How to Safely Descend the Retirement "Mountain"

For  mountaineers brave enough to attempt Everest, the most dangerous part of the journey is actually the descent down the mountain. And like Everest, your retirement journey "down the mountain" can be perilous — especially in the absence of adequate planning — because even the seemingly small mistakes can be catastrophic.

The good news is that you can get ahead of these dangers with a well thought-out and thorough plan. One of the critical elements with this type of planning includes evaluating, and if necessary, adjusting your investments to prepare you for the utilization of your current capital.***

***It's important to note that prior to retirement, for most people the objective is capital appreciation and growth. Then moving into and through retirement, the investment objective changes to capital utilization, and also capital preservation. It's quite the balancing act! The good news is that it can be achieved with the right tools.***

So there should be a shift in mindset, in which you recognize the investment approach you're going to employ in retirement will need to be safer and more conservative compared to your working years.

I learned this valuable lesson very early in my career. It was 2009 and I was worker for a large Wall Street firm. Shortly after getting hired, I met a man in his mid 60's who confessed to investing most of his retirement savings into his company stock. Unfortunately, his company was GM, and they had recently filed Chapter 11 bankruptcy.  The ensuing result of GM's bankruptcy for common shareholders was total loss. For the man I met this meant a lost retirement because he was now forced to continue working. 

To prevent a scenario like the one above, there are three core strategies for creating safety that we should all embrace...

1. Spread out your money

Take care to follow the old adage that says "never put your eggs in one basket."  This is a time-tested principle that proves its effectiveness over and over again. We saw this pay off just last year for our clients who heeded our recommendations to spread their resources among various asset classes and investment programs that included real estate, annuities, and prudently selected mutual funds, index funds, and ETFs. The result: they were able to sidestep the big losses that plagued many investors.

2. Be honest about your tolerance for risk

How much risk you take is a very personal preference and deserves careful thought and introspection. If you're married, it requires even more time and attention to ensure you and your spouse are on the same page. 

3. Regularly evaluate your plan, your circumstances, and your goals  

We encourage everyone we help to sit down with us AT LEAST once per year. During these check-ins, we'll use our time together to get an update on your goals and circumstances. This helps you determine whether or not your investments and the way you've structured your accounts align with your current situation. Sometimes we find things are working perfectly and are going just as planned. In which case, minimal (if any) changes are warranted. Other times, we learn your life has changed and your goals and needs are different. As such, appropriate adjustments are made. In essence, we're regularly reviewing everything to make sure you're NOT missing the mark.  

So the takeaway from all the above:

Retirement can certainly be daunting and the descent "down the mountain" is filled with risks. But if your planning is done well, and if you put in the effort to create a strategy built on safety, you greatly improve the likelihood of experiencing a fulfilling and steady retirement.