BOSTON WEALTH MANAGEMENT, LLC

BOSTON WEALTH MANAGEMENT, LLC

7 Mistakes That Could Jeopardize Your Retirement

As you prepare for retirement, it's helpful to take a look at common mistakes made by other retirees and try to avoid making them yourself. Here are the seven most common mistakes that could jeopardize your retirement future, and strategies to avoid making them.

Starting Too Late to Save for Retirement When is the right time to start saving for retirement? Immediately. You should begin saving for your retirement the day you start working your first full-time job. Improvements in healthcare have increased life expectancy, so your retirement could last 20-25 years. You simply cannot save for only 10 or 15 years and accumulate enough money to support that kind of extended retirement. Tackle this head-on by starting to save as soon as possible, which also gives your retirement more time to accrue compound interest and increase in value. The earlier you invest, the more you will earn through compounded returns. For example, if you invest $50,000 over the first 10 years of employment, you'll be ahead of the person who waits ten years, then contributes $175,000 over the next 35 years.

20,000 15,000 10,000

5,000 -

Contribute $5K for First 10 Years at 8% Growth

1,200,000 1,000,000 800,000 600,000 400,000 200,000 -

Year 1 Year 3 Year 5 Year 7 Year 9 Year 11 Year 13 Year 15 Year 17 Year 19 Year 21 Year 23 Year 25 Year 27 Year 29 Year 31 Year 33 Year 35 Year 37 Year 39 Year 41 Year 43 Year 45

Contributions

Value

The opinions expressed in this report are those of Boston Wealth Management and are not intended to be used to purchase or sell securities or assets.

BOSTON WEALTH MANAGEMENT, LLC

Contribute $5K for Last 35 Years at 8% Growth

20000 15000 10000

5000 0

1,200,000 1,000,000 800,000 600,000 400,000 200,000 -

Year 1 Year 3 Year 5 Year 7 Year 9 Year 11 Year 13 Year 15 Year 17 Year 19 Year 21 Year 23 Year 25 Year 27 Year 29 Year 31 Year 33 Year 35 Year 37 Year 39 Year 41 Year 43 Year 45

Contributions

Value

Contributing Too Little Toward Retirement America is a society of spenders, not savers, and a majority of us have grossly under-contributed toward retirement. The sooner you start saving, the less you need to set aside to reach your financial goals. Here is a general guideline on how much you should save; if you are below these guidelines, you should attempt to increase your retirement savings.

Start Saving in Your:

Guideline

20s

10-15 percent of Income

30s

15-25 percent of Income

40s

25-35 percent of Income

Over 50

50-60 percent of Income

Failing to Build Your Savings Buffer Retirement savings should be considered sacred and should be raided only as an absolute last resort in emergencies. If you are living paycheck to paycheck, any bump in the road could put your accumulated retirement savings in jeopardy. (In fact, if you are living paycheck to paycheck, you need to reevaluate your monthly expenses and trim the excess.) Building a savings equal to six months of your living expenses will provide a necessary buffer to protect your retirement account.

Failing to Set Retirement Goals In order to determine how large your retirement nest egg needs to be, you first need to decide what you will be doing in retirement. If you plan to spend your retirement gardening in your own backyard, you'll need drastically different resources in retirement than the person who plans to take an exotic trip every year. If you have a partner, it is vital to discuss your individual and combined retirement goals to be sure you are on the same page. The more detailed your retirement goals are, the better you can position your portfolio to ensure funds are available to meet them.

The opinions expressed in this report are those of Boston Wealth Management and are not intended to be used to purchase or sell securities or assets.

BOSTON WEALTH MANAGEMENT, LLC

Retiring Too Early Deciding when to retire is both an art, and a science. First, you should determine how the value of your various income streams may change at different points in your retirement. Second, assess your current health condition and prognosis by evaluating family medical history and observing the longevity of relatives. But remember that the advancements in medical care have extended individual life expectancies and could make a retirement much longer than originally expected, and you'll need to plan so your resources meet that lengthened demand. Finally, you need to be prepared for an altered lifestyle in retirement. A majority of retirees do not have enough funds to continue to support their pre-retirement expenditures. If you are not ready to reduce your expenses to match your retirement income, don't retire! Failing to adjust your expenses will quickly deplete your retirement nest egg.

Failing to Manage Retirement Taxes Most future retirees expect taxes to decrease after they retire. While this is probably true, retirees still need to take control of their retirement tax situation in order to minimize their tax liability. Here are some guidelines that will help minimize your tax exposure during retirement:

Reduce Expenses: The less you spend, the less money you will need to draw from your retirement accounts, keeping you in a lower tax bracket.

Pay Your Mortgage Off Before Retirement: A mortgage payment is usually your largest monthly bill. If your home is paid off before retirement, you have significantly reduced your monthly expenses.

Minimize Tax on Social Security Income: Did you know that Social Security income is taxed? Therefore, the lower your retirement tax bracket, the lower the taxes you will pay on this taxable income stream.

Minimize Long-Term Gains Tax: When liquidating a taxable investment, look for offsetting investment losses to reduce your tax impact. A financial advisor can help you identify opportunities to do this.

Invest in Roth IRA and/or Roth 401(k) plans: Roth accounts are a great way to diversify your postretirement income stream. Your retirement funds in a Roth IRA or Roth 401(k) won't be taxed for qualified withdrawals, which are those withdrawals taken after age 59 ? on contributions made more than five years ago. Check the IRS rules and with your tax advisor to verify your qualified withdrawals.

Failing to Prepare for Unexpected Events Even the best laid plans often go awry, and retirement plans are no different. Failing to have a contingency plan or determining your response to these events could ruin your retirement plans. To protect your retirement future, you should anticipate at least one "unexpected" event over the course of your retirement. Here are some common "unexpected" events and potential solutions:

The opinions expressed in this report are those of Boston Wealth Management and are not intended to be used to purchase or sell securities or assets.

BOSTON WEALTH MANAGEMENT, LLC

Event

Health Crisis Job Loss Elderly Parent Care

Unemployment of Children

Unexpected Death of Wage Earner Market Declines During Retirement Years

Potential Solution

Premium Health Insurance Long Term Disability Savings Buffer Savings Buffer Savings Buffer Extend Employment Years Verify Parents Have:

Premium Health Insurance Long Term Disability Savings Buffer Savings Buffer Extend Employment Years Verify Children Have: Savings Buffer Life Insurance Savings Buffer Retirement Income Stream Diversification Pension Plan Income Convert Portion of Retirement Savings to an Annuity Flexibility in Retirement Savings Withdrawals Re-enter Job Market

These seven common mistakes can decimate your retirement future. Avoid as many mistakes as you can, correct the mistakes you have made, and prepare for the unexpected. This will help secure your financial future.

Boston Wealth Management, LLC | 286 Boston Post Road | Wayland, MA 01778 | 508.276.1098 | aspelker@

The opinions expressed in this report are those of Boston Wealth Management LLC and are not intended to be used to purchase or sell securities or assets. Securities, advisory and insurance services offered through Royal Alliance Associates Inc., Member FINRA/SIPC and a registered investment advisor. Boston Wealth Management, LLC is not affiliated with Royal Alliance Associates Inc. or registered as a broker dealer or

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