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Why I Popped The Retirement Question




I was creating a retirement plan for a client by the name of Ms. Smith the other day, and I popped the question to her. She said, well, I don't know. It depends on how I feel at that time. I said what do you mean how do you feel at that time, better yet how do you feel about it today. She said I feel pretty good about it today. I said I have been married for 23 years and have never proposed this question to my wife. She said you should; she would probably feel the same way I do about it.

The question I had popped to Ms. Smith was, "If we could go back to November 2007, the "Great Recession" and her entire retirement portfolio was cut in half by 50% would she stick it out?" She said mainly she was in a different place financially and mentally at the time verse where she is now. I told her I get it, and she should be in two different areas in her life versus back then, but preparing retirement plans, I have to ask that question. Not because it's on my questionnaire, but because I need to know the risk tolerance of all my clients. I have had to save a few clients over the last 20 years from themselves because they were unfamiliar with their risk tolerance.

I informed Ms. Smith that the S&P 500 Total Return fund was down 50.95% meaning if the S&P or Standard and Poor's stock index (snap shot of the top 500 company stocks of the United States) were down then there was a good chance her portfolio would have been down as well. When I create retirement plans for my clients or when I am conducting my online retirement planning webinars or retirement planning workshops, risk tolerance is essential in the preplanning phase. 

In closing, I had an opportunity to pop the question to my wife to get an idea of what she would say. She confidently said she would look to me to ensure she had all the right adjustments in place. I told her that was not the correct answer and proposed it a different way in the fact I asked what if her husband was not a retirement planner, what would she do? She said she did not know because she has always been a safe kind of girl. I asked her what if she had a retirement planner that had software that could predict, based on past performances of the previous markets, how her current retirement portfolio would hold up. What if we could go back and even run a sample stress test against her 401k plan in that same period from November 2009 through February 2009.  How would she feel then? She said a lot better; I said okay because I can do that for all of my clients, and she would be no different, only with benefits. She said funny joke wise guy, but you should share that with your listeners and your clients, so they know. My question for my readers is: What would you do if your retirement account was cut in half?



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