Erin: Jordan, so good to see you. Let’s talk through 76 years of history. What market history teaches us about staying invested. From oil embargos to global pandemics, the S&P 500 has endured decades of uncertainty and come out stronger over time. So, let’s break down the data and talk through whether pre and postretirees should make any changes to their portfolio. And as we talk through this answer, Jordan, I do want to bring up this chart which shows 76 years of all these global events, what stands out to you about how the market responds to those events?
Jordan: Each one of those events was probably scary. People didn’t know what was going to happen. But if we look at history, every single time the market 100% of the time has recovered. And that’s something that we try to reinforce. The market will recover in time. Although going through those dips is very scary. There’s a lot of uncertainty. The market always has recovered.
Erin: Okay. Now, I understand staying the course, staying invested often the best advice, but if I feel uneasy about how I’m invested, when is the right time to make changes to my portfolio?
Jordan: Yeah, we want to make sure we listen, right? And your concerns are our concerns. So, if you are uneasy, we want to make sure we talk through this now because the best time to change the portfolio is before the next big correction occurs. Now, we go to history and say, you know, the market doesn’t repeat itself, but it does rhyme and it does kind of over time grow and it has that positive return. But if you’re not comfortable with this, we can’t make sure that you’re taking that unnecessary risk because your peace of mind is more valuable than making a few extra percent in the market.
Erin: And how does that answer change for someone who is nearing retirement or recently retired?
Jordan: Yeah, the game changes when you’re nearing in retirement. It’s not just about accumulation, growth, growth, growth. It’s about how do you preserve what you have? How do you get income from what you have? And then the third thing is how do you grow that to maybe yourself or the next generation. So when you’re nearing retirement, you need to not focus on just growth. You how am I going to get an income stream off of your nest egg to kind of sustain your lifestyle? Because I believe the business of life is the accumulation of memories. How do you make memories? Well, you need income to do that.
Erin: Yes, that is true. So, we can’t have this conversation without talking about sequence risk. This is a risk for people who are retiring during a down market. This presents a really unique challenge. Can you walk me through this risk?
Jordan: Yeah, again we can personalize this to each person in their portfolio. But the real challenge is if you start taking withdrawals, you might have the same average return rate, but because you have a negative market the first few years of your retirement and then you were taking withdrawals, that’s kind of a negative compound effect where you could be down to the last, you know, $10,000 in this scenario.
Or some people it could wipe them out if there’s a big market downturn right as they retire.
Now, I’m not predicting anything, but we’re near all-time highs. Is this the time to be maybe more greedy and aggressive, or is this the time to be more conservative and make sure we have a well-run plan?
That’s a question we want to ask that client and really provide that leadership to make sure if the market does correct and they need to take withdrawals, they’re not overly exposed.
Erin: Right. So, then that begs the question, how do you guard against sequence risk? Because we can’t really control if we’re retiring into a down market.
Jordan: Correct. And a lot of people when they are putting money in 401ks and IRA, it’s all about growth and then they retire and sadly the portfolios are all about growth too. So if we have a plan and we make sure that we have a plan for income, we have a plan for safety. We have a plan for that long-term growth money. If the market does have a dip, we’re not going to be forced to sell because we have a plan. We have a bucket where we’re taking from over the next few years. Maybe we have different strategies for guaranteed income inside that plan. But the market should not derail your retirement and your lifestyle if you have a plan and not all your money’s left to risk which would then force you to take from a negative market year if you needed some income.
Erin: Right. The lynch pin being having that plan. So Jordan, if somebody would like to sit down with you, create that plan or talk through how they’re feeling in this moment and if they are feeling like they’re too stressed out by their portfolio, then it warrants a conversation. So what’s the best way to reach you?
Jordan: Yeah, we’ll even offer a free review of their portfolio. A lot of people like, “Oh, I’m moderate. I’m aggressive. I’m conservative.” But we want to show you what that means in real dollars and cents and how much you could lose and how much you could maybe make and make sure you’re comfortable with that. So, we’ll review that complimentary. You just got to call our main number 847-499-3454.
We’ll sit down, make sure you have the peace of mind that you deserve.
Erin: That’s great. And also, Jordan, it bears repeating for people who are watching. You and I have had the time and the luxury to go over so many different topics when it comes to retirement. So, we’d like to encourage people to like and subscribe to your channel. Also, like this video and take the time to digest all of these videos on their own time. We also have a great QR code coming up. So, again, Jordan, I really appreciate your time today. Thank you.
Jordan: Thanks, Erin.
