Financial Planning Myths All Boomers Need to Be Aware of

Many boomers are financially unprepared for retirement. In fact, a recent Associated Press survey shows that most boomers are nowhere near ready for retirement.
What’s the problem? Unfortunately, many boomers have succumbed to some financial planning myths that simply won’t fade. And the more you believe the prevalent financial planning myths, the more of a struggle your retirement will be. Let’s clear up these myths once and for all so you can take charge of your financial future and be prepared for retirement.

Myth #1: You have to put your money at risk in order to make a decent return.
Most 401Ks and IRAs are invested in the stock market. But the stock market is the riskiest place to put your money.
Here’s the truth: There’s no reason for your money to be at risk. You can make money with safer investments, such as fixed index annuities, which are like a savings account with an insurance company. In fact, even during the Great Depression, not one person lost money with a fixed index annuity. They’re safe, they have liquidity, and they offer better rates than most other products.
So why hasn’t your broker told you about these less risky options? See Myth #2.

Myth #2: Your broker only makes money when you do.
It’s nice to think that your broker only cares about you and your financial future, but that’s not 100 percent true. While your broker likely does want the best for you, here’s what usually happens when you let him or her invest your money. Your broker buys shares of stocks and mutual funds. The market can then go in one of three directions: up, down, or stagnant. Wall Street can’t control the market, and neither can your broker.
Since your broker makes money by managing your money, why would he or she want to have you invest in something boring, like the fixed index annuity mentioned before—especially since the less risky products typically offer brokers a one-time commission and nothing more? In contrast, there are big commissions in stock marketing investing. Every time your broker buys or sells stocks for you, not only do they charge you a fee (see Myth #3), but they also get a commission. Knowing this, who do you think most brokers are really looking out for?

Myth #3: Maintaining a stock portfolio is very inexpensive.
Even though you may be putting money into your retirement account on a regular basis, hidden fees may be slowly draining your account. The disclosed fees are simple to find; look at the expense ratio, which is found in the prospectus. These fees are commonly referred to as “management fees.”
Therefore, be sure to look for and ask your broker about the following fees:
• Plan Administration Fees
• Investment Fees
• Individual Service Fees
Knowing the truth about hidden fees and taking action to avoid them can add thousands of dollars to your retirement savings.

Plan Your Future Today
Whether you plan to retire today or in another 10 years or more, you need to take control of your retirement accounts right away. By doing so, you can rest assured that you’ll be financially ready for the best years of your life.