In the many years that I have been fortunate to work with couples and families as a financial planner, I have seen, heard, and witnessed just about every type of financial mindset you can imagine. From the “Free Spirits” to the “Doom and Gloom” to the “Fiscal Hawks”— it’s been a colorful journey. One thing that continues to surprise me is the persistence of the idea that all that matters is the allocation of one’s investment options or their selection of wealth managers inside of their portfolio.
In our retirement workshops, we often discuss several issues and concerns that we frequently hear from folks who come to see us when they are planning for retirement. The overwhelming majority of people who attend these workshops are coming to learn how they can make their retirement income last longer than they do. However, we still see people who have been trained to believe that the “right” portfolio is all that matters. I say “trained” because I believe that the majority of what some people know comes from the marketing of Wall Street and financial institutions disguised as financial advice.
Instead on focusing on just investment choices— investors and clients should be focusing on creating an actual PLAN.
“Why is that?”, you ask.
The answer is simple: A portfolio is simply a tool that should be used to achieve your financial goals. The measure of a portfolio’s long-term success should be how well it enables you to meet your goals like saving for retirement, funding college education, or generating retirement income—NOT how it performed against the S&P 500 last year.
The best benchmark for a portfolio is the answer to these questions:
“Am I on track to make sure I know for certain that I’ll never run out of income during retirement?”
“If I get sick or die unexpectedly, how could my family be impacted?”
“If my spouse gets sick or dies unexpectedly, what’s my plan?”
“If I need to take care of my aging parents, will I need to provide financial assistance?”
“Is there anyone in my family that I want to help with education or financial expenses?”
“If taxes or healthcare costs go up unexpectedly, how will I be impacted?”
Of course, there are more questions…but you get the idea. Retirement planning is much, much more nuanced than whether your retirement account allocation is appropriate for your age. Decisions like 401k rollovers, social security claiming, optimal retirement ages, etc. can be incorporated into a plan that guides you along the way. In fact, fund giants like Vanguard and some 401k plans are trying to find ways to add planning advice to their platform because they realize how valuable good financial advisors can be to clients.
Right now, stock markets may be touching all-time highs, as the DOW, S&P, and NASDAQ have all hit record closes during this current bull market run. More and more, we are seeing the slow grip of inertia and complacency weave their way into the mindset of investors. What an amazing time to put a solid plan in place without the fear of market volatility or unexpected life events hindering your thought process. Don’t let this opportunity to seek investment help for the future pass by—take the time to build your plan today…one that will protect you tomorrow in ways that a portfolio can’t.