On this episode of the Retire Once Show, Johnathan and Melissa answer 2 listener questions.
Should you delay your retirement because of the market and inflation? What things should you consider when retirement is right around the corner?
Many people are worried about the current market and don’t know what to do. We help a listener with 4 tips on surviving a market crash.
If you look at your portfolio and don’t know if you are in the right investment strategy for your retirement, make sure you schedule some time for us to go through a detailed retirement analysis for you.
Today we're answering listener questions about when and if you should delay your retirement and ways to help you navigate the volatile markets that we're seeing. All that More on today's episode of The Retire Want Show.
Hello and welcome to the Retire Want Show. The show designed to help you get to retirement, but most importantly, stay. I'm your host, Jonathan Rankin. I'm the founder and CEO of Theorem Wealth Management, and I am joined as always by my lovely co-host. Hi, I'm Alyssa Rankin. Thank you so much for joining us.
We have a great show for you today. We got some questions in from our website, retire once show.com, where you could submit a question and we are happy to answer it on air. We are always happy to answer those. So head to retire one show and submit a question if you have one. Uh, but before we jump into everything, well, what do we want him?
We want you to subscribe and to follow us along this retirement journey. That's right. Follow us along on this amazing retirement journey that, uh, we wanna help you with. So let's get into the first question that we got. So the first question that we got is from Brian. He says, Hi Rankins. I love the show and appreciate the new retirement tips videos you're releasing as well.
That's right. Definitely check those out. Yeah, make sure you check those out. We are, this show is a podcast format, so this is on audio platforms and we like to just sometimes rant about other things like life. Uh, but we know that some people, they just want a. Shorter to the point. Hey, let's, Very straightforward.
Very straightforward. So we are doing, uh, weekly retirement tip videos. Uh, unfortunately sometimes those are just me. They have been so far. So you miss out on my lovely cohost. That's why we love doing this show, which is a little bit more casual and a lot more fun. With that in mind, let's move on to Brian's question.
He says, I was planning on retiring in the next six to nine months, but with everything going on, I'm starting to think it might be best to delay it for some time. Is it a bad idea to retire during a bad market? What a very common question that we're getting right now. Uh, delaying retirement is obviously the first thing that comes to mind, I think for a lot of people when they're going through a market like this, or even just the headlines that are out there in the world.
I mean, just today, inflation came in hotter than expected, so that's, you know, a big thing that's on everybody's mind as well. Uh, but there was a study by BlackRock just to put some context around this, that you're not alone, Brian, you know, thinking about delaying your. Is very common. In fact, more than a third of Americans feel unprepared or unsure if they're on track to their retirement and that they attribute to inflation and market volatility.
And you just look at inflation, look at, you know, I pulled this today, I saw this, uh, John Erman said, uh, shared this. , this is inflation in the past year on certain items, and this is as of the end of September. And look at some of these things. I mean, nobody can afford to eat , let alone the electricity to even cook.
So you've got electricity up 16%, uh, gas up 18. I mean, obviously nobody's going, Wait, I'm just saying. I was gonna say gas. Everybody had been talking about gas, like it was the only thing. Now you can't even afford the gas to go grocery shopping, and you're definitely not getting on a plane. I mean, 43%. . But yeah, I was surprised that age she barely afforded two gum.
That's true. And, but you know what? 13% increase on gum. But hey, we do have to thank, um, you know, the Social Security administration because they gave the largest raise almost 40 years of 8.7%, which. I just have to add real quick. You should check out the video that Jonathan did. Again, him solely, but it was a great one on social security.
I, I did. We'll link to that somewhere. I, I'm gonna put it in, in one of these corners. Come on. I don't know where he does the, this corner or that corner. But another great video you should check out. Click there, but 8.7%. I didn't see a single thing. I was gonna say that's not even enough to cover, like we talked about the gum.
Yeah. So you see, you can't cover gum, but at least you gotta raise in social. But if you're buying. You know, a lot of gum then, I don't know, maybe that's just, well maybe you're buying gum because you can't afford to eat, I don't know, help starvation or something. Okay. Yeah, that's true. True diet trip here.
There you go. Gum. That's, so, yeah, that's, uh, 8.7%. Not enough to, uh, cover the increase in costing gum. But you look at that, you think, Well, yeah, that does make people rethink. Retirement. You know, in fact, uh, third of seniors say they either plan to work through the age of 70 or never retire. Now, Brian never gave us his age.
