How many people do you know who have lost money to some unfortunate circumstance, situation or event? We have all heard sad stories of people making fortunes and then losing them overnight. Or, working a lifetime to accumulate a nice nest egg only to lose it or have it severely damaged by theft, bad spending habits or an ill-timed stock market decline.
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Don’t be lulled into a false sense of security. We are not all that far removed from the severe stock market decline of 2008, which caused many, poised to retire to change their plans and delay retirement it due to lack of sufficient resources after the market crash. The stock market has been rolling along nicely since then and it is only human nature to not think about the reality that what goes up must eventually come down. The biggest concern The Retirement Guys see while working with those planning their retirement years is that of “outliving my money.” There are several important tips we can offer to help you not outlive your money and to have a better chance at a happy and comfortable retirement. Here are a few.
Five tips — plus one — to avoid outliving your money
- Understand the different types of risk and your tolerance for each. There are many types of risk that can affect retirement including stock market risk, interest rate risk, liquidity risk, purchasing power risk, etc.
- Make sure each of your accounts has a specific purpose. Don’t just throw money in investment accounts and hope they do well without a defined purpose for each.
- Manage the different types of risk based on time frames. Determine what you will need your money for and when you will need it.
- Do what grandma and grandpa told you. Don’t put all your eggs in one basket. Diversification can help reduce overall risk.
- Understand where the income allowing you to live out the rest of your life comfortably will come from and protect it. Think about any possible events that could damage any income stream.
Plus one: The biggest and most important tip of all is to create and implement a plan (a good one).
The Retirement Guys call this good plan The Retirement Game Plan. I (Mark) have a tendency as a sports fan to relate to things in sports terms. A game plan can be used to help win the game of retirement.
Whether you are a sports fan or not, you probably can relate to being part of a team.
Each team member has an important role to help the team achieve the goal of winning the game. These team members can help you with important issues such as investment allocation, taxes, insurance, income flow, estate planning, etc. The problem is that in many cases the different team members don’t all work together. This can be a classic case of the right hand not knowing what the left hand is doing.
You may have your investment person, insurance person, attorney, etc., each all with a different agenda. At The Retirement Guys we like using what we call the “comprehensive approach.”
These many issues have a tendency to overlap. What you do with your investments, taxes, health care planning and estate planning can all have an effect on each other.
Factoring as many of these issues as we can into the plan can better help us manage the different types of risk we mentioned earlier. If you can get the different team members and parts of your plan to synchronize, the more likely you are to achieve success.
A big key is not procrastinating but rather taking action. Do you have a false sense of security? It is likely that the next big market crash is coming at some point. Are you prepared for it? How will you be affected if we have to relive 2008?
Do you have any types of circuit breakers on your investment accounts to potentially reduce stock market losses? Do you have a retirement game plan? You can take a little bit of action by getting information. Visit www.retirementguys.com and request your free copy of The Retirement Game Plan Summary. Start to take steps before the next bomb hits.
For more information about The Retirement Guys, tune in every Saturday at 1 p.m. on 1Newradio 370 WSPD or visit www.retirementguysradio.com. Securities and Investment Advisory Services are offered through NEXT Financial Group Inc., Member FINRA / SIPC. NEXT Financial Group, Inc. does not provide tax or legal advice. The Retirement Guys are not an affiliate of NEXT Financial Group. The office is at 1700 Woodlands Drive, Suite 100, Maumee, OH 43537. (419) 842-0550.
