It has been an interesting year and quite the opposite from how last year ended. In December 2018, the market was down and interest rates were up. Now the market is up and interest rates are back down. Since most of you are checked out for the holidays I decided to skip the heavy content and give you a recap of the most valuable advice I can offer. This will essentially sum up what I consider to be the foundation for making good decisions and creating a successful retirement plan.
Pursue Maximum Potential:
Whether you are just trying to protect and grow your money or looking for some lifetime income payments, go for the option that gives you the most. It may sound simple but you’d be surprised at how many people leave money on the table by not looking around a bit. Income annuities are easy to figure out. I can get top of the market payouts in about 15 minutes. Growth annuities can be a little more difficult to identify as there are many factors that affect the potential. It takes experience and disclosure of all material details to identify the most efficient opportunities available.
This is the monster in the closet. Fees can be charged against any type of investment or retirement product and it can make a big difference in the bottom line. Several weeks ago I showed you how fees erode your assets over time which makes it harder to achieve success. It’s not just the fee you pay but the lost opportunity for growth on money that’s gone. The best strategies minimize or even eliminate fees to give you the greatest chance for success.
Maintaining control over your assets is the key to taking advantage of new opportunities in the future. Being able to make changes throughout retirement will give you an advantage over other strategies in terms of market performance, interest rates changes, inflation, longevity and legacy. No one likes to turn over control of their money so don’t. Stay flexible and you will profit and succeed because of it.
Timing is critical:
Most people can’t successfully time the market. Proof is only in hindsight anyway. While you should be selling while others are buying or buying when others are selling, too many people still get lost in exuberance or panic and follow the crowd. It’s quite true that fear and greed drive the majority of financial decisions. So forget the market and make your decisions based on timing that is specific to what you need. Set a timeline for the years leading up to and into retirement. Make moves when you need to do something. I think when is more important than how much. Regardless of what happens with markets or interest rates, make a plan based on your needs. If you’re still nervous then please see the point above about staying flexible.
Tackle one issue at a time:
Some people approach retirement while trying to deal with every single issue at the same time. It’s one of the greatest obstacles you’ll face. Social security, asset protection, market risk, annuities, long-term care, health insurance, RMDs, legacy etc. If you try to do it all at once then rarely will it all get done correctly. I can’t say which one is most important for you but deal with things one at a time. Make a list with the most important things coming at the top and check them all off as you move down the list. It will save you time and produce better results.
Get on the same page as your spouse:
This is one thing I don’t always hear directly from an individual. But an educated assumption tells me lots of people stall out because a husband and wife don’t agree on the path forward. Well I’m not a marriage counselor so I can’t tell you exactly how to handle it but to some extent I’m guessing a compromise will sort it out. Some couples have one person who makes all the decisions and others work on big decisions together. However it works for you is fine, just make sure you don’t spend too much time chasing something your spouse won’t approve.
Don’t forget your priorities:
In regards to tackling one issue at a time, keep your priorities on the forefront at all times. Too often I see someone lose sight of the reasons for making a move and get stuck on the complexities of one part of a plan. Always remember why you’re doing it and keep everything in the context of your goals. Focusing on contractual details too long may lead you to something that doesn’t work as well. Details are important but not at the cost of losing sight of the reasons you started looking in the first place. Believe me, it happens.
Don’t follow the crowd:
This is entirely up to you. Most asset managers don’t beat the market. Most retirement plans have underperformed as well. Traditional retirement advice is fine in theory but success takes a creative approach. Computer simulations and Monte Carlo tests will reduce your portfolio to a dot on a scatter plot. The real world works a bit differently so keep the traditional advice in mind but I recommend taking a slightly more creative approach to getting there.
If I had the time to write a book then I could probably tell you some funny stories about each of the above points. Meeting all of you is definitely the best part of my job because I get to learn something from every encounter I have. There are some great stories out there and I want each of you know that in here you are part of a large group of successful, intelligent and good people. My position is a blessing and I don’t take it for granted.
If I left something out that you feel is important then please send me an email or make a comment below. I want to thank you all for a fulfilling 2019 and as we finish this year and prepare for the next, no matter what plans you have, please remember I’m here to help.
Have a Merry Christmas!