It is safe to say that the vast majority of Americans – guided by their financial advisors – leave the success of their retirement nest eggs entirely to chance. Think about it. Most people invest their nest eggs on the probability that, come the time for their retirements, they might end up with amounts sizeable enough to enable them to enjoy their desired lifestyles. However, what this means is that there is also a possibility that these variable funds might end up being far less than is necessary, or perhaps even completely lost.
Your own advisor, favorite radio or TV financial personality, personal finance magazine, or finance-related blog you highly esteem may have convinced you that insofar as you have a “well-diversified” portfolio and a “long-term” perspective, things will turn out just great. While that may sound good and perhaps even have been the case in the past, you need to understand that it is still simply pure theory! The thing is, a “well-diversified” portfolio and/or “long-term” cannot and will not eliminate the possibility that your variable investments may experience devastating losses from which you might never be able to recover, period!
The fact of the matter is that millions of retirees (and folks within few years of retiring) now wish they had known better and paid attention to this reality before the stock market tsunami of recent memory. The reality for those folks is that when their so-called “long-term” rolled around, their “well-diversified” nest eggs stood decimated; meanwhile, their biological clocks keep on ticking. What now? Are they supposed to wait for another magical “long-term?” Do you consider approaching a retirement that is certain with a strategy hinging on uncertainty to be even a remotely good idea?
Just last year, the National Institute on Retirement Security found that “when it comes to retirement some 84 percent of Americans have a high level of anxiety. They are concerned that current economic conditions are impacting their ability to achieve a secure retirement.” Eighty-four percent! Remember, these are people who had been receiving financial advice for all those years. But it seems their so-called advisors failed to recognize the simple reality that probability works in both directions. That is both sad and scary because as it turns out, many financial advisors don’t follow everyday commonsense in their work.
Did you know there are folks (just like you and I) who are virtually unaffected by stock market dips – including the recent market crashes? In fact, their portfolios did not lose even a penny of value! Instead they have made gains every year. And as the markets begin to recover, their gains will only get better. Unlike those who are now trying to play catch-up, these investors will not have to delay their retirements – and those already retired did not have to endure any unpleasant changes to their lifestyles. Doesn’t this sound like a better, more realistic approach to retirement?
So what about you – what’s your strategy? Do you want to stake everything on “probability”, or would you rather make a plan that will benefit you, regardless of market conditions?
Samuel N. Asare, MBA, CRPC, CMFC, CTP, CBM, is the senior strategist at Laser Financial Group, with nearly two decades of experience in retirement-income planning. His straight-forward and superb ability to simplify often-complex strategies has made him a regularly featured expert in various print, radio, and television media. Samuel is the celebrated author of several personal finance books and the acclaimed Proven , Common-Sense Wealth Building blog. His firm trains financial professionals on a variety of retirement-related subjects, and he regularly speaks to investors about how to retire successfully. Visit LaserFG.com, or connect at facebook.com/LaserFG for more practical insights.