Cover your bases and assemble the right team video

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Video transcript

Welcome to the fifth video in our series

Cover your bases and assemble the right team

This video wraps up our series by summarizing some key pointers to make sure your retirement approach factors in all considerations.

Is your retirement strategy complete?

  • We’ve talked in this series about setting your retirement goals, getting to retirement, and making sure you last through it
  • We also discussed how you’ll want to keep a long term focus in a short-term oriented world
  • We covered some of the planned and unplanned expenses and challenges you’ll want to factor into your retirement
  • Once you’ve thought through every issue you can uncover, you still may be asking the question – “is my retirement strategy complete?”
  • Let’s talk more about this topic now.

Key #4 – Cover all of your bases

Let’s start with diversification, which is an important ingredient in any portfolio. Specifically,

  • Diversity of companies within a sector – so no one company can cause you too much impact
  • Diversity of sectors – so you are protected against fluctuations in any one sector 
  • Diversity of instruments – as different types of investments can produce different results over time
  • Diversity of tools – so your overall strategy is protected beyond your direct investments

Beyond diversification of investment types, we also want to diversify by tax treatment.

  • You can use accounts with different tax treatments wisely to achieve your growth goals. For example,
    • Tax-deferred accounts – where you don’t pay tax until you withdraw, vs
    • Non-tax deferred accounts – where tax is taken out up front, and gains are taxed
    • Roth IRA – where tax is taken out up front – but then no more tax accrues
  • Carefully plan how you sequence your withdrawals during retirement to optimize tax savings
  • Incorporate tax diversification into your portfolio by integrating tax-advantaged municipal bonds

There are also some advanced tax diversification tools you should consider.

  • Tax-loss harvesting – where you strategically sell investments that have lost value to limit your current tax bill 
  • Portfolio rebalancing – where you add and remove concentrations in certain investments so your risk ratios match your original intent over time 
  • Increasing contributions to traditional or Roth IRAs and employer sponsored plans
  • Converting traditional retirement funds to a Roth Account – which can then eliminate ongoing taxes
  • Using tax-advantaged education savings vehicles – for example, a 529 education saving plan for your dependents

Covering Your Bases

  • There are principles and checklists you can use to make sure you’ve covered all of your bases.
  • If you’d like to learn more about how our team can help you integrate the optimal approach into your retirement strategy, click the button below to find a financial advisor who can help you figure out the right approach right now 

Now let’s move on to, Key #5 

– Assembling the right team

Automation is a powerful tool in our investment portfolio, but like anything else, it has its limits. Let’s go through a quick story to illustrate.

  • On a crisp and clear day in January of 2009 – one of the most sophisticated human inventions ever developed was going through its paces of rapidly and mostly automatically moving towards its destination
  • Then both engines of the Airbus A320 were struck by a flock of Canadian geese, and millions of lines of code and super-tuned algorithms were suddenly rendered useless.
  • Thanks to the finely tuned instincts and experience of Captain Chesley “Sully” Sullenberger, 155 human souls were saved – and - as you may know -  the story had a happy ending
  • There are thousands of algorithms to execute every investing strategy imaginable – but it’s also important to know how to land your portfolio on stable ground when the unexpected happens  

Specifically, how do you stay on track?

  • Algorithms can execute the tactics of a strategy, but you need to know whether you are on target or off target to meet your goals
  • A good strategy is personalized to you and managed over time to make sure it continues to align with your interests
  • As changes occur in your life – or in the markets – you’ll want to make the right decisions to adjust course on the path to your retirement

This brings us to personalization.

  • Your financial needs and goals are as unique as you are
  • There are countless strategies that can be executed against your portfolio
  • Which of these strategies make sense today? Tomorrow? 
  • Who will execute the strategies and also make sure they continue to align with your goals?
  • It’s helpful to have someone who understands these strategies and how they apply – or don’t apply – to your specific situation

Now let’s talk about experience.

  • Who you get advice from when you’re planning for your retirement is important
  • There are 2 key questions you should ask when evaluating any advice. 
  • Are their interests aligned with yours? And
  • Does their team have the depth and breadth of experience to give you the full picture to make the best decision possible?

In terms of depth of experience,

  • How much experience does the firm and its investment team bring?
  • Have they weathered market ups and downs?
  • Do they have the relevant expertise to track investments and make well thought out decisions in a timely manner?

In terms of breadth of experience, it’s important to realize (continued)

  • No financial decision is made in a vacuum
  • Your advisor should be able to coordinate among all of the different types of expertise you need to make sure your decisions optimize across all dimensions of your portfolio
  • e.g., retirement strategies, trust and estate consideration, tax mitigation, cash flow management, etc.

Let’s quickly summarize:

  • Diversification across companies, sectors, instruments and tools is important to balancing out risk
  • It’s important to balance the taxable nature of your investment accounts and factor tax implications when managing withdrawals
  • Algorithms and automation are powerful tools – but should be balanced by human oversight 
  • Your retirement strategy is as unique as you are – and should be personalized to your goals
  • It’s important to incorporate a broad range of advice into your approach

When it comes to planning your retirement, the new landscape certainly introduces new challenges – but it also comes along with new opportunities to thrive over the long term.

  • Even with all of the changes that happened during the pandemic – the same fundamentals that drive successful planning for retirement still apply – now more than ever
  • Navigating retirement is a complex endeavor –
  • but with the right focus on fundamentals, you can feel confident about your strategy

For a tailored approach, click the button below to connect with an experienced Edward Jones Financial Advisor who will partner with you to create a long-term personalized strategy to help you achieve your retirement goals.

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