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September Financial Insight: 5 Retirement Questions You Should Ask Yourself

| September 12, 2017

5 Retirement Questions You Should Ask Yourself


As I sit writing this, I am experiencing many emotions.  First is relief that I have heard from most of my family and friends in Florida who were impacted by Hurricane Irma.  Next is some anxiety as there are still a couple of folks on Key West Island who haven’t reported in due to loss of all communications.  Finally, I have a sense of happiness as we have started the process of adopting our new fur child, Sugar.  We met Sugar at a community service project we were working with our Fork Union Military Academy Interact Club. Sugar and her sister Cinnamon had been abandoned at the Fluvanna SPCA a few weeks previously.  We had been talking about beginning the process of finding a new pup and Sugar let us know she was THE ONE!  It has been three years since we had to say Au Revoir to our first fur baby Hapine.  She took care of us for 12 years and we still miss her every day.

If you have family or friends affected by the two most recent natural disasters, make sure to reach out to them and let them know that you are thinking of them.  These next few months are going to be a time of hard work in the affected areas.

I have had the pleasure of assisting many of you for years. Others are newer clients. Our paths crossed via referrals, or we met through various professional organizations.  There are many reasons why you’ve reached out to me for assistance.

But there has generally been one common thread—the complexities that inevitably spring from the many, but confusing, roads that can lead to holistic financial planning.

One question that comes up often in meetings is retirement planning. While your goals and dreams may differ, there is one common theme—financial security. More specifically, many ask the question, How much monthly income will I have during retirement?  That’s where this month’s newsletter takes off.

Situations will vary from person to person. That is why we never employ a cookie-cutter approach when guiding our clients. Each plan must have an individual element to it. But the plans are guided by time-tested principles.

Consider this—a top-rated professional quarterback, his team and their coaches tailor a game plan for each opponent they face. However, the plans are guided by the basics—the fundamentals.  In our case, we look to the fundamentals that span the financial planning spectrum.

As you look forward to retirement, let’s touch on these various fundamentals and what you may want to consider in approaching them.


1.  Am I working on reducing my debt so that I can enter into retirement without the expense of paying interest carry?  Heading into retirement can mean, for many of us, a reduction in income.  By planning to eliminate or drastically reduce our debt load, we can actually see a positive increase in cash flow in spite of a reduction in income.

2. Am I saving enough in your retirement plan or 401(k)? Is there a matching provision that your company provides? If there is, don’t pass up free money! I can’t stress this enough, because too many employees leave cash on the company table. At a minimum, pick up the low-hanging fruit.

 For many of you, we have discussed how much is needed to hit your goals, but if questions are beginning to arise, or you have concerns, let’s talk.

 3.  Do I have enough invested in equities? It’s a question that is bantered around often by financial professionals. For some who experienced the market declines of 2001 and 2008, there is a nagging fear that we will get battered again. It’s a fear that keeps us too close to the financial shoreline and delays or prevents us from reaching our financial goals because we may be too conservative.

 Believe me, I understand your concerns. It’s why I preach diversification within an asset class (numerous equities across industries and countries) and diversification among asset classes (stocks/bonds, short-term cash, etc.). Diversification helps to manage risk.

Historically, stocks have outperformed income-producing securities such as bonds or CDs over the long term. But I recognize a portfolio that is 100% invested in stocks, even if fully diversified, is too risky for most individuals. It’s one reason we “anchor” the portfolio with securities that are not as volatile.

It is also why we approach investing from an individualized risk basis.  Having an investment strategy that is designed to help you achieve the right amount of risk exposure for where you are right now is what we strive for.  Our goal is to maximize your upside potential by limiting your downside risk.  We don't aim for homeruns but rather a good series of singles and doubles without a lot of strikeouts.

4.  When should I take Social Security? That’s a question that comes up often. You can take Social Security when you turn 62. Or, you can delay it until you reach 70. While many factors will influence the timing, it’s usually best to avoid the temptation of dipping into Social Security too early.

