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The Ten Financial Pitfalls Draining Retirees' Nest Eggs—and How to Evade Them

by Eric Seyboldt, MBA

As the golden years approach, the anticipation of a serene and financially secure retirement is a universal aspiration. Yet, lurking beneath this hopeful horizon are treacherous financial pitfalls that can swiftly erode the hard-earned savings of retirees and pre-retirees. Recognizing these hazards and implementing strategic alternatives is imperative to safeguard one's financial future.

1. Underestimating the Insidious Erosion of Inflation

Inflation, often dubbed the "silent thief," gradually diminishes purchasing power, making it a formidable adversary for retirees. Many fail to account for the cumulative impact of even modest inflation rates on their fixed incomes.​

Alternative: To combat this, retirees should incorporate investments that offer inflation protection. Treasury Inflation-Protected Securities (TIPS) and certain annuities adjust payouts based on inflation rates, preserving purchasing power over time.​

2. Neglecting Escalating Healthcare Expenses

Healthcare costs are notoriously unpredictable and can escalate rapidly with age. Underestimating these expenses can lead to financial distress.​

Alternative: Proactively securing comprehensive health insurance, including Medicare supplements and long-term care policies, can mitigate unforeseen medical expenses. Additionally, maintaining a Health Savings Account (HSA) prior to retirement can provide a tax-advantaged buffer for future healthcare costs.​

3. Premature Social Security Claims

Claiming Social Security benefits at the earliest eligibility age of 62 results in permanently reduced monthly payments. This decision, often made without thorough consideration, can significantly diminish lifetime income.​

Alternative: While claiming Social Security benefits at age 62 results in a permanent reduction of up to 30% compared to full retirement age benefits, it may be advantageous for individuals with immediate financial needs or shorter life expectancy. The break-even age—the point at which total benefits received from delaying surpass those from early claiming—typically falls between ages 77 and 80. Therefore, individuals should carefully assess their health status, financial requirements, and life expectancy when deciding the optimal time to claim benefits.​

4. Overlooking Required Minimum Distributions (RMDs)

Failure to adhere to RMD mandates from retirement accounts like 401(k)s and traditional IRAs can incur hefty penalties, eroding retirement savings.​

Alternative: Implementing a well-structured withdrawal strategy that aligns with RMD requirements is crucial. Consulting with a financial advisor can ensure compliance and optimize tax efficiency.​

5. Miscalculating Withdrawal Rates

Adhering rigidly to outdated withdrawal rules, such as the 4% rule, without considering current market conditions can lead to premature depletion of assets.​

Alternative: Adopting a dynamic withdrawal strategy that adjusts to market performance and personal circumstances is advisable. Regularly reassessing withdrawal rates in consultation with a financial advisor can enhance sustainability.​

6. Disregarding Tax Implications

Overlooking the tax consequences of withdrawals from various accounts can result in unnecessary tax liabilities, and diminishing net income.​

Alternative: A tax-efficient withdrawal plan that considers the sequencing of withdrawals from taxable, tax-deferred, and tax-free accounts can minimize tax burdens. Strategic Roth conversions and charitable distributions are also worth exploring.​

7. Maintaining Debt into Retirement

Carrying significant debt, such as mortgages or credit card balances, into retirement can strain fixed incomes and jeopardize financial stability.​

Alternative: Prioritizing debt reduction before retirement is essential. Strategies may include accelerating mortgage payments and avoiding new debt to ensure a debt-free retirement.​

8. Lack of Diversification in Investment Portfolios

Over-concentration in specific asset classes exposes retirees to heightened risk, potentially leading to substantial losses.​

Alternative: Diversifying investments across various asset classes—such as stocks, bonds, real estate, and commodities—can mitigate risk. Regular portfolio reviews and rebalancing are vital to maintaining an appropriate risk profile.​

9. Underestimating Longevity Risk

Failing to anticipate a longer-than-expected lifespan can result in outliving one's assets, a predicament known as longevity risk.​

Alternative: Planning for a retirement horizon that extends beyond average life expectancy is prudent. Incorporating lifetime income solutions, such as annuities, can provide financial security for an extended lifespan.​

10. Ignoring the Impact of Inflation on Fixed Incomes

Relying solely on fixed income sources without accounting for inflation can erode purchasing power over time, compromising the ability to maintain one's standard of living.​

Alternative: Incorporating investments that offer inflation protection, such as Treasury Inflation-Protected Securities (TIPS), can help preserve purchasing power. Additionally, considering dividend-paying stocks with a history of increasing payouts can provide a hedge against inflation.​

Conclusion

The journey through retirement is fraught with financial challenges that can swiftly deplete even the most robust nest eggs. By acknowledging and proactively addressing these common pitfalls, retirees and pre-retirees can fortify their financial defenses. Implementing strategic alternatives not only preserves wealth but also ensures that the golden years are truly golden, unmarred by financial distress.

