“Life doesn’t come with a manual; it comes with a mother.” In honor of Mother’s Day coming up, I have spent some time reflecting on advice that I’ve received from the mother figures in my life as well as the lessons that I’d like to instill in my own children. I’m sure you all have heard the age old adages: “A penny saved is a penny earned”; “Save for a rainy day”; “Spending is quick; earning is slow.” These financial proverbs are ones that will always ring true.
Although we have learned many important lessons from the mothers in our lives, there are also lessons we have learned that are no longer accurate or relevant. When we start making financial decisions based on history rather than the current environment, we can get ourselves into trouble. Consider the following pieces of advice that you have probably heard that are no longer the best decision:
- “Start taking distributions from Social Security as soon as you can.” While you can begin taking Social Security distributions as early as 62, it is not always the best idea. Social Security benefits grow the longer you keep from taking them, until you reach age 70. As long as you don’t have an urgent income need and you’re in good health, there is a good chance that waiting to draw is your best option.
- “You can withdraw 4% of your retirement savings, plus annual inflation adjustments, and make your savings last.” In today’s economy, you must be more flexible with your plan. Interest rates were higher back in the 90’s, and the economy was much different. Everyone’s situation is different and you should be making plans based on your individual circumstances.
- “Invest in 60% stocks and 40% bonds for retirement.” This advice could do more harm than good in today’s environment. People planning for retirement have to consider more than just their age when investing their money.
- “You’ll probably die young, so plan for retirement accordingly.” According to the CDC, most US citizens can expect to live just past age 78. This is a national average. Remember that this average includes people who don’t take care of themselves. If you are in good health, you can live many years past this. Your money needs to last your lifetime.
We will always treasure the advice that we receive from the mother figures in our lives. What we have to remember is that many things regarding how we work, how we spend, and how much things cost have changed dramatically since 2008, especially in the last two years. We need to focus on financial advice that is keeping up with the world as it currently is, not as it was twenty or thirty years ago. Make the decisions that make the most sense for your lifestyle, goals, and budget. If you need help with these discussions, reach out to a fiduciary advisor who deals with these topics daily.
Financial Enhancement Group is an SEC Registered Investment Advisor. Securities offered through World Equity Group, Inc. Member FINRA/SIPC. Advisory services can be provided by Financial Enhancement Group (FEG) or World Equity Group. FEG and World Equity Group are separately owned and operated.