Everyone makes financial mistakes at some point in their lives, but when you are young, you can afford to make a few. But, the older you get and the closer you get to retirement, these mistakes can me much more costly to you, says Nicole N. Middendorf, a LPL Financial Advisor and CEO of Prosperwell Financial.
Middendorf has come up with what she feels the 5 biggest mistakes that retirees make:
- Mistiming Social Security Benefits – Most people start collecting at 62 or right before they retire and they end up losing out. After your full retirement age, you can increase your monthly payments by 8% each year you delay claiming, up to age 70.
- They are too optimistic about their health – On average, a 65 year old couple retiring this year will need approximately $220,000 to cover heath care for the rest of their lives (husband living to 82 and wife to 85) according to a Fidelity report issued in May 2013.
- They are forced to sell at the wrong time – One of the biggest risks with a retirement portfolio is being forced to sell holdings when the market is low to be able to meet your spending needs.
- Mishandling IRA’s – Many people do not understand the differences among types of IRA’s and may end up taking distributions from their Roth IRA’s before their Traditional IRA’s.
- Paying off their mortgage in full – By doing this, they are reducing their investments in more-liquid assets in favor of an asset that’s not liquid at all. It leaves them house-rich and cash-poor.
Middendorf has appeared as a regular contributor to Kare 11, KSTP, WCCO and Fox 9 and hosted a financial radio show on FM 107.1 in the Twin Cities for years. She has won numerous awards and most recently she was honored in NYC with the national Stevie Award for Business Woman of the Year and by the TwinWest Chamber as Entrepreneur of the Year.
Her new book, Lipstick on the Piggy Bank, is a resource to help women take control of their money, no matter how desperate their situation.