3 Things You Shouldn’t Stress Over in Retirement
There are many things a retiree can worry about in retirement. Today, we discuss 3 things to avoid stressing over in retirement.
3 Things Retirees Shouldn’t Stress Over in Retirement
Resources:
- Click here for video on 3 Retirement withdrawal strategies for down markets
- Bear Market Study
- Study on Investment Behavior
Full transcript:
SPEAKERS
Anthony Saffer 0:00
When you’re in retirement, you no longer rely on your ability to earn money. This can cause retirees to worry because you’re no longer in control, there are a million things you can focus on. Today we’re discussing three things you should avoid results over process, thinking short term, and obsession with finances. Hey there, it’s Anthony and Alex with One Degree Advisors, and we help you gain confidence in your retirement. So Alex, when we’re working, there’s a sense of control in that, right, if the stock market’s down or a bill comes up, we have the ability to earn money. Whereas when we’re in retirement, we lose that sense of control. And it can be quite worrying to people.
Alex Okugawa 0:38
When you’re in retirement, you move into a phase of life where you can no longer rely upon your human capital, to earn an income and make ends meet, and pay the bills. When you’re in retirement, you are now shifting and you’re now on the investment capital, you’re reliant upon your investment capital to make ends meet, and pay the bills. And honestly, this can be stressful because it can make it feel like things are out of your control, I no longer can control my human capital side of things to make an income, pay the bills, and do those sorts of things.
Anthony Saffer 1:13
Yeah, and you only want to retire once nobody wants to retire, and then go back to work. And this is where a good financial plan and a good financial advisor to help navigate those scary times can be really valuable.
Alex Okugawa 1:22
Yeah, this is helpful, because we have helped so many families to and through retirement, we know the things to focus on. But we also know the things to not focus on. And I know you had the privilege of helping families through the great financial crisis during 08/09. And so you know, the fears and emotions that go along with it. And what we do know about life is that we are going to have more recessions and more market declines more bear markets in the future. Now, the good news is that you can say Mr. And Mrs. Client, I know that you just retired a year or two years ago, and you’re experiencing a bear market right now, the good news is that I’ve already helped many folks through this process, and they’ve gone through the bear market. So I know what to tell you and I know what to focus on. Whereas that retired clients, this is their first experience. They’ve never had any type of bad market before, where they’re reliant upon their investment capital
Anthony Saffer 2:13
That makes me think about when I’m on a plane, and there’s really bad turbulence, I look at the flight attendants to see what their demeanor is because it helps me to calm down. Now, there are a million things to focus on when you get into retirement. But there are three things retirements really should not focus on. Let’s talk about that. Number one is focusing on results over process.
Alex Okugawa 2:33
We’ve talked about this before, investing can often feel like it’s two steps forward and one step back. So I want to pull this up on screen because I really think that this epitomizes that concept. So let’s take an investor who put $100,000 to work in the s&p 500, on January 1 of 2020. Now, by the end of 2021, they saw their wealth balloon all the way to $152,400. Now, of course, that wasn’t a smooth ride on the way up. But that’s a pretty substantial growth and wealth over a short two-year period of time. Of course, when we look at 2022, things weren’t so smooth. From January 1 of 2022 through the end of the year, that same wealth declined down to $124,706. And again, that’s that whole concept of two steps forward, one step back.
Anthony Saffer 3:34
If you’re focused on short-term results, instead of the long-term and really being disciplined. It can really feel like you’re giving up all those gains. I wrote a blog post recently comparing investing to baseball batting averages, we’ll go ahead and post that. Alright, so let’s talk about number two, which is thinking short-term, I don’t have time to recover.
Alex Okugawa 3:53
Yeah, many retirees sometimes get into like this hunker-down mode, when they’re in retirement. They want everything to be super, super safe, and conservative. And really, they’re afraid to lose anything that they’ve accumulated over the years. But we see this too often they forget the principles that built their wealth in the first place, and Hartford funds ran the data, we’ll put this up on the screen. Since 1928. There have been 26 bear markets, with the average bear market lasting 289 days or roughly 9.6 months. Again, these things happen. This is a normal part of market cycles. And when you get in retirement, it doesn’t mean you have to pull back and just focus solely on the short-term stuff.
Anthony Saffer 4:43
At the time that it’s happening. It feels like forever, but we don’t want to sacrifice tomorrow for that safety of today. So alright, let’s talk about number three, which is an obsession with finances.
Alex Okugawa 4:55
We all know that person that checks their investment account multiple times a day and we’ve also probably heard, research shows that when you check your account more often you typically perform worse than folks that check their account less often. And so we’ll post this in the show notes or research article that shows that folks that check their account daily, rather than every three months increased their chances of seeing losses, it’s usually seeing those losses, which is what creates poor investment behavior. But beyond the behavioral investment aspect of this all, we have seen people who obsess over finances and they’re just obsessed over every single penny and dollar kind of ruin family relationships, we’ve seen that have a negative impact. And we’ve talked about this time and time again, money is a tool. And money can be used for good or it can be used for bad, but you can’t let it dominate and control your life.
Anthony Saffer 5:55
Right, we want to enjoy retirement and spend it with people we love. So one of the points you discussed was thinking that I don’t have time to recover. We posted a video recently on three retirement withdrawal strategies for down markets. This is especially important for today’s environment. We’ll go ahead and post that up here. Yeah, this is Anthony at One Degree Advisors. If you’d like to learn more about how we can help you gain confidence in your retirement, go to onedegreeadvisors.com/getstarted.
Transcribed by https://otter.ai
The One Degree Blog
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This does not constitute an investment recommendation. Investing involves risk. Past performance is no guarantee of future results. Consult your financial advisor for what is appropriate for you. Disclosures: https://onedegreeadvisors.com/solutions/#disclosures
