today, be sure to give us a call at 586-226-2100 or visit us online at summitfc.net. And if you go to the website, be sure to check out the podcast page. If you'd like, you can listen to past episodes or just subscribe to us on Apple Podcasts, Spotify, or Amazon Music. So for plenty of baby boomers and even some Gen Xers at this point, the work week may be ending soon. Maybe they're already retired in a lot of cases, but some questions and some potential mistakes may still remain. Things like, you know, how much money are you going to really need when you retire? Are your 401(k)s, IRAs and maybe even a pension lump sum well positioned right now? When exactly should you turn on Social Security? So today we're going to be discussing some mistakes to avoid, especially during retirement. But before we jump into this hot topic, let me introduce my co-host, Tony Shore. Tony, we've got Halloween coming up. I see that you are an excellent dresser today. We were just discussing before the show one of our favorite movies of all time, Ghostbusters. So any big plans this weekend? Yeah.

Yeah, I am wearing a Ghostbusters t-shirt and a sport jacket over it. You know, it is a financial show after all. But yes, we were talking about Ghostbusters and it is Halloween weekend. So hopefully the kiddos are out there doing some ghostbusting this weekend. I love it. Favorite time of the year. One of them. One of them anyway. One of my favorite times of the year to see the kids dressed up. But thanks for having me on the show and allowing me to wear my Ghostbusters t-shirt. Grew up watching that. We were talking as a kid. I've seen that movie a couple hundred times myself over the years, so that's always fun. But I'm doing good. How about you? What are you doing? Again, I asked you this, I think, last week and maybe even the week before, but what are you doing for, did you dress up for Halloween this year?

I don't have a great costume figured out. Our weekend is jam-packed, so my daughter is in eighth grade, and her volleyball team qualified for the state championship tournament, and they're actually ranked as the number two seed in the state. So we're going to have a huge tournament this weekend, so we're sort of laser-focused on that. But We'll look to have hopefully some celebratory cocktails after these young girls hopefully win a volleyball tournament. Hopefully. They played the first place team one time earlier in the season in a tournament, and they split. They both won one game. Oh, wow. We're going to see how the cookie crumbles here Saturday evening. The tournament will finally be over. And what are their ages again? Uh, pretty much everyone's 13 or 14 years old on the team. So my daughter's 13 and, uh, you know, she, she may continue playing in high school, but as far as middle school is concerned, she had her, uh, or she will have her last practice tonight. And then, uh, so we were, we were teary eyed leading up to this because my, uh, my wife just sent me a video of the school had a half day today and they had the entire school lineup in the hallways and the girls got to run through and get high fives and, uh, Oh, that's awesome. From from every single student.

Well, let's hope they win that one.

That's great. That's what we're hoping. It's been you know, she's been playing for many, many years.

Wild ride. Well, it's a it's a proud moment for a parent and so involved, but it keeps you busy. That's for sure. Crazy running the kids to the the sporting events and the extracurricular activities. I love it. It's all part of the fun, right? It is.

Yeah. My friends are trying to get us to do something Saturday night. I was like, I don't think I might have enough energy after this tournament. You get you get so emotionally tied to every single point when it's a close match. And they usually are, you know, at this level.

So where's the tournament at? Um, it's in Rochester, Michigan.

So it was used to, it was supposed to be at one point, uh, sort of on the other side of the state, but for whatever reason, they moved it over here, which is nice. So that was nice.

Yeah.

It's like a hour drive or a half an hour drive now rather than an hour, two hour drive.

So it's funny how there's a Rochester, Michigan and Minnesota, Rochester, Minnesota, Rochester, New York.

It's, it's like the most basic name in the United States. Okay. Maybe I guess every state has one.

So what are we talking about today? I mean, obviously, there are mistakes that people need to avoid, especially during retirement, but also in planning for retirement. And that's what we're looking at, right?

Yeah. Yeah. And before we jump into the mistakes, I just wanted to let all of our listeners and viewers know that we would be absolutely happy to put together a retirement income analysis for you. We'll figure out when you should turn on Social Security. We'll tell you how much you can spend once you're retired on vacations and gifting and a new car. You know, can you afford that? Can you afford that Corvette? You know, anything that might be on your bucket list. We can look it all over and figure out exactly what you can afford based upon some probabilities. So a lot of do-it-yourselfers, they know they have enough money, but they're not sure how much they can spend on all this stuff. And we can help whittle it down and then obviously figure out when you can retire. Do you need a part-time job? So give us a call at 586-226-2100 or go to our website at summitfc.net. We would love to put together a plan for you and we will not charge for the meetings.

