When The Plan Goes Off The Rails
Even the best designed plans go awry from time to time. The perfectly planned vacation can get rained out. The outdoor picnic can have too strong of a wind. The phone’s GPS that is leading you step by step down an unknown part of town will work perfectly until your phone dies. Things can go wrong and certainly the financial world is not immune to its fair share of hiccups and missteps.
So when it comes to your retirement, what do you do when the strategy goes off the rails?
Besides taking a deep breath, we suggest taking a good long look at the strategy. Your financial roadmap should allow for the curves that life throw at you and provide three main elements of confidence. There are three main elements that a plan needs to have:
1) Have Redundancies
Your strategy should be resilient to ups and downs of the stock market. In fact, your strategy should thrive during unpredictable times. Why? Because it should have redundancies built into the strategy. If interest rates go up and bonds go down, this should not affect your income. If the stock market has a correction, this should not affect your income.
By layering multiple strategies and time segments to protect your income, you can ride through many different type of storms. Your income should be stable and have many different engines working to protect it.
2) Have A Fail Safe
One of the biggest threats to an income strategy is a health even such as the need for long-term care. This can drain resources needed for income now and in the future. That is why it is important to have a fail safe, to look at purchasing long-term care to help protect your next egg should the need arise.
Another issue when it comes to retirement income strategies is not leaving enough for the heirs. This too can be solved by looking at life insurance as a protection for the future.
In some cases, these two problems can be solved by one hybrid strategy. These fail safes give your strategy some breathing room and confidence.
3) Have The Confidence To Be Creative
Once you are secure knowing that you have a vision for your future, you have redundancies protecting your short-term income, and you have fail safes protecting your whole strategy, you can have the confidence to be creative. That’s right, when the stock market is taking a downturn, you can have the confidence to go through your strategy to see if now is a good time to buy some more equities.
If stocks have outperformed your goals, maybe it is a good time to see how to take your gains and put more towards another goal. In other words, uncertainty can be advantageous to those with a solid strategy and good guidance.
If your financial strategy does not have these elements, please call our office. We are wealth strategists, we create durable strategies for our clients. More importantly though, we give our clients confidence. After all, you deserve it.