• Skip to main content
  • Skip to header right navigation
  • Skip to site footer
Bautis Financial

Bautis Financial

Secure your Castle, Achieve your Dreams.

  • Schedule a Call
  • Podcasts
    • Agent of Wealth
    • Clear a Path
  • About
    • Our Approach
    • Our Team
    • Our Difference
  • Who We Work With
    • Individuals and Families
    • Small Business Owners
    • Retirees and Pre-Retirees
    • 401k Plan Sponsors
  • Insights
    • Blog
    • Business Valuation Advisor
    • College Planning Hub
    • Discover How
    • Learning Center
    • Risk Score
  • Client Access
    • Wealth Center
    • Orion
  • Facebook
  • Twitter
  • LinkedIn
  • YouTube

Shift in Mindset – Part 2 – Climbing the Retirement Mountain

November 28, 2018 by Marc Bautis

I think it’s safe to say that the most infamous mountain in the world to climb is Mount Everest. More than 280 people have lost their lives trying to make it through the clouds to its 29,029-foot summit.  Some have made it their life long mission to navigate its dangerous terrain to hopefully get to its peak and only a few of them will actually make it.  Let us imagine for a moment we are standing on its summit looking down at the world and as we gaze out into the infinite beauty, we look back on the years of preparation and the challenges we overcame.  It is probably an understatement to say the feeling of accomplishment would fill us with pride.   Now that we have staked a flag at the top of the world, at some point it will start to set in that we are only half way to our final destination which is standing safely at sea level.  We need to start our journey down but a feeling of concern rushes over us.   We had focused on getting to the top so intensely for so long that we hadn’t thought about a safe descent.  How will we get down?

Sounds ridiculous, right?  Would anybody start to climb the most dangerous mountain in the world without thinking about a plan for a safe descent?  Of course not.  With that said, it is concerning to me that there are millions of people currently relying on simple retirement accounts to get them “to” the proverbial “Everest Peak” we call retirement and very few will ever ask about the descent until they get to the top (Maybe sometimes as they approach the top).   Most will never have the opportunity to understand how they are going to spend their money without running out.  I’m not suggesting that the ascent is not incredibly important. I’m simply suggesting that we need to look at retirement planning as a long journey that starts with a climb and ends with the ultimate goal of getting down safely.  The best kept secrets within the financial planning process are the ways you can pack your bag before you make your way to the top to make sure you can get safely to the bottom.  These techniques can exponentially improve your chances of success because the biggest dangers exist on the way down.

Let’s go a little deeper and look at a comparison.  Let’s say you and your significant other are 65 today.  Today is the day you both finally get to retire, and you have a choice between one of the following.  Your first choice is you get 4 million dollars and you will be able to spend 3% per year safely without running out. Your second choice is you get 3 million dollars and you will be able to spend 5% per year safely without running out.  Stumped?  4 million is looking pretty good but how good is it if you can’t spend it the way you would want?  The rate at which you set yourself up to be able to spend can have a huge impact on your income streams and in turn on your lifestyle in retirement.  This is where packing your bags early and doing proper planning are extremely important because it can set you up for higher distribution rates.  Wait till retirement to put together a spending plan and be stuck with a spending rate of about 3-4%.  Plan early and you will have control and, most importantly, more options that will set you up with a higher distribution rate.

You may be thinking at this point, “What could possibly set me on this path?”  One of the biggest, if not the biggest, threats we face while embarking on our retirement journey is what is called sequence risk or sequence of return risk.  This is the risk of the unpredictable ups and downs of the market and how they work with withdrawals from retirement accounts.  Simply put, this risk could reduce the principal of our retirement accounts in the early years of retirement and if our only choice is to spend from these accounts before the market bounces back it can greatly reduce our chances of success.   With proper planning you can strategically pack your retirement bag and buffer, or essentially insure your nest egg against sequence of return risks allowing you to spend more of your money safely.  Your future self will thank you.

Category: Retirement Planning, Wealth Management
Previous Post:Year End Financial Planning: Part 4Episode 6 – Your Year-End Financial Planning Checklist: Part 4
Next Post:Episode 7 – Breaking Down The Current State Of The EconomyBreaking Down the Current State of the Economy

Sidebar

Featured Articles

bautisfinancial risk number

Recent Posts

How to Use Meditation as Business Growth Tool

Episode 175 – How to Use Meditation as Business Growth Tool With Anand Balasubramanian

September 29, 2023 By Bautis Financial

Gen Z Online

Gen Z Is More Likely to Fall for Online Scams Than Their Boomer Grandparents

September 28, 2023 By Bautis Financial

Pre-retiree working, downshifting and working longer

Downshifting: Working Longer and Loving It

September 28, 2023 By Bautis Financial

Bautis Financial Advisor Commentary: September 27, 2023

September 27, 2023 By Marc Bautis

New Home Sales Dropped In August As Mortgage Rates Climbed

New Home Sales Dropped In August As Mortgage Rates Climbed

September 27, 2023 By Bautis Financial

Blog Categories

  • Budgeting/Saving (37)
  • Business (55)
  • Clear A Path Podcast (6)
  • Client Resources (4)
  • College Planning Learning Center (2)
  • College Planning Podcast Series (3)
  • Daily Flash Briefing (1)
  • Education (36)
  • Estate Planning (18)
  • Finance News (664)
  • Insurance (29)
  • Investments (276)
  • Learning Center (26)
  • Lifestyle (54)
  • Miscellaneous (50)
  • Personal Finance (175)
  • Politics (23)
  • Real Estate (55)
  • Retirement Planning (109)
  • Social Security and Medicare (29)
  • Taxes (49)
  • The Agent of Wealth Podcast (174)
  • Uncategorized (109)
  • Videos (155)
  • Wealth Management (80)

Subscribe to Our Insights

Sign up to receive valuable financial insight and updates straight to your inbox each week.

Social

Follow along on social media

  • Facebook
  • Twitter
  • LinkedIn
  • YouTube

Contact

Bautis Financial
8 Hillside Ave
Suite LL1,
Montclair, NJ 07042
Get Directions
862-205-5800

Navigation

  • Schedule a Call
  • Podcasts
    • Agent of Wealth
    • Clear a Path
  • About
    • Our Approach
    • Our Team
    • Our Difference
  • Who We Work With
    • Individuals and Families
    • Small Business Owners
    • Retirees and Pre-Retirees
    • 401k Plan Sponsors
  • Insights
    • Blog
    • Business Valuation Advisor
    • College Planning Hub
    • Discover How
    • Learning Center
    • Risk Score
  • Client Access
    • Wealth Center
    • Orion

Copyright © 2023 · Bautis Financial · All Rights Reserved · Powered by Mai Theme

Return to top