Life Storms: Protecting Your Retirement From Multiple Threats

Gas prices and inflation are spiraling out of control. Investment accounts are suffering. Health costs keep rising. Taxes increases are expected. It's like a storm battering your retirement's stability from every direction. How can you protect your retirement from so many threats?

Midwestern storms often rock our world in the spring, but really, they can happen during any season. Admittedly, we don't experience near the widespread, catastrophic destruction caused by hurricanes like the one I barely dodged, or Florida’s recent disaster, Hurricane Ian. But we do deal with other storm-related fallout, which can be severe (tornadoes), damaging (ice/hail), and just plain scary (high winds/heavy rain).

Recently we experienced a moderately damaging storm. Lightning lit the sky and thunder rocked our house, and our family’s sleep was interrupted as we rushed for shelter in a corner of the basement. A furtive look out the window revealed nothing of the storm’s rage, as the visibility was near zero.

Ten minutes seemed like an eternity before the worst of the storm moved on. When the wind subsided and the lightning ceased, we peered out the front door and discovered our 40-foot maple tree was a victim. We saw no other damage in the neighborhood, so we assumed a lightning strike was the cause.

When we called a professional tree removal service to handle cleanup, however, they noted that the damage wasn’t from lightning at all. Our tree actually had suffered some disease inside its trunk, which wasn’t visible until the breakage left it exposed. When the high winds came, this weakened condition resulted in most of the tree coming down, and made it impossible to salvage what was left.

It wasn’t the first time we’d lost a tree to storms—with previous tree loss I learned how important it is to nurture roots to achieve a solid foundation, which is necessary for a lasting tree. This time, though, the issue wasn’t a weak foundation, as our tree was firmly rooted. Even as an entire section went down, the trunk was firmly planted.

Sometimes, being rooted isn’t enough.

It was really a combination of threats that led to the untimely demise of our tree. If it had suffered only disease but was unaffected by the storm, or if high winds blew through a healthy tree, it most likely would have lasted for many more years—but the coupling of threats was more than our poor tree could take.

It’s often the same way with finances.

Of course you want your investments to have strong roots, but you also need to protect them from a multitude of threats that have the potential to jeopardize your financial well-being. Some common possible threats include:

  • Inflation
  • Market volatility
  • Longevity
  • Loss of a spouse and income (Social Security/pension/wages)
  • Taxes
  • Increase in living expenses
  • Long-term care events

Basic plans can be designed to weather any one of these financial threats, but what happens when unexpected “life storms” happen simultaneously?

Like now.

Currently we’re experiencing high inflation, the stock market is down, and living and medical expenses are skyrocketing. Don’t forget that taxes are expected to increase, too—and what happens when other unexpected issues arise? Because unplanned issues do arise…all the time.

Plan today for tomorrow.

We realize that multiple financial challenges can occur at any time without warning, and we just aren’t satisfied until we are able to account for all factors and combinations of possible events. Are we overthinking things? Maybe—but we do this because we believe in our comprehensive financial planning process, and we want to have solutions for our clients before unexpected, unplanned financial events pop up.

We are committed to protecting our clients.

We don’t simply trust our plans to luck and hope for the best—we test them extensively to check for cracks. We employ state-of-the-art technology to run hypothetical Monte Carlo scenarios. And we account for thousands of different combinations of threats and project possible outcomes over time.

Tapping into technology for protection.

We use sophisticated software to share detailed projections of assets available over a given timeframe. More importantly, these tools can give a projected success score to any given retirement strategy through an extended lifetime. Only when we have a success score of 99% or better do we feel confident to offer our clients a plan.

Otherwise, it’s guesswork. With enough assets, many advisors can establish ‘financial plans’ to protect against market volatility. Some will do a simple Roth conversion and call it a tax plan (it’s not). You might also have insurance for a long-term care event. And while these may be helpful against a single threat to one’s retirement, it’s usually a multitude of combined factors that end up derailing the master plan for a secure and happy retirement.

We don’t want this to happen to you.

So we take the time to assess (and re-assess!) your financial situation and predict what might happen if things get rough. Because we’ve learned from experience that while it’s great to be “rooted,” it’s equally important to plan for an unpredictable “life storm.”

Questions? Contact us today to see how we can help you prepare for your financial future.

Krista McBeath is an Investment Advisor, Chartered Financial Consultant, a Licensed Insurance Advisor, a Fiduciary, and an experienced tax advisor who specializes in financial planning, investments, and insurance.

She utilizes advanced tools for in-depth calculations that analyze tax and retirement scenarios to help their clients avoid a future tax time-bomb.  Whether this means enjoying more of your hard-earned money in retirement or passing along assets to loved ones with less tax burden, planning makes the difference.

Her new book, The Generational Wealth System outlines a holistic approach to preserving lifestyle, wealth and legacy.

click to schedule an appointment with financial planner Krista McBeath of Normal IL