Today’s Prep:

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.

Equipping Points:

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.

4:29 Taxes

• 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.

Today’s Takeaway:

“You can’t control what’s happening in the market, but you can control how much it impacts your plan by how much you have exposed to stock market risk. – Eric Peterson“