You know that mental list most of us have in our heads titled “Things I’ll Do When I Have Time”? These items creep up on us when we have a lazy morning in bed, or perhaps when you walk by a cluttered garage or kitchen sink brimming with dirty dishes while thinking you’ll get to it later. Better yet – is the common “stuff room” – those of us with a spare bedroom have, where items go that don’t seem to have another specific place in the house. Simply put, out of sight, out of mind.
I myself am guilty of this crime, constantly triaging both my home and office life into two categories: Get It Done Immediately vs It Can Wait A While.
I’ve noticed that for many of us can – even something as important as our own retirement – fall into the It Can Wait category.
If I had to take a shot in the dark, I’d say about 80% of the families who come into our office wanting advice on their situations had their accounts in a risky position. Most of them generally had 75% of their account at risk, with only 25% in secure investments. It is not that they didn’t know the stock market had risk as one of its biggest drawbacks—they had always just left their 401(k) that way because, well, it’s always been that way!
Many pre-retirees forget that their retirement accounts are not just a messy closet. If another serious financial crisis was to hit, those of us nearing our final years in the workforce don’t have the luxury of time to wait for those funds to come back.
Politicians and financial analysts might say we’ll never have another recession in our lifetimes. The truth is that no one knows what the future has in store or what changes we might face in the next year, much less the next decade. “Never” is not reality. Just the past couple of years proved this fact: 2017’s stable market was followed by a raucous 2018, with huge drops coming in just around this past Christmas.
At our office, what we stress to our clients is to have a portfolio that keeps your income steady while the market fluctuates, rather than a portfolio that puts your income at risk solely to the whims of market performance. That way when you see the Dow drop, you won’t hit the panic button.
Our clients know that regardless of what direction the market takes, their monthly paycheck from their accounts is stable.
The key to this is acting early, a few years prior to retirement. If you’re curious to see how secure your accounts are, I encourage you to make a free appointment with our office to see how your accounts stack up when it comes to their risk level, and to see what potential adjustments you might need to make to ensure your retirement security.