 Let’s look at a simple example Fidelity recently provided. “Colleen is 62 and will reach her full retirement age (FRA) at 66 (note: if you are born 1960 or later, FRA is 67). If she starts taking benefits at 62, she will receive $1,200 a month. If she waits until her FRA to collect, she will receive 33% more, or $1,600 a month in Social Security. If she waits until 70, her benefits will increase another 32%, to $2,112 a month.”

That’s about 8% compounded annually. Moreover, your spouse will receive a higher survivor’s benefit. I can’t cover all options available to you in this limited space, but if you and are your spouse are considering taking Social Security, let’s talk and see what might be the most advantageous strategy for you.  As in designing your investment strategy, deciding when to take your Social Security benefits is an individualized decision and we need to work together to make the best choice possible.

5.  Do you have a pension? How should you take it? Many prefer the peace of mind a monthly check will provide, one that comes on top of your Social Security and savings. Or, you may choose a lump sum payment and roll it into an IRA.

 But consider this—might you want to choose a joint and survivor annuity?

Simply put, if you were to die before your spouse, he/she will continue to receive a monthly check at a reduced rate. Or, you may choose a reduced initial payout that continues at that rate if you pass first. There are other options we can discuss, including life insurance. But my aim is to educate and get you thinking about the various choices you may have.

If you are being presented with various pension options and aren’t sure how to proceed, let’s talk. Part of the services we provide includes helping you make the best decision on your whole financial world, not just the portion we manage.

  1. What are you going to do once you’ve retired? When you wake up each morning and are no longer going to work, what will you do? Let's talk about some options.  Some will require an expenditure of funds, such as travel, a vacation home, etc.  Some however don't.  There is a huge need for the skills and abilities you have developed over a lifetime.  Many organizations need your help, and who knows with more time on your hands, maybe you are the person to help!


Switching gears: 3% GDP growthhow does that make you feel?

 Second quarter Gross Domestic Product (GDP), which is the largest measure of economic activity, was just revised upward by the U.S. Bureau of Economic Analysis (BEA), from the initial annualized reading of 2.6% to 3.0%. That compares with 1.2% in Q1.

The upward revision leads directly into the highlights of an August 30 CNBC interview with Warren Buffett that I happened to come across (

 The legendary investor was asked, “Does this feel like a 3% GDP economy to you?” Buffett didn’t miss a beat. “No, it’s been about 2% per year now since the fall of 2009.”  While he also pointed out that long-term growth of 2% “is not bad,” he maintained that it just doesn’t feel like a 3% economy to him. In a way, he’s right. One quarter isn’t enough to sway sentiment.

 If we look at the data provided by the U.S. BEA, the economy has exceeded a 3% annualized rate just once during the last 2½ years. It’s also fallen below 1% twice. Coincidently, the average increase in GDP over the last 10 quarters is exactly 2%.   No doubt about it, at the margin, the improvement is welcome. And recent reports suggest the economy is on a firmer footing, even if GDP growth hasn’t been very robust.

 The jobless rate stands at 4.4% (U.S. BLS), which many economists would argue is near or at full employment. And job creation has been respectable, if unspectacular (using payroll data from the U.S. BLS).   Job openings stand at over 6 million, a record high that dates back to 2001 when this particular survey began (U.S. BLS). Plus, weekly first-time claims for unemployment insurance remain at an unusually low level (Dept. of Labor), which indicates employers are reluctant to lose workers amid improving business conditions and the difficulty in finding new ones.

 While forecasting market surprises can be dicey, remember that longer term, shares react to the economic fundamentals, which are aligned with the financial plan we’ve recommended for you.

 Table 1: Key Index Returns




3-year* %

Dow Jones Industrial Average




NASDAQ Composite




S&P 500 Index




Russell 2000 Index




MSCI World ex-USA**




MSCI Emerging Markets**




Bloomberg Barclays US Aggregate Bond TR




Source: Wall Street Journal,, MarketWatch, Morningstar

MTD returns: July 31, 2017-August 31, 2017

YTD returns: December 30, 2016-August 31, 2017


**in US dollars


I hope you’ve found this review to be informative. If you have additional questions about this month’s newsletter or you would like to talk about any other matters, please feel free to reach out via email or phone.  We are always thrilled to hear from you!

As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.  Kind Regards, Rudy