We have no clue how old Brian is. Um, but I hope you're not 70, Brian. Yeah, we, yeah. We want you to hopefully retire early. That's obviously a, I think a lot of people's goal. But if you are 70, hey, good for you. Hopefully you love what you're doing. Hopefully, uh, So there really are three things we want you to think about when it comes to delaying your retirement.
Now, the first thing is just know, delaying your retirement isn't a bad thing. You just want to ask yourself, Okay, why are you delaying your retirement? You know, have you updated your retirement plan? Or is this just something that you're thinking about because of the headlines that are out there? And you know, you look at your portfolio and odds are is probably down just because the overall broad market is.
So is it just an anecdotal thing or did you actually run your retirement plan? Uh, have you stress tested your retirement plan against further downside or higher inflation? We hope that inflation is just here for a short period of time and the fed's doing everything they can to try and, you know, crush all aspects of demand.
But it could be here longer than many people think. Have you stress tested your retirement plan against that? So what is the rationale behind. Delaying your retirement. And that's, I think the first thing you want to really look at is, are you doing this? Is it emotional or is it, is it practical? Is it from a, an actual retirement standpoint or is it something you just feel that you should do?
She's so much more articulate and to the point. I sometimes ramble, so yeah. Thank you for that. But again, I'm gonna go with the feeling side of it because I feel like that's where a lot of people are coming from is that it's, they feel like they should delay it. Not necessarily that they're not prepared financially, just that they feel like they should.
Absolutely. And just remember, it's not a, it's not a bad thing if you delay your retirement. Obviously there are a lot of positives. This brings us to our second point you want to consider. There are a lot of positives to delaying your retire. Obviously you are continuing to save. You are. You've got a steady income.
If you're at a job that pays you a salary, you're not withdrawing from your assets while prices are down. You can let social Security continue to grow if you're obviously, if you're under the age of 70. Um, so you can delay social security and if this market correction and inflation is really, you know, making your initial retirement plans un feas.
You know, or unattainable, maybe you have to consider, were they at all what you should have been striving for in the first place? You know, should have you, should this have really been your retirement plan in the beginning, if you didn't really go through those stress tests at the, when the mark was at an all time high, which is something that we mentioned quite a bit actually on previous episodes.
It's kind of going through all scenarios. Obviously, nobody expected it to kinda come to this, I mean, The groceries alone are kind of a big surprise, I think, to most people, but that's kind of what we've mentioned before, is that you should be running through every scenario possible. That's right, cuz now whenever I make an omelet at home, I'm going to present to Melissa like it's a filet and yon steak because it's not, and it better not have a shell in it.
That's very true. But let's look at a hypothetical from T Row price on the positives of delaying your retirement. So this is a hypothetical of a 62 year old who makes a hundred thousand dollars, has $900,000 in savings for retirement, and if he retires this year with a goal of $66,000 of annual living expenses right now, there's a 58% chance.
That he won't run outta money. So his probability of success is not where he'd like to be. Not great, not great. Delaying till age 65, obviously you can see that the difference in which he has, his portfolio has to make up for the withdrawals because social security is going up. His portfolio only has to account for 60% of his living expenses as opposed to 69% in, you know, this age 60.
And it by delaying until age 67, that's where he gets in that 95% likelihood of success and almost half of his living expenses are coming from Social Security. A much better spot to be in a much better spot. But that doesn't mean that delaying retirement is a necessity. You really wanna look at your scenario, Brian.
And it brings this to the third point that we want you to think about. Look at reasons to retire, not reasons to delay your retirement, but forget the headlines of what's going. Let's assume that you have planned, you've, you know, done the retirement stress testing, you're still successfully viable to retire, and it's just the noise that's keeping you, you know, with that thought in your head that you should delay.
There might be further downside to go, but I would, if I were you, and you've done all of those exercises, you've retired, let's say you have no debt, you're financially secure and able to do that. Retire if you're not fulfilled in what you're doing. I mean, if it, and if you can still afford to travel. Yeah.
I mean, if you have that booked in there, if you can afford those airline tickets that are up, you know, 43%, Absolutely. Mm-hmm. retire. Yeah. If, Retire, if you plan on, you know, you have a plan on how you're actually gonna spend your time, and it gives you a sense of purpose. We've talked about that in previous episodes, the importance of a purpose, and especially in retirement.
