Other Retirement Facts:
Having confidence in your finances is great, but overconfidence can lead to gaps in your retirement plan. It can blindside you when something happens that affects your plan. We’ve seen this happen in all sorts of ways. On today’s show, we are going over 5 areas of overconfidence in financial planning.
A lot of people become overconfident in the stock market. The patterns of the market can change quickly. It’s a lot about luck and timing. Some people claim they know the market well but it’s volatile. Having too much confidence can leave your financial plans exposed.
“I need a million dollars and then I can retire.” This is a common saying and has been used by media outlets a lot. But where is this number coming from? Have you run the math behind it? It’s great to have a savings goal but you want to make sure it matches your actual plans for retirement. Income planning can help you understand how much money you will need for your long-term retirement goals. Make sure it’s realistic!
Rules of thumb are common in the financial world. The 4% rule is one we hear a lot when it comes to retirement withdrawals. However, this doesn’t hold up for everyone. That may be too much or not enough for your specific retirement lifestyle. You have to go through the process and find details that fit your situation.
Lastly, as we become more involved in our finances, we can become overconfident in our own understanding and decision-making skills. Knowledge is great but a lot of investments have fine points that are easy to miss. It’s best to discuss your decisions and options with a professional. An advisor can make sure you are making the right moves and give you the stability you need for the future.
Listen to the entire episode or skip ahead using the timestamps below.
[0:55] – Happy Halloween
[2:36] – Stock market
[5:50] – A certain number
[8:48] – Rules of thumb
[11:12] – Understanding and decision making
A Quotable Moment:
“It’s a great place to start. Just don’t get too overconfident in the various rules of thumb out there.”