Reach out to us for a complimentary, 10-minute consultation call. Let's explore strategies to protect your wealth and make your retirement everything you've dreamed of—secure, fulfilling, and worry-free. Schedule a free 10-minute consultation today by calling 614-943-2265. Your future deserves the best plan, and we're here to help make it happen.

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*Mode Mobile recently received their ticker reservation with Nasdaq ($MODE), indicating an intent to IPO in the next 24 months. An intent to IPO is no guarantee that an actual IPO will occur.
*The Deloitte rankings are based on submitted applications and public company database research, with winners selected based on their fiscal-year revenue growth percentage over a three-year period.
*Please read the offering circular and related risks at invest.modemobile.com.

THE ART OF THE DEAL: HOW A BUSINESS OWNER CAN MAXIMIZE VALUE BEFORE SELLING

by Eric Seyboldt, MBA

Client: "Eric, I’m approaching retirement and want to sell my business. How do I get the best price, find the right buyer, and make sure everything goes smoothly?"

Eric: A business isn't just an asset—it’s a legacy. Getting top dollar requires knowing what buyers want, presenting financials in the right way, and playing the long game to attract the right deal. Let's break it down.

Step 1: Define the Why, Then the When

Before listing your business, ask yourself: Why am I selling? Do you want out entirely? Would you consider staying on as a consultant? Do you need a lump sum, or are you open to structured payouts?

Your motivation determines your strategy. If you need an immediate exit, you’ll target a different buyer than if you’re open to a gradual transition. Timing matters too—selling in an economic downturn or an industry slump can lower your valuation.

Step 2: Get a Real Business Valuation (Not Just a Guess)

Pricing a business isn’t like selling a house. The value isn’t just in the physical assets—it’s in revenue, cash flow, competitive positioning, and future growth. Buyers will use one (or a mix) of these valuation methods:

• Asset-Based Valuation – Adds up everything your business owns, minus liabilities. Works best for asset-heavy industries like manufacturing or construction.

• Earnings-Based Valuation – Looks at cash flow and profitability, often using EBITDA (Earnings Before Interest, Taxes, Depreciation, and Amortization). Most buyers pay a multiple of EBITDA based on industry norms.

• Market-Based Valuation – Compares your business to similar companies that have sold recently. Industry benchmarks can give you a baseline price expectation.

Pro Tip: Many owners overestimate their business’s worth because they think about potential, not reality. Buyers, on the other hand, look at risk. A professional valuation keeps expectations grounded.

Step 3: Make Your Business Sellable (And Desirable)

Even if you think your business is worth millions, buyers won’t bite unless it looks like a sound investment. You need to eliminate red flags and maximize value.

✔ Clean Up Financials – No personal expenses mixed in, no messy records, no “under-the-table” revenue. Clean, accurate books increase credibility.
✔ Reduce Owner Dependence – If the business can’t run without you, it’s worth less. Document key processes, delegate responsibilities, and ensure a strong management team is in place.
✔ Diversify Revenue – A business too reliant on one big customer is risky. Buyers prefer steady, diversified income streams.
✔ Optimize Operations – Cut unnecessary costs, improve margins, and streamline inefficiencies. Buyers want scalability and efficiency.
✔ Protect Intellectual Property – Trademarks, patents, or proprietary processes can increase your valuation. Secure your IP before going to market.

Step 4: Find the Right Buyer (Not Just the First One)

Not all buyers are equal. Your ideal buyer depends on your goals:

• Strategic Buyers – Competitors or larger companies looking to acquire your business for market share or synergies. They often pay the most.

• Financial Buyers – Investors looking for a solid return. They care about numbers, not legacy.

• Owner-Operators – Entrepreneurs who want to run a business. They may need seller financing.

• Private Equity Firms – If your business has high profit potential, PE firms may be interested. They typically look for businesses they can grow and sell later.

A good business broker or investment banker can quietly market your business to the right buyers without jeopardizing operations or alerting competitors.

Step 5: Due Diligence – Be Ready for the Scrutiny

Once a buyer is interested, they’ll scrutinize everything. A few things they’ll look at:

📂 Financials: Tax returns, profit & loss statements, balance sheets—at least three years’ worth.
📂 Contracts: Lease agreements, vendor contracts, employee agreements.
📂 Legal Issues: Any pending lawsuits, compliance risks, or regulatory concerns.
📂 Customer Retention: Are customers locked in with contracts, or can they leave anytime?

