Retirement Planning in Death Valley
Every so often, I think it's good to get out and gain a fresh perspective on life. That's one reason I decided to attend this year's Financial Advisor magazine's retirement symposium in Las Vegas, where it would be hard to find a climate more different from my usual surrounds in the Columbia River Gorge. In addition, Nick Murray, one of my favorite curmudgeonly financial commentators, was a keynote speaker on a theme high on my list of professional interests: Helping families achieve and sustain a desirable retirement.
Retirement Planning – Las Vegas Style?
During the symposium, I had the opportunity to learn some of the latest thinking on a number of subjects related to retirement planning, such as determining when and how to take one's Social Security, using reverse mortgages, calculating spending/withdrawal rates in retirement, and ensuring ongoing tax-efficient portfolio management.
Retirement planning is a growing challenge in these days when corporate pension plans are increasingly fewer and farther between. The transition from "Father knows best" retirement benefits to individual contribution plans offers investors a double-edged sword: Like Las Vegas Strip's Frank Sinatra, you have greater ability to "do it your way" when it comes to retirement investing. But you also shoulder the consequences if "your way" doesn't work.
Retirement investing isn't a high-rolling game of chance – or at least it shouldn't be. It takes some serious planning indeed, on all of the above fronts and more. A recent blog post estimated that 20-year-olds today may need to save $7 million by age 65 if they hope to retire in even modest comfort. In calculating that figure, the blogger concluded: "Most people wrongfully worry more about the effects of short term market volatility and less about the effects of long term inflation."
Financial Survival Strategies
Which brings me to Nick Murray's keynote speech, in which he also focused on the inordinate attention most investors pay to short-term volatility. It's ingrained in our nature to want to react to this or that crisis du jour, when our real lifetime financial risks lie firmly elsewhere.
Over your lifetime, there are going to be any number of market crises, many of which are going to seem very serious at the time. But the truth is:
1. We have no practical control over how global crises play out.
2. Reacting to near-term events is far more likely to hurt than help your investment cause.
As The Wall Street Journal's Intelligent Investor columnist Jason Zweig observed in one of his recent posts, countless studies have demonstrated time and again that investors who make trading decisions in reaction to near-term news are highly likely to wind up underperforming both the market in general as well as the very funds in which they're invested.
A Visit to Death Valley and Lessons Learned
After the symposium, my wife and I took a side trip to Death Valley. If you're looking to get away from it all, this is surely the place to be! That's my wife in the photo, showing just how much "away from it all" there is out there.
Having visited Death Valley in person, I returned more determined than ever to continue helping investors navigate the forbidding landscape of retirement planning. In addition to maximizing various retirement planning tools and strategies, survival calls for firmly avoiding our misguided instincts to abandon long-term discipline for near-term mirages. Death Valley is an okay place to visit, but most of us want to retire to much greener climes.