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5 Steps To Protect Your Assets You Can’t Afford To Neglect

by Neal Frankle, CFP ®, The article represents the author's opinion. This post may contain affiliate links. Please read our disclosure for more info.

You work hard to earn, save and invest in order to grow a retirement nest egg. That being the case, you’ll likely agree that it makes a lot of sense to do everything you can to protect your assets. Here are the top 5 ways to do just that.

1. Track Spending

Look in the mirror. When you do, you’ll see the greatest threat to your retirement assets. Sorry…it’s true. More people go broke because they don’t have a handle on their spending than from someone ripping them off. Your retirement assets are supposed to create retirement income for as long as you live – at least. So…..if you spend those assets, they won’t be earning for you and you’ll be broke. Not a pretty picture.

The solution? Implement a budget tracking system. Read my You Need A Budget review and make sure you aren’t overspending as compared to your income.

2. Right Time Frame

I’ve spoken about this many times before. You are going to live a heck of a lot longer than you think. According to IRS Publication 590, if you’re 40, you’re going to live another 43.6 years. And if you are 65, the IRS says you’re going to live another 21 years.

Too many people eat up their assets way to soon. A few do this because they don’t think they’ll need them that long. But most of the people who go broke do so because they worry about their short-term results so they invest accordingly. They avoid any value fluctuations and invest ultra-conservatively. HINT – short-term accounts are not the best investments for a secure retirement. What they should be doing is investing in assets that create income over the long-haul.

3. Don’t Do Anything Dumb

This is where the sharks come in. There are terrible people out there and you must protect your assets from them at all costs. They prowl for people who aren’t financially literate. Don’t get caught in their web.

Never ever invest in something you don’t understand. Don’t be afraid to just tell the person you don’t understand and as a result, you’re not interested. The sharpies will fan your greed or fear. This is not the mark of a person who is trying to help you make smart financial decisions. Slow down. There are very few investments that you have to get on top of right away.

4. Don’t Trust Your Banker or Broker

Please don’t rely on your banker. Sure…there are a few good ones out there but most don’t have the training to help you make smart decisions. In fact, bankers are usually instructed not to provide any advice to you. That’s why so many people walk into banks and walk out with a little less money in their pockets. Sometimes, unfortunately it’s a lot of money.

If you are single, this is a huge issue. A client of mine showed me her banking and investment statements. She is a single woman and the bank and investment statements were all in her name alone. This is fine…..if she never dies. But if she dies and the money is in her name alone, the assets would likely be tied up in costly probate court. What is probate? A painful, expensive and time-consuming process of transferring your assets after you die if you don’t make provisions before you pass away.

The solution? Consider setting up a trust or putting the money in a “Transfer on Death” account. This way, the account, in effect has a beneficiary and will flow to the intended person without having the court or probate involved.

5. Get Second Opinions

You will be happier, healthier and richer if you ask someone to be your accountability partner. This is especially the case in those areas of your life where you lack key knowledge, skills and experience. If that describes you, you need a financial accountability partner. This can be a trusted friend who has experience and knowledge. Some people don’t like spilling the beans and showing their friends their complete financial picture. In that case, you can hire a financial advisor.

I’ll be frank – in my 25 years experience, I’ve learned that you are the biggest threat to your own financial security. You probably already noticed that from the list above. If it’s important that you protect your retirement assets, take the 5 steps I’ve outlined above.

What other ideas can you offer to help others protect their assets?

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Comments

  1. cashflowmantra says

    August 12, 2011 at 10:23 AM

    For most people, their biggest asset is their ability to earn. Taking care of mental and physical health is a biggie in my mind too. But of course, your list is great.

    Reply

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Who is Neal Frankle

Neal Frankle

I'm a Certified Financial Planner™ with more than 25 years of experience. I feel very blessed and hope to share my personal financial experience and professional wisdom with readers of WealthPilgrim.
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