So if you have that, I would consider Retir. But if you're gonna just retire because you feel like you've already done all the planning and you're gonna sit at home too afraid to go out and do anything, or travel or the stuff that you planned on doing, take a second look. Yeah. And that brings us to the last point on just thinking about a way to retire.
This is what you saved for, you've worked for, you've sacrificed, you've given up a lot of stuff over. My guess would be a long period of time to invest and be diligent. This is what you plan for. There's never going to be a right time to retire. Yes, we could all say it'd been great to retire at the all time high of the market, but then you've gone through this and now you would've worried if you made the right decision.
The markets are down 25%, so it's, you're never gonna find the right time. It's kinda like, you know, when is there a right time to have kids? Mel, there's not one there ever a perfect time. There is never going to be one. Are you ever really. . No, no. We have kids and I still don't feel like I'm ready half the time.
I'm like, I'm not ready for this phase they're in. I mean, yeah, that's, that's true. Anybody knows how to discipline a combative child who's five and you know, thinks that he runs the house. Head to retire one show.com. Instead of asking all the trip, leave that as a feedback on, you know, hey, we would like to know how you handle that.
Um, but the last thing, if you do question at all, if you're even ready for retirement tier price did have these five Ws of retirement. These really questions that you wanna make sure you have an answer to. I will go through these. First one, who do you wanna spend time with in retirement? You know, hopefully you've got that kind of loved ones family, friends.
You know, maybe, maybe you just said, you know, maybe it's just yourself, and that's okay. You know, we're not gonna, If someone just wants to spend time with themself, that's okay. Hey, if you're going into retirement for some me time, we're not here to judge. Nope, not at all. That's, uh, second thing, what do you want to spend your time doing in retirement?
Have a plan for that volunteering, Bird watching, just giving out some ideas. She's, she's real big into this bird watching thing. If you watched in previous episodes, uh, where do you wanna live and visit retirement? You might be driving a car because you know, the price of airline tickets has gone up 43%.
Hopefully it's not far because gas has also gone up. That's true. Maybe it's a little, maybe a neighbor, maybe a walk. Yeah. Maybe down the street to the local library. Uh, so where do you wanna live, Larry? I don't know. Some people still go to the library. Oh, okay. If you're gonna do that in retirement, hopefully it's in walking distance.
That's true. Uh, for number four, when would you ideally like to retire? Now we know Brian would like, ideally like to retire in six to nine. So you have that question answered. And the last one I think is the most important. Why are you retiring? What meaning will you look for in retirement? We've talked about this a lot, but figuring out that why that purpose will hopefully help answer the question, should you delay retirement?
Don't do it because the headlines do it because of your specific situation. So make sure you're ready. I mean, we go back to that constantly again. Stress, test, run many scenarios. Just make sure that you're doing it, either retiring or delaying for what's best for you. Absolutely. And two, that comes our next question.
So we got a question from Beverly. She says, Hi, Melissa. Jonathan, I absolutely love the show and have not missed an episode yet. Thank you, Beverly. I know you've said before that it's hard to time the bottom of the market, but it just seems like everything keeps getting. . It absolutely does. Again, we have to reflect back to the articles and the headlines and all the negative noise out there, but her actual question is, what advice do you have for dealing with this market?
I'm retired and just dunno how much more I can take. Well, first of all, Beverly, thank you for listening. Thank you for not missing an episode. Hopefully you've also hit that subscribe button wherever you're listening or watching this. Um, but we look at it as there are four things that we want you to think about when managing your portfolio in a market like this.
Now, the first thing is you wanna make sure that your portfolio is balanced, diversified, and most importantly, something that you can stick. So what do you mean by that? So balanced. You wanna make sure you have a mix of different asset classes, stocks, bonds, cash, you name it, it. And when we say diversified, that means within those asset classes, you wanna have more than just one stock, more than just one bond.
So you want to have a balance and be diversified, but most importantly, find something that you can stick with that is a strategy that doesn't cause you to have that emotional reaction that makes you want to bail. That is the first thing we want you to think. It brings us to our second point. It's okay to rebalance your portfolio into a strategy that you could stick with.
