Retirement Planning Is About More Than Your Investments
Retirement decisions don’t happen in isolation. Income, investments, taxes, Social Security, and the choices you make along the way can all affect one another. A decision in one area can have an impact somewhere else, which is why we look at your retirement strategy as a whole. By coordinating the different pieces, we can help you better understand the trade-offs and make more informed decisions about your income, investments, taxes, and legacy.
The Three Stages
The strategy that helped you build your retirement savings may not be the same strategy you need as retirement gets closer. Your money actually changes jobs. As you move from building wealth, to protecting what you’ve built, to turning it into your new paycheck, how you approach your money needs to change too.
Build
During your working years, you have time on your side to save, invest, and build the wealth you’ll eventually rely on in retirement. You’re still contributing, with time to recover from periods of market loss. Time is your advantage—time to save, time to invest, and time to recover. At this stage, the primary job of your money is growth—participating in market opportunities, managing exposure to significant losses along the way, and building the resources that will eventually need to support you when the paycheck stops.
Protect
As retirement gets closer, time is no longer the advantage it once was. A major market loss earlier in life can be painful, but you have time to recover. The same loss near retirement—when your paycheck and contributions are about to stop and withdrawals are about to begin—can have a much greater impact on the retirement you've spent decades building.
The job of your money begins to change. Growth still matters, but so does protecting more of what you've built and managing the risks that could disrupt the retirement you're preparing for. Imagine planning to retire in the fall of 2008, just as the financial crisis was unfolding. The market lost nearly 52% from October 2007 to November 2008. A loss like that, at that point in your life, with little to no time to recover, could change when you retire, how much income you can take, and what your retirement looks like.
The goal isn't to eliminate every risk. It's to make sure you're not taking risks you no longer need—or can no longer afford—to take.
Distribute
Once you retire, the flow of money reverses. For decades, you've been earning a paycheck and adding money to your retirement savings. Now the paycheck and contributions stop, and you begin relying on what you've built to create the income you need.
You've spent most of your adult life learning how to build wealth, so continuing to do what got you here can feel like the natural thing to do. But retirement requires a different mindset. The strategy that helped you build your wealth has done its job. Now your money has a new job—it needs to help become your new paycheck. The way you think about your money has to change...because you only want to retire once.
Taking money out of your investments while the market is falling creates a very different problem than experiencing a market loss while you're still working and contributing. This is called sequence of return risk. A significant loss early in retirement, combined with ongoing withdrawals, can leave fewer dollars invested to participate in a market recovery—even if the market eventually comes back.
That's why retirement isn't simply about how much money you've saved. It's about how—and where—you create the income you need, while managing the risks that could affect how long your money lasts.