^{Episode 5}
The Risks That Could Derail Your Retirement (And How to Plan for Them)

Welcome back to the Retirement Game Plan podcast. Today, we're talking about question that many people carry as retirement gets closer, as they approach this important date, and that's this: what could throw my plan off track? You know, a lot of people spend years saving and investing and preparing financially, but retirement planning isn't always about growth, it's also about protection As retirement approaches, many people start thinking less about how much can I make and more about how do I protect what I've built. 

You see, that shift is completely normal because retirement changes the conversation. There's less time to recover from mistakes. Losses feel more personal. Healthcare concerns become more real, and uncertainty starts carrying more emotional weight. And let's face it, as you get into retirement, you also have more time to let those thoughts creep into your head. 

So today, we're gonna talk about some of those risks, and we're gonna try to simplify what those retirees worry about, what risks deserve more attention than others, and how some of the proactive planning can create more confidence moving into those retirement years. So as a quick request before we get started, would ask everybody to make sure you subscribe to our podcast. 

Help us grow the show by sharing it with family, coworkers, anybody that may be approaching, and make sure to write us a review in the comment section. So let's get started. So you see that shift from growth to protection is oftentimes not even realized by people as it's happening. So during your working years, you're focused so much on saving and accumulating and growth of the account. 

Oftentimes you may not even know what you're invested in, but you're really tuned in to whether the, the statement you receive is bigger than what it was last quarter. Or if it went down, now you're concerned. Others are focused on maximizing those contributions. But as retirement approaches, all of a sudden there's this shift, and it becomes, "Can I make this money work? 

Can this pool of money protect or give me the lifestyle that I want in my retirement years?" And all of a sudden, if we see a market downturn, it feels different than it did when we were 35, all right? At 63, that market downturn lets worry creep into your mind. Am I gonna have enough time to recover? These losses are permanent, and I will never be able to recoup what I once had. 

And your confidence all of a sudden drops, and you become scared or worried. So what I'm trying to say here is that we're not trying to eliminate growth completely, right? And I'm certainly not encouraging you to go move everything to cash or become overly conservative. But one thing we have to think about is if we did make a decision like that What kind of impact would that have, not necessarily next year, but 15 or 20 years down the road? 

And a big change in today's world is, let's face it, 30, 40 years ago, people would retire, take all their money from a work plan if they had anything at that time, put it in the bank, earn 8 to 10% in a, a CD, and then they would die in 10 years, right? So the reality of what we're facing today is people are living longer. 

Much, much longer. And so we can't afford to take that risk of going and putting all of our money in a bank account where today we may earn 3%, and hoping that that money will last the remainder of our life. So what we have to do is we have to align our risk with our retirement. All right? We have to be strategic about how we're going to invest those dollars. 

So I hear it all the time as I visit with couples, "Should I reduce my stock exposure? How much risk is too much for the age that I am? How much cash should I keep available? And could a market downturn right before I retire delay my retirement?" So again, we have to think strategically about that. Because the risk isn't always just about what's on the statement. 

It's about running out of money later in your retirement. It's about inflation, which is a serious deal these days. It's about healthcare costs, and it's about the emotional roller coaster that you go on throughout those retirement years. So how do we handle it, right? Again, market crashes right before I retire. 

And I get it, that concern's real. Like, I would be a little concerned if I had a big market correction happen in my account right before I retired. So how do we strategize for that? And one of the things that, that I talk about with our clients often is, is what we call the three-bucket strategy. And it's, it's simply put where we would want to have a short-term bucket that may have one to three years' worth of money that we would plan to spend in it designed to not have a whole lot of risk, right? 

Why would we do that? Because typical market cycles last anywhere from three to five years, maybe four to six years. So if I have three years' worth of money in an account that Doesn't take on a whole lot of risk. It allows me to worry less about what happens day-to-day inside of the market. Then I'd have an intermediate term bucket, and inside that intermediate term bucket, we might have maybe a little more aggressive of a portfolio, but really, its intent is to replenish the short term for the next, say, three to seven years. 

