This Can Wreck Your Retirement…

Do the financial markets have your attention? I believe so. After all, the worst day in the U.S. stock market this year was on Wednesday with an 800-point drop in the Dow. And while many investors abstained it, the December 2018 fall in stock prices capped off a 20percent decline which started in October. That could have put a significant divot in the plans of people who recently retired. Also one’s who in the late stages of their careers.

Demographics tell us that there is a large group of people from the ages between 55 and 70 years old. They are the bulk of the “Baby Boomer” generation. Many of them have developed lovely nest eggs, thanks to a robust U.S. economy over the last 40 years. That time of technological change and globalization of the economy also produced forty years of commonly falling interest rates. That’s presented a historic opportunity to create wealth if you conserved well and invested steadily. But now here we are, with a stock market near all-time highs and interest rates crashing toward zero. The tailwind that lifted Baby Boomers in their “growth” years may flip to a headwind, just in time for them to start utilizing the money.

At this stage of their purchase life, Baby Boomers are influenced from all directions. They are told to bank on index funds, 60/40 portfolios, structured goods, and private organizations. And, while there are benefits to each, I am telling you what I see as someone who has been hovering around investment markets since this Baby Boomer was a Wall Street rookie in the beloved World Trade Center in NYC: much of it is bunk. It’s a sales pitch, a distraction.

Your focus should be on true risk-management, today as much as any time in the past ten years. Take these over-exaggerated attempts by capital management firms to heighten their bottom line and ascend their businesses, and bring your concentration to your own priorities.

But it does mean that the planned use of your saved assets (when you need it, how much you need, and how you will steer the markets of the future) should be inward-looking. It should not be constructed on trying to guess what the stock market is going to carry out. That is an obvious timing move, and it borders on gambling. Meaning you should not necessarily run to your cash.

The big news on Wednesday was the “inversion” of a tightly-watched part of the U.S. Treasury yield curve. Translated to English, that means for the first time since 2007, U.S. Bonds growing in 10 years yielded less than those due in 2 years. This is far from the first inversion we have seen between different sections of the Treasury market. However, it is the one that is most widely-followed as an economic decline warning signal.

Don’t fall victim to the riches of market analysts whose livelihood depends on progressively higher stock prices. Corrections are not always good, diversification is often a ploy, and long-term investing is for 25 year-olds! For those who have fought hard and strategically to get to the precipice of retirement, they have most definitely earned, the last thing they want is to have this dead object ‘the financial markets’ knock them back toward a more compromised retirement plan.

The best news about today’s financing climate is that the tools we have to operate through them are as abundant as ever. Even in a period of discouragingly weak-interest rates for people who figured on 4-6 percent C.D.s paying their bills in retirement, bear markets in stocks and bonds can be handled with, and even exploited for your benefit.

This may not be the ‘big one’ that there have been warnings about. Possibly it is just another bump in the path of a historically long bull market for both stocks and bonds.

If you want to advance your chances of success toward and through retirement, is different. Namely, to get away from the jargon and hype of financial media, clarify your strategy, and take a straightforward path toward protecting capital in a time of uncommon threats to your wealth.

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