What do I mean by that? Well, when you look at your portfolio today, you are going to probably see a lot of red numbers, and there's a common thought that I don't wanna sell any of these stocks or investments that are down because I don't wanna lock in those losses. Well, if your ass allocation was, you know, at a higher risk profile than what you should.
it's okay to rebalance into something as long as you go back to number one, You're balanced, you're diversified, and it's something you could stick with that's gonna be most important. That brings us to number three. You gotta realize, Mel, the pain is already here, which sounds terrible, sounds so negative when you hear it, but it's so true.
It is so true, but, and right now, bail. If you think about it, all you're doing is you're letting that pain impact you for a longer period of time, because then you really are locking in those losses, and that's going to impact your retirement strategy for a lot longer than it probably should. And I kind of equate this to, uh, to getting a tattoo.
Now, I, I don't have a tattoo. I don't either, so I, I don't know what it feels like, but I don't like needles, so I'm gonna assume that it doesn't feel good. Yeah, I would assume it's bad. So I just always think about this, is if I decided that I wanted to get, Mel on my arm, just right there, right on, right on my arm, just so she could see her name every day.
If I decide to get Mel, but it hurt so bad, I would advise against that, by the way. So if it hurt so bad that I end up just getting me, then I have to stick with a tattoo of me forever. Whereas I could just stick it out and just continue to go through the pain because I already started the process. And what I mean by that is you're already here, the market's already down 25%.
And yes, it could get worse, but when we look at this chart since 1950, the s and p has had nine instances where the SB has dropped by 25% or more. And what you can see is there's only one time that we've experienced so far where the market is negative one year. On average, it's been up and on average it's been up 21.6% and you look at the three year, the five year, 10 year numbers, they've all been pretty good.
So bailing now is locking in those losses for a very long period of time because we're already through a a significant drawdown already. You look at some of these periods, look at 2008. Yeah, the market didn't end positive a year later, however, 3, 5, 10 years later, it did extremely well. So we still have, we still might have further downside to go, but just know a lot of the pain's already baked in.
And that brings us to number four. Don't get caught up in bear market rallies. Now, this is as equally as important as not getting caught up in the downside. Don't get caught up in the. Just because the market's rallying doesn't necessarily mean that we're outta the weeds yet. And so this is why making sure it's something you could stick with is important.
And when we look at the market over the past couple weeks, this is very relevant because we had a period where the s and p rallied 5% over a two day period. And it's not like nice to see. Yeah, it is ni it was nice to see, but the market was still in bear market territory. It was still well below it's 200 day moving average.
And when we look. History of the market. This has happened 11 times where the s and p 500 rallied by 5% over two days while we were in a bear market. And what this shows is that we weren't out of the weeds. In fact, Jonathan Harrier looked at, did some research on this, and what he found was that we were closer to a bottom, but there was still further downside to go.
And on average, the further downside was 15.79% to reach that. Which took on average 52 days. And when you look one year later, on average, the market was up, uh, about 19% and there was only one period, which was 2008, where the market was negative one year later. So it doesn't necessarily mean that just because we see those rallies that were outta the weeds, so you don't want to get caught up.
The upside or the downside in volatile markets like this, I think it kind of leads back to the don't try to time it either way, the, the top or the bottom virtually you can't. I mean that's kind of that in a nutshell, if you will. With all those four points being equally as important, what would you say is the most important one?
The most important one by far has gotta be number one. And really that last part, just find something that you could stick. Sticking with a strategy is the most important part of retirement investing and retirement planning. And if you feel stuck, if you don't know where to go, you look at your portfolio and you go, Is this what I should really be investing in?
Do US sphere hit that link in the description below. Or if you're listening to this on podcast platform, there's a link in the description there where you can schedule some time with us, where we would go through a very detailed retirement analysis for you. We'd love to talk to you. We would, we'd walk through your portfolio and make sure that you're allocated properly, given your overall individual circumstances.
So if you have questions or you just want to schedule that time, use those links. Uh, but before we get out here, what do we want people to do? We want you to subscribe to the show. We want you to follow it. We never want you to miss an episode. And again, we always wanna talk to you, and we welcome all the questions.
So again, Brian and Beverly, thank you so much. Thank you both. And make sure to check out those shorter retirement tips videos. And with that, I'm Jonathan Rankin. And I'm Melissa Rankin. Thank you so much for joining us.
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