So we're not taking on a ton of risk inside of that portfolio or that bucket, but we are taking a little more risk than what's in the short term. And then finally is the long-term bucket, and the long-term bucket is where we can afford to take some risk because we aren't planning on touching those dollars for seven-plus years down the road. 

And it allows you to let that portfolio or that bucket, if you will, go through whatever market cycles may occur along the way. So why would we do that, right? First off, what it helps people do is it helps them not to panic. When we've had those strategies in place for folks, the markets have gone down, they call us up. 

What do you suppose we say? We say, "Well, Mr. and Mrs. Client, good news is your income is in place for the next two, three years, and that market correction that we're just going through isn't going to impact your lifestyle." So it helps eliminate that day-to-day worry, that day-to-day, uh, freaking out, if you will. 

And it also allows the portfolio, the money over here in that long-term bucket, to continue to grow as it should. Because what happens when the markets go down? Typically, they come back up. So instead of having all of your money invested in an aggressive portfolio and leaving it there, now all of a sudden you only have certain dollars that are in that, that portfolio, and you can let them go through whatever market cycle it is. 

And again, most importantly, it helps people from freaking out. And it just reminds me of a story we had. A couple years ago, we, we had some clients that, uh, had sold a business. Um, they had a sizable amount of money. They invested the dollars. It happened to be in 2022. Well, if anybody remembers, in 2022 the market had a very bad market year. 

Both stocks and bonds had gone down that year at double-digit clips. It's one of the, I think it was, the only year that both stocks and bonds had been down double digits. So what did the client do? They invested early in that year. They saw their portfolio go down, and they got ultra concerned, right? They, they freaked out a little bit, and they made a rash decision to pull all of those dollars out of that account. 

So they had locked in a fifty thousand dollar loss on, again, it was about a half a million dollar portfolio. And what did they miss out on? 2023, 2024, and 2025 all were significantly good market years. So had they understood that market cycles occur, they wouldn't have made a rash decision and missed out on some of those opportunities. 

And again, it's their dollars or their money. They, they can choose to do with it as they wish. But I think sometimes people have this impression that markets only go up, and they certainly don't. So as a pre-retiree, we have to strategically plan for that. We have to think about what kind of impact those market corrections may, uh, lead to, if you will. 

Other strategies, you know, maintaining that appropriate cash reserve, again, the three bucket story that I just kind of walked through. Diversified income sources, so making sure whether it's different products that create guaranteed income streams. We don't need to get into all those today, but there's different products that can support those market corrections. 

Making sure you're adjusting your portfolio, so as you approach those retirement years, maybe you're taking some risk off of that portfolio. And then making sure you're flexible with your withdrawal strategies I think I shared it in an earlier show. Most people don't wanna reduce the income they're trying to create from their portfolio, but others sometimes do based on the portfolio's performance. 

So again, couple different strategies, but we have to be prepared for market corrections, 'cause that's a huge risk that retirees face. Now let's talk about healthcare and long-term care, another major concern. I remember I did a video, uh, I don't know, 10 years ago or so, about how pre-retirees younger than age 65 or Medicare age can plan for their healthcare, and I was blown away with the number of people that watched that video on YouTube. 

I think it's still out there if anybody wants to watch it. But it is a huge, huge planning concern for folks is, how am I gonna secure my healthcare at retirement or at retirement prior to age 65? Or if I am at a- age 65, what do I need to do in order to get that healthcare put in place? How expensive is that all going to be? 

A lot of people are surprised with how much they have to pay, because they're used to coming off of a work plan or a group plan where they maybe only paid a small portion. Maybe they've paid nothing because their employer had paid it all those years. And then how does that healthcare or that long-term care risk affect my family, right? 

I, I hear this all the time that, "Oh, my daughter's gonna take care of us." Is she really? Is she really gonna take care of you? Do you wanna put that burden on your daughter or your son? Most times people want to maintain their independence. So I've always said long-term care planning, it, it's not just a financial conversation, but it's a family conversation. 

It's an independence conversation. It's a quality of life conversation. But we have to address that elephant in the room, right? People are living longer today than they've ever lived, right? I always say it's quantity of life today, not quality of life. In a married couple age 65, I believe the stat's something like 50% of all married couples age 65 will face a long-term care event. 

