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"All of life is the management of risk, not its elimination.."
- Walter Wriston
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Solving the (Retirement) Problem
Reaching (and maintaining) financial independence so that work is optional is usually not a function of achieving superior investment returns. Rather, it is about behavior. Saving, investing and spending are, of course, important parts of the equation but finding the next hot stock (or mutual fund) is not the answer. Neither is it about finding /following the firm with the "best" stock analysts or (God forbid) one of the pundits on TV. Neither is it about investment smarts. It is about focusing on long term goals, maintaining discipline, staying invested and controlling costs.
We think we have the solution but sometimes it seems clients aren't really interested. They say that there must be another way. Of course, you always have a choice when it comes to investing and spending. You certainly don't have to be invested in the stock market. Instead, you can lower your living standard and get out. Or, you can lower your withdrawals when market values decline. For some reason, folks don't like those choices. They want to save a little, invest for maximum safety, have consistency of income and spend a lot. This is usually not a formula for long term success.
It is important that those looking towards retirement not be swayed by "popular" opinion. Particularly in times of change, fear sells and it is easy to find forecasts of impending doom throughout the financial media. None of us are immune to these fears but we can develop immunity to acting on them. If our retirement timeframe (including life expectancy) is 20 - 30 years or more then we must act like it and avoid the blunder of sabotaging our plan by short term reaction.
We have been working on a new retirement planning model that takes into account the desire for smooth/stable consumption and also utilizes random returns from actual market history. We are rolling this out starting next month in client review meetings.
Take a look at our blog archive as we just crossed over the 100 post mark.
- James E. Wilson, CFP® My Blog
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WealthRx® is J.E. Wilson's unique wealth management process, designed with successful physicians in mind. Learn more. Contact 
