"Put me in Coach......!"

Conventional wisdom may have caught up a while back, but conventional implementation is now just beginning to take hold of a fact that the professional community has known for a long time....

"Success in retirement is about a lot more than money."

When we leave the workforce after so many years we leave behind more than just a paycheck. To a large extent, the fabric of our very lives is disrupted and cutoff. The daily routine we'd followed for decades is now rendered all but useless. 

Connections are lost, relationships cast aside and even where they do remain, many we find sadly, were bound by the commonality of our job, careers and associates. 

Photo by NeONBRAND on Unsplash

Photo by NeONBRAND on Unsplash

How do we fill these voids. How do we remain relevant in our own eyes and in the eyes of others. While retirement may or may not be filled with money and wealth (for many it will not) we need to examine closely (and hopefully in advance) that there is much more to "success" in retirement than what's on our balance sheet. 

Here's a great article on how the world is starting to wake up to the fact that you can design your life in many ways rather than taking what it hands you. 

 

 

Retirement Lost

In nearly 40 years of private practice, I've interviewed very few prospective Client's who's view on retirement and how that's all gonna work out is even close to being accurate. 

Retirement planning is complicated in and of itself. It becomes more complicated with the pressure of being in "distribution mode" as opposed to a lifetime of "accumulation mode." Look when you were building your nest egg harrowing markets didn't bother you all that much because you were still making money. Well, that changes when you're living off your nest egg and employment is well into the rearview mirror. 

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Prudential makes a good point in their most recent commercial that you should be focusing on how long you might live not how long you think you'll live. With the advent of increasingly effective medical technology, many, many of us will leave the typical mortality ages in the rearview mirror by a pretty fair amount. 

The mathematics of how retirement will likely play out are daunting and not something that a typical pre-retiree or retiree is in a good position to calculate. And missing the math might scuttle an otherwise rewarding retirement. 

Am I pitching you to seek advice? Well sure I am because advice when done right works. 

Will you have to pay for the advice, of course you will. But unbeknownst to you, you already are you just haven't figured out why or how. 

Here's some help in that regard. Then take your savings and get some real planning done. It may be the most important step you take. 

Winning the Losers Gane

Sorry can't take credit for the title to this blog, it belongs to Investment Guru Charles D. Ellis and is the title to one of the best books on investing ever written.

That book squares up pretty well with one of my favorite blog posts that came up on todays read list. "Why Can't "Winning" Active Managers Keep on Winning"

If you invest, no matter if you invest on your own for your own account, or you have an advisor, banker or insurance broker that invests for you, both of these pieces should be a must read and for good reason. 

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The quest to find a strategy or person that will beat the market is a failed attempt from the start. Frankly, if you're investing for yourself, I'd question that as a strategy as well. If the typical mutual fund manager, with almost unlimited funds and access to data and research the likes of which you'll never see as an individual investor can't consistently beat the market, the fact that you're going to based on data you cobble together when you're not doing your day job seems pretty unlikely frankly. I mean seriously, look at the math. 

The good news is that if you're investing for yourself you won't fire yourself and you'll make obtuse excuses for your failure, one of which is that at least you're not paying for the losses. But you are actually paying for it, sure, it's a debit to your net worth that you'll never actually calculate and good thing because that number would make you sick. 

There are more proven methodologies you just have to find them. 

Advice Is Advice Until It Isn't

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A recent study shows that 53% of employees receive no investment advice about how to allocate the money that they contribute to their 401k plan. 

What we know to be true is that independent research as well as academic research in both the investment industry as well as in the area of behavioral finance, is that left to their own device, people make horrible investment decisions. 

For many, your company retirement plan is your sole means of investing. (That's a problem in and of itself, but that's a topic for another blog post at a later date and time.)

Here's what's likely to happen:

  • Market timing; you'll move money in and out of markets trying to beat professionals at a game that you really don't understand. Odds are great that you'll fail at this attempt, though the temptation of psychic comfort will hard to avoid
  • Concentration: not the good kind, as in working with focus, the kind where your money is nested in a singular investment or worse, in your company stock. Ask the folks at Enron how that worked out for them
  • Not engaging a Fiduciary as your partner: Fiduciary's are required to protect your best interest above all others; everyone else? Well they're typically out for a commission win at some point and likely sooner rather than later
  • Saving too little or saving too much: Yes, that's right, saving too much! There I said it. The reality is that you'll walk away from work before your age 70 and 1/2 which means you better have some non-retirement dollars to draw on to get you by. The government doesn't require you to take IRA or other distributions until that magic 70 1/2 age so if you have to take them earlier, congratulations you're now voluntarily paying taxes. If you do that, run the risk of giving back the bulk of the tax savings you had banked over a lifetime of making your plan deposits. Consider capping your contribution to the amount that you'll need to get your employer match and putting the difference in a tax efficient personal portfolio. That's the bridge that will get you from retirement to age 70 1/2 when your required to begin taking retirement withdrawals.

Bottom line is that saving for a rainy day is a good strategy, been around for a long time. 

But, that doesn't bely the fact that there's still a great way, a good way and horrible way to do that and you should find yours. The results will matter. A lot. 

 

I'll Get By Without A Plan

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Yes you will. 

You'll get by. 

But what you have to ask yourself at every point is was that your intention? To get by?

It's easier not to have to answer the tough questions. It's easier not to have to keep score. 

Going it alone makes getting by seem pretty easy. 

But when in your life has inattentiveness and winging can it ever be truly been "optimal."

If you're not focused on "optimal" then you're not focused. 

Maybe it's time for you to start. 

There's More To It Than Money

For nearly 20 years a segment of the Wealth Management profession has been letting you know a very simple, yet immutable fact: That there's more to a "happy" retirement than money. 

The problem has long been that we don't freely associate our "value" (either in the world or; especially in our own minds) with our work. While we may bitch more than a bit about how much we hate our jobs, frustrate over work, good and bad assignments, colleagues, etc. for many of us; our work is an important marker of our vision of how we fit in in the world and why.

As you make your choices to turn away from your work and focus on that next horizon, don't lose sight of the fact that separating from work is just; that a separation. And like any other time connections are broken, the results aren't always easy and transitions can be cumbersome, clumsy and painful. 

Working with someone who has experience in these transitions can be an invaluable part of both your PRE and POST Retirement Planning. 

Sarah O'Brien at CNBC certainly has a good take on it. She has found what I've long known, that accumulating wealth is important; but accumulating wealth targeted on specific goals and lifestyle concerns is imperative. 

When is a good time to start all this? That's simple, yesterday. 

If you haven't started yet or haven't considered it yet, today's a good time to start.