So it's pretty high chance that one of you will need some sort of long-term care throughout your lifetime. How are we going to plan for that, right? So people are asking us all the time, "Do I need long-term care insurance? What happens if one of us needs care and the other one doesn't? Could healthcare costs ruin or train wreck our retirement lifestyle?" 

And what risks am I underestimating? All those are valid questions, and there are lots of approaches that you can take with it. I'm not gonna get into all of those today, but in short, we could either pay for it ourselves or self-fund, right? We could look at some sort of long-term care insurance solution. 

We could look at a hybrid type of contract. That's a life insurance policy that has a long-term care component with it. We could take a portion of our portfolio and position it to be there in the event that we have a long-term care situation. All those are potential solutions. What we've tried to help people do is at least have a, we call it a long-term care document, but it gives guidance to your children or your loved ones that in the event you need long-term care, they know exactly what the plan is.

So even if we self-fund it, which accounts do they pull it from? When do they sell the farm? When do they sell the house? All those types of things become very important to address, and that's like I'm saying, it's important to have that family conversation. The reality of it is there's not a perfect answer when it comes to long-term care. 

The goal is more understanding what risks are we really facing, what trade-offs could we be making, and at what level of protection do you feel comfortable, right? Again, everybody's willing to take on more risks than others. The next section I wanna talk about is, I think, ultra important, and I'm gonna actually share some, some personal stories here. 

But I call it the spousal protection conversation. You see, one of the most overlooked risks that couples face today is what happens if one spouse suddenly dies, and that spouse was the one that took care of most all the financial affairs, right? You see, most couples, let's face it, divide responsibilities. 

One may handle investments and taxes and pay the bills or handle all the money stuff. One may do more of the family stuff, planning of vacations or organizing holidays, whatever it may be. But oftentimes, one will take care of one side, the other will take care of the other. And this became a reality to me a few months ago. 

Marsha and I were actually on a, a trip down in Key West, Florida. And so since we had a week together, we decided we ought to do our own, uh, financial review, if you will. So we're sitting there drinking a cup of coffee. Marsha looks at me, and she says, "You know, if you were to die tomorrow, I would have no idea how to manage all the different moving parts that you take care of."

Again, whether it's investing in our accounts, handling the taxes, handling some of our rental agreements and so forth that we have and some farm ground, so forth and so on, because she doesn't do any of that, right? It's not that she doesn't care. That's not what this is about. It's that she just doesn't handle those day-to-day responsibilities, and Marsha's an incredibly intelligent, capable woman. 

She just hasn't put any time and energy or focus into this situation. So what did we decide to do? We, we decided that it would be very important for me to go document those responsibilities and share some of those thoughts and put them on paper so that if I were to be gone tomorrow, she would have a clue or have an idea of how to handle all those things. 

And it really got me thinking is that that is probably more true than anybody will ever really want to talk about because most couples work just like we do. They don't talk about things like managing the rental agreement on some farm ground that we own, or how do we decide whether our insurance premium went up too much last year and we should re-quote it? 

Whatever it is, let's face it, most couples aren't having those in-depth conversations on a regular basis. So I sat down, and I built that thing, and it ended up ... It's kind of funny, and it's a little extensive, but it was ended up being, like, a 20-page document. I spent some time with our AI friends and, and kind of said, "Okay, if I was gone tomorrow, what would my wife and family need to know about how to approach that?" 

We shared that document and, and now Marsha feels more overwhelmed than what she did prior to that conversation, but at least she now knows where to go. A- and I would encourage all of you to spend some time documenting some things, and whether it's with each other, whether it's with the next generation, but that's a risk That most couples face that they don't even know they're facing, right?

How would we handle things in the event one of us were gone? Because everybody needs to understand the strategy, the goals, the approach, really the bigger picture to make sure that you're, you're moving forward in the right, right direction that you want to. So here's my request. One time a year at minimum, sit down with your spouse and document some things. 

