By Kyle Louvar, CFP®, AIF®
Some things can be put on autopilot: that monthly order of pet food or the payment for your cell phone bill. But retirement planning is not one of those tasks.
As your life changes, your retirement plan needs to adapt to those changes—big or small. If that sounds like a lot of work, know that it doesn’t have to be. There are ways to approach retirement planning systematically, even if it can’t be fully automated.
Here are three reasons why retirement planning is not a one-time event and how we can help you stay on track to reach your retirement goals:
1. Life Is Constantly Changing
Life can change at the drop of a hat (one minute life is normal and the next we’re in an ongoing global pandemic), and it’s naive to think that a 2015 retirement plan still has the same level of relevance and protection as one updated last week.
There are two main areas of change that should be accounted for when reviewing your retirement plan:
- Factors you can control: Spending habits, where you live, where you work
- Factors you can’t control: Market changes, laws, life events (death, injuries, layoffs, etc.)
Depending on how these factors change, you’ll need to make the appropriate adjustments. For instance, altering your spending habits during a market downturn can have a significant impact on the viability of your retirement plan, allowing you to keep your cash flow steady without having to draw on investment assets earlier than anticipated.
Similarly, the death of a spouse can have dramatic effects on your day-to-day life and also your retirement plan. Decreased income and a reduced ability to contribute to your retirement savings are factors that will need to be considered and accounted for.
2. Retirement Planning Can Be Complex
Contrary to popular belief, retirement planning can be complex for just about anyone—not just the ultra-wealthy. In fact, middle-class families face their own set of challenges when it comes to retirement planning. Consider these scenarios:
- Retirement fragmentation: Have you worked for multiple companies throughout your career and accumulated several different retirement accounts that are not part of a comprehensive plan?
- Retiring from a small business: Do you own a business in which most of your profits have been reinvested and very little has been put aside for your retirement?
With less disposable income than their ultra-wealthy counterparts, middle-class families usually have less wiggle room for common financial pitfalls. But, regardless of how much money you have, a retirement plan should be treated as a process. This will allow for any complexities in your financial situation to be assessed and handled in a timely fashion, which in turn will maximize your ability to retire comfortably.
3. Asset Allocation Should Be Adjusted Periodically
Lastly, retirement planning can’t be left on autopilot because asset allocation (a key component of your retirement plan) should be periodically adjusted to account for changing goals and priorities.
Think of asset allocation as the mechanism by which your retirement plan operates, the gear that actually gets the work done. It’s great to know exactly when you want to retire and which accounts you want to use, but it’s asset allocation that really drives the whole plan.
For example: If you are a pre-retiree and are planning to retire in the next five years, you should probably adjust your asset allocation to less risky investments like bonds and other fixed-income securities. These adjustments will have significant impacts on both the rate of return for your portfolio, as well as your overall exposure to risk.
You might also have competing goals and priorities that come up along the way, or you might be forced to retire earlier than expected due to factors beyond your control. These changing circumstances need to be integrated into your plan, and your asset allocation should be updated as soon as possible to keep your plan on track.
Review Your Plan Today
If your retirement plan has been on autopilot, now is the time to take control of the wheel. Review your plan today to make sure you are still on track for the comfortable retirement you’ve been working toward. At Guided Capital Wealth Management, we utilize our proprietary process, The Paradigm FORMula, to help you create a dynamic plan that can maximize your retirement potential and help keep you on track to achieving your goals throughout your lifetime. Schedule a FIT meeting by contacting us at (832) 975-0711 or by email at info@guidedcapitalwealth.com to learn if we are the right people to guide you on your financial journey.
About Kyle
Kyle Louvar is the CEO and Wealth Management Advisor for Guided Capital Wealth Management, a fiduciary financial advisory firm offering fee-based advice, guidance, and education. After seeing the impact that the 2008 financial crisis had on families, Kyle became fully committed to helping his clients develop a financial plan that changes as their lives unfold and their needs evolve. Spending nine years working for one of the largest brokerage firms on Wall Street, Kyle holds a high value for process, expertise, objective advice, and customized solutions. His goal is to help his clients experience confidence in their financial future through a disciplined process of financial planning, investment management, and sound financial decision-making.
Kyle graduated from New Mexico State University, where he was a proud 4-year letterman in football for the Aggies and where he’s sat as a board member since 2015. Kyle holds the CERTIFIED FINANCIAL PLANNER™ and Accredited Investment Fiduciary® (AIF®) certifications. When not helping his clients, Kyle enjoys spending time with his wife, Nicole, and their two daughters. You can often find him coaching his daughters’ softball teams, playing golf, cooking, and traveling. To learn more about Kyle, connect with him on LinkedIn.