Investors, soon-to-be retirees, and those who have already retired are always trying to find the right answers about retirement. The problem is they are not always asking the right questions.
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For example, when the market sees a 10 percent decrease as it did in August, asking why your portfolio lost so much money is not the best inquiry. A better approach would be to ask if there was anything that went up in value that could have helped your portfolio remain positive. Coincidently, the answer is yes. But if you don’t ask the right question, you may never find a solution.
In retirement, there are things you should know as well. Here are three specific questions to help you retire and stay retired in these volatile times.
Because we are working with a global economy, global investments, and global volatility, the first question is: “Have I positioned my portfolio to withstand global conditions while being able to benefit from them?”
This question has become increasingly important as we have seen Greece, a relatively small economy, drive the market’s major swings. Constructing an investment strategy that utilizes both long and short investments positioned across the globe has been very useful during the last few months.
Second, I talk to more and more investors who are not sleeping at night as they get closer to retirement. Of course, that is exactly why they are coming to see me; perhaps there is some predictability here. But the question you should be asking is, “What is keeping me up at night about my retirement?”
Often the concerns will revolve around whether you can actually retire. You’ve worked so hard to save for retirement, but with all the bad news coming from Wall Street, it seems that you may have to continue working. Therefore, the answer here is not always straightforward. The way to get comfortable with your retirement is to put together a retirement plan. Either find a good software program and do it yourself or meet with a Certified Financial Planner that will put one together for you.
This plan is a critical part of your comfort. It tells you exactly how you are positioned based on all inputs. It takes your incomes like Social Security and pensions, your assets like your 401(K)s and IRAs, and your taxable investments and plots them against your expenses. The plan will also allow you to adjust for things like inflation, taxes, and returns on investments. It is the best way to prepare for retirement.
The third question concerns what you want to do in retirement. Here I mean what you REALLY want to do. This is about where you want to live and the types of activities you want to participate in—like golfing, traveling, consulting, or even starting your own business.
So the question is, “What do I want to do after I stop working, and is there anything I always wanted to do but never got around to?”
Answering the last part of this question can change your post-working life from just “living” to “living with passion.” The answer here will be different for everyone. As a matter of fact, we asked one 72-year-old client that question, and he startled us with his answer. He said he wanted to ride on a fire truck.
Apparently when he was in second grade, he was sick on the day his class toured the fire department and rode the truck. Knowing how important it was to him, we spoke to another client who was a retired fire chief and set it up. He was ecstatic about the experience. That is what life is all about.
So as you can see, there is a way to change your focus from the negative to being positive and making your retirement a reality. But your success hinges on the questions you ask.
Good luck and happy investing.
Kelly Campbell , CFP® and Accredited Investment Fiduciary, is the founder of Campbell Wealth Management, a Registered Investment Advisor in Alexandria, Va. Campbell is also the author of Fire Your Broker, a controversial look at the broker industry written as an empathetic response to the trials and tribulations many investors have faced as the stock market cratered and their advisers abandoned their responsibilities to help them weather the storm.