Deadly sin of retirement planning: Envy
Yes, keeping up with the Joneses is a cliche, but at its core is envy, which can unwittingly thwart your retirement planning.
"Driving new cars, acquiring a home in a fashionable neighborhood, sending the kids to private school to keep up with their friends, are surefire ways to minimize your retirement saving potential," says Mark Petersen, CPA, CFP and vice president of affluent wealth planning for Carson Wealth in Omaha, Neb. "They are all nonincome producing assets."
The human tendency to compete may transfer to the investing arena, which could lead to disaster. "The problem is that focusing just on winning on an annual basis forces us to make big and specific market bets," says McCarthy, author of "The Safe Investor: How to Make Your Money Grow in a Volatile Global Economy."
"We know that never works consistently."
Rather, the better course, he says, is to forget whom you're envious of in the short term, and invest in broad categories of asset classes to minimize your risk.
"What we should care about is to make sure to have enough money growing so we have enough to last us until we are 90," says McCarthy.