Financial planning and retirement strategies are crucial, especially in today's economic climate. With global economic fluctuations and uncertainties, it's essential to have a solid plan in place to protect your financial future.
Troy, the quality, substance and how well you translate complex terms into easy to understand concepts is unparalleled. Thanks for another great video. 👍
I didn't know that it was called Sequence of Returns Risk, but I have known it for a long time. To mitigate it, I keep 2 to 3 years' worth of expenses in a good, safe ETF like SCHD. Nice video. Thank you.
Hi Raj, thanks for commenting! SCHD is 100% equity ETF and it dropped about 30% in the Covid crash. While dividend stocks tend to have less volatility than growth stocks, they shouldn’t be considered “safe” or an approach to mitigate sequence risk. Hope that helps!
For the scenario analyses you do, it would be nice if you could end your programs with "You'll be okay if you keep your total spending down to N dollars a month' or "There's a 95% chance you'll be okay if you keep your spending down to N dollars a month", so that gives us something immediately relatable to conclude on our readiness for retirement.
Great video. This is one of the main reasons I am not going to convert to Roth. If you converted $100k at the end of 2021 and paid $25k of tax and your account declined by 25% with the stock market declined in 2022, you know in effect paid 33% tax instead of 25% and your account would need to grow by 33% just to get back to what you already paid tax on. I also would point out the time value of money and paying tax with future inflation adjusted dollars as reasons not to convert.
I’m 45 and want to retire ASAP. My current asset allocation is as follows (held outside tax wrappers) 3.5M global ETF 350K government treasuries How safe is this if I withdraw 3% from each bucket, adjusted for inflation per annum?
Hi Philip, thanks for watching and commenting! It's tough to give any real answers without knowing your full situation. You're welcome to give our office a call and we can see how we might be able to help answer your questions. You can also click here to set something up: click2retire.com/schedule
Troy, why do you use the word “Lost” when you give your explanations. I have noticed that many other financial people do the same. I believe when you have for example a market pull back of let’s say 10% on a 1 million dollar portfolio and you say that the portfolio “Lost” in this case, 100 thousand dollars, that is misleading. The reason I say this and don’t understand why many others do the same is because these are unrealized “losses” and are only losses therefore the term “lose” is unrealistic since in order for those to be “losses” you would have to sell those securities therefore locking in those losses. I believe using words like your portfolio is down by x amount, would be a much better description of what is really happening. The same applies to gains. One doesn’t really experience any gains, unless they sell there securities at a gain. The way I see it is any “losses” and or “gains” today, if securities are not sold, can be your future “gain and or “loss” depending how the market as a whole performs in the future. For me if you have not sold securities, the word loss or gain is irrelevant. Maybe a better way to say it is by inserting the term unrealized before the word loss or gain. This is only my opinion. Thanks
Thanks for watching and commenting Marcelo! You bring up an interesting point that is important to understand. Your basic premise is correct in the accumulation phase. The big distinction in the distribution phase is that you are required to sell those positions to generate income (in these Sequence Risk videos). That is the entire reason why Sequence of Returns Risk is so consequential in the beginning years of the distribution phase. If you don’t sell, you don’t have income. If you only sell the fixed income portion (assuming it didn’t also lose value) your overall risk is possible to be outside your comfort zone posing more risk if the stocks continue their slide for another year. This is why having a plan for income ahead of time is important. Hope that helps to clarify!
Isn't the best method to avoid sequence of returns risk from killing your retirement, is to have several years of cash set aside to cover this BEFORE it happens?
Exactly! Thats what I have done. I’m 61 married, have 6 years of cash for sequence of return risk barbell approach if Market goes down I take from cash if Market goes up I take from investments and delay social security till 70
@jdgolf499, Having a cash reserve ahead of time is always helpful. However, it's important to strike a balance between having enough cash reserves and maintaining long-term growth potential in your portfolio. While having several years of cash set aside can provide a buffer during market downturns, it may also limit your portfolio's growth potential over the long term. Additionally, diversifying your assets and implementing strategic withdrawal strategies can further enhance your probability of success. At the end of the day, it all comes down to each person’s individual financial situation and risk tolerance to help guide the right approach for each. Thanks for watching JD!
I also think that sequence of inflation risk can also be a plan killer!
You see retirement planning is not a day's job, it takes strategic positioning and placements
Financial planning and retirement strategies are crucial, especially in today's economic climate. With global economic fluctuations and uncertainties, it's essential to have a solid plan in place to protect your financial future.
Impressive, please tell me more
Thank you for this Pointer. It was easy to find, he seems very proficient and flexible. I booked a call session with him.
