By Money & Finance Editor Ellen Duffy, CFP™
It’s easy to feel optimistic when the stock market is booming. Your accounts are growing, your balance may look better than ever, and you might be thinking, “Maybe I can retire early, or finally take that dream trip.”
A rising market today doesn’t guarantee a smooth retirement tomorrow. Especially if you’re in your 60s and planning the next chapter. It may be time to look past the headlines and ensure your plan is built to last. It’s tempting to assume that a comfortable retirement will naturally fall into place… but there’s risk in complacency. Current high returns often mean lower future gains. This means making outsized assumptions on future growth and relying on sustained high returns can be risky.
1. Don’t Let a Rising Market Fool You
When the market is rising fast, it can give a false sense of security. Markets go up and down. Your investment portfolio value can drop significantly, and without warning. Understand how much risk you may be taking and ensure that your investment strategy is consistent with your goals, timeframe, income needs, and the appropriate risk tolerance to handle potential ups and downs.
2. Retirement Doesn’t Always Mean Spending Less
Many people assume they’ll spend less once they stop working. In reality, many retirees may find that their expenses stay the same — or even go up, especially during the first few years of retirement when they may be healthy and active. Build a plan that includes travel, hobbies, family time, and health care — not just bare-bones living expenses.
3. Retirement Happens in Phases
You may want to think of retirement spending years as part of a “go-go, slow-go, and no-go” pattern.
• Go-go years (60s to early 70s): active, traveling.
• Slow-go years (mid-70s to mid-80s): more low-key activities.
• No-go years: health-related needs may increase spending again.
Your 60s might be full of travel and adventure. Your 70s may bring more rest and reflection. And your 80s may require more health-related spending. Planning for these shifts may help ensure you don’t overspend early or shortchange yourself later.
4. You May Have Options
If you’re unsure about where you stand, you may have levers to pull. Options include working longer, spending less, saving more, and adjusting investment strategy among others. Be thoughtful on your social security claiming strategy. Small shifts can make a big difference later.
Everyone has a unique financial profile including assets, liabilities, spending level, cash flow, investment strategy, insurance, tax level, goals and dreams. Whether you are feeling confident about your retirement plan or not, it is important to “hit the ball where you’re at!” Undergo an assessment, have a plan and understand your strengths, weaknesses, opportunities and threats. A strong market is great, but past performance may not be a reliable indicator of future results.
Ellen Duffy CFP™ simplifies money and investing so that her clients feel confident about making decisions for their financial future. She is a Certified Financial Planner™ and owner of Parkway Wealth Management, an independent wealth management firm in Boston offering investment advisory and planning services. After spending 20 years in investment management with “downtown” firms, Ellen founded Parkway Wealth to serve clients in an authentic way and offer personal financial advice. Her business has a focus on women, helping women feel more confident and informed. Today, women have more responsibility for the financial well-being of the household than ever, yet despite this increased role and responsibility, many women feel uncomfortable talking about money and investing. Ellen works with clients to understand their questions, concerns, hopes, and fears. Financial planning is about freedom and choices. Ellen lives in West Roxbury with her husband Tim Turley and their three teenagers. An active community member, Ellen believes an integrated approach to “health, wealth, community” can build a strong foundation for a lifetime of financial well-being. (Investment advice offered through Private Advisor Group, a registered investment advisor.)
Health, Wealth, Community – It’s All Connected. Investment advice offered through Private Advisor Group, a registered investment advisor.
Investment advice offered through Private Advisor Group, a registered investment advisor.