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Critical Retirement Transition, FOMO & Grand Canyon – Finger Financial Five #20

FFF#20

“No individual raindrop considers itself responsible for the flood.” – Anonymous

In 2016 I went with some friends to hike across the Grand Canyon.  Such a beautiful sight.  I was in awe.  But we did not let that beauty fool us.  This trip could be very dangerous, if we were not prepared.  We had a guide, who told us what to bring, what to wear, and how to train for the 25 mile rim to rim trek.

People get in trouble hiking the Canyon because it is fairly easy going down.  The problem is coming back out.   They underestimate the time, resources (like water), and stamina it takes to climb up and out.  Many get lost; never to be seen again.  We came across two girls who screamed for help, when we were making our ascent.   They were armed with only one flask of water and their iPhone flashlight.  Our guide gave them salt tablets and said follow us.  The girls may not have made it through the night, if we did not pass by.  They were lucky.

The transition to retirement may seem easy as first, like going down into the Canyon.  Problems arise when you transition from work income to retirement income.  Creating and maintaining a sustainable income stream is vital for survival, like water in the Canyon. There are many challenges.  Here are just a few:

  1. Inflation – Kills cash as an investment (and some annuities too). Will your retirement income plan keep up with the cost of living?
  2. Withdrawal strategy – Is your withdrawal rate sustainable? Are you prepared for Sequence of Return risk?
  3. Market volatility – Will you be ok WHEN the markets become volatile? Do you have a backup plan?
  4. Taxes – Are one the biggest expenses in retirement.  Are you planning accordingly? Your advisor and your CPA coordinating together can have a tremendous benefit for you and your family.   I have seen hundreds of thousands of dollars in tax savings, by establishing a good tax plan.
  5. Longevity risk – Living too LONG can put an extended strain on assets.
  6. Untimely death – Can leave a surviving spouse in dire straights if income planning is not accounted for the survivor.  Many pensions disappear or are drastically reduced at death.  In addition, when someone claims Social Security can have a dramatic impact on their surviving spouse.

I could go on F O R E V E R, but this is a Finger Financial Five. The Five is for five minutes or less. 😊

Guy called me last week to ask about when to take Social Security, tax planning, etc.  I went over what he will need to do to be certain he is making the right decisions.  His response, I’ll be all right.  He was concerned enough to make the call, but not enough to take action.  Maybe you can afford to pay to a few hundred thousand dollars more in taxes, and it not have an impact on your family.  Maybe you don’t want to take a little time to double check things to make sure things are setup right. Maybe you have enough money that none of these things are an issue.  You are truly blessed if you can do all of this and congratulations are in order.
Before you write this off and sail off into your retirement sunset, think about this…

If you died, would your spouse feel comfortable with the decisions they will now have to make?  Will your children be ok with handling all the complex decisions in dealing with the estate you leave behind?

I have seen families torn apart because of money.  I have seen many people “be ok” financially.  But when they died, it was an emotional and financial nightmare organizing and making sense of everything, for the people they have left behind. It is not so much as WHAT you leave behind that matters most, but HOW you leave it behind.  Mind your wake.
Let me know if you have any questions.

FFF bonus and On the lighter side, As a family we tend to watch a show all the way through to completion.  Right now, we are watching Cobra Kai.  Pretty funny show on Netflix.  There was one scene where all the high school kids were having an all out brawl in a house in a high end neighborhood.  The fight went on forever. Elliott said, “where are the cops?”  No way they would not have shown up by now.  Good point.  How does this relate to retirement?   You may know of people who claim to be making a bunch of money (insert the hottest trade/stock/scheme here).  Here is where Fear of Missing Out (FOMO), can kick in.  You may have some fun, make a few bucks for a while, but you never know when the cops will show up and take it all away.  You just don’t know when the party will be over.  Like a gambler in the casino, the odds are stacked against you.

Hope all is well with you and your family,

Jeremy Finger, CFP®, CIMA®, CRPC®, CPFA

Founder & CEO
Wealth Management Advisor

Finger Financial Five – 5 points in 5 minutes or less – is to provide you with a weekly shot of useful financial information.  My intention is to share principles, so that you will have more clarity and peace, that help you make better financial decisions.

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www.RiverbendWealthManagement.com

Investment advice offered through Stratos Wealth Advisors, LLC, a registered investment advisor; DBA Riverbend Wealth Management.

This content is developed from sources believed to be providing accurate information and provided by Riverbend Wealth Management. The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. Stratos Wealth Partners and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.

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