Beware The Eight Great Retirement Bets

If you are willing to wager that sports gambling is on the rise, that’s a safe bet.

As German Lopez reports in the New York Times, “Six years ago, sports betting was illegal under federal law. Today, it is everywhere.”

Here’s why. In 2018, the Supreme Court struck down a federal ban on gambling. Today 38 states and the District of Columbia now allow gambling on games.

While other countries were allowing sports betting, the U.S. only allowed wagering for some competitions, like horse racing. This didn’t stop gambling on sports, it just gave rise to illegal bookmaking (which is still in the news if you followed the headlines about L.A. Dodgers superstar Shohei Ohtani).

The truth is millions of Americans were already betting on sports, regardless of its legality, but the action was hush hush.

Today you see a great deal of advertising about sports betting, something unheard of a decade ago. Think business names like Draft Kings, Fan Duel, and Ceasars exercising their free speech with ties to the NFL and Major League Baseball.

Starting in the 1970s, the Supreme Court interpreted the First Amendment to protect business advertisements. Therefore, if something is legal, it can be advertised, and governments can’t stop companies from marketing it. As Lopez reported:

“The court has taken the view that the freedom of speech, generally speaking, should let individuals decide for themselves what to believe without the government trying to say that these are bad messages,” Eugene Volokh, a legal scholar at UCLA, told me.

In other words, concludes Lopez: If people want to spend their savings on legal sports wagers, they should be able to find out how to do so.

But my question is: What if people want to bet their retirement savings on risky propositions?

Are You Making These Eight Retirement Bets?

My concerns are not with gambling as entertainment. What concerns me are the bets investors are taking with their retirement nest egg. Sports wagering might be an entertainment boon, but don’t gamble with retirement investments.

There are eight bets I see retirees consistently making, and most do not know if the odds are in their favor.  Where do you stand on these eight bets?

Are you betting you are taking on the right amount of risk? You take more risk on based on your life expectancy and your stage in our life. You take on less risk when you are entering the distribution phase.

Are you betting you will be in a lower tax bracket in retirement? Because taxes are our largest expense every single year. And in the future, it’s scheduled to go up, not down.

Are you betting you are paying the right amount in fees? Rarely do the people we talk to know how much fees they are paying because it’s not showing up on their statements. It is a bad bet to just trust and not verify.

Are you betting you don’t need a Roth conversion? No matter what stage you’re in, you should be considering converting. If you are wagering your tax bracket will be lower in retirement, you might be losing that bet. Maybe it is time to bet on higher taxes by moving that 401(k) and IRA money into a Roth account. You can pay the tax man a little now or you can pay the tax man a lot down the road.

Are you betting on an income plan that is closely tied to the Stock Market? Minimize the impacts of eventual stock market dives. Don’t bet your income plan on stocks and even index mutual funds. Remember when the market dropped 30% in March of 2020 and 50% in the Great Recession of 2008?

Are you betting you won’t need a long-term care plan? Betting you won’t need long-term care could jeopardize all of your planning if you or your spouse become sick.

Are you betting your loved ones are accounted for? Make sure your assets will be properly transferred to loved ones if you do not spend it all.

Are you betting on a cookie cutter financial plan? Many feel a typical plan will suit their needs and there is no need to invest time or resources in a customized plan. One size fits all doesn’t work for sweatshirts, bathrobes, or retirement plans.

If you are not addressing these eight great bets, chances are your retirement planning is going to be incomplete. Many people in the retirement industry have a vested interested in getting as many investors to participate with them as possible.

If you would like to hedge your bets with a second opinion, we would be happy to sit down with you.