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)
- [1:49] – In The News: Formal Federal Reserve Chairman Alan Greenspan Says US Economy Is ‘Out Of Whack’
- [6:35] – Mailbag: Samantha wants to give her mother a sense of financial peace.
[11:51] – We Can’t Control The Market.
- 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. Mitigate the amount of risk in your portfolio. Don’t make investments if you aren’t comfortable with the amount of risk they carry.
[13:26] – We Can’t Control How Long We’ll Live.
- None of us know how long we have to live. That’s important simply because we don’t want to outlive our money. Thanks to modern medicine, we’re living longer. However, longevity presents its own financial challenges. It’s important to create lifetime income streams while limiting expenses. We’ve all heard the seemingly simple concept “live beneath your means.” Eliminate your reliance on the market, create income streams, and cut down on your spending. While you don’t know when your clock will run out, you can be sure you’ll have money until it does.
[14:45] – We Can’t Control Tax Rates.
- 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.
- [16:08] – What’s going to happen to Social Security?
- [17:50] – How do these elements fit into my financial plan?
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