As I write this we are in the midst of the 9/11/2001 20 year “Remembrance”. Even with the Wars of the last hundred plus years and with generations of myself and relatives having been involved in the beginnings, the middles, and at the ends, I don’t recall ever referring to “celebrating” those events. We remember Armistice Day, Pearl Harbor, D-Day, VE Day, etc. but we generally “celebrate” Veterans Day, Independence Day, Memorial Day, and other days that had become national holidays.
Apparently, younger Americans these days are not well versed in the significant noteworthy conflicts involving our country over the last 100+ years. This may be similar to the need to change names of various schools, sports teams, destroy/remove statues of noteworthy historical figures, remove actual footage of various events from various forms of media, and to insist that these conflicts are no longer relevant for our students. Go to this link for a very good summary of the history of the “anti-Patriotic” teaching and “racist” tags:
A LITTLE HISTORY…FOR MANY OF YOU, SOME HISTORICAL PERSPECTIVES FROM BEFORE YOU WERE BORN!
Our most recent themed email we sent out was on the topic of Eight Mistakes Than Can Upend Your Retirement. The article could have been as short as “Not Planning” repeated 8 times. We get a lot of advice from many sources about many important life topics, but we need to realize that each source of that advice has their own perspective of what is “good advice” and just how universally true it may be for US.
For example, in the example of retirement savings, we hear “start early” but what if we are 60 now and not 35? What should we be “starting”? How much should it be? Where should we put it? Can we trust it to do what we intended? And on and on. But somewhere in that string of questions we see that the answers are no longer “in general” but they become very specific to who we are and where we are in our life’s specific financial conditions. The bottom line for me is that while the “retirement planning tools” offered by so many financial firms, self-used applications, etc. would suggest that it is simply filling out a data input form and hitting the button and you get “THE ANSWER”. But in fact, you get “AN ANSWER” that may not be good for more than 6 months! Also, while it may produce an answer it may not explain how sensitive (i.e. close to being a reasonable answer) it is do a variety of factors that we may face on a regular basis in our lives.
I thought about using this blog to give examples of “principles” that apply to good retirement planning. For example, “time value of money” which suggests that the earlier the age you start funding your retirement account the more it grows in value at your selected retirement date. But I also introduce a myriad of other “variables”. Such as how much do I need to accumulate for retirement, what will my employment history allow me to save, what will my family circumstances dictate I will have available to save, etc. Another “principle” that comes up is to “pay yourself (i.e., fund our retirement account) first”. That is often easier said than done! And by the way, often caused some family dis-harmony if all parties in the family don’t have the same focus. I may have mentioned recently that Sue and I just celebrated our 50th wedding anniversary. When we got married, she had the full-time job, I was finishing up college. When I graduated, I was in the Air Force, and she had a new full-time job. When Wesley was born, I was in the Air Force, and she was not working or sometime helping a friend in their store. When Sarah joined the family two years later, I was still in the Air Force and Sue had started her own business on a small scale. When I got out of the Air Force, I did some aerospace consulting, helped Sue grow “our” business, and this “change of circumstances and income prospects” continues to this day! My point is that nothing is “predictable” for very long.
So how can we FOCUS our efforts and begin a better understanding of our retirement plan? Don’t worry, FOCUS is not intended to be clever acronym. Focusing on our retirement plan simply means gaining an understanding of the critical goals of the plan, those “circumstances” that can affect the outcome, both negatively and positively, and being prepared to assess and project those new circumstances into the future. Planning means we may need to modify goals, suspend, or accelerate funding, etc. As our office planning strategies have evolved over the years, we are now incorporating the typical long term care impacts on future projections, we have adjusted downward the expected rates of return on assets, and we currently are assessing our 3% inflation assumption we use for variable living expenses, travel, insurance, etc. At an even more “macro” level, I personally am trying to interpret the drastic changes (financial, social, regulatory, and even “cultural outlook”) we are seeing show up on a seemingly daily basis which may point to new disturbances to retirement planning.
Last Blog: Simple: Still impossible to explain. Defy logic. Looks like gambling to “me.”
Current Summary: As of September 22, as I write this, ALL Financial markets (stocks, bonds, traditional investments in general) are subject to “disruption” which will likely show up as continuing volatility, price swings up and down, and fast movements in and out of favor.
Last Blog statement: For the last few weeks the ratio of rising stocks vs falling stocks in the major indexes has been falling, the number of new high prices vs new low prices has been declining and since mid-April the number of stocks in the S&P100 index that are trading above their 50-day moving average has dropped from about 90% down to about 55%.
Now I would note the percentage of S&P100 stocks trading ABOVE their 50-day moving average as of close of business on 9/21/21 was 29% (down from the 55% in the last blog post). Only in April and October of 2020 was this percentage lower in the last 18 months.
Achieving your overall financial goals can be done using various types of assets (asset classes) including stocks, bonds, real estate, commodities, metals, energy, and the related derivative products available today that far outnumber the assets themselves. Sometimes we just stand aside, we don’t need to own them all and no one asset class works forever!