How to Test Run Your Retirement Plan (for Greater Success and Fulfillment Later in Life)

How to Test Run Your Retirement Plan (for Greater Success and Fulfillment Later in Life)

Sometimes long vacations can seem like a test run for retirement. Long walks on the beach. Endless rounds of golf. All the umbrella drinks you want. But there’s more to retirement than just all the cliches of tropical relaxation.

 

You are going to have plenty of regular days at home. But what will those look like? And how will you feel about being retired and on a “fixed” income? Are you confident in your current retirement plan to keep you not only financially comfortable but also enjoying life all the way to the end?

 

Here are three ways to test run your retirement plan for greater success and fulfillment later in life:

 

1. Start Thinking Like a Spender

No, we don’t mean to start spending frivolously.  We mean to start wrapping your mind around the idea that you will be moving from a saving mindset to a spending one. Because you will have chosen to invest wisely with the help of a trusted financial advisor, you will likely be receiving an income from your assets. But, for many folks, it can be a mental mind twister to no longer have a paycheck coming in (even if you owned your own business).

 

Some recent research from BlackRock and the Employee Benefit Research Institute showed that even after 17-18 years of retirement, retirees across all levels of wealth had 80% of their pre-retirement savings remaining. And that was even more likely for high-net worth individuals, who have assets worth more than $1 million.

 

You’re going to have to trust yourself and trust your retirement plan that you have enough to support the retirement lifestyle you want for the rest of your life. And enjoy it!

 

 2. Start Figuring Out Your Budget

  

A budget can really help you get into the right “spending versus saving” mindset. Now, a lot of folks think a budget means that you are limiting your spending, but a budget simply means telling your money where to go. And by figuring out a budget now, you will already have a game plan come retirement. No one wants to be the person who runs out of money, but you also don’t want to be the person who has millions just sitting in the background while you watch your life pass your by. It’s your money. You should leverage it to help you meet your goals, but also to make sure you live a fulfilling final chapter.

 

Once you have your budget all written out or put into a spreadsheet or app  — whatever works best for you (and your spouse) — take it for a test drive. See how it works for you for a month or so. You can make the necessary adjustments now so you’re ready once retirement comes along. You may uncover that you need more or less than you anticipated and can work with your financial advisor to make modifications as needed.

 

3. Start Planning a Routine

Aside from the money aspects, you also need to consider your time. It makes sense that all you can think of now is how great it’ll be not to have a plan. No meetings, no deadlines, no responsibilities. Woohoo! But, throwing routine completely out the window can be a huge change to you mentally and physically. Just think about the first few weeks of the pandemic when we were all asked to stay inside. It was certainly strange for many of us!

 

Often, mental health can be a touchy subject for some, but you do need to consider what a change in routine will do to yours. Remember that you will have had a schedule from the time you started school in kindergarten or preschool all the way through your working career. That’s a long time! And mental health can especially be a struggle for newbie retirees. Even before the COVID-19 pandemic caused depression and anxiety to skyrocket in adults of all ages, one in 10 (11%) older adults — those age 65 and older — reported depression or anxiety on the 2018 Medicare Current Beneficiary Survey. Consider printing out a calendar and writing up a model week of how you think you may spend your time, including when you will take care of non-negotiable responsibilities, your physical health, socialization, and household responsibilities to protect your mental health in this new stage of life. 

 

Still Need Some Help Preparing for Retirement?

 

Don’t have a retirement plan yet? Not confident in your current plan? Or simply need a retirement plan check-up? No matter where you are in your retirement planning journey, our team can help. Simply schedule an appointment with one of our trusted advisors to discuss your opportunities today.

 

 

 

 

 

Are you on track for retirement?

 

Making sure you will be ready for retirement can be overwhelming. Funding your retirement accounts over the years is a critical part of your journey to the retirement of your dreams. An experienced Financial Advisor can help you navigate the complexities of investment management. Talk to a Financial Advisor>

Dream. Plan. Do.

