After meeting with hundreds of people that are shopping around for a retirement professional, I've noticed several common red flags in their retirement plans. Here are five of the most-common you need to make sure aren't in your plan.
Red Flag #1 - You don’t understand what you are invested in
Never put your money into something you don't fully understand. Unfortunately, we meet lots of people who have either worked with another retirement professional or done the "do-it-yourself retirement plan" that have no real understanding for what they are invested in - and more importantly, how their investments are affecting their retirement plan. Always know!
Red Flag #2 - You don’t understand how much you are paying in fees
It's really important you know your costs, up-front, for doing business with a retirement professional. Again, we have met many people who are working with a retirement professional or are invested in financial products with hidden fees. If you don't know how you are being charged for your retirement product or advice, do some research.
Red Flag #3 - Your assets are heavily invested in non-liquid investment products
We're certainly not against non-liquid assets like an annuity or a Certificate of Deposit (CD). These retirement vehicles are not bad and have their time and place. However, if the majority of your assets are tied up in these non-liquid products, you may want to reconsider.
Red Flag #4 - You have whole life insurance policies
Whole life insurance policies are expensive and don't make effective retirement planning vehicles. Term life insurance is the most efficient way to protect you and your family in case of a death. If you have a whole life policy, especially if you are young and not nearing retirement, this is major a red flag.
Red Flag #5 - You have no life insurance at all
Even though we're not fans of whole life insurance policies, that doesn't mean we think you should have no insurance at all. It's not a fun topic to talk about, but you always need to consider income replacement in case of a death. Again, especially if you're young, having no life insurance is a red flag and should be addressed.
If you have any of these red flags in your retirement plan, I'd be glad to help.
Feel free to give me a call at 320.222.4236 or email firstname.lastname@example.org.