Reader Beware: Bad Advice Out There

Reader Beware: Bad Advice Out There

There are lots of financial advice columns and blogs out there. This is one of them.

I read many of these financial blogs and columns, because no one can know everything. Just the other day I was reading one I’ve subscribed to for a while and couldn’t believe the first paragraph quoting the wrong ages for social security retirement benefits.

As I continued along reading other assumptions the author was making, I realized that someone, or some couples, relying on this advice might be in for a rude awakening as they approached retirement with less savings than they likely needed and a longer work life ahead of them. They might even unknowingly give back part of their early retirement social security benefits because of an earnings test the author failed to mention.

Now I realize that it’s very unlikely that someone would make a lifetime decision based on one blog, but it does point out the issue that facts change, or facts quoted can be wrong. Also, rules change.

Carpenters say it best: “Measure twice, cut once”. Second, third and even fourth opinions will confirm responsible and accurate financial advice, in my opinion. Not only that, but periodic checkups to find out if the rules have changed or financial research has developed new information and readers and advisors should change assumptions.

For example, social security retirement is not at age 62 or 65 as stated in the blog I’m criticizing. Reduced retirement benefits can be taken as early as age 62, but there is an earnings test that starts to claw back your benefit as your earnings pass the $15,720 mark for 2015. By the time you pass about $42,000 in earned income you’ve given back your entire benefit, which the IRS collects, on your tax return. Surprise.

In 1982, Congress raised the full retirement age gradually from 65 to 67 with many baby boomers having age 66 as their normal retirement age. This also gave rise to many social security claiming strategies to maximize earned benefits. However, that’s a topic for another blog.

Two significant issues have surfaced recently based upon new research. The 4% withdrawal rate to have savings last 30 years, and how much and how long, nursing home or assisted living costs and utilization rates have changed for each gender. This research calls past assumptions into question. Up to date financial advisors, bloggers and columnists are changing their assumptions and advice based upon this new research. We’ve mentioned this in recent blogs.

Hopefully, readers are being made aware of these kinds of changes by financial advisors, bloggers and columnists, and are making appropriate decisions as they progress towards retirement so they can save and spend appropriately and reach the comfortable retirement they desire.

Jim Ludwick
Jim Ludwick

Jim Ludwick is the founder of MainStreet Financial Planning. His varied education and life experiences have enabled him to apply his knowledge and experience into useful solutions for personal financial problems. His writing and broadcasting activities allow him to help many more than just individual clients. He loves a microphone.

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