As we watched the Winter Olympics, I pointed out to my wife a salchow jump and then a death spiral.
She looked at me with surprise and asked how I had learned about figure skating. Then she asked my opinion on the competitor’s technical score. It was sweet but I had to remind her that my opinion on what I like and don’t like hardly qualifies me to pass judgment on the entire routine.
Truth be told, we pass through life passing judgment on many little pieces of information or observation without truly grasping the context of the entire issue. We have devoted much ink to this conversation over the years but perhaps too much ink cannot be wasted in addressing the blunders inside of retirement planning.
Unlike the few minutes when Olympians get to begin, perform and ultimately end their performances, your retirement plan must last as long as you do. In fact there should be some resources left after you are gone! The skaters’ scores confuse me even though I can watch the entire routine, so imagine how challenging it can be to determine if an investor’s retirement “performance” is successful.
Beginning with the end in mind, I would suggest you first define success. For most of us that proper definition will have nothing to do with the return on an individual investment or even your portfolio over a single year. Success will come from your money lasting longer than you do while allowing you to maintain the lifestyle to which you have grown accustomed. That is most people’s definition and a worthy end objective.
The focus has to be multi-faceted. You must pay attention to the amount you are saving and accumulating. Often people save whatever the minimum amount needed to gain an employer’s match to put into a 401(k). What if it isn’t the right amount and what if it’s in the wrong investment tool?
Trouble will find you if you follow an emotional style of investing trying to chase ambiguous market returns or perceived averages. Rather, a disciplined approach that provides a return in both calm and choppy markets will have a far better chance of getting you to the retirement you imagine.
Many investors take the tax landscape for granted without understanding the fluid nature of the tax code and things that can and need to be adjusted. Just as Shaun White had challenges in the half pipe because of conditions outside of his control, it didn’t mean he did not need to make adjustments. By ignoring changing conditions and hoping for the normal outcome, many investors end up with retirement surprises they could do without.
There are many art forms in the world. We watch the Olympians and cheer for their success and safety. Our job as fiduciaries in the financial services industry is to watch over the families we serve with the same competency, clarity and communication we would use in our finances.
Joseph “Big Joe” Clark, whose column is published Saturdays, is a certified financial planner. He can be reached at email@example.com or 640-1524.