You’re Turning 60, Time to Panic

In the process of getting certified for scuba diving safety is paramount.  A good deal of time is spent on emergency situations.  If there is one thing, you do not want to do while diving is panic.  The training includes responding to various scenarios.  Unlike a resort dive course, the PADI dive course I took was 4 weekends of classroom, pool dives, and an ocean dive.  If you want to take a risk, take the resort course.  If you want to be prepared, get the full certification.

While on a trip to the British Virgin Islands, I went diving with a friend.  I had not been diving in quite some time and should probably have taken a refresher course.  As I descended, I noticed I was breathing way too much air.  I tried to control my breathing over the course of the dive, but I depleted my tank fairly quickly.

I did not panic because I had trained for this scenario.  I showed my air gauge to our guide.  We started to make our way back to the boat.  As the last of the air tank showed zero, the guide shared his mouthpiece several times.  Once we got under the boat, we ascended with no issue.

As in retirement planning if you have prepared properly there is no need to panic.  One of the best ways to prepare is completing a financial plan.  You can do this yourself or with a professional.  Either way you should be assessing your situation carefully.

The milestone age of 60 seems to activate a lot of people to consider financial planning.  Hopefully up to this age, you have amassed sufficient assets to support your later years.  A financial plan can help clarify your situation.

Assuming you have been saving in a retirement vehicle for a long period, you will likely have enough to support your retirement.  That is a fairly generic statement and not in depth enough to stave off panic.

There are 4 major components to assess in completing a financial plan: current portfolio value and allocation, time horizon, risk profile, and goals.

A married couple of sixty-year-olds with a portfolio of $1.5 million may seem to have more flexibility than another couple with $500,000.  The next step is analysis of the portfolio allocation.  A portfolio made up of a single stock from an employer can be a ticking time bomb.  After a review of a portfolio, a reallocation may be necessary. Diversification is the key to creating a portfolio that can withstand up and down markets.  It is also critical to re-balance the portfolio on a regular basis to keep it aligned to the original selection.

A person’s time horizon is critical to whether to recommend a particular investment.  For instance, if someone wants to buy a house with their savings in 3 years, it is not prudent to put them into a typical portfolio allocation.  The house purchase goal overrules the portfolio growth goal.

This reveals a critical balancing act for the person in pre-retirement.  Actuarial tables regularly forecast people living into their nineties.  A career length retirement may require taking market risk to grow a portfolio to last long enough.  It is important question to be pondered.

What is the 60-somethings risk appetite? How much risk are they willing to take to achieve their goals? A detailed risk profile assessment is critical to portfolio allocation.  It should also align with a person’s comfort with risk.  None of this matters if you cannot sleep at night worrying about your money.  Treasuries may be more appropriate for someone is sleepless from anxiety.

Finally, the articulation of an investor’s goals is paramount. From bouncing the last check to creating a charitable foundation, planning is incomplete if goals are not documented.  For a couple it is a critical discussion topic.  For an individual it can be a wonderful daydream exercise.  Regardless of your situation, goals are important in any endeavor, especially financial planning.

To learn how an independent, fee only advisor and a CERTIFIED FINANCIAL PLANNER™ professional can help you, please contact me.  Feel free to share with others and make suggestions for future articles: peter.oneill@fiduciamwealth.com