Confusing a salesperson with an advisor.<\/b> The two are not the same. A salesperson is paid commissions to convince you to buy what they have to sell. An advisor is paid a fee to help make your decisions the best they can possibly be. One is your ally. The other is your adversary. Unfortunately, many financial salespeople go to great effort to look like advisors and inspire trust that is not deserved. You should be skeptical of any source of \u201cadvice\u201d that might be influenced by conflict of interest.<\/p>\n\n\n\n
Relying on emotion instead of reason.<\/b> If you\u2019re going to get the most of what you want from what you have, you need to realize that markets have evolved to take advantage of your fear and greed, which are amazingly predictable, and turn them against you. The investment markets are like poker games and you\u2019re not the best player in the game. If you want to survive for long, you\u2019ll need to rely on a strategy that acknowledges the odds you face, accepts them, and uses reason to turn them to your favor.<\/p>\n\n\n\n
Focusing on wealth instead of cash flow. <\/b>Much what you\u2019ll read and hear from financial and investment experts is aimed at maximizing economic wealth \u2014 basically your net worth. Paying off a fixed-rate, low-interest-rate mortgage is an example. While reducing your interest cost over 30 years might dramatically increase your net worth, it also completely misses the point that your retirement standard of living is not dependent upon your net worth, but on your ability to produce the cash you\u2019ll need to pay your bills.<\/p>\n\n\n\n
Failing to account for inflation. <\/b>Inflation is a threat to any retirement plan. Your expenses will inflate, over time, at varying rates, while your income may, or may not, keep pace with that inflation. CSRS annuity and Social Security income increase with the CPI (for now), FERS annuity income increases less than the rate of inflation, and many other pension and annuity income streams either don\u2019t increase at all or increase at a fixed rate. Failing to properly account for inflation can leave you without the resources you\u2019ll need to live the life you\u2019ve been expecting years, or decades, down the road.<\/p>\n\n\n\n
Leaving the TSP.<\/b> The TSP is an outstanding retirement investment vehicle. It allows you to produce portfolios that are more risk-efficient than anything else you are likely to find or have access to. Low cost, excellent diversification, and access to the G Fund are a combination that\u2019s hard, if not impossible, to beat. Keep as much of your retirement money as you can in the TSP for as long as you can. Ignore the temptation to think that the \u201cgrass is greener on the other side of the fence.\u201d It probably isn\u2019t.<\/p>\n","protected":false},"excerpt":{"rendered":"
Federal employees face many potential pitfalls in planning for their eventual retirement.<\/p>\n","protected":false},"author":7,"featured_media":30858,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_yoast_wpseo_meta-robots-noindex":"","_yoast_wpseo_meta-robots-nofollow":"","_yoast_wpseo_canonical":"","_acf":"","_yoast_wpseo_primary_category":15,"_jetpack_feature_clip_id":0,"_jetpack_memberships_contains_paid_content":false,"footnotes":"","_smg_distribution_targets":[]},"categories":[104,106,11,31,15,33,59],"tags":[],"coauthors":[378],"class_list":["post-23225","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-acquisition-update","category-daily-brief","category-fedlife","category-home","category-management","category-newsletters","category-retirement"],"acf":{"subheadline":"","legacy_arc_id":"BA3ADURBGFFGJD4JGBZZ42RWP4","arc_canonical_url":"\/management\/2019\/12\/30\/common-retirement-planning-mistakes-to-avoid\/","remove_feature_photo":false,"is_sponsored":false,"subtype":"","redirect_url":"","disable_inline_ads":false,"native_logo_pretext":"Presented By:"},"yoast_head":"\n