4 Mistakes That Will Kill Your Retirement – Part 2

In Part 2  of “4 Mistakes That Will Kill Your Retirement”, we have detailed the final two rollover problems that come up most often during retirement.

3. Going Through Your Money Too Fast

Ah, the tantalizing prospect of early retirement. The danger is that it’s based on sloppy or misleading math, says Gerri Walsh, head of investor education at FINRA. FINRA warns that advisers present 72(t) withdrawals “as a ‘little-known loophole’ that allows you to retire early.” The trouble is, you must withdraw a steady amount, which is capped based on your age. “You’re not going to get as much as you think,” says CPA Ed Slott, who runs IRAHelp.com. Going over the limit just once triggers a 10% penalty, plus interest, on all your withdrawals.

4. Investing in Risky Stocks

Chasing high returns can get you in trouble. Rolling money into what’s known as a self-directed IRA so that you can shoot for the stars is especially dangerous. The SEC estimates that in 2011 investors had $94 billion in this type of IRA, which lets you invest in pretty much anything, from real estate to tax liens. Last year the state securities regulators association warned that self-directed IRAs can hold exotic assets. IRA administrators don’t generally vet, so the accounts leave you vulnerable to risky pitches.

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