by Jude Boudreaux, CFP®
The recent market volatility has created another bump in the road for prudent long-term investors. Perhaps you have just retired or are several years into your retirement. Perhaps you don’t feel like a long-term investor right now or maybe you are just feeling nervous about it all.
Years from now, we will all be able to look back at this with some perspective. Right now, you might be concerned with the timing.
We can confidently say that’s all normal. Families that have put in years of work and saving are undoubtably feeling stressed as they plan to make a big transition to retirement, only to see the investment values they’ve watched grow for years change dramatically over the course of a few weeks.
What is TPC’s guidance if you are one of those families?
Make a list.
What are the things that are on your mind? What are your fears right now? Write them all down. Something about the process of getting those on paper, in front of our eyes and not swirling around our heads can be healing. Once they’re out of your head, can you see what are immediate concerns? Which are possible/unlikely that we can monitor but partially set aside to focus on what’s immediate?
If you’d like some help with this, TPC has a great template to walk you through this. Please contact your planner or our client services team at clientservices@theplanningcenter.com.
Make a plan to address those immediate concerns.
Some of these we can take action on right away, others we’ll just need to monitor. Some of us are watching from a distance as loved ones are in relative isolation while we engage in ‘social distancing’ to try to slow the spread of COVID-19 and not expose somebody who may be at greater risk than the general population. In those situations, perhaps we can only manage or monitor our emotions and actions, but there are other items on that list we can take action on. We can look at how much we think we need to spend over the next few months and look at what our income sources are. We can look at how much cash we have set aside in reserve. We can speak with our planner about those immediate, short-term needs and determine if any changes need to be made or if we’ve already got plans in place to address those immediate issues.
Have a plan for if this lasts a while.
If the financial downturn in markets lasts for 12-18 months, what’s your plan for getting the money you will need? Do you know where it will come from? Are there some expenses you’ve been planning that you may be able to defer for a few months? We often naturally do this when we head through difficult financial times. Purchases of new cars get delayed, we get by with a struggling washing machine without replacing one, and we might put off a big trip. What are the choices you can make that will reduce your spending needs, if necessary?
What is ‘long-term’ anyway?
While we may be in a position where we are spending some of our investments, what does ‘long-term’ mean? That’s different for all of us because we don’t know the day the end of our plan will arrive. That said, we have clients in their 80s who are healthy and active and could well have another 30 years ahead of them. The challenge and complication of retirement is that we don’t know with certainty how long we need to make our money last. If there’s a possibility that we have needs beyond just a few years, then chances are we need to take some of the risks and benefits that investing in equities provide to us, so we can have enough growth to meet our needs 2, 5 or 10 years from now and further.
Know you don’t have to walk this alone.
The relationship between a planner and client is so impactful because it allows us the opportunity to discuss these hopes and fears with somebody who is on your side, focused solely on your well-being. During these times when we are all feeling somewhat isolated, it’s important to know that we’re not alone. If you’ve got a planner you’ve got a partner along your journey that knows precisely your needs and goals, your fears and your wishes. We work in this industry because we want to be here for families who have to navigate these turbulent times and we want to speak with you when you’re concerned – let’s have a conversation.
Your TPC team is here for you and your family. Please feel free to give us a call.
Jude Boudreaux, CFP®, is a Partner/Sr. Financial Planner in the Chicago and New Orleans offices of The Planning Center, a fee-only financial planning and wealth management firm. Email him at jude@theplanningcenter.com.
