An unexpected quiz and some pitfalls for you this week
In this issue, we’ll address the impact social security will have on retirement and financial pitfalls to avoid.
The Wealth Minute
What amount are you expecting social security to add to your retirement nest egg?
There's been a lot of talk about social security in the news recently.
It's not uncommon to see changes in the monthly allotment at the beginning of each year, but this year there seems to be a greater interest with all of the changes currently being enacted by the Trump Administration.
Social security is also a huge part of the discussion my clients and I have when planning for their retirement.
The decision on when to take your social security benefit is a critical one. It should not be made lightly, nor without a review of your complete financial portfolio.
We use a comprehensive social security analysis tool with all of our clients to ensure we can fully account for the impact social security will have on their retirement timeline.
Wealth Move
Download your latest SSA statement. You may need to create an account if you haven't already done so.
Confirm that your employment credits are accurate.
Use the simulator to get an estimate of what your retirement numbers could be, given today's value of your account.
Here is a great little quiz to help you learn more about this incredibly important part of your retirement plan.
The Freedom Path
Pitfalls To Avoid In Key Decades
A huge part of why I love what I do is being able to provide high value financial literacy and education to my clients.
This is the type of education I wish I had years ago when I was trying to figure out my financial future.
I've made almost every financial mistake there is...including getting a pay day loan at one point when I was a single, commission only sales person.
So many poor financial choices.
So this week's money poor segment is to be for others what I didn't have myself.
Each decade comes with its own financial challenges, but avoiding these pitfalls will help ensure long-term stability and a secure retirement.
Let's review some pitfalls to avoid during key times in your financial life.
In Your 30s
Not Saving for Retirement Early – Compound interest works best when you start early. Skipping retirement contributions can cost you in the long run.
Living Beyond Your Means – Avoid excessive spending on lifestyle upgrades like expensive homes, cars, and vacations.
Not Building an Emergency Fund – Unexpected expenses can force you into high-interest debt. Aim for 3-6 months' worth of expenses.
Relying Too Much on Credit Cards – Accumulating credit card debt can be costly due to high interest rates. Pay off balances monthly.
Delaying Debt Repayment – Student loans, car loans, and credit card debt can snowball if not managed properly.
Not Investing – Keeping all your money in a savings account means missing out on potential market gains.
In Your 40s
Not Increasing Retirement Contributions – Your income likely grows, and so should your retirement savings. Max out 401(k) and IRAs when possible.
Ignoring College Savings for Kids – If you have children, failing to plan for education expenses can lead to debt.
Not Having Adequate Insurance – Life, disability, and health insurance are critical to protect your family.
Failing to Diversify Investments – Over-reliance on one asset type (e.g., employer stock) can be risky.
Lifestyle Creep – As income rises, expenses often do too. Maintain a solid budget and save more instead of overspending.
Neglecting Estate Planning – A will, trust, and power of attorney are necessary for asset distribution and family protection.
In Your 50s
Not Catching Up on Retirement Savings – If behind, take advantage of catch-up contributions for 401(k)s and IRAs.
Dipping into Retirement Funds Early – Avoid withdrawing from retirement accounts unless absolutely necessary, as it can trigger penalties and tax consequences.
Underestimating Healthcare Costs – Medical expenses rise with age. Look into long-term care insurance or an HSA (Health Savings Account).
Co-Signing Loans for Adult Children – This can jeopardize your financial stability if they default.
Carrying Too Much Debt – Aim to pay off high-interest debt before retirement, especially credit cards and personal loans.
Not Considering Downsizing – Maintaining a large home can be costly. Downsizing can free up capital for retirement.
In Your 60s
Claiming Social Security Too Early – Waiting until full retirement age (or later) can significantly increase your monthly benefits.
Underestimating Retirement Expenses – Factor in inflation, healthcare, and unexpected costs when planning your retirement budget.
Failing to Adjust Investment Strategy – Shift towards more conservative investments while still maintaining growth potential.
Not Having a Withdrawal Strategy – Without a proper plan, you could outlive your savings. As I stated last week, you want a plan that is right for you, not for the masses.
Ignoring Required Minimum Distributions (RMDs) – Failing to take RMDs from retirement accounts after 73 (or 75, depending on birth year) results in hefty penalties.
Not Having a Long-Term Care Plan – Assisted living or nursing care can be expensive. Have a strategy in place to cover these costs.
Wealth Move
Regardless of your age, pick one or two of the list above and begin to put a plan in place.
You can even take the entire list and use it as a financial goal for the year.
The key is to do something to move from where you are financially to where you want to be in the next 3-5 years.
Click here to schedule some time for a review of your plan to make sure you're on the right track.
Book of The Month
The March 2025 book of the month is "The Richest Man In Babylon by George S. Clason.
I read this book every year. It was originally written in 1926 and is STILL RELEVANT.
The edition I'm giving is the updated version to making it easier to understand.
Take notes and implement what you learn.
Coffee Chat Question
If we were to meet for coffee, what would you want to know?
Feel free to email me questions that will anonymously be added to this section during each edition.
“Is it possible to invest and get out of debt?”
Yes you can!
It will take longer because you are dividing your resources into two tasks instead of focusing all of your extra income on debt reduction first, but yes, it can be done.
I teach a formula to keep it simple.
Check out this video for how to approach it.
Feel free to subscribe to my YouTube channel for more Walking Wisdom videos.
If you have questions on how to implement it, click here.
