“Who Moved My Cheese” was a great little book about dealing with things that don’t happen the way we expected and how we adapt to them.
As we look at the world today, certainly, things are not what we expected! Who could have predicted the pandemic? The hyper volatility of the stock market? Inflation going up to the highest level, 8.5% in March, in 40 years? https://tradingeconomics.com/united-states/inflation-cpi#:~:text=US%20Inflation%20Rate%20Hits%20New%2040-Year%20High%20of,with%20gasoline%20prices%20surging%2038%25%20%2840%25%20in%20January%29.And let’s not forget the war in Ukraine! Any one of these issues would be enough for you to reconsider your retirement date. Add all of them together and it’s no wonder people are concerned about their retirement and their very future.
If you are within the typical 5-year period just before retiring, these issues are likely causing you some angst about your decision to retire. No one would blame you, either!
Let’s look at some steps to take that may help you make a decision that won’t keep you up at night. Firstly, it is important to focus on those things in life that we can control. Just like we can’t control the weather, we can’t control the stock market or any of the other issues noted above. So, instead of getting worked up over the level of risk you have in your portfolio, why not meet with a professional to determine the actual risk you have and potential ways to mitigate that risk going forward? That is something you can control.
If you are concerned about your retirement income such as where it will come from, will it come from an uncertain asset such as stock market investments or will it be contractual with an insurance company? If you are concerned meet with a qualified advisor that can help you determine which strategy might work best for you and your particular circumstances.
There are many questions that would typically be considered when pondering your retirement date. Hopefully, these questions may better prepare you for that wonderful time when you can walk through that retirement door and enjoy the next phase of your life.
Here is a list of some questions to provoke some thoughts:
· Am I mentally prepared to leave my work life and work friends?
· Do I really know where my retirement income will come from?
· What portion of my retirement income will be guaranteed?
· What portion of my retirement income will be subject to the ups and downs of the stock market?
· Have you optimized your Social Security income benefit?
· According to the Social Security Administration, they are projecting an approximate 25% reduction of benefits starting in 2033. What is your plan to cover that projected loss of income?
· Do I have an adequate emergency fund established?
· Is my spouse up to date with the family finances?
· Have you determined your lifestyle expenses for a year? Knowing this is the first step in developing your income plan.
· If my income is stock market dependent, do I have a backup plan if there is a major drop in the stock market value? A significant stock market decline may reduce your income or require you to sell more shares of stocks to maintain the same level of income.
· Are you prepared for a “sequence of returns” risk in the market? The risk is most significant in the early stage of retirement if the stock market has a steep decline in value and you are relying on the market to produce a certain income every month.
· What if I withdraw too much from my investments? What will be the impact be in the later part of my retirement years?
· Are you prepared for major medical issues that may arise? Do you have a strong medical insurance plan?
And the list goes on! I do hope that this article will motivate you to learn more about your financial readiness for retirement. I have developed the “7 steps to Retirement Readiness” to help our clients with the daunting task of solidifying their retirement planning. These steps cover everything from your emergency fund up to your estate plan and how best to maximize your legacy to your loved ones.
I realize that planning your retirement is a tough challenge. I have written a book that covers the most important aspects of retirement planning. Reach out to us if you’d like a complimentary copy of my book. My passion is to help as many people as possible prepare for their “golden years” in retirement.
Control what you can and adapt to the changes! Have a GREAT day!
Investing involves risk, including the potential loss of principal. Any references to protection benefits, safety, security, lifetime income, etc., generally refer to fixed insurance products, never securities or investment products. Insurance and annuity products guarantees are backed by the financial strength and claims-paying ability of the issuing insurance company.
Our firm is not affiliated with U.S. government or any governmental agency. Neither the firms nor its agents or representatives may give tax or legal advice. Individuals should consult with a qualified professional for guidance before making any purchasing decisions.
Massey And Associates, Inc. is an independent financial services firm that utilizes a variety of investment and insurance products. Investment advisory services offered only by duly registered individuals through AE Wealth Management, LLC (AEWM). AEWM and Massey And Associates, Inc. are not affiliated companies. 4/22-1306235
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