Ep 54: Hidden Expenses in Retirement PlanningInvesting
On This Episode
When looking for a financial advisor, beware of signs that they are more interested in giving you sales pitches than helping plan your financial future. We’ll share things to watch out for when selecting a professional to help with your money and tell you more about the planning process we utilize with clients.
On today’s Saving With Silverman podcast, Mark Silverman CFP® shares some of the hidden expenses you might run into while planning for retirement.
Mutual fund expenses
Some fund expenses can be found in the prospectus, others are harder to uncover. Our industry does a really good job of hiding fees on purpose, and it’s unfortunate. There are a few of us who leading that charge and trying to be more transparent.
Variable annuity fees
You can find out the fees if you know where to look and you know what questions to ask. Unfortunately, most people don’t know.
We are not fans of variable annuities and have never sold them. They are one of the most expensive products to own. The fees are usually between 2.5% to 4% a year.
Everybody knows that inflation is there, but most people underestimate its impact over time.
We typically use a 3% inflation rate, which is low compared to what real inflation is right now. Hopefully we can get a handle on inflation.
This is the problem with having too much in cash, which doesn’t keep pace with inflation. You need to have a diversified portfolio.
If tax rates go up, it’s going to affect your net income on IRA and 401k withdrawals. Most people don’t take this into account.
Taxes have to increase. This debt’s not going to pay itself off. But you shouldn’t have to pay more taxes than you have to pay.
Increased leisure activities
Even if you don’t have wildly ambitious travel plans for your retirement, the fact that you’ll have so much extra time on your hands will likely cause you to spend more money on a day-to-day basis.
Listen to the full episode or use the timestamps to jump to a specific section. Thanks for listening! We’ll be back for another show every other Thursday.
Our industry does a really good job of hiding fees on purpose, and it’s unfortunate. There are a few of us who leading that charge and trying to be more transparent.
- Mark Silverman, CFP®
Listen to the entire episode to hear more. Click on the timestamps below to skip to a particular segment.
2:00 – Mutual funds
2:47 – Variable annuities
3:57 – Inflation
5:43 – Tax increases
6:40 – Leisure activities
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