Amelia The Literalist Show 43

Amelia, our three-year-old, is a literalist. We planned our summer beach trip to Destin, Florida, in February. We told her so that she could look forward to our vacation, but she didn’t understand the timeframe.
Her response was to go to her room, open her dresser, pull her swimsuit out and put it in the tote we use when she travels. She then brought it out for us to see. Amelia was showing us that she was ready to play in the water. She loves the sunshine!
After she got her swimsuit, she walked around our house putting her toys, books, and snacks in her little bag that she wanted to take with her to the beach. She was ready for the white sandy beaches! I can’t blame her. I am too. We’re pictured below in Destin in 2018.
Mallory David Amelia in Destin
Amelia doesn’t quite grasp time yet. Sometimes we ask her how long she’s been playing with something or watching TV, and her response is “one owy” (also known as one hour). As her personality continues to blossom, she provides constant entertainment for us.
Her immediate time frame to everything got me thinking. Have you ever wondered when to begin planning your retirement? When should a person begin making adjustments to prepare for retirement?
I tend to enjoy having a plan. Someone once said a successful day is planned the day before. That statement resonates with me because making a list is freeing my mind to focus on what’s at hand.
In today’s fast-paced information age, planning has become an essential task in order to get anything done. It’s easy to get distracted with our screens constantly pulling us back to them with notifications, dings, and alerts. I’m reading an interesting book on this that I’ll share with you in another newsletter.
Increasingly, I’m speaking with younger people who are asking, “Can I retire?” I’m even having this conversation with people in their forties! The precautions around Covid-19 appear to be causing folks to begin looking for their career exit path. Can you imagine the psychology books that will probably be written about this era?
A challenge I’ve seen people face is figuring out how to begin transitioning their finances for retirement. This may be especially difficult for some people because of the stock market’s upward momentum. It’s hard to know when enough is enough or how to scale back your portfolio risk level when times are good in the market.
As bonds have increasingly paid less and less, this becomes even more problematic because we’re seeing portfolios completely constructed with equities. What that means is when a market correction happens, you may be impacted. What will that mean for your retirement aspirations?
Then we have to plan around the government’s intervention in the markets. As another round of stimulus payments are set to hit bank accounts soon, it makes me wonder what this will do to our purchasing power. After all, when there is more of anything, the price goes down.
I had a realtor cold call me this week. The price of our home has gone up over 40% in the last four years. He said he was having issues finding houses for his buyers. We see pockets of inflation in certain sectors of our economy as the government lowers interest rates and buys bonds and even equities to stabilize markets.
We don’t have a crystal ball for what the future will hold, but our philosophy is that we should make the best decisions possible with the information we have available to us. It’s easy to want to withdraw all of our money and stash it in our mattress, but we know that isn’t prudent.
The ten years before you are retiring and really the five years before you are planning to retire are important. I frequently talk to people who explain to me that they never fully recovered from the 2002 or 2008 crash due to when they retired or when they got out of the market. The decade before and after retirement are important.
There are ways to be invested in the stock market without being overexposed to gyrations or corrections that may be devastating in a retiree’s portfolio.
Also, there are substitutes for the bond portion of your portfolio. The 60% equities and 40% bonds rule from the 1990s is broken. There are innovative techniques to remedy being overexposed in the market.
If you’d like to learn more about what tool we use for the bond portion of portfolios just respond to this email or call our office at 864.641.7955 and we’ll send you a complimentary bond alternative report.
If retirement is on your horizon in the next 5 to 10 years, I highly recommend you meet with a financial planner. Here’s a list of questions I’d ask the financial planner.
1.    How much of my current income will I be able to replace with my pension, Social Security, and retirement savings?
2.    When should I start Social Security?
3.    How do I figure out where I should pull money from first?
4.    What is a sustainable withdraw rate?
5.    Are there any assurances that I won’t run out of money?
This quick list should allow you to understand a financial planner’s investing philosophy and help you better understand if it resonates with what you are looking for in a planner. As always, thank you for reading and feel free to reach out by email or phone with questions or comments.
Until next week,
David C. Treece,
Financial Advisor
PS: Look for pictures of Amelia on the beach in Destin in a couple months!
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