All right. I think that's a great offer for our listeners and viewers out there. And that way you can avoid costly mistakes that we're going to talk about. But you need to be aware of them first. So where do you want to start? What's the first mistake on the list?

The biggest mistake that our clients have been making in recent years is relocating without a plan. So, you know, people have a dream home, a vacation home. And then they get into it. And I just had a client last week call me and say, hey, Ken, we just put an offer on a place down in Florida. I'd like to talk it over with you and see where we should get the down payment money from. And in their particular case, they can afford it. But there are plans where it's like, oh my gosh, if you do that, it's going to ruin your retirement. There's so many unexpected things that pop up. When people move, especially so like in this case, Florida, and I know you and I have talked about it in the past, sometimes Florida, but but really anywhere can have some some unexpected costs that people didn't necessarily fully analyze.

Sure. They can pop up. And not only that, I think a lot of people move without really fully investigating sometimes. Maybe you've vacationed every year for the last 10 years and spent a week in Florida every year. You love it. Like I'm from Minnesota. And Minnesota. And of course, in January and February, it's 30 below zero and two, three feet of snow in the ground. So people and and and Michigan, you know, get the snow. People go down to Florida for vacation in January or February. And maybe they would spend a couple of weeks down there and they think, well, when we retire, let's this would be a great. This is a look at the ocean and the weather's great. And then when they retire, they get a place and they haven't spent time there year round or other times of the year as much. You need to rent first, right? And maybe for about three months, wouldn't you say? That's a good idea. So before you relocate, rent in that area, live there for three months off season. In other words, What do people say is probably the least favorable time in Florida? Oh, June through August. So we're going to live there June, July and August for three months. And we're going to find out from other residents what they're actually paying for property taxes. Right. Yeah. And so those I think those are the big ones. People don't take into account property taxes, people and cost of living and people homeowners insurance. And homeowners insurance down there, especially the hurricane expenses for insurance and flood insurance is outrageous for most of Florida. And in some places it's really hard to get. And if you can, it's really expensive, but you have to have it. So that's tough. I think both of those are reasons to, you know, I'm not saying you can't and you won't enjoy it, but a lot of people who retire to Florida from Minnesota from where I'm originally from, three years is about the max and then they end up moving back or somewhere else.

Yeah. People definitely try it out and decide, you know, Oh, I can't drive this far to the grocery store or you know, one, one client, they bought sort of a fixer upper down there. And they figured, OK, you know, I'll get a good deal on it. And then when I move down there, I'll put some money into it and it'll be our dream home. Well, they didn't realize once they needed to start pulling permits, they were sort of opening up Pandora's box. And now they have to make some additional changes to the home that they weren't expecting. You know, they... 30, 40, 50 years ago, they didn't have to be, the houses were not built to handle certain wind speeds. And now the minimum wind speed requirement for these houses, for siding and windows and things. So you basically have to rebuild it and buy new hurricane windows, and those things are expensive. Yeah, yeah. Nothing's cheap down there because there's just so many people that are either because of the destruction and then trying to rebuild or moving down there and trying to make improvements to make it.

And finding a good contractor or the materials. It's so in demand down there that it's hard to, you know, oh, yeah, we can get to that two years. Yep.

Ouch. Now you're paying homeowners insurance and property taxes for two years and maybe you can't even use the place.

Yeah.

So yeah, a lot of, a lot of, so mistake number one, relocating without a plan. You got to do all of your due diligence. And you know, I would recommend working with a trusted advisor who's had dozens of clients, if not over a hundred clients, buy a vacation home down there and see what insight we can provide about your specific situation. Yeah.

Yeah, exactly. And everybody's situation's different. Not saying don't relocate. Relocate somewhere nice if you want to, but do due diligence and research. Work with a financial professional to look at the cost. So what's next on the list?

