When planning for retirement, there are certain things you can’t control. Account for those unforeseen elements by planning for what you can control.
(Click the featured times below to jump forward in the episode)
First Things First.
- [1:08] – In The News: Carrying Debt Beyond Age 75 Is New Normal.
- [4:27] – Mailbag: Gretchen lost her job, and she’s considering a Roth Conversion.
We Can’t Control The Market.
- [7:27] – It’s impossible to time the market. We simply don’t know whether it will move up or down over any given period of time. However, we can control how much of our portfolio is exposed to market movement. It’s important to know how much risk is in your portfolio. Otherwise, when the market takes a dip, you could find yourself in trouble. Create different buckets of investments. In your short-term bucket, minimize your risk exposure. That way, if the market takes a dip, you’ll be okay. In your long-term bucket, you might consider taking on riskier investments. It’s okay if the market drops because you’ll have time for your investments to recover losses.
We Can’t Control How Long We’ll Live.
- [13:35] – None of us know how long we have to live. That’s important simply because we don’t want to outlive our money. It’s important to create lifetime income streams and eliminate the unknown variables presented by longevity. Develop multiple income streams. Whether it’s Social Security, a pension, some type of annuity, or real estate, make sure you’ll have what you need to live on in retirement.
We Can’t Control Tax Rates.
- [16:36] – Who can predict what will happen in Washington? It’s impossible to say whether tax rates will rise in the future, although we do know they’re historically low right now. However, we can control how our wealth will be taxed in the future. It’s important to think of your money’s exit strategy. Examine whether you’re placing your money in tax-free, taxed-now, or tax-deferred accounts. Especially if you’re investing in tax-deferred accounts, you’re more than likely going to endure a heavier tax burden in the future.
More Planning Points:
- [19:43] – What’s going to happen to Social Security?
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