As Baby Boomers see retirement in their horizon, financial planners counsel against these common mistakes.
No current will. Even if you created a will when you were younger, it may be badly out of date as you approach retirement...and...not in synch with your wishes or circumstances. Update it.
Out-of-date beneficiary designations. Beneficiaries named in life insurance policies and retirement accounts must be up-to-date to avoid misunderstandings and possibly adverse tax consequences for your heirs.
Concentrated stock holdings. Whether through long association with a single employer or as owner of your own business, you may have a significant portion of your wealth tied up in a single stock. Nearing retirement, it's too risky to keep so many eggs in one basket. Diversify.
No excess liability insurance. Auto and homeowner's insurance policies offer liability protection if someone comes to harm on your property or in an accident involving your car. If claims exceed your policy limits, though, plaintiffs could come after your personal assets. Carry an excess liability, or "umbrella, policy, for added protection.
Emotional investing. Volatile financial markets can be unnerving, especially when you're close to retirement. Be patient, and hew to your well-grounded investment strategy...but...recognize that your stockbroker will never tell you, "When in doubt, get out" of the stock market.
No estate or tax planning. Many retirees craft an investment plan but overlook estate and tax planning. Start the process now if you haven't already, both to minimize tax bills for you and your heirs and ensure that your estate is distributed according to your wishes.
Source: The Wall Street Journal, March 8, 2008
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