I don’t like to talk about politics in this blog as it really doesn’t have any impact on retirement or building up a nest egg. However, given the impeachment inquiries going on at the moment and the brawling that is just beginning regarding them, it may be wise to at least discuss whether such proceedings can have an effect on markets. While there is very little data on such matters, the what little info there is doesn’t show that the markets are swayed by partisan happenings on Capitol Hill. For example, the stock market continued to skyrocket during the Clinton impeachment proceedings–driven largely by the dot com bubble. In 1974, however, the stock market did take a small dip right after Nixon resigned, but rebounded in 1975. Therefore, regardless of your political leanings, you probably don’t have to worry about an impeachment ruining your portfolio. That doesn’t mean though, that you shouldn’t keep abreast of current affairs. Also, this is a reminder to keep politics out of your investing decisions when it comes to your portfolio. While some politicians may claim to have the ability to impact the markets, there doesn’t mean that the markets will react as they claim. If anything, you should pay attention to foreign policy moves and economic decisions (i.e. decisions regarding trade pacts, the federal reserve, etc.), which often do impact markets and can have a wide-ranging affect on your investments and portfolio. So, in short, don’t let the impeachment proceedings impact your retirement planning or investment strategy (I don’t think it would anyways).
As I’ve said in many past blog posts, there’s a lot of data out there when it comes to retirement planning. Some of it helpful, some of it misleading or confusing. While I encourage you to go out and do your own retirement research, I just want to remind you that the information you are reading out there isn’t necessarily designed for someone in your exact situation. It may be written with someone in a similar earning bracket or age or similar socioeconomic background in mind, but not for you in particular. That’s important to keep in mind as you read up on retirement saving ideas and plans. As you do retirement research, you need to be aware of the fact that what you are reading may not be intended for someone in your situation and that while the ideas may seem like a good idea, they may not be what you need. As you learn more about retirement and look for ways to build up your nest egg, you need to make sure that what you read will really help you and–if you do decide to act on what you read–that such decisions will benefit and not hurt you. It can be easy to fall for a new saving concept or investment idea that sounds interesting, but in reality it might open you up to risk you may not realize or immediately comprehend. Again, I encourage you to read up on the latest retirement saving trends and ideas, but just take it with a grain of salt and realize that what you are reading most likely isn’t written for someone in your exact situation.
Technology has drastically changed the retirement saving and planning game. It has made loads of information regarding retirement saving and planning available to the average person and has allowed people to access their retirement savings and information from their mobile phones and tablets. However, technologies introduction into the retirement savings world has also created new vulnerabilities that you need to be aware of, particularly fraud and hacking. It seems like every month a big company or financial institution suffers a data breach where personal and private information for thousands, if not millions, of accounts are stolen. Once that data is in the hands of the hackers, there are many ways that they can attempt to access your accounts and drain your nest egg. So, how do you protect yourself? First off, in order to protect yourself, you need to know how much you have saved and what approved transactions have occurred in your account. It’s hard to know if you’ve been hacked if you don’t know what you have saved or what transactions you have approved. If you notice that your account is lower than the last time or checked or saw unapproved transactions occurring, you should contact your account custodian as soon as possible about it and make sure they are aware of such activity. You should also heed any data security warnings that your account custodian sends to you. If they tell you to change your passwords because of a data breach, you should do so. You may also want to get into the habit of changing your password once a year or every couple of months so as to make it harder to hackers to access your information. You won’t be able to prevent the breach from occurring, but you can take steps to protect your money by making it much harder for hackers to access it if they do have it. If you want further advice about how to protect your account or the safety features on your account, you should speak with either your account custodian or a certified financial planner.
For many readers of this blog, retirement resides in the future. And as with anything involving the future, there is a lot of uncertainty as to how things will play out. After all, no one can accurately predict the future. That uncertainty regarding the future can open the door to a lot of assumption making. For example, many people assume they will remain healthy in retirement or that their living costs will drop dramatically in retirement or they will be able to control their spending in retirement. While these assumptions may be supported by credible traits and data (i.e. family health, ability to budget, etc.), it’s no guarantee that things will go exactly as you think they will. That’s why you plan. It’s why you set up emergency funds or create a plan to cover unexpected expenses. It’s why you meet with a certified financial planner to set goals and benchmarks and saving plans so that you don’t have to worry about having enough saved in retirement. Smart retirement planning and saving leaves assuming and assumptions to a minimum. Are you assuming anything regarding retirement?
If you’ve put a lot lot of time, effort, and thought into your retirement planning, wouldn’t you want to know if it’s taking you down the right path? You’d want to make sure that it doesn’t need to be changed or tweaked. If you’ve set a retirement plan, you’ll want to review it from time to time and when you do so, you may want to have a checklist that you can turn to during that review. While there is no template for such a checklist, you will want to include a few of the following: a list of your assets and their total worth, a projection of how much you plan to spend in retirement, and a calculation of how much you spend annually now (sidenote: an Excel spreadsheet is a great and simple way to organize those numbers). You may also want to make use of investment calculators to help you get a sense of the returns on investments that you may make (these can be found for free online). Once you have those numbers in front of you, you will want to play around with them a bit. Don’t be afraid to calculate what you might need for retirement by changing your retirement projections or by using different asset numbers. Using hypothetical numbers can give you a sense of what really is and isn’t feasible for retirement. If you have serious questions regarding whether you are on the right path to retirement, you will want to speak with a certified financial planner to better understand the numbers and benchmarks you will want to hit.