Have you decided if you really have enough money to retire? How much do you need? A million? Two million? More? If you’re like most people with money in the market–and big decisions to make, you are justifiably concerned. The market is rising to record heights– just before an election. Interest rates are ridiculously low. Therefore, you have questions deep down in your soul.
Because you can’t start all over again with your investments, you may be asking yourself: “Which way will the markets go based on WHO gets elected? Will the COVID vaccines really work? Will we EVER get rid of COVID? When can the economy really get back to humming again, and when can people travel in safety? Can I really retire if the market remains at risk? ” If you find yourself stressing over these issues, and staring at your monthly financial statements, you may be wondering not only if it is time to re-think your financial plan, but more important– if you really can afford to retire.
As a result, dare you have the confidence to let go and start having fun again? I’m helping my clients retire and stay retired, even in these queasy times. There is a strategy that can help you build, grow, and protect your money. Let’s talk about it.
It wasn’t supposed to be this hard.
Because we have all worked, saved, and contributed to a retirement plan, we always thought retirement income planning was supposed to be easy. This is the time in your life when you want to start relaxing and enjoying things. You’ve put in your time…now, you want to reap the rewards. But if you are still stressing over markets, there is still a flaw in your financial plan. Yes, it is a crazy, crazy year. But do you think everything will conveniently calm down the day after the election? Now, more than ever, you need to reassess, re-think, and perhaps re-design your strategy.
If you are stressed about retirement income and the long term safety of your money, the cart somehow got in front of the horse. Your strategy has a hole in in it. And if you don’t fix it, you may never feel at ease about where you are going with your money.
We all remember the line from the great movie Casa Blanca: “Round up the usual suspects.” As an advisor, I typically can find common mistakes hurting clients who come to see me. Financial mistakes that can hurt your retirement often stem from these “usual suspects”: a) not having a written income strategy that is guaranteed for life b) Placing too much faith in the markets c) Not trusting the market at all d) Using the same investment allocation in retirement that you used before you retired.
A Better Path Forward
Resolving these issues will almost immediately put you on a better path to achieving your goals in retirement, and if you don’t take these steps now, when will you do it? It is a well worn cliché’ but we all know about doing the same things over and over again while expecting a different result.
This is a time when you want the best advice you can get. But whose advice should you be taking? How do you know if the advice you are getting will get you where you need to go? Some advice we get in this world is excellent—if only we were getting it twenty or twenty-five years ago—when interest rates on bonds were high enough to retire on.
Today, ten year treasury bonds are yielding in the range of 7/10ths of one percent. A million dollars in bonds would have yielded $70,000 annually, twenty-five years ago. Today, a million in treasury’s will yield only $7,000 annually—ten times worse.
Twenty-five years ago, the secret to retirement was to move half of your retirement money to bonds paying five to seven percent. The bonds gave you the safety you needed and a very nice secure income. That income, along with Social Security, could keep you from worrying about your money. But twenty-five years ago, you were still working. You were still CONTRIBUTING to your 401k, not drawing from it for income.
….And twenty years ago, you were PERTURBED because the rate on a ten or thirty year treasury was dropping all the way “down” to five percent from seven percent! Today, many retirees would be thrilled with bonds guaranteed to pay five percent for thirty years. Those days are long gone and as governments keep rolling up bond debt in the trillions, they like the idea of not paying ANY interest, or having bond investors pay the government.
No one predicted negative interest rates five or ten years ago. But here we are.
Because previous generations of retirees could retire on bonds, we never thought the “unthinkable” would ever happen. But of course it IS happening in Germany and Switzerland as I write this: negative interest rates on government bonds. Why would anyone pay the government to store their money? Because people crave safety.
Unfortunately, even though the world of interest rates and retirement income planning have changed drastically, many advisors still keep peddling the same bond allocation. Who in their right mind wants to buy an investment that pays ninety percent less than it did? (7% versus .7%)
Sadly, the advice you get from a big-box-brokerage like Vanguard, Fidelity, or Edward Jones, is to keep buying bonds paying the lowest interest in one hundred years. If you are in this predicament, it is time for a second set of eyes to review your financial plan.
It is wise to get a second opinion–especially when you have less time to recover from a crash
You are getting older, with less time to recover. Yet if you own a Vanguard model portfolio, you are heavily invested in stocks at all time highs and bonds at all time lows. If the market falls and a prolonged recession follows, you will needlessly suffer the emotional if not financial strain of seeing your portfolio get crushed at exactly the wrong time in your life.
If you are withdrawing retirement income of five percent annually from that stock-bond portfolio and it gets cut in half, will you be comfortable withdrawing TEN percent of your money every year during a recession? Or will you settle for the pay cut?
With the IQ Wealth Smarter Bucketing plan, you will have a lifetime income of from five to nine percent for life, depending on age and deferral period. If you want to invest in equities (stocks/ETFs), we will make sure you have the right and proper allocation. You will have professional management that keeps an eye on markets, the economy, politics, etc. Your management team makes changes as the facts change. The professional management fee: less than one percent, with no charges for transactions. There are no commissions. When you do better, we do better.
With the market at a high point, an election to deal with, and seemingly nowhere to turn for safe income at higher rates, now is an excellent time to get a review from a second set of professional eyes. Learn how the IQ Wealth Smarter Bucketing System™ puts a firewall around your income, keeps an ample supply of your money 100% liquid 24/7, and positions you for growth with Dividend Stalwarts and Technology Leaders in your growth bucket. Learn more about the IQ Wealth Black Diamond Dividend Growth Portfolio and the Blue Diamond Technology Leaders portfolio. Put it all together with a Smarter Bucketing™ plan. The IQ Wealth® Strategy in a nutshell: “Insure your income, insure your outcomes, invest the REST with purpose.®”