So next one is falling for scams. So I had a client that I sat down with. They were a potential client and now they became a client. but they have fallen for three pretty bad scams just in the past three years. So retirees are a common target for these types of schemes. So anytime someone is asking you to give your social security number, Tap the brakes. Anytime someone's asking for your credit card number, even if your computer is flashing red that it's been taken over by a virus and you need to put your credit card number in there, tap the brakes. If you just found someone who is in love with you and they live on the other side of the country or the other side of the earth, you know, they call that a romance scam. People get taken for tens of thousands of dollars, if not hundreds of thousands of dollars. every day. So if it seems too good to be true, if it seems scary, if a grandkid is calling you, screaming, asking for your credit card because they're in trouble or they're in jail, tap the brakes, take a minute, take a deep breath.

Yeah, it's usually not true. And make sure you call somebody you know at a number you know, not a number they're giving you to check on it.

Yeah. Yeah. And for our listeners, we did an entire show about scams that are going on now a little more than a month ago, I think. But, you know, the Microsoft scan where they say, call this number to connect with Microsoft and they say, hello, Microsoft tech support. You know, it's scammers. They're just going to take your credit card info. Yeah. You don't want them moving around in your computer if they have access to your account numbers, whether that's your bank accounts or your investment accounts. It could get messy. We want to be very, very careful. When in doubt, call somebody that you trust. If there's nobody around you that's really... With it, when it comes to technology, call the geek squad at Best Buy or, you know, not necessarily recommending them, but just call somebody who is an IT who could give you a second set of eyes on the situation. If anyone's asking you to pay in Bitcoin or go to a Bitcoin ATM or anything like that.

Never do that or buy gift cards. If they mention Bitcoin or gift cards, hang up. Or money orders. Or money orders. That's a scam. Or ask for your bank account information or passwords. That's a scam. Or credit card. That's a scam. Everything's a scam. Everything. Just assume everything's a scam and hang up and then figure it out.

Yeah, absolutely. Yeah. So the next one I have on the list is purchasing a timeshare. So, you know, flashy vacation promises, you know, you get a free vacation. Speaking of scams, timeshares. Yes. Yeah, I like talking to those right next to each other because they're in the same ballpark. Out of all of our clients that have timeshares, I only have one that has fully enjoyed it and didn't ultimately feel that it was a burden later on in life. And that particular family is very well to do. It came with all the bells and whistles and they paid a lot of money for it. But your run of the mill timeshare, there's a good chance it's going to end up either being a scam or just something that you do not enjoy down the road. There is typically a lot of upfront costs. And then we call them eternal fees. The fees never go away. no matter what, very, very poor resale value on these things. Scams are very, very common. I had one client that their timeshare was destroyed by a hurricane. And they were notified by the timeshare that, hey, bad news, you can't come to your timeshare. It's been destroyed. But we need you to keep paying those fees forever so that we can rebuild this place so that eventually people can inhabit it again. And they were like, what am I paying for? I can't even go. There's so much fine print in these contracts. It's wild. Yeah.

Uh, yeah. And that you have an attorney look it over. Uh, but typically you might want to avoid it. They're very hard to get out of. I mean, have, I've never known anyone and I've known a few people, my aunt and uncle, um, a couple of friends of ours, other family members, the people I know, a couple of guys I worked with who have gotten timeshares all ended up being nightmares, very costly, very hard to get out of them or sell them almost impossible. Didn't you tell you told me a story about Orlando once? Oh, yeah. Yeah. We my wife and I went to Orlando and we we got offered to, you know, one of these. Hey, we'll give you two free nights at the hotel if you come to this pitch meeting and just just hear us out. Well, it was a hard sell. They did not want to let you out of that room. They had food and that was great. And but you didn't get a voucher until the end and they didn't want to give you that voucher for the hotel nights or let you out of the room. until you agreed to sign something. So it was very hard sell and they're really convincing. But we held our ground and we got our hotel vouchers. Oh, nice. But I did some research and we noticed driving to the airport out of town, going to the airport, we saw billboards need to get out of your timeshare contact. And I looked at the company and I wrote it down and looked it up later, owned by the same parent company that sold the timeshares. Coming and going. So, so they're like, we can help you get out of your timeshares, call us, you know, but then they charge a fee. And I looked up reviews and they said, this is a scam. They take all your money and they're the company that owns it. You know, they take, they charge you a lot of money and they say, our attorneys will contact the company who owns your timeshare. It's the same company.

I could not believe it.

Hopefully that company, this has been a number of years ago. So, and I'm not going to name names, but hopefully they're out of business. But you got to just be careful with timeshares. Buyer beware, I guess. Timeshares are very spooky. Yeah. Oh, yes. Oh, yes. they're very scary, right?

