Look in the mirror. You are your own worst enemy when it comes to your financial well-being. Not the market, not the economy, but you. Luckily, you can avoid doing damage if you pay attention to the three personal aspects that are most likely to hurt your finances: your health, your longevity, and your subjectivity.
Your health: If your health changes, you could have big expenses. Medicare does cover most issues, but not all. “Medicare generally doesn’t pay for long-term care,” notes Medicare.gov. Long-term care is expensive. The average cost for dementia care in a skilled nursing facility (private room) is $92,000. And long-term care costs are rising. The Metlife Mature Market Institute’s recent annual survey of the cost of long-term care services found that provider costs rose far faster than the rate of inflation. How to mitigate this issue? Purchase long-term care insurance. Don’t plan to use your investments. They could go fast.
Your longevity: You could live a long time. You eat well, you take care of yourself, and you live right. You want to live a long and active life. In order to do that, your investments need to stay with you for up to 30 years past retirement, which can be a financial problem. Why? Over the last 100 years, we’ve had 33 bear markets. On average, that’s one every three years. God willing, you’ll live 30 years in your retirement; therefore you could have 10 more bear markets in your life. Do the maths. If you’re taking money out of your investments while living through 10 bear markets, how long do you think your money is going to last? You need an exit strategy to protect yourself from the big downs, because it’s likely you’re going to live through 10 of them.
Your subjectivity: You could make bad decisions. You are emotionally involved with your investments. If you think you are capable of managing your own investments, you’re deluding yourself. It’s like performing surgery on a loved one. You’re not objective. You may think I’m being self-serving because I’m a certified financial planner, but even I rely on the expertise of my team to help me manage my own investments. I’m very good at what I do, but I do not make any decisions individually because I know I would become emotional. We all do. Therefore, I think it’s important that you have a financial advisor who helps you avoid making bad decisions.
Now that you know about those three issues, you can take action. By planning for your healthcare, protecting yourself from the inevitable bear markets, and using the services of a certified financial planner, you can avoid damaging your finances. You can look yourself in the mirror, knowing that you’re no longer an enemy to your financial well-being.
About The Author: The host of the popular radio show, “Money Matters with Ken Moraif,” Ken specialises in retirement planning and offers free seminars that help attendees learn to plan their retirements and secure their investments. A certified financial planner, Ken also heads the financial & retirement planning firm Money Matters with Ken Moraif.
All expressions of opinion reflect the judgment of the author as of the date of publication and are subject to change. Information presented does not involve the rendering of personalised investment advice. Different types of investments involve varying degrees of risk, and there can be no assurance that any specific investment will either be suitable or profitable for a client’s investment portfolio.
MMWKM Advisors, LLC, is registered as an investment advisor with the SEC and only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration does not constitute an endorsement of the firm by the Commission nor does it indicate that the advisor has attained a particular level of skill or ability.