Hello and welcome to Module Two lesson four. Tony Ken's here with you again. Today our topic is the 12 reasons you will go broke in retirement. In our last lesson we spent time talking about risk, and in particular investment risk, but how you can learn to embrace and manage it, and then deal with others which are essentially a roll of the dice over which you have no control. None of us can choose our parents or when we get born in this lesson are things over which you have a lot of control. From the first videos you saw, perhaps those were the three mini videos that I created for successful retirement secrets.

I've tried to sound a bit like a college professor, you know, trying to have a clear and resonant voice giving you pearls of wisdom. Well today at the risk of being a plagiarist I'm sharing something that came from Kiplinger, a publishing house whose focus is the world of money. I'm doing this without their Express permission. So here's the URL that if you copy and paste into a browser will take you to the 12 reasons You will go broke in retirement. I don't know when these first appeared, but I saved them as they made so much sense. I follow the Kiplinger, news feed and from time to time, something like this appears that really resonates with me as a financial planner.

We're going to review all 12 and I'll provide my insights for each one. As you follow along, your goal is to absorb each one so that it plays a role in the roadmap you're building that you use to follow as you travel through time towards retirement. going broke in retirement is something you should make every effort to avoid. Reason number one, you will abandon the stock market. This essentially echoes what you've already heard me say not only on the videos, but in the car and house story, that if you expect to grow the money in your retirement buckets, you have to accept the inherent risk of being invested in the stock market. You must plan for a source of money for the 20 to 30 years of retirement.

And that means having at least 40% of it allocated to the stock market as the only way to outpace inflation. Reason number two, you invest too much in the stock market. On the other hand, if you become too reliant on your stock market portfolio to pay your core expenses, and a global recession happens at the wrong time, you could easily end up on the wrong creek without a paddle. Reason number three, you live too long. People retiring today expect to live another 28 years. According to the Transamerica center for retirement studies.

If you have no money, you're left sitting around waiting to die. And that's not a pleasant thought. Reason number four, you spend too much money. We already spoke about the gogo years and being able to check off the items on your bucket list of things to do. If you spend too much and have only a fixed income. One that doesn't grow along with the increase in the cost of things you have to buy.

You're going to eventually go broke. Reason number five, you rely on a single source of income. The word diversified comes to mind and diversifying yourself Investments doesn't mean using different banks to buy certificates of deposit. It means taking into account stocks and bonds and real estate and a recognition that Social Security is being threatened by Congress's inability or unwillingness to impose the necessary fixes. Reason number six, you can't work. We're not just talking about having to retire for health reasons.

Many of us expect to find ways to earn a little money somehow after we retire. But if you can't, for whatever reason, and it may be because a loved one requires constant care, you're going to go broke if you can't make adjustments. Reason number seven, you get sick. According to a report from the Employee Benefit Research Institute in 2015, a 65 year old man needs to have saved $68,000 to have a 50% chance of being able to afford health care expenses in retirement beyond those paid by Medicare, and that doesn't include long term care expenses. Reason number eight, you tap the wrong retirement accounts. There's some basic rules about how to identify which retirement account should be tapped first.

And that assumes you have a diversified mix of investments in those accounts. And of course, this gets more complicated when there are changes in both global economic conditions and tax rules. shrink your accounts carefully, my friends. Reason number nine, you don't consider taxes. This was touched on in the last reason for going broke. What are the tax regimes like where you live or keep your money?

Retirees flocked to Florida and Arizona because they are generally warm and because there is no state income tax to deal with. The new tax rules are going to push a lot more retirees in some of the northern states down here to Florida, because state income taxes are no longer deductible or at least to the extent that they were on your federal income taxes. Reason number 10. You bankroll the kids. I've had more than one client over the years put the welfare of their adult children In front of their own welfare. As a parent, I understand the sentiment.

But those folks are now closer to being broke than they would have been. You naturally want to avoid the social stigma, whether it's self imposed or from others, that your children are not important to you. But paying for college or perhaps helping them buy a house may have huge financial implications for you. Reason number 11, you're under insured. Once again, the car and house story comes to mind. You haven't read it, put it on your list of things to read soon.

Transferring the risk of something bad happening to your retirement accounts can be critical. And don't forget healthcare risks, lawsuits from accidents you might be involved with, or hurricanes and tornadoes. Reason number 12. You get scammed. Those who would rip us off are almost always going to be ahead of the curve when it comes to technology and the rules we allow society to impose on our freedoms for protection. And according to MetLife in the National Committee for the prevention of elder abuse 55% of the time, financially Use comes from family members and other caregivers.

Okay, you've gotten the idea now, here's the link once again, if you want to read the full comment that Kiplinger put with all 12 reasons. When you get ready for our next list, that's video module two, number five. Come on back and we'll talk about the retirement red line. This is a projected point in your future where you might run out of money unless you make some changes along the way.