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258 Don’t Make Me Say I Told You So

► Don’t make investments that you don’t understand.

► Keep some of your money in investments that protect

you against loss of principal.

► Don’t make spur-of-the-moment investment decisions
based on advice from friends or family members.

When the stock market is doing well, and you’re making good
returns, don’t assume that those returns will go on indefinitely.

Many retirees in the 1990s assumed that they would earn at
least 10% per year on their investment portfolios based on

that decade’s terrific stock market returns. They started taking
income and spending money, assuming that those returns

would continue over the course of their retirement. As a result,
many have wiped out a good portion of their assets by being

too optimistic and spending too much in the early part of their
retirement.

Medical Costs

All of us are aware of how financially-crippling medical expenses

not covered by insurance can be. Unexpected medical expenses
may be the most common financial disaster for today’s retirees.

The cost of deductibles, prescription drugs, hospital stays, and
maybe even a short nursing home stay can add up quickly, and

Chapter 6: Your Action Plan