Dave Kennon, Kennon Financial
I’m going, to be honest here. Last week, as the markets were going up and down significant amounts each day, I felt a tremendous amount of pressure and sadness in my chest for those Baby Boomers.
Was it because I was concerned about the long-term plans of my clients? No. I know temporary market movements have little effect on a long-term diversified plan.
It’s just that I could almost feel the anguish being experienced throughout the country. I care so deeply about my clients, and I also feel a deep connection with the Baby Boomers population as a whole.
I know that Boomers have it tough. They have found themselves at the intersection of a bunch of unfortunate circumstances.
1. Most retirees no longer receive guaranteed payments from a traditional pension plan.
2. Boomers parents were alive during the Great Depression. You were told, “Watch out! Everything could fall apart at any time. Never feel secure in your finances. You just never know.”
3. The general population is now exposed to this ultra-focus that the media places on the minute to minute changes in the markets.
4. Boomers are now being asked to pin their financial security on the stock market which while effective in the long-term, is inherently volatile and unpredictable in the short-term.
All of this adds up to a whole lot of anxiety and fear about your financial solvency in retirement.
So when the markets were dropping and the pundits were yelling, I kept imagining the Boomers across the country…
Billy turned on the news after a hard day of work. At age 64, he didn’t know how much longer he could put in long hours at the post office. His body was tired.
Billy turned white when he saw the news that the stock market had dropped another couple percent that day. He slept restlessly, believing his retirement day would never come. His back aching from another day of lifting boxes from Amazon.
Ginny had retired about three years ago. As she didn’t completely understand her investments, she held the belief that she could lose it all without warning. After seeing a news report on how we might be approaching a “bear market,” she felt sick to her stomach. She couldn’t shake the feeling of dread. That night she barely slept. What if she became a burden to her family? What if she couldn’t provide for herself?
Jim and his wife Emily were looking forward to next month’s river cruise through Europe. They usually don’t splurge on such adventures, but they figured it was high time to enjoy the fruits of their labor.
After seeing the stock report (which was plastered all over every newscast) they looked at each other in panic. Were they making a huge mistake by taking the trip? Should they cancel? Is there any way to get some of the trip money back? What were they thinking? It was stupid to plan that vacation!
Ron had gotten into the very bad habit of checking the stock market on his phone several times a day. Each time he viewed his portfolio he either felt relief that his value was increasing or dismay when it decreased. In the same day, he might feel good five times and concerned five times.
As the markets saw increased volatility, Ron started to get obsessed. Many times when he viewed his portfolio it appeared he had lost money. When was it going to end? Should he sell? Should he stay the course? On a typical day, he was relieved at 11:00 AM when the market was up, sick to his stomach at 2:00 when it changed course, and then felt okay again at 4:00 when the markets closed slightly higher.
“This isn’t any fun,” Ron thought to himself as he prepared himself to tell his wife the bad news.
“Staying with the kids in Colorado for a month might be off the table,” Ron thought to himself. “Not the way this economy is going…”
Joyce never paid any attention to her investment portfolio. With a solid plan in place, she felt confident in her financial future. But even her confidence faltered when she started seeing all the frightening stories. They were everywhere. Her Facebook feed, the national news, the newspaper headlines, the internet articles…even her favorite morning shows! Not to mention the near-daily stock reports from her nervous neighbor, and it sure didn’t help that her uncle kept reminding her that “she might lose it all.”
Joyce sold when the markets were down. She put the money in a money market paying 1%. Chances are she made a terrible mistake that would cost her dearly in the years to come.
These examples are some reasons why The Retirement Revolution needs to happen and happen quickly.
It is time for the Boomer generation as a whole to say:
“I’m not going to live in fear of running out of money. I’m going to put a plan in place and allow myself to start responsibly spending some of the money I’ve saved for retirement. I’m not going to pay any attention to the markets on a daily, weekly, or even monthly basis. I trust in the power of a diversified portfolio of stocks and bonds. I’m going to live my life based on the financial plan I have in place and focus on what I should be focusing on…living my best retirement possible!”
Dave Kennon, Kennon Financial
There is no certainty that any investment strategy will be profitable or successful in achieving your investment objectives. An index is a portfolio of specific securities. Indexes are unmanaged and investors cannot invest directly in an index. Index returns are “total returns” with dividends reinvested, which means the return is not only the change in price for securities but any income generated by those securities. The performance of an unmanaged index is not indicative of the performance of any particular investment. Investments offering the potential for a higher rate of return also involve a higher degree of risk. Past performance is no guarantee of future results. Actual results will vary.