So what do I do now with my retirement plan?

 

If I hear one more time how someone's freedom 55 has become freedom 75...

Yes, markets have continued to gyrate and it is scaring many Canadians who are concerned about their retirement plans.  

For most Canadians, the current market shakeout has become personal, particularly for those who are on the verge of retirement and are now reassessing their plans.  Given that one-thousand of us turn 60 each and every day, there are a lot of people who are trying to make sense of where their retirement dreams have disappeared to.

On one hand, retirement clients are in desperate need of comfort and a calming source of wisdom.  On the other hand, they are confused about who to blame for their current situation and are not convinced that the advice they have received from their advisors was appropriate given what was going to happen in the markets! (Isn’t 20/20 hindsight wonderful!)

In fact, I watched one financial commentator on a major Canadian network talk about where clients could go to launch action against their advisors for “unsuitability of investments”.  His message: if your investment portfolio is down significantly, you may be able to take your case to Securities regulators.

Irrationality has now become the norm…

Do I sell everything and get out? I have never pretended to be an investment expert and I am not sure that they even exist in this kind of market environment.  Here are some things that you might think about:

• It is probably too late to get out--you have already lost a chunk of your nest egg and now you are trying to time the bottom.  One thing I do know is that this is unlikely the end of the world as we know it and at some point the opportunities will appear again.  Give it some time (months, not years) before you make a knee-jerk reaction.  Besides, it is not your investments that are bad--just their prices!
• If you do sell everything, are you just going to put it into a mattress?  This is not the time to tie it up for a long time, though I do understand the fear that will drive you to liquidate.
• Don't automatically blame your investment advisor.  All that anybody can go on is what has always been rationale and reasonable in the markets--this isn't a rationale or reasonable market so how was anyone going to see it coming?
• Remember Warren Buffet's advice: "it is always better to be approximately right rather than precisely wrong!"

Sit down with your advisor and figure out where you are.  You can't do anything about the money you have lost so you might as well look at your retirement portfolio as if it were entirely new money.  If you had new money today, what would you do with it?

Bottom line though, is that you have to be able to sleep at night.  However, that is not an automatic invitation to make a rash decision!

Does this mean that I won't be able to retire? Neither one of us can answer that question without taking a look at your overall retirement plan.  By the way, that is more than just a financial plan--it is also an examination of what you actually want to do in this next phase of your life.  You may be so caught up in thinking that you won't be able to retire that you will miss the fact that you may not have wanted to retire anyway!

Sit down with your advisor and work out a lifestyle plan.  Then look at the money you have left and figure out if the two match.  I also think this is a good opportunity to look at all of the assets you have that will pay for your retirement, along with the liabilities that you are carrying.  We have all received a financial wakeup call, so let's make the best of it.

Good luck, stay informed and stay calm!  If you have an individual question or concern, email me.