Navigating Retirement: Insights from a Financial Advisor

I often get asked, “When do you plan to retire, Robin?” It’s a question that catches me off guard because I genuinely enjoy what I do. Finding solutions that enhance my clients’ financial well-being is incredibly fulfilling. I sometimes wonder, especially now that Warren Buffett has announced his retirement, if he faced the same question at 90: “When do you plan to retire, Warren?”

As financial advisors, we meet with clients well in advance of their expected retirement dates to create detailed roadmaps—or what we like to call financial flight paths—to ensure a smooth transition from employment income to investment income. We need to know monthly expenses and sources of income, and then we input assumptions for investment performance and life expectancy. It’s a simple math problem to solve.

During these meetings, I like to ask clients to “paint me a picture of what retirement looks like to you.” Their answers vary widely:

• “I want to play a lot of golf.”
• “I want to travel and take lots of cruises.”
• “I plan to move closer to my grandchildren.”

Each of these responses is worthy. They aim to reach a point where they have the freedom to pursue their passions. Beyond having more free time for activities they love, many still seek to be relevant and have purpose. As we gather data and understand their retirement goals, the number one concern we hear is the fear of running out of money. The emotional component of retirement is not such a simple problem to solve.

Managing Market Volatility in Retirement

Many retirees, who rely on their 401(k)s and other retirement accounts, are understandably worried about the potential impact recent market volatility will have on their financial stability. This uncertainty has prompted some to reconsider spending habits, delay major purchases or even make hasty investment decisions. During such times, retirees should focus less on daily stock market movements and refrain from allowing market fluctuations to dictate how to spend your retirement.

Consulting with a trusted financial advisor to establish an asset allocation that aligns with your risk tolerance is an essential step toward making investment decisions free from emotional influence. At TFG, we emphasize the importance of maintaining a diversified portfolio as well as setting aside 12-18 months of living expenses in safe investments. According to my graduate school finance professor, that time frame typically represents the average duration of a market correction. By having cash flow set aside, you can avoid the need to unfavorably sell assets during periods of excessive market volatility. A diversified portfolio of uncorrelated assets—meaning one investment may rise when another falls—also helps mitigate the effects of market downturns and can lead to a greater probability of financial success because you remain invested over time.

With over 35 years in the industry, we have experienced many seasons of investment volatility. Whether it’s the Dot-Com Bubble of 2000, the Great Financial Crisis of 2008, the Pandemic of 2020, or today’s Tariff Trade War, these periods will inevitably occur. We cannot stress enough the importance of managing emotions during market corrections. This is where average investors are separated from successful investors. The successful investor understands investments fluctuate and will even decline at times. 

Success is determined more by how one handles volatility than by the specific stocks in a portfolio. As Warren Buffett wisely said, “The stock market is designed to transfer money from the Active to the Patient.” This underscores the importance of staying invested with a diversified portfolio and not allowing emotions to dictate investment decisions. Remember, the true investor welcomes volatility, as it often presents opportunities to buy quality assets at lower prices.

For additional information on retirement planning or guidance on navigating these challenging times, please feel free to contact us. One of our wealth advisors would be delighted to discuss your unique situation and help you along your financial journey.