Life changes require planning. We can help.
This month, we’ll be talking about the emotional realities of preparing for and being in retirement. While we could keep this short and sweet and simply tell you to save enough and then spend a certain fraction each year after you retire, well, we all know there’s more to it than that.
We’ll talk about what we’ve seen as our client families have chosen to retire, how to manage withdrawals in retirement and how we define emergency versus lifestyle expenses. And, for those of you who grew up with WWII-era parents, we’ll address the fear of running out of money that many of these folks tell us about. We’re happy to have that conversation where we address your worry about going broke while making sure you can live your best life now.
When it comes to making withdrawals in a bear market, one thing we always do during the first quarter is to sit down with our client couples who are in retirement and look at how their portfolio performed, how much they took out, and what they expect their lifestyle to look like this year. This isn’t simply an “up or down” conversation. The markets could be up or they could be down, or the money we took out could have been dividends, as if we’re squeezing the orange without actually cutting into it. (Dividends are not guaranteed and can be affected by market volatility.)
In a well designed portfolio, we believe bear markets shouldn’t have a significant effect on your cash flow requirements for at least 12 to 24 months, and historically, the majority of bear markets haven’t lasted longer than that. (Past performance is no guarantee of future results.)
But Dave, you’re thinking, what if they do? Well, we’ll address that. But the reality is that we can’t just put money in a CD and let you live off the interest. Most people can’t be fully retired and only withdraw 2.5 percent. Whatever your number is – some clients take 4 or 5 percent, but it varies depending on situation – we’ll work to find a way to help you enjoy life while still leaving something to pass on.
However, even if we do get into a period of massive volatility where things do drop, that shouldn’t affect the cash you’re taking from your portfolio initially. People see the headlines that say “Dow Crashes 6 percent!” and they think they won’t be able to pull out their monthly $5,000, when in reality, they may have enough cash available to pull without selling a single stock, which we’ll rebalance and replenish as it makes sense.
In our first meetings of a new year, we’ll also review not just your accounts, but whether your cash flow requirements will change in 2019. Will you take the same vacation as last year? Did you finish up that kitchen remodel? Will the family be gathering for your 50th wedding anniversary? Do you need to start thinking about taking care of a family member, or did your grandchild get into a school their parents didn’t plan for? These are all things we need to know in order to plan for them. These life changes conversations help us help you, in 2019 and beyond. It’s our job to help make those life transitions smoother and less costly.
So, before you come in for your first quarterly meeting, jot down your 2019 goals and highlights, and what you’d like this year to look like for you. That way, our team can plan accordingly. We look forward to seeing you all soon!
The views and opinions expressed in no way represent the opinion of any broker dealer.
1792 Alysheba Way,Suite 201,Lexington, KY 40509
Phone: 859.219.1006Fax: 859.219.1012
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*Representatives are licensed to offer insurance and annuity products in AL, AR, CO, FL, GA, IN, KY, MA, MD, MI, MO, MS, NC, NH, OH, PA, SC, TN, TX, WV, VA, and WA and are licensed to offer investment products in AL, AR, AZ, CA, CO, CT, FL, GA, IL, IN, KY, MA, MD, MI, MN, MO, MS, NC, NH, NM, NV, NY, OH, PA, SC, TN, TX, UT, WA, Washington DC and WV. This website and its content are not intended for residents of other states. Securities offered through: The O.N. Equity Sales Company, Member FINRA/SIPC, One Financial Way, Cincinnati, OH 45242. 513.794.6794 Investment Advisory Services offered through The O.N. Investment Management Company. Estate Planning Services provided in conjunction with your licensed legal advisor.