A New Look at Risk and Spending

Am I asking the right questions to you?

This blog is controversial, but I post it anyway.  It is controversial because it is extreme and black and white in his premise.

How much risk are you comfortable with?  How much of your income will you spend in retirement?

I don't believe I ask this, but reading this has allowed me to focus on sharpening my questions and message.

First, let's talk about spending in retirement.  I personally like to think about it in two "buckets".  The I have to spend this bucket and the discretionary "fun" bucket.  The article here says that most people when you ask say 75%, but when you ask differently, that number goes to 135%.  Both answers in my opinion are incorrect and why I try to treat unique people uniquely.  You may need 60 to 75% to pay your bills.  The mortgage goes away, savings will fade away.  Other expenses will likely favorably change as well.

Risk.  I am definitely in the camp that you should minimize investment risk until opportunity presents itself.  Opportunity presented itself 3 years ago.  Simultaneously, we must avoid the trap of gambling with market timing.  Dollar/Percentage Cost averaging, rebalancing, etc are strategies you can use to avoid that.  There are other tactics to employ as well.

This is just another awareness article that I am posting and to get people thinking and to challenge your wealth manager with healthy skepticism regarding their collaboration techniques.