At the beginning of 2019, we had a client come into our office for his 2019 Strategic Planning session. At 65 years old, this client was beginning to entertain thoughts of retirement after a long and rewarding career teaching at some of the country’s most prestigious universities. However, as time wore on, and more specifically time wore on him, he was becoming more interested in what life for himself would be like after his three-year phased retirement and if everything he had worked hard to achieve over his lengthy tenure would be enough to provide for him throughout the remainder of his life. His asks were modest: one condo in Michigan and another in Florida, access to golf courses in both states, and a comfortable amount of “walking around money” as he called it so that he could continue to enjoy his lifestyle.
During 2018, most noticeably between Thanksgiving and Christmas, the broad equity markets declined significantly and swiftly, resulting in a negative year for most, if not all, asset classes. This left a bad taste in most investors' mouths, especially those who did not have the ability or want to ride the market’s roller coaster for another 10-15 years. As we sat around our conference room assessing his portfolio and potential changes we could make, his goals during retirement, and ultimately what it would take to get him to meet his objectives, I turned to the client and asked him, point blank, how he would feel if he had less money in three years than today, after his phased retirement came to an end. The client turned to me, deadpanned, and said, “I would be extremely pissed.”
With his simple and succinct response, all of us around the table understood at that very moment that his portfolio, his retirement, and the rest of his life would be focused on preservation.
With his simple and succinct response, all of us around the table understood at that very moment that his portfolio, his retirement, and the rest of his life would be focused on preservation. Preserving his portfolio from downward shifts in the broad market and global economy in an effort to protect his lifestyle and what he worked so hard to achieve. From then on, our focus with this client shifted from generating long-term wealth to protecting long-term wealth. We adjusted his portfolio to align with the next stage of his life, not chasing after the previous, and continue to provide consistent and predictable growth both now and once he retires.