Troy, the quality, substance and how well you translate complex terms into easy to understand concepts is unparalleled. Thanks for another great video. 👍
Thanks so much, Scott! I really appreciate that and am glad these videos are helping. Thanks for keeping up with our channel!
I think your videos are usually informative and good, but I thought this was one of your best.
Wow, thank you! We really appreciate that @thecowiee8002!
Wow what an amazing YT Channel. Great job. Have you considered Reverse Mortgage at the start of retirement to help mitigate SOR Risk even more?
I didn't know that it was called Sequence of Returns Risk, but I have known it for a long time. To mitigate it, I keep 2 to 3 years' worth of expenses in a good, safe ETF like SCHD. Nice video. Thank you.
Hi Raj, thanks for commenting! SCHD is 100% equity ETF and it dropped about 30% in the Covid crash. While dividend stocks tend to have less volatility than growth stocks, they shouldn’t be considered “safe” or an approach to mitigate sequence risk. Hope that helps!
@@OakHarvestFinancialGroup Thank you!
For the scenario analyses you do, it would be nice if you could end your programs with "You'll be okay if you keep your total spending down to N dollars a month' or "There's a 95% chance you'll be okay if you keep your spending down to N dollars a month", so that gives us something immediately relatable to conclude on our readiness for retirement.
You’ve just made annuities look good.
Great video. This is one of the main reasons I am not going to convert to Roth. If you converted $100k at the end of 2021 and paid $25k of tax and your account declined by 25% with the stock market declined in 2022, you know in effect paid 33% tax instead of 25% and your account would need to grow by 33% just to get back to what you already paid tax on. I also would point out the time value of money and paying tax with future inflation adjusted dollars as reasons not to convert.
I’m 45 and want to retire ASAP. My current asset allocation is as follows (held outside tax wrappers)
3.5M global ETF
350K government treasuries
How safe is this if I withdraw 3% from each bucket, adjusted for inflation per annum?
Hi Philip, thanks for watching and commenting! It's tough to give any real answers without knowing your full situation. You're welcome to give our office a call and we can see how we might be able to help answer your questions. You can also click here to set something up: click2retire.com/schedule
Troy, why do you use the word “Lost” when you give your explanations. I have noticed that many other financial people do the same. I believe when you have for example a market pull back of let’s say 10% on a 1 million dollar portfolio and you say that the portfolio “Lost” in this case, 100 thousand dollars, that is misleading. The reason I say this and don’t understand why many others do the same is because these are unrealized “losses” and are only losses therefore the term “lose” is unrealistic since in order for those to be “losses” you would have to sell those securities therefore locking in those losses. I believe using words like your portfolio is down by x amount, would be a much better description of what is really happening. The same applies to gains. One doesn’t really experience any gains, unless they sell there securities at a gain. The way I see it is any “losses” and or “gains” today, if securities are not sold, can be your future “gain and or “loss” depending how the market as a whole performs in the future. For me if you have not sold securities, the word loss or gain is irrelevant. Maybe a better way to say it is by inserting the term unrealized before the word loss or gain. This is only my opinion. Thanks
Thanks for watching and commenting Marcelo! You bring up an interesting point that is important to understand. Your basic premise is correct in the accumulation phase. The big distinction in the distribution phase is that you are required to sell those positions to generate income (in these Sequence Risk videos). That is the entire reason why Sequence of Returns Risk is so consequential in the beginning years of the distribution phase. If you don’t sell, you don’t have income. If you only sell the fixed income portion (assuming it didn’t also lose value) your overall risk is possible to be outside your comfort zone posing more risk if the stocks continue their slide for another year. This is why having a plan for income ahead of time is important. Hope that helps to clarify!
Isn't the best method to avoid sequence of returns risk from killing your retirement, is to have several years of cash set aside to cover this BEFORE it happens?
Exactly! Thats what I have done. I’m 61 married, have 6 years of cash for sequence of return risk barbell approach if Market goes down I take from cash if Market goes up I take from investments and delay social security till 70
@jdgolf499, Having a cash reserve ahead of time is always helpful. However, it's important to strike a balance between having enough cash reserves and maintaining long-term growth potential in your portfolio. While having several years of cash set aside can provide a buffer during market downturns, it may also limit your portfolio's growth potential over the long term. Additionally, diversifying your assets and implementing strategic withdrawal strategies can further enhance your probability of success. At the end of the day, it all comes down to each person’s individual financial situation and risk tolerance to help guide the right approach for each. Thanks for watching JD!