Pitfall #1: Not Downsizing or Paying Off Your Mortgage

Series: 9 Mistakes to Avoid in Retirement Planning

It’s crucial to minimize your expenses for retirement. This is particularly important when you aren’t earning any income. If you don’t keep your overhead down, you will have to cut back on your spending and draw on your resources more quickly than you would like.

One way to do that is with your mortgage or rent. Budget, plan and work to pay that off so you don’t have ongoing cost for living expenses to deal with.

Pitfall #7: Transferring a Home/Property to a Child Before Death

You may think that it’s a wise move to transfer your home into your child’s name in advance. Perhaps to ease the probate process or to mitigate the risk of nursing home expenses against your estate. However, there is a down-side to this plan. If children have legal entanglements because of lawsuits or financial issues, the house may get wrapped up in those legal affairs. The step of putting a house into a son or daughter’s name early might mean you unwittingly giving away a tax break the child might otherwise be entitled to.

The best solution is to put the house into an irrevocable trust, so that the property would be protected without incurring these extra risks.