Expect tough questions, and be ready with solid answers. If you hide problems, buyers will walk—or worse, lower their offer at the last minute.

Step 6: Structuring the Deal for Maximum Payout

A sale isn’t just about price—it’s about how you get paid.

• All-Cash Deal – Best for you, but rare unless the buyer is well-funded.

• Seller Financing – You finance part of the deal. Riskier but can attract more buyers.

• Earn-Outs – You get paid based on future performance. Common in deals where the buyer wants you to stay involved for a transition period.

• Stock vs. Asset Sale – In a stock sale, the buyer takes over everything (including liabilities). In an asset sale, they pick what they want. The structure has major tax implications.

Work with a financial planner and a tax expert to ensure the deal is structured in your best interest.

Step 7: Exit Gracefully & Secure Your Future

Once the deal is signed, don’t assume it’s over. A smooth transition helps maintain goodwill and protects your reputation.

• Have a clear transition plan for employees, clients, and vendors.

• Be available for consulting if needed (but set clear boundaries).

• Plan what to do with your payout—reinvest, create passive income streams, or secure a comfortable retirement.

Selling a business is a once-in-a-lifetime event. The right strategy ensures you get the best outcome—not just financially, but personally.

Final Thoughts

A business sale isn't just a transaction—it's a transformation. Whether you built your company from the ground up or took it to new heights, this is your moment to cash in on years of hard work. Make sure you do it right.

With a solid valuation, a clean operation, and the right buyer, you’ll walk away knowing you didn’t just sell a business—you secured your legacy.

Contact us for a free, brief 10-minute consultation. Let’s ensure you walk away from your business sale with the financial security and retirement lifestyle you’ve worked so hard to build. Schedule a free 10-minute consultation today by calling 614-943-2265. Selling your business is a once-in-a-lifetime event—make sure you have the right strategy to maximize your payout and secure your future. We’re here to help you make it happen.

Fixed annuities can be an essential component of a well-rounded retirement strategy, offering security, predictability, and efficiency in financial planning.

These are current fixed annuity rates and their durations from Top A-rated carriers (subject to change at any time, not FDIC insured):

Some Rates Are Up and Some Are Down! Don’t Wait To Lock These Fixed Annuity Rates In Today!

3-year: 5.00% (under $100k Deposited)

3-year: 5.10% (over $100k Deposited)

5-year: 5.55% (under $100k Deposited)

5-year: 5.45% (over $100k Deposited)

Please feel free to call Eric at 614-943-2265 if you’d like to ask any questions or request information on these fixed annuities or other retirement topics that are on your mind.

REAL ASSETS, Invest Like the Ultra-Wealthy

Have You Considered Adding ‘Real Assets’ like Precious Metals or Bourbon to Your Investment Portfolio?

As economic uncertainty looms, savvy investors are turning to physical assets to safeguard their retirement savings. With inflation potentially continuing to rise, and central banks flooding the market with newly printed money, tangible investments like gold—and even bourbon barrels—are gaining appeal as reliable hedges against financial instability. These hard assets not only endure economic downturns but also strengthen portfolio diversification, even in stable times.

Historically, physical assets have outperformed traditional investments during market turbulence, offering a dependable shield against financial uncertainty. Their resilience makes them a valuable addition to any long-term strategy.

In today’s challenging economic climate, incorporating real assets into your portfolio could be a strategic step toward greater financial security. Are these investments the key to fortifying your wealth-building plan?

Allocating funds into the asset class known as “Real Assets” may be a strategy that you should consider.

Ask us how to Rollover a portion of Your IRA or 401k To A BOURBON IRA (www.bourbon.fund/how-it-works/) or a GOLD IRA (see link below) and:

• Safeguard your assets from the collapsing dollar

• Incorporate the ‘REAL ASSET’ class into your portfolio like the ultra-wealthy

• Hedge against the current high-inflation conditions

• Protect your retirement assets against economic crises

Just get in touch. We make it easier than ever.

Feedback or Questions?

You’re invited to get in touch with us if you’d like to find out how the Novus Financial Group can help you on your journey to a happy, fulfilling life in Retirement. 

Office: 614-943-2265

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Investment advisory services are offered by duly registered individuals on behalf of CreativeOne Wealth, LLC a Registered Investment Adviser.

The content we provide here isn’t financial advice and cannot be taken as such. Please speak to your financial advisor before making any investment decision. Also, note that every investment comes with its risks and drawbacks. Lastly, we would like to remind you that past results cannot guarantee future returns.

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