Family Update
I don’t recall if I mentioned it, but I’m now on the board of the Sarasota Orchid Society. Our annual orchid show and sale has become so popular that we’re considering moving it to Robarts Arena. I’ll keep you posted once we finalize the date. Even if orchids aren’t your thing, it’s truly a sight to behold.
It’s also mango season, which means every few days Yaya shows up with a giant sack of mangoes, enough to feed a small village. We’ve got way more than we can eat, but we’re not complaining.
My 15-year-old, Alex, just got back from spending two weeks in the mountains of Georgia with his cousins. He said he had a great time. When we asked what they did, his answer was classic: “Things just move slower up there.”
And finally, the pickleball court is complete! After a series of rain delays, it’s officially ready. It turned out to be seriously cool. We even got a ball machine to practice with, so maybe we’ll host a few tournaments. Time to pickle.
After over 20 years and thousands of meetings, here are the mistakes I see over and over again
1. Not saving enough. You already know this, but most people simply aren’t saving enough in their 401(k)s (or other retirement accounts). You receive a tax deduction now (which saves you roughly 20% off the top), and when you withdraw it later in retirement, you’ll likely be in a lower tax bracket. That’s a significant advantage.
At the very least, save 10% of your gross income. If you’re behind, aim for 20%.
Here’s my favorite strategy: bump your savings up to a level that feels uncomfortable, then give it a few months. If it’s too painful, dial it back. However, most people never do. You’ll adjust faster than you think. If you start too low, you'll never increase it.
And remember, you can generally withdraw about 5% per year from your savings once you're retired. That means $500,000 gives you approximately $2,000 per month. Add in Social Security and see if the math works. If it doesn’t, start saving more today (or trimming your budget).
2. Timing the market.
Yes, people are still doing this. They move to cash because things “feel uncertain,” waiting for the “right time to get back in.” Over the past 30 years, the average active stock investor earned around 6.8% per year, while the S&P 500 returned about 10.0%. Yes, the more you look at your investments, the worse they tend to perform.
3. Buying a rental property.
This one always stirs the pot, but I stand by it: if you’re not a full-time real estate investor, skip the rental property. Most amateur landlords rarely break even. One bad tenant, rising property taxes, insurance hikes, and emergency repairs can wipe out years of gains. And good luck raising rent on your cousin who just lost their job.
I must admit, though, this time in history is a unique situation. If you're sitting on a mortgage paying 3% and rents are skyrocketing, renting out the place might be a viable option. However, it will still be a considerable amount of work, and you'd probably make just as much by investing in the stock market.
4. Downsizing.
Seems logical, right? Sell your $600,000 house, buy a $400,000 villa, and pocket the $200,000. But after commissions, moving costs, dramatically higher property taxes, and surprise HOA fees, you’re left with a smaller, less enjoyable house and maybe an extra $600 per month in income.
Plus, you just left your friends, your neighborhood, and the kitchen you remodeled exactly how you like it. If your house is truly too big or the upkeep is too much, fine. But don’t downsize just because you feel like you “should.”
5. Not spending enough money.
This one’s for the millionaires who live like they’re broke (I know this is not a problem for most of you). I suppose one reason they're millionaires is that they've learned to be great savers. However, they never switch to "spend mode"and never truly enjoy their hard-earned savings.
Your 60s are your go-go years.
Your 70s are your slow-go years.
Your 80s are your no-go years.
If you’ve saved well, enjoy some of it now. Take the trip, make the memories. And if generosity is on your heart, give with a warm hand. Does it matter if you die with $900,000 or $800,000?
That being said, I've noticed that the generation immediately following the Boomers tends to save too little and spend too much. It's a bit of a switcheroo!
6. Buying annuities.
I see people sold on “equity-indexed annuities” all the time. They are wildly complex products. And honestly, I can’t think of a single client who said they were glad they bought one. Anytime a salesman says they have a guaranteed product with great returns, beware.
7. Retiring too early. The earliest you can take Social Security is 62, but that’s a reduced amount, and it may not be enough. Some people say, “I’ll take Social Security and just work part-time.”
Sure. But will you be working at 82?
Unless you’ve saved well or live a very frugal lifestyle, 65–70 is a safer retirement window. You're likely to live until 90, so plan accordingly.
8. Buying gold coins off a cable news ad. Please. Just… don’t.
9. Stressing about daily fluctuations in the stock market.
It’s front-page news every time it drops. But here’s what no one’s talking about: the market is up 13% over the past year. Why isn’t that all over the headlines? Because it’s boring, and you’d change the channel.
Be Blessed,
Dave