Some things are just out of your hands. In retirement planning there are a lot of things completely out of your control, but if you re-frame your thinking, there is actually something you can do about them. Eric talks through these four areas where you have an opportunity to prepare for the unpredictable.
(Click the featured times below to jump forward in the episode)
[1:08] The Market
- You can’t control the whims of the market, but you can control how exposed you are to certain risks.
- There are two sides to the debate, however. If you don’t have risk, then you won’t have the same kind of returns from the market.
- Allocation comes in during retirement planning to give you an appropriate amount of risk.
[2:34] How Long You Live
- Staying healthy helps, but you can’t know how long you will live.
- You want money for the remainder of your life and to be covered through retirement.
- Sometimes something will happen that you can’t predict.
- Average life expectancy is going up.
- We can control how much of our wealth we leave in places where money will be taxed.
- Money goes in three buckets: taxable, tax-free, and tax deferred.
- You don’t know exactly what you will pay on tax deferred money because the laws may change.
- Eric illustrates the different tax brackets.
[7:08] Social Security
- We can’t control whether the payout will drop or go away, but we can control how heavily we rely on it in our plan.
- If your plan works without Social Security, it will work with it.
- You want to have assets accumulate and an income strategy where you do not have to rely on Social Security, just in case it goes through some changes.
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