Platt Wealth Management offers financial plans to answer your important financial questions. Where are you? Where do you want to be? How can you get there? Our four-step financial planning process is designed to be a road map to get you where you want to go while providing flexibility to adapt to changes along the route. We offer stand alone plans or full wealth management plans that include our investment management services. Give us a call today to set up a complimentary review. 619-255-9554.

2019 Fourth Quarter Review

SCORECARD

Fed lowered rates 3 times in 2019. Inflation remains low.

Bonds: The U.S. 10-year Treasury yield fell from 2.7% to 1.8% over the course of the year, and the Barclays U.S. Aggregate has returned over 8% year-to-date.

Although at a lackluster 2.3%, the 30-year U.S. Treasury bond yield is higher than all other government debt of developed countries, so buyers might just be buying the best house in a bad neighborhood.

2019 MARKET REVIEW

The stock market reached all-time highs in 2019, with all major asset classes positive for the year. U.S. stocks continued to outperform international. The broad-based S&P 500 index was up 31.5%.

Bonds also had a very good year, up 8.72%, but most of that growth was through September.

Yes, gains in 2019 were big, but remember the almost 20% market drop at the end of 2018? The stock market finished 2019 up about 10% from the previous peak in September 2018. Much of the gain in 2019 was making up ground from the sell-off at the end of 2018.

MOST COMMONLY ASKED QUESTION LAST QUARTER

What will the market do in 2020?

The first quarter of a new year and a new decade brings questions about what the market has in store. We know the market will go up and the market will go down, sometimes on the same day. There will be short term volatility regarding the election, impeachment, trade wars, and potential military actions.


There will always be short-term bumps and noise on the road of long-term investing.


While this could cause some bumps in the road ahead, unemployment remains low, inflation remains under control, and wages are making modest increases. All of these bode well for stock prices.

2019 is a prime example of successful investing for investors that tuned out the noise of politics and warnings of the imminent end of the longest bull market in history. Ironically, a year ago everyone was talking about the possible looming recession. The concern now is that no one is talking about it. After more than a decade of economic growth, we will continue to keep our eye on underlying fundamentals and corporate earnings.

LOW UNEMPLOYMENT AND RISING WAGES

What impact does this have on the economy?

December unemployment hit a 50-year low of 3.5%, with employers trying to fill vacant jobs at all skill levels. Although wages have remained stagnate for the past decade, there has finally been some improvement in 2019. This is particularly true for the lowest-paid workers, mostly due to the mandate of rising minimum wages in many states and cities.
This is good news for the economy, since lower-income earners tend to have higher marginal spending, but increased wages could eventually cut into corporate profits.

Our Contact Information

3838 Camino del Rio North
Suite 365
San Diego, CA 92108
619.255.9554

info@plattwm.com

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NEW BENCHMARKS ON QUARTERLY REPORTS

Effective with the enclosed statement for Q4 2019, we have enhanced our reporting with a blended benchmark to more accurately reflect the makeup of the underlying portfolio and to measure the portfolio’s performance. The previous benchmark used the S&P 500 for stocks and the Barclays Aggregate Bond Index for bonds. The new benchmark includes proxies for additional asset classes of mid cap, small cap, and international stocks, and for short term bonds.

Stock Benchmark

60% S&P 500 Index
12% Russell Mid Cap Index
10% Russell 2000 Small Cap Index
18% MSCI EAFE (Europe, Australia, Far East) International Index

Bond Benchmark

70% Barclays Aggregate Bond Index

30% Barclays U.S. Government/Credit 1-3 Year Index

Stock Benchmark

If your asset allocation target is 50% stocks and 50% bonds, your benchmark will be made up of:

30% S&P 500
6% Russell Mid Cap
5% Russell 2000
9% MSCI EAFE
35% Barclays Aggregate Bond
15% Barclays U.S. Government/Credit

What this means for your portfolio

There will typically be a small difference between the benchmark and our performance since we report our performance net of fees. The indexes do not have fees since investments cannot be made directly in an index.
If you wish to discuss the new benchmark, your portfolio allocation, or any other concerns, please call us. As always, we appreciate your trust and confidence.

Warmest regards,
Platt Wealth Management