Woodstock Financial Advisor – Third Act Retirement Planning —

Most common retirement planning problems

The 14 Most Common Retirement Planning Problems And Their 5 Solutions

I’ve been working in this industry for 20 years, and I see so many retirement planning problems year after year. Most often, people come into my office with one of several fairly common problems, and they’re almost all caused by not having a plan. So, as we look at some of these frequent retirement-planning problems, most of them can be solved simply by creating a plan. Here are some of the issues that I often see with people facing retirement:

1. They’re do it yourself-ers.  

2. High investment and advisory fees.

 3. Poor asset allocation and lack of diversification with investments.

4. Paying more taxes than they should.  

5. Spending more than their budget will allow.

6. Not knowing what their budget should be based on their income.

7. Not knowing how to use insurance properly.

8. Not having an updated will, or not having a will at all. 

9. Not having their investments well-positioned for the next market crash.   

10. No idea what their portfolio did in 2002 and 2008 when the stock markets went down dramatically.   

11. No non-correlated asset classes to the US/Global stock markets, and they do not know how to calculate the proper withdrawal rate from their portfolio during retirement. 

12. Not having a good idea as to how long it would take their investments to recover if we have another recession or market drop. 

13. Not reviewing their retirement or financial plan regularly. 

14. A lack of peace of mind. This is worst and has the most harmful impact on people, I have found. 

Before I answer these questions, I highly recommend that you watch this video I recorded that goes through how to avoid running out of money and increase your retirement income.

You are also invited to set up a short, 20-minute, no-cost and no-obligation Retirement Ready Success call by clicking here. During this short call we will go over:

where you are now,

where you want to be,

and some of the strategies I use with my clients to help them achieve financial freedom and peace of mind.

These are the problems that we have with retirement planning. What I’m going to do now is go over 

5 ways to help you solve a vast majority of these problems.


Quit worrying about how much you’re going to end up paying a professional. Instead start worrying about what the cost is to you by doing it yourself. How much sleep are you losing? How much anxiety do you think you’re having as a result of doing it yourself? How much more money do you think you could make if you were not using that time managing your own portfolio but instead trying to grow your career? Or how about the increased time with your family that you could be having? 99% of all people are not qualified to manage their money as well as a professional can. Or do any of the other things that a holistic financial planner would do for them. Vanguard did a study and found that financial planners, on average, bring about 3% per year to their clients.


or you can do it online using a site called LegalZoom. Having a will, and in some cases, a trust, is a very important thing to do, particularly if your net worth is above the estate tax exemption. 


know the tax code and what you should be doing with your money to reduce your taxes. One of the most common things that we help our clients with at Third Act Retirement Planning is doing Roth conversions and determining how to time IRA withdrawals, both for their own IRAs and inherited IRAs. We also look at creating LLCs for our clients that have rental real estate and using those LLCs to allow us to set up another type of retirement account for one of the members of the LLC so that they can make contributions to it and further decrease their taxes. Additionally, we look at helping our clients set up health savings accounts (HSAs), which can provide our clients with a dollar-for-dollar reduction in their taxes. These are some of the more common types of tax planning strategies that we use, but there are many, many more. 


This will address almost all of the issues that are covered above. Make sure you know how much your expenses are going to be in retirement, what your income is going to be in retirement, and how your investments will be able to provide you with the additional income you’ll need to live a comfortable retirement regardless of what the market does. You will also want to make sure you test your portfolio in different types of markets. 


When we have clients come in and we begin the process of putting together an investment strategy that is going to meet their goals and the amount of risk that they’re wanting to take for their retirement, we start by explaining to them everything that we can about the strategy so that they understand and feel like they have control, which will give them peace of mind. We want them to know that they understand what’s going on with their portfolio. They also need to understand what will happen if we have another market crash and how their portfolio will most likely perform in that scenario.

You want to make sure that you do have adequate international exposure because international and US equities go in cycles. US equity will outperform for several years, and then international will outperform. So, the top two continents that we invest in outside of the US are Europe and Asia. I still recommend having most of your stock money in the US, but you’ll certainly want to have some diversification in other countries, with European and Asian countries as the major places.

Also, you want to know your fees inside of all of your investments if you’re using mutual funds, annuities, or exchange-traded funds—what are your fees? You want to get those fees as low as you possibly can. Companies like DFA and Vanguard, SPDRs, iShares, and Charles Schwab offer very low-fee ETF and mutual funds, and these are excellent to use.

You also want to make sure that you buy ETFs and mutual funds with low tax cost and low turnover. With this alone, we often see people come in and immediately make changes that cover our entire fee, just by putting them in different types of securities with lower tax cost ratios. One of the things you want to look at is the turnover inside of an ETF or mutual fund. The lower the turnover, the better, and the higher the turnover, the worse. This is the number of stocks—the percentage of stocks—that are sold in that portfolio per year.

Of course, you also want to have bonds from all over the world, not just in the US. International bonds is an excellent non-correlated asset class to US stocks. In fact, foreign bonds are less correlated to US stocks than US bonds. If you put together a portfolio that is diversified between stocks and bonds from all over the world, not just here in the US, it will give you a more smoothly-performing portfolio with less risk and better long-term returns than without planning. And, of course, reducing the fees and the taxes, even if the mutual fund is inside of an IRA, will have a tax cost ratio because it is responsible for itself for paying its own taxes to the government.

So these are the problems and some of the most important solutions, although everyone’s situation is different. You can also click here to watch my free video on how to avoid running out of money in your retirement and how to potentially increase your income in retirement by making one simple change to your finances. Or schedule a 20 minute no cost no obligation Retirement Ready Success Call where we will look at where you are now and where you want to be.

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