September 17, 2008 11:00 ET

Five Common Financial Mistakes Executive Baby Boomers Make When Planning for Retirement

Underestimating Medical Costs, Tax Impacts of Taking Distributions Among Pitfalls to Avoid

LOS ANGELES, CA--(Marketwire - September 17, 2008) - As record numbers of executives prepare to exit the workforce over the next few years, investment advisors at MullinTBG have observed a trend of common missteps taken by these soon-to-be-retired top earners.

"Baby boomer retirees will need their savings and investments to provide a steady stream of retirement income for 20 to 30 years or more," said Deanna McMahon, Executive Vice President at Mullin TBG, a leading executive benefits firm with more than $21 billion in total assets representing almost 60,000 corporate executives. "We're concerned that these investors haven't developed a plan to address the myriad issues associated with the transition from wealth accumulation to distribution and don't have the strategies in place to reduce the risk of outliving their assets."

Whether anyone's portfolio of assets can go the distance to provide a lifetime of financial security is largely influenced by making proper allocation decisions over time. MullinTBG Advisors suggests that those executives who expect to maintain their current standard of living during an extended period of golden years give serious consideration to what the firm views as the most common financial planning mistakes being made by those close to retirement.

Five Common Mistakes Executive Baby Boomers Make

1. Going it alone sans professional financial advice. To cut costs and reduce their financial obligations, more companies have chosen to either freeze or terminate their defined benefit plans and offer defined contribution programs instead. Executives no longer able to rely on guaranteed retirement income have to take charge of savings through self-directed plans. To compensate for the loss of expert oversight of their retirement accounts, many executives should turn to online financial planning tools and/or professional financial advisors to help them assess their risk tolerance, recommend asset allocations, and establish short- and long-term goals.

2. Timing the Market. With decades of retirement to look forward to in most cases, executives should continue focusing on the long-term impact of their asset allocation strategy and keep their short-term investments on track to withstand market fluctuations as much as possible. Often, however, executives attempt to time the market by reacting to every market swing as it happens. This is a recipe for disaster, especially considering the volatility of the Dow recently -- up 300 points one day, down 300 points the next. This can prove devastating to one's portfolio.

3. Giving too little consideration to tax consequences of big distributions. Tax planning is an oft-overlooked element of investment strategy development. Planning for future benefit payments to cover such foreseeable expenses as college tuition, retirement living and health care is smart -- knowing the tax effects of each distribution is smarter. The consequences of taking benefit payments while still employed can differ greatly from those received during retirement, as do those paid out in a lump sum versus installments over a predetermined number of years. Differences in tax rates and tax brackets must be examined as well as tactics for minimizing impacts to the overall investment portfolio.

4. Disregarding annuities entirely. With the future of company pensions and Social Security murky at best, baby boomers ought to consider diversifying into other financial vehicles that provide a steady stream of retirement income. Although annuities have gotten a bad rap in the past for being associated with scams and having high fees, new products are being introduced that are more palatable to investors looking to reduce their risk of outliving their retirement assets. Some of the more attractive features of these offerings being marketed today include reduced or no surrender charges, a guaranteed floor that allows the investor to participate in the upside of the market, and the flexibility to convert the annuity to long-term care dollars.

5. Underestimating medical expenses not covered by Medicare. While the term "golden years" would suggest a time of relative ease, it takes a lot of planning and ongoing attention to managing one's financial and overall well-being for retirement to ultimately be a rewarding experience. Underestimating medical expenses not covered by Medicare, not figuring in the cost of inflation, or neglecting long-term care needs are just some of the retirement planning pitfalls that could seriously compromise the longevity of a nest egg.

In an effort to assist executives and their employers, MullinTBG offers Continuum(SM), an executive benefits program that provides comprehensive financial services for executives during their employment tenure as well as after they retire. With Continuum(SM), executives receive life-long advice and assistance in tailoring financial strategies for their short- and long-term personal objectives. The service includes financial planning for all company-provided plans and personal assets, coordination of qualified and nonqualified plan investments, asset allocation recommendations and retirement plan development.

MullinTBG is one of the nation's largest providers of nonqualified executive benefits, with more than 650 customized plans and $21 billion in total assets (as of 06/30/08) representing nearly 60,000 corporate executives. The firm is headquartered in Los Angeles, and has regional offices in Baltimore, Chicago, Dallas, New York, Boston and Newport Beach, CA. For more information, please visit and

Contact Information

  • Editorial Contacts:
    Marilyn Haese or Daryn Teague
    Haese & Wood Marketing
    (310) 556-9612