Transcript:
Easan Arulanantham:
So this is a question that we get a lot as people get closer and closer to retirement, does my retirement portfolio look any different than the one I have right now, when I’m killing money?
Tom Vaughan:
Yeah, that does come up a lot, you know, people are heading into retirement, and they’re like, well, will I be changing my portfolio? Because I’m going into retirement? And the answer to that actually, in my experience, has been no, not very often, sometimes. Mainly, because, you know, the portfolios are generally driven by two things, what the financial plan says they need to have to accomplish their life all the way through, which is 90 to 100 years old. And so that, you know, if that comes out at 60%, or 40, or 50, or whatever it is percent stock, you know, that thing, from an analytical standpoint, we need to have that much. But more importantly, what we’ve found over the years is that people kind of settle into a certain mixture, and they are either happy or unhappy with that mixture. And if they’re unhappy, they readjust.
And eventually they get to a spot where they’re happy, within our practice is kind of fascinating, you know, over a 20 year period, we’ve been riding around 60% stock. And that’s not because I’m driving that is because that’s a comfort point, people like that portfolio, I have people at 100 people at 10% stock, but just the average across the whole board is around 60. But and so you know, it’s a comfort level that continues. And so you know, changing that heading into retirement, I suppose if somebody had way more risk than they should have, I would recommend that they move down, just because again, they’re now you know, not working and don’t have that income. But most of the times that don’t see that situation, you can change it. But oftentimes, you’ll find that the plan isn’t requiring it. So then it just becomes a situation where, you know, what’s your comfort level? What do you really like? You know, some people are very aggressive, they like that, and they’re willing to handle the fluctuations. Other people are very conservative are in the middle, you know, that doesn’t change just because somebody retires.
Easan Arulanantham:
Yeah, and you just have to remember, though, you’re starting retirement, your portfolio, so also last till your rest of your life, which could be another 20 3040 plus years. Yeah. And so if you’re, if you become too conservative, you could really, as you get older and older, have a higher chance of running out of money.
Tom Vaughan:
Yeah, that’s right. Yeah, that and that’s, you know, that’s, I’ve said this before, but the most difficult challenge of financial planning is longevity. And just, you know, making sure you have enough money for the long term, because inflation does happen, like we’re seeing right now, usually isn’t this high, but it does happen and things cost more and more, and the same things you’re doing now will cost more at some point, and it just sort of creeps up on you. So gotta make sure that you have, you know, enough money to keep that rolling. And you know, that that’s part of that plan. So yeah, it’s generally speaking, I don’t see tremendous changes heading through retirement, I’ll see changes more having to do with what’s going on with the market or just people’s you know, overall scenario. I have seen changes within couples, where, specifically the cases I’m thinking of it was the, the man in the relationship was very aggressive, and the woman was not, but she allowed him to do what he was doing. It was his main job. And then when he passes away, she’ll talk to me it says, you know, I’m not that I’m not that aggressive. And so we’ll move that back down to kind of match her tolerance. And so you know, there’s some times that happens within a couple and there’s nothing wrong with that at all just that those were sometimes we see adjustments, but it really doesn’t revolve around retirement that often as far as I’ve seen.