Where are our accounts at? How is our income currently structured? What are the important contacts that in the event one of us were to be gone, we would need to reach out to? Where are our key documents at? As an example, like where's your will? Where's your power of attorney? Where do you keep your tax returns in the past in case you got audited? 

Where do we keep our insurance contracts? And what's our overall retirement strategy? Do we fully understand? Again, if you're working with an advisor, hopefully they're helping with all those stuff. But at least having a couple conversations like that every year is gonna help keep you on the same page, right? 

So that would be my request. Because good planning's not only about protecting assets, it's about protecting the confidence, the clarity, and the stability that comes during those difficult times or difficult transitions. So final section I wanna talk about, and that's kind of the pre-retirement risk audit. 

So as you're approaching your retirement date, we're super excited. Every day becomes Saturday, right? We're ready to go tackle the world with all this free time we have. I'd ask everybody to think through what risks come with retirement. So some areas that I want you to think about. What investment risk are you currently taking, right?

So inside of the portfolio, how much risk are you really facing? I see it all the time. People are 63 years old, and they have 100% of their portfolio in the S&P 500. They're a year away from retirement, and they have no idea what risks they're facing because the markets have been good as of these last few years. 

What kind of income risk are we facing? In other words, how much am I gonna need to manage the lifestyle I wanna live, and am I at a risk? Or in other words, am I gonna run out of money or not have enough money to, to live the way I want to live? What's our healthcare risk, whether it's securing health insurance prior to age 65 or even after age 65? 

And then what kind of long-term care risk are we facing? What about inflation? Is my portfolio too conservative? And if it's too conservative, how do I make those adjustments and still stay comfortable? What kind of tax exposure am I facing, not just today, but maybe in the future? Am I taking on risks that I need to address there? 

How am I sitting in my emergency fund? And how prepared is my spouse if I were to be gone tomorrow? So those are a handful of areas, and that's where the financial game plan really comes into play We talk it, about it all the time with our clients is our intent is to help you check the box, right? What do you suppose we go through? 

All of those categories. Because if we can check the box in all of those categories, that should lead to the confidence that you need to go live life to its fullest in your retirement years. So a retirement plan should not only answer, can I retire, but it should also be able to answer, can my retirement handle any uncertainty that comes with it, right? 

Or those risks that may unexpectedly happen. So when we talk with people, we always say the financial game plan is gonna cover that risk. It's gonna help plan for the income. It's gonna walk through all those healthcare considerations. It's gonna help you develop that three bucket strategy or a portfolio strategy, and it's gonna help you work towards those long-term goals. 

So whether you do that with us or whether you do it on your own, the key is, as you get closer and closer to retirement, you've gotta have a plan in place for all those things. And remember, it's not about eliminating all the risks, it's about managing those risks or being prepared for those risks. I think a great line that, that always comes to me is, as we prepare for retirement, we wanna plan for the best, but be prepared for the worst. 

All right? And again, that's where that financial game plan comes in. So if you take one thing away from today's show, let it be this. Retirement planning is not just about growing wealth, it's about protecting the life you want that wealth to support. And a few questions I'd encourage you to think about as I leave you today is, can my retirement handle a market downturn?

Do I understand my healthcare exposure? Have we discussed, you and your spouse, a plan for long-term care? And would your spouse feel confident if something were to happen to you? And if you don't have answers to all those yet, again, that's okay. That's where planning begins, and that's where we can come in and try to help, or find an advisor that can help you if you're uncertain on how to approach those things. 

So before you go, all right, I've got something for you. We put together a quick quiz called, Are You Really Ready to Retire? It takes just a few minutes, and it'll show you where you're solid and where you might have some gaps. Go take it. It's down in the show notes down below. It's a free download, but I would encourage you to go do that. 

And then have a conversation with your spouse. Address all those gaps that are there. And again, I'd ask each of you to subscribe to the show and share the show. If you found value in today's show, please share it. Right? Write us a review, write us a comment. Help us grow the show. Again, our goal is to try to help as many people as we can be prepared for their retirement. 

All right? Make sure they're handling all those areas of risk that we talked about today. And in conclusion, I just want you to go out there and live life to the fullest and go be great.