Threats to a Successful Retirement Story
When you’re successful, it’s easy to get comfortable. You set a goal, developed a plan and achieved it. Now you have the income and assets to do what you want. You’ve arrived! But unfortunately, that can all change very quickly. Especially when you’re successful.
Many threats can take away what you’ve earned. At Global View, we’ve seen very successful clients come to us after something bad happens. Here are some of the threats you may not have fully considered:
- Significant investment loss
- Serious illness or disability
- Death of a loved one
- Unexpected business downturn or job loss
You probably know family or friends who had to change their lifestyle when one of these things happened. It’s never easy. And when you have serious money, these threats can affect you emotionally and financially. That’s why it’s important to practice financial self-defense.
Let’s look at these threats:
Risk is a confusing topic. Once you have money, you usually know one thing: You don’t want to lose it. Sounds straightforward, but many investors commonly get caught in bad situations. And that’s when they fall victim to the confusopoly (where industry players intentionally make things confusing to profit at your expense)!
To avoid this, you must have an understanding of risk. And it needs to be in your bones. That’s why we spend so much time showing you what could happen. To prepare you for how you react, when (not if) risk rears its ugly head.
We see the same stories play out over and over: New clients come in thinking they are diversified. But nearly every working client we help retire is taking much more risk than they should. Many think they are “low risk” because they are invested in U.S. stocks they know. They think they are safe. It’s rarely the case.
When creating your investment portfolio, make sure you’re working with a fee-only, fiduciary financial advisor and that there are no conflicts of interest that will put you in the wrong place. Find your true risk tolerance and invest according to the findings of a valid test, proven to hold steady over time.
A divorce can also threaten your finances. Sometimes a divorce can be sorted out amicably and assets preserved along the way. But when lawyers get involved, the expenses can increase dramatically. While you shouldn’t necessarily plan for the worst, not protecting your assets can be an expensive oversight.
Having serious money also opens you up to a possible lawsuit. Unfortunately, success makes you a potential target.
There are ways to protect your assets. By not titling your assets properly, you may be taking a great deal of unnecessary risk. Don’t underestimate this risk to your wealth. In our litigious society, it’s easy for a business owner to have a lawsuit at some point in their life. And if you’ve ever been involved in any litigation, you know it can be ridiculously expensive. In some cases, catastrophically so.
But all of this is less likely if you are not viewed as an attractive target. Lawyers aren’t stupid. They will not advise someone to pursue a target that’s not a good one.
At Global View, we have an in-house attorney. That means we can consult with him to discuss your case. We can also work with our clients’ asset protection attorneys. However you do it, you don’t want to put it off. It’s not worth the risk.
If something happens to you or you pass away, it could have serious implications for your heirs. We’ve seen this too many times.
It means you need a solid understanding of what risks are worthwhile to insure. And it means you need to have a plan in place to ensure your assets are dispersed according to your wishes.
Having a solid estate plan in place will also lessen the financial burden and stress you’ll leave your loved ones. We know because in the 20 years our advisors have been working with clients, we’ve seen it all.
Making any big decisions after losing a loved one can be dangerous. This is an emotional time meaning decisions you make may be based on those feelings. We see it a lot: Spouses make big purchases or moves in their investment portfolio out of fear, sadness or impulse. Sometimes the damage cannot be undone.
The financial services industry is intentionally deceptive. Many “advisors” (really just salespeople who hide behind the title) prey on this vulnerability. Financial losses can be harder to make up the closer you get to retirement or once you’re in retirement. As we get older, this is also when we start to lose close loved ones.
If someone asks to make changes to your financial plan immediately after the loss of a loved one, say no. While you may want to review your financial plan for life insurance policies, estate planning and budgeting purposes, making any drastic changes is not wise. Talk with a financial advisor you trust. A fee-only fiduciary financial advisor has no conflicts of interest and therefore won’t sell you something you don’t need because of your emotional state.
A job loss can happen for many reasons – recessions and corporate restructuring can throw a curveball. But if you’re prepared (through the right financial planning), you can help soften the blow of these events.
Financial planning is a broad term. And few investors incorporate risk management. But in order to plan, you have to know what will be expected. Again, this means you need a valid understanding of your attitude toward risk. And you need to be educated on how much volatility you can expect, given that level of risk.
Everyone knows a market correction can do harm. But few realize the full impact of getting bad advice. If you are a business owner, your risk increases.
When creating your financial plan, make sure you work with a fee-only fiduciary financial advisor and discuss the what-ifs. Planning for the unforeseeable can help you get back on track quicker.
When you’ve got serious money, financial planning becomes less about getting there and more about staying there. You’ve got a lot more to lose than someone with lesser resources.
The help of a financial advisor can be the difference between retirement success and a retirement horror story we’ve all heard about.
Take steps to protect yourself, your assets and your finances. Prepare, discuss your options and be ready for whatever may come your way.