Very scary. What is that from? Is that from the Simpsons or something?

I'm trying to figure out what that's just a scary sound effect. I don't know. It's a generic one, but that's just Tony on the keyboard at home. Yeah. Just me and the keyboard at home recording sounds for the show. Now, that's a typical scary sound effect that comes preloaded in my board here. In fact, that one, that's a good one, though. Yeah. So what's next? What's another mistake we need to avoid, especially in retirement?

Yeah, so next one that I wanted to talk about is just planning to work forever. So I have a ton of people that say, you know what? I don't wanna set money aside right now for my retirement. I've got some expenses coming up. My kids' sports are very important to me, or we've got these vacations planned and they're very, very important to us. And I get it, but many people plan to retire either very late or never. But gosh, Tony, what happens if your health goes bad or if you get laid off from your job for some reason, you know, car accident? Like if your career is cut short, you know, then what happens? And if you're in a relationship, like what happens to your surviving spouse or your well spouse? You know, if you can't work anymore and money's too tight, like you want to start getting a job again when you're in your late 70s or early 80s, like trying to put things back together. Yeah. It's tough. So, you know, we did a whole show about it where we just said you have to like the most important financial advice we can give to anyone is pay yourself first. So if you pay for the vacations and pay for the sports and pay for all the fun and living expenses and then with what's left over, save for retirement. it usually doesn't work out unless you're just making it.

You're not going to get there. It's going to go into that checking account and get spent, right? That's what I call the general fund. That's where money goes to disappear. It's just like your state or the federal government or your state government. They have a general fund, and when the taxes that go in there, poof, they're gone. They're gone. It has to be earmarked, and you have to do it first before you pay your other bills even. So you never miss it. It's like each month you're not getting that money in your checking account to spend. It's just going right into your retirement account or, you know, those types of accounts. So and if you never had it, you'll never miss it. Yeah.

Yeah, very few people have leftover money at the end of the month. Vacations are too fun. Food tastes too good.

And if you make more money, even if you make a lot of money, you find ways of spending it. Lifestyle creep. You've got to save first, pay yourself first. But that excuse, and I call it an excuse, but so many of us have said that. And I was even guilty of that. well, okay, I haven't started saving for retirement yet, but I'll just keep working. I'm not going to retire. I'm just going to keep working. And that's a mistake a lot of people make. They say, I don't need a retirement plan or that much money saved because I'm not going to retire. What I say, the old phrase, man plans, God laughs.

Yeah. Right.

That's right. That's what happens. And in other words, you know, I I'm going to keep doing this as long as my voice holds out, as long as you let me co-host your show, Ken.

Yeah.

I'm going to do radio work and voiceover work as long as I can. I don't have any set plan like this is the year I plan on retiring. Well, if my voice goes out. I'll have to retire. Right. I might not be able to control the physical health. Uh, your physical health is a big one. A lot of people end up having to retire or your employer lays you off, you know, maybe they want a different voice or, you know, maybe gradient financial says, Hey, and we don't want you producing and co-hosting shows anymore, or we're moving to this, or, you know, we got this AI here. We love his voice better or something. Oh gosh. You never know what'll happen, right? Yeah, that's true. That's why I do need to be saving for retirement, even though I'm planning on, I'd like to work until 70 if I can, because I love what I do. I'm one of the lucky ones, but I'm not using that as an excuse not to plan for, that's not my retirement plan. Well, I don't, I won't have money for retirement, so I'm just going to keep working. Unfortunately, that's a common mistake.

Yep. I would agree. I mean, my dad's a 72, you know, he's been a financial advisor for almost 40 years now. He's still working.

Um, part of it is you can't get them out of there. I believe me. I know you've tried. It's like, no, no, we are not here.

We need the manpower.

I know. I know you need your dad. Your dad is, is great. And everybody loves him. He does such a great job there. I'm just giving you a hard time trying to create a little fan, a little friction. In case dad's listening to the show today, right?

Yeah, yeah. No, we definitely still want him around. But on that note, I think if he was home all day, he would drive my mom crazy. So she legitimately does not want him around all the time.

I know that story at my parents' 50th wedding anniversary. You know, I've told you the story probably before, cause I love it. And it's true. And I said, so Ruth, tell us, how did you, my mom, uh, how did you make it 50 years, you know, of marriage? Congratulations. She said he was gone a lot. Not spending time together. Got it. How'd you make it 50 years? He was gone a lot. Just no hesitation. Even it's like, ouch. So anyway, sometimes absence makes the heart grow fonder, Ken.

