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Most Common Mistakes Baby Boomers Make After Retirement IRA

The most common and gravest mistake made by baby boomers after retirement is not seeking the help of a financial advisor. Retirement planning does not stop at the point of retirement.

Here in South Windsor, retirement planning does not stop at the point of retirement. Retirees must have a plan post-retirement that reflects their investment preferences, situation, and risks. Mistakes can be made during the working years but also during the retirement years. Some of the most common mistakes made after retirement reflect poor execution concerning tax treatment, income needs, and risk management, Social Security  and rolling over an IRA.

One of the most common mistakes made by baby boomers is not rolling over their employer-sponsored 401(k) plans to an IRA.

IRAs allow retirees to consolidate their investments, oversee them more closely, and may reduce their expenses. IRAs also typically allow for more investment freedom. Retirees’ investment choices are often restricted in their employer’s plan while they are not in an IRA.

Another common mistake is not optimizing the tax treatment of the retirement plan. Retirees are in the same tax bracket or a higher one than they were before retirement so rolling over to a Roth plan from a Traditional plan may actually be harmful.

The opposite may be true, however, so choosing the correct tax treatment for a retirement plan is extremely important. Furthermore, retirees are required to take IRS minimum required distributions from their plans, but not with Roth IRAs, when they reach the age of 70 1/2.

Retirees mistakenly fail to take distributions from their plans causing them to pay an 50 percent IRS penalty tax on the amount of the minimum distribution. Another common mistake made by retirees is being reactive instead of proactive. Not implementing strategies to help protect income from inflation, health costs, volatility, and other risks can cause undue risk and possibly decrease retirees’ standard of living.

Taking Social Security too early is a common mistake as well. Once a retiree is eligible for Social Security, it does not mean that the retiree has to start collecting from it. In fact, delaying payments from Social Security actually increases the amount of income received later.

The most common and gravest mistake made by baby boomers after retirement is not seeking the help of a financial advisor. The professionals at Mundo Financial Services are knowledgeable about the nuances of different investment services and how stocks, bonds, insurance, Social Security, and other financial instruments address retirement goals.

A financial advisor, like Mike Mundo can help baby boomers with strategies to help reduce their investment expenses and tax liabilities. Circumstances change so financial advisors are essential for implementing these strategies to mitigate the effects of inflation and other financial risks. Mundo Financial Services is available to help retirees navigate the investment landscape as conditions and situations change during retirement. Most importantly, seeking the help of one of our financial advisors can help retirees to avoid making the other common mistakes previously outlined.

Please email me for other topics you may may to read about. www.mundofs.com

This post is contributed by a community member. The views expressed in this blog are those of the author and do not necessarily reflect those of Patch Media Corporation. Everyone is welcome to submit a post to Patch. If you'd like to post a blog, go here to get started.

Rick Stahr February 15, 2013 at 02:27 AM
I don't understand what the mission of the Patch is sometimes. This is not the first time I've seen "articles" purporting to be news turn out to be solicitation for service. I'm not judging the quality of the services offered, I just wonder why posts like this aren't separated from real news with tags such as "political view" or "advertising" versus "news". To illustrate the lack of information, and my suspicion that this is more about SMO, let me quote with edits: "Retirees rolling over to a Roth plan from a Traditional plan may actually be harmful.... The opposite may be true, however" This isn't helpful since it's self-conflicting. Does the Patch tag political or self-promoting posts so that we know what we're reading? Or can anyone contribute regardless of intentions? I would like to see some distinction here lest we dismiss everything as unsourced material.
Mike Mundo February 20, 2013 at 01:30 PM
That’s why the word MAY Be is there. The fact is some investors converted their IRA or 401k plans to ROTH IRA with out knowing the tax implications to do this. In doing this it will cost them over the long term. Yes as a small business owner here in town I’m trying to bring awareness to issues and also looking to grow my business by helping others. I’m sorry if you didn’t like this but thank you for your feedback. We wish you all the best.
Peter J February 20, 2013 at 02:12 PM
This is clear advertising with no usable information given to the readers. Should be labeled as advertising.

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