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By: Josh Slocum, McClellan Wealth Management

This year, maybe more than ever, saving for retirement is on everyone’s mind. While some people think it’s a given – that things will fall into place financially, and they’ll be able to retire on their pre-planned timetable – others may be more informed about what it takes to prepare for this momentous life change but don’t really know the best way to go about saving for it.

As a financial planner, I know first-hand that both of these mind-sets can lead to trouble when it comes time to put your retirement plan into action.

But there is good news and that is – there are financial planners like myself out there who truly want to help you navigate the complicated territory of retirement planning so that you – and your finances – are potentially ready when the time comes to move on to your next phase of life. I want you to be able to live out your retirement dreams and not be held back due to lack of finances.

While there are many ways to go about saving for retirement, in my view, some ways make more sense than others, and ultimately, when you’re serious about saving, it’s really about trying to limit loss impact.

Retirement Planning: The Importance of Minimizing Loss Impact

Limiting loss impact is about choosing investments that we think are less susceptible to market volatility. Normally, as you get closer to retirement, you want to lower the volatility risk in your portfolio, not just the downside but the upside as well. When you do this, you lower that variability of return, with the intention of getting a more consistent rate of return.

The Do’s and Don’ts of Retirement Planning

There are a lot of factors to consider when it comes to retirement planning and limiting loss impact, and it’s important to have a general idea of the basics as early as possible. Here are a few things you may want to consider doing, and not doing, in order to help improve your chances of a financially successful retirement.

First off, let’s start with the DON’Ts of retirement planning.

    • Don’t touch your investments. Investments are like a bar of soap. The more you touch it, the less there is. In my view, when people start monkeying around with their investments, like their 401(k)s, they stand to lose a lot of money and may miss out on the big upswings.
    • Don’t mess around with variable annuities. While variable annuities can be a tool to grow funds tax deferred and are exempt from probate, in my opinion, with the high fees and big commissions attached to them, plus several other drawbacks, I feel variable annuities are best left alone.

Now, here’s what you DO want to do when it comes to saving for retirement.

    • Do start early. Starting retirement planning when you’re 22 or 23 versus 32 or 33 or into your 40s makes a dramatic difference with how much you’ll have to save. Trust me, the earlier you start, the better.
    • Do consider consolidating your holdings. While there are benefits to having multiple locations for your investments, I feel when people have their finances sprawled out everywhere among different firms, it’s hard for them to keep tabs on how they’re doing overall. Let’s face it, as people go about their lives, they just don’t have the time to constantly monitor their investments. I recommend you consider consolidating your holdings with one financial planner. In my opinion, this is the easiest way to help make sure you have a solid understanding of your financial standing.
    • Do think about getting help from a professional. Steer clear of the proverbial “water-cooler guy” who tries to offer financial advice he’s not qualified to give out. People can get wrong information from this guy, the know-it-all who has never been in the world of financial advising and really doesn’t know what he’s talking about.

Most DIY investors learn the ropes on their own, only to realize that it’s a lot more complicated than they thought. The more they learn, the more they realize they don’t know. Sometimes we just need to stick to what we’re good at.

Retirement Planning with McClellan Wealth Management in Birmingham, AL

Back in the day, you had to have a firm place a trade for you, and all information came through those brokerage houses, so there was limited information available to the general public. Then the Internet came along.

Now, the reality is that there’s just so much information out there that it’s nearly impossible for people to parse through it and make informed decisions. It can be overwhelming to those who aren’t experienced in managing investments.

With so many factors to consider when you’re planning for retirement, it’s never a bad idea to consider getting the help of a financial planner – one who you trust that can take care of all the details.


This material is provided as a courtesy and for educational purposes only.  Please consult your investment professional, legal or tax advisor for specific information pertaining to your situation.

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