Retirees must be the 'CEO' of their personal finances: Investopedia chief
Some Americans view retirement saving as a relatively simple feat. They maintain a 401k, sit back and trust the process will all work itself out in the end.
That's a big mistake.
So says Investopedia Editor-in-Chief Caleb Silver. Seniors, he said, should take a more proactive approach to saving over the next five years. "You have to be the CEO of your own life, of your own personal finances,” Silver said recently on Yahoo Finance Live (video above).
During his appearance, Silver spotlighted the most common mistake seniors make when planning for retirement.
“They think that they've had enough saved for retirement, or they haven't really calculated that drawdown,” Silver told Yahoo Finance. “You could be very sorely mistaken on how much you're going to need.”
Silver said seniors need to be properly insured and adopt the right tax strategy while planning for retirement. He observed that they need to set aside money for life insurance often fail to appreciate which of their assets are taxable in terms of long-term capital gains.
“Whether you do it with a financial advisor or you do it online through a digital advisor, you have to check all those boxes to make sure everything is covered because you want to be covered, and you want your loved ones to be covered as well," Silver said.
Silver added that retirees should come up with a thorough “income replacement strategy” for retirement. He advised retirees to think carefully about how much money they would need for retirement, asking them to consider savings, investments, and property as sources of funds. He warned that they might need more for retirement than they appreciate.
“We know we're living a little bit longer,” Silver said. “Retirement is not just 10, 20 years anymore. It could be 30, 40 years."
Silver cautioned them to reduce risk in their portfolios through fixed-income investments like certificates of deposit, and money market funds.
“This is a time to get a little bit more defensive, especially if you have kind of a risk lean into your portfolio. You want to lean back, play some defense here,” Silver said. “These emergencies come up all the time,” Silver said. “The last few years have taught us a lot of lessons. You want to have a little bit more savings.”
He added: “And then expect the unexpected because we know things happen.”
Dylan Croll is a reporter and researcher at Yahoo Finance. Follow him on Twitter at @CrollonPatrol.
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