BUZ LIVINGSTON: Ways to lose your retirement

Buz Livingston

Paul Simon got it right. There must be 50 ways to lose your retirement, too. Investments get all the hoopla but that narrow piece of financial planning is simple compared with successfully navigating retirement. The financial services industry makes their money from asset management fees and commissions tied to financial products. Buy some product, follow some management technique and voila you are on the retirement planning yellow brick road. In reality, retirement planning is a treacherous minefield and magic products don’t help. Let’s look at two cases where retirement was destroyed and investable assets only played a small part in the misfortunes.

Even people with minimal investment assets can find their golden years crushed due to retirement planning blunders. A South Georgia woman allowed her granddaughter and husband to move in with her. I assume the plan was the young lady would assist her elderly grandmother. Somewhere along the way, the granddaughter and grandson-in-law finagled the grandmother to take out a home equity loan. When the loan went belly-up the grandmother lost her home.  Lesson: If you own a home free and clear, don’t borrow against the equity during retirement. Don’t expect the loan officer to explain why.

On a more sinister note an Atlanta area man, and I use the term loosely, was sentenced to 10 years in prison after he swiped more than $300,000 from his father-in-law’s retirement nest-egg. The scoundrel also charged personal bills on his father-in-law’s credit cards. According to Atlanta Journal-Constitution reports it seems the daughter was granted power of attorney due to her dad’s dementia.  Why the daughter is not in the hoosegow remains unanswered.

This situation shows the value of working with an investment advisor. Don’t wait until dementia strikes either. As you get older consider using a trust. In this case the expense of a corporate trustee would have prevented the larceny and been money well spent. Even a revocable trust with multiple trustees would have made this caper much more difficult to pull off. This misadventure shows what happens when you don’t want to pay for advice. 

If an investment advisor had been part of the relationship the fraud could have been detected much sooner. A client contacted their adviser requesting a wire transfer. It seems the client “won” an overseas lottery. As part of their due diligence the firm contacted the family and learned the client had drained all his bank accounts as part of the lottery scam.  Despite the client’s demands the investment advisers held firm against making the transfer and helped save a retirement.

Here’s page two. The defrauded Atlanta dad could no longer afford his assisted living home and moved in with his son.  What is unsaid is the simple math of caring for a dementia patient can destroy a provider’s retirement planning. Ask yourself who will make decisions for you if incapacity strikes. No investment product will provide the answer and tactical asset management (whatever that is) won’t help either.

Even though Buz Livingston is a fee-only certified financial planner this should not be considered personal advice. For specific recommendations visit online at livingstonfinancial.net or at the office in Redfish Village, 2050 Scenic 30A, M-1 Unit 230.  Follow us on Twitter @BuzLivingston.