Yeah, no, no doubt. I'm looking at our time on the show so far. I think I've got so many things on the list, Tony. I don't want the show to be too long. I'm thinking we might break it up into two shows, actually. Sure. So maybe I'll just knock out one more and then one more.

Pick a good one and a retirement mistake. Maybe too many pizza buffets.

Yeah, that wasn't on my list, but that's on mine. I know that's a mistake I'll probably make. Yeah. Yeah. Last mistake I'll go over for today's show is just borrowing against your home. So I met with a client just last week who came in and she had to bring quite a few family members into the meeting. And A problem is that at some point she decided to get a home equity line of credit. So she just tapped into the, you know, the value of the equity inside her home for something that she was actually trying to help out a family member. when she was doing that, but the family member hasn't been able to pay her back. So now we've got a problem. We've got this high interest loan, it's accumulating larger, she can't always make the full payments on it. Now we're trying to make these decisions of do we wanna jeopardize her long-term income to be able to pay down on this debt? So just tapping into your home equity, sometimes it's really tempting, but sometimes it's a little bit risky when you're on a fixed income. So so that's one sort of mistake that goes into that. But then there are alternatives like we were already talking about, like buying the dream home and funding it with that. Sometimes even downsizing or relocating can cause a problem, too, because people. don't necessarily think about what the property taxes are gonna be. So I have clients all the time that say, you know what, I'm downsizing my house. I'm tired of these stairs. I'm going to a one-story condo and it's gonna be, you know, I'm gonna sell my house for X and I'm gonna buy a condo for Y and that's gonna be cheaper and that's gonna work out. Most of the time they end up paying more out of pocket because the property taxes go up so much because originally the property taxes were tied to their purchase price from 30 years ago and now their property taxes are tied to the new higher price. So anything involving your home, borrowing from your home, relocating, downsizing, It can get messy in a hurry, so this is another one of those times where you wanna meet with a financial advisor, probably meet with a real estate agent, see what the property taxes are gonna be, make sure that it's cash flow beneficial, or at least tolerable if you're on a fixed income when the dust settles. Tolerable. The stairs might be intolerable, you know, but we got to make sure that it's not going to not going to hurt your long term financial plan. We don't want to go back to work when we're in our when we are in our 80s.

Oh, sure. Well, it's hard enough to go back to work in your 60s or 70s. I mean, the older you get, the harder it gets. So you need to look at that as well. I think it's been a great show. I know you have a lot more that you want to cover, and we will. Maybe I won't have so many interruptions. I'll let you get a few more in next time for our listeners out there and viewers. But, Ken, before we go, let's say I'm out there, I'm listening to the show right now or watching it, and God bless you if you're watching us. That's all I can say is... You have my sympathy. However, I'm teasing, and I want to get a plan in place, or I want to get a second opinion on where I'm at financially. I don't want to make any of these mistakes. I want to have a successful retirement. I want to know how much am I going to need in retirement? How am I going to make sure I have enough to last as long as I do? This is where you come in. What's my financial situation? Do I have too much risk, not enough risk, not enough growth? How can I get ahold of you to get a plan in place or at least have a no charge, no obligation consultation with you and your team there?

Yeah, so just go to our website, summitfc.net or give us a call at 586-226-2100. I got to tell you, Tony, almost everybody's happy with their financial advisor right now because the stock market's just been going straight up for five months. It's a great time to get a second opinion. The market's pretty frothy right now. There's always a chance it's going to take a step back. It might be a good time to have a fiduciary look over your account, see what kind of fees you're paying, see if there are any hidden fees that you can't see. In a lot of cases, there are fees that you can't see, so you don't really realize how much you're paying to get that investment. Maybe the numbers would be even better if your fees were lower. But figuring out, can you relocate? Can you buy a vacation home? Should you downsize? When should you turn on Social Security? How much can you pull every single month from your investments? What's your vacation budget look like? How much can you gift? There's so many things that we can help remove that uncertainty with a proper written financial plan. We'd be happy to meet with any of our listeners or viewers for no cost.

All right. That sounds great. Thank you so much, Ken. And listeners, that does it for today's episode of Money Talks with our host, Ken Wink. Thank you for joining us for Money Talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit summitfc.net. Join us again soon for another episode of Money Talks.