Risk tolerance is the measure of how much risk you can handle as an investor. It may help determine what you can afford to lose, the time frame you have remaining to reach your goal and your emotional ability to handle risk.
Risk tolerance changes over time, too. Whether you’re investing conservatively, moderately or aggressively, age, income and circumstance all form your current level of tolerance. It’s always wise to reevaluate your risk tolerance to ensure as your risk tolerance changes, your portfolio reflects those changes as well. This is where many investors—and advisors—may fall short. Reevaluating as your life changes is imperative.
The Red Zone for Baby Boomers. The decade of danger lies in the five years before and after your retirement date. Market corrections, bear markets, Black Swan events and sideways markets can side line your retirement dreams and turn them into a nightmare. So it’s important to have a retirement game plan and an audible or two in your back pocket to back up your plan in case life hands you a setback. The world has changed. Globalization has made the planet smaller. Everything is correlated, so it’s hard to escape the gravity of the global impact of international markets on investments and even savings instruments.
Baby boomers have already been through the grueling bear market of 1973-1974. Then came Black Monday, October of 1987 when the market shed 22% of its value in a single day! And again in 2001-2003 the market endured double digit-compounded losses due to the siren song of the emerging tech industry. Many a young boomer loaded up on tech stocks driven by the fear of missing out on the tech revolution. But nothing could prepare the baby boomers for the greatest economic upheaval in their generation, the devaluing of home real estate and the market crash of 2008. Many didn’t recover from the housing debacle, losing their homes or seeing the value of their homes descend below their mortgages. Their 401(k) losses were between 30 to 40%. Real recovery may not have happened for most baby boomers. In all these events, time was on our side. But no longer. Time can’t heal all wounds because there’s not enough time to go around any longer. No one in or near retirement can take another blow to their portfolio. The time for conservation of your portfolio is now. Any significant delay could expose your holdings to another devaluation that may directly affect your retirement lifestyle.
Most people have a predisposition about risk. It’s generally environmental and based on family upbringing. That doesn’t mean it’s necessarily right, it’s just where you are, depending upon your financial literacy. Whether you know it or not, you ...
Released On: 12/27/2019
There are mortality averages based on actuarial statistics that can approximate the life expectancy of the general population at large. But “averages” don’t address half of those who will exceed the norms. The more data you put into determining y ...
Released On: 12/26/2019
For most wage earners and retirees taxes are the biggest expense they’ll ever have over their lifetime. Managing your tax bill effectively is learning to become a “gamer,” by avoiding tax traps and snares along life’s journey. You have to know th ...
Released On: 12/25/2019
It’s rather stunning to discover that most baby boomers have never had a budget in their life, but they’re going to need one in retirement. Retirement may be the biggest motivator for most Americans to create a budget because retirees live month ...
Released On: 12/24/2019
Life just happens, but there are predictable events common to most in our culture and most of those events have a financial impact. Planning for those predictable events can prepare you to meet many of these obligations. The life event checklist ...
Released On: 12/23/2019
The Mortality Revolution may very well be the final frontier in mankind’s quest to beat death. So far, the grim reaper has won every time, but new timelines are emerging in human longevity that are delaying the inevitable. Prepare yourself for l ...
Released On: 12/20/2019
Living longer is exacerbating over a dozen other retirement risks that threaten the vast majority of retirees and those near retirement. If the status quo continues, the retirement lifestyle of most seniors will be severely pared back. Watch the ...
Released On: 12/19/2019
Most of the retirement plans currently operational have a significant flaw. They’ve grossly underestimated the increase in life expectancy over the last generation. But government and military pensions are in the greater financial jeopardy, becau ...
Released On: 12/18/2019
The law of large numbers and changing demographics of life expectancy is having a significant impact on guaranteed lifetime annuities. Annuity manufacturers are touting their alpha with mortality credits and receiving newfound interest among fina ...
Released On: 12/17/2019
The last 100 years have seen a significant increase in human longevity compared to the earliest records of mankind. The spike in longevity has caught the Western world by surprise. The effects of this revolution are affecting financial planning a ...
Released On: 12/16/2019
There was a time when Social Security benefits were not exposed to ordinary income taxation. But over the years, small incremental steps were taken to tax the benefits. Maybe “means testing” may be implemented to shore up the vulnerable Social Se ...
Released On: 12/13/2019
Collateralized loans are not characterized as income and are not reportable, as such, on your 1040 form. And because these loans are not forms of taxable income, they are not counted for the provisional income test for Social Security taxation. W ...
Released On: 12/12/2019
Retirement, as it is today, is inherently crippled by taxes. You may very well have one million dollars in your retirement plan, but Uncle Sam may own up to 40% of it. Health Savings Accounts (HSA) and Roth IRAs need to be reconsidered as a first ...
Released On: 12/11/2019
Most American workers don’t comprehend the realities of retirement until they’re a few years from retirement date, which is often too late. They’re just too busy dealing with immediate financial pressures to understand the long-haul consequences ...
Released On: 12/10/2019
Retirement will undergo a drastic reinvention as the newest generation redefines it's golden years in their investment habits and senior lifestyle goals. https://www.youtube.com/watch?v=RAdtMWBaseY&feature=youtu.be
Released On: 12/9/2019
Your retirement account is only as big as your tax planning strategy. Your personal exemptions and standard deductions in retirement will not be enough to offset your tax bill. Tax management must be a major component of your retirement plan. Wat ...
Released On: 12/6/2019
If you have longevity in your family, guaranteed income for life is a must consideration. If you think it’s reasonable that medical advances will impact your longevity, then guaranteed income for life may need to be in your retirement plan. Watch ...
Released On: 12/5/2019
A happy retirement is based on math and science, not on wishful thinking and hoping things turn out right. You need to eliminate debt and risk in retirement and secure reliable income to generate the peace of mind that seniors desire in their gol ...
Released On: 12/4/2019