Well, as you get to retirement, into retirement, your priorities begin changing, including your investment strategy and your investment priorities. Things don't look as much about returns as they start focusing more on protecting what you've already built. And that's where our question comes in today. John got a great question, and I think it's one that you know I think addressing would be helpful for a lot of folks.
So here it is. At my age, I don't care that much about seeing my investments grow. I just don't want to lose what I have. Is that foolish of me? I can probably answer that second part.
Definitely not foolish of them, right? No, I think a lot of people feel guilty because they've been conditioned for so long that I'm supposed to aggressively grow my investments. But I've I've had some version of this question asked to me a hundred different times, or or maybe not even in question form. They're just stating, "Hey, you know what? We don't care about making any more money." We just don't want to lose what we have, and I think a lot of that is, you know, a lot of the folks we deal with never had massive incomes necessarily.
They were just diligent at spending less than they made, and they did that for a long period of time—thirty or forty years—and they saved and invested over that three or four decades. And now they're in a position where they can't believe how much they have saved for retirement. Like it's just it's an unfathomable amount to them, and so to them, like it's a lot of money, and they say we don't we don't need to grow it anymore. We just don't want to lose what we have. And then you know, for a lot of people, it that money represents like a lot of hard work, a lot of sacrifice.
They don't want to see it go away, so I don't think it's foolish. From an emotional standpoint, I also don't think it's foolish. From a planning standpoint, think about it in football terms.
Okay, let's suppose that we're up by nine points. We have the ball. There's a minute and forty-five seconds left in the game, and the other team doesn't have any timeouts. What are we doing in that situation? You're definitely not throwing the ball.
You're not worried about gaining yards. You're not throwing it all over the place. Just no turnovers. Just don't lose the ball. Just run the clock out.
Take a knee four times if you have to. Run the clock out, and as long as the other team doesn't get the ball back, you can't lose the game.
So you'll see football teams go into what they call victory formation, which is where they're basically lined up to take a knee, and not fumble the ball. That's all they're trying to do. And at some point in your financial life, that's kind of where you get to with your investments. Is let's just let's line up in victory formation. Let's not lose the ball.
Because if we don't give the ball away, we can't lose this game.
Now that doesn't mean that you park all of your money in cash, because you are sixty-eight years old and you are retired and you are going to live on that money for the rest of your life.
Well, no, you might still live another twenty or twenty-five years, so you can't just leave it all in a money market account collecting dust. That's not a good use of that money, but it also doesn't mean. Let's go invest like we did when we were twenty eight, and we opened our first four hundred one k and started saving in it. That's not how you want to be invested at that age either.
So, I think that's what people are trying to convey when they say something like this. They sort of intuitively understand. I don't think aggressive growth is my goal anymore, but I don't know exactly what I am supposed to do. And that's what they're trying to express with this question. I thought I thought your analogy was very accurate.
I thought you were going to go with the four corners offense by Dean Smith rather than the victory. I mean, that's actually a pretty good analogy too. Because think about what are they doing in the four corners? Just keep the ball and burn the clock, right? Yeah, yeah.
It's all you're trying to do.
Well, I think another part of this conversation too, though, John, is you know knowing. I guess when you're to that point where you can take a knee, obviously, you know you don't want to be taking a knee when you're down one, right? And get to victory formation early without knowing for sure that you've got the game in hand.
So that's the other part of this conversation too, is just knowing that you are in the position where you can start pulling back and actually, you know, being a little bit more more conservative potentially. Yeah.
So that's a really good point because we do see a lot of people who They do start taking any a little bit early, and that could be you know they felt burned from a past market downturn, and we saw this after two thousand eight. A lot of people were really nervous about the market in general because they lost so much in that two thousand eight two thousand nine period, and so it's been really hard for them to have any aggressiveness ever since now. At this point, people have gotten over that. But in the first five or six years after 2008, it was actually really hard to get people to take the appropriate amount of risk that they should.
So yes, it can be a temptation to try to take any too early. The thing that's tricky about it is I can't just give you an age. Of when you should take the risk off the table, it's less about age, and it's more about when do you need this money for income. And a lot of people would say, "Oh, well, that's just age, right?" Like if I'm going to retire at sixty-five, and I'm sixty now, that means I need this money for income in five years.
Well, maybe, maybe not. There are people who retire and they don't need. Any of their investments to provide income for them, maybe ever, or in other cases, not for several years. I mean, in this area, we have a lot of state employees who have maybe been state employees for thirty or forty years, and they have a nice pension. And that pension, plus their social security, gives them all the income they need.
I have clients who actually have more retirement income between their. Pension and their social security, more retirement income than they had when they were working. It's crazy to think that that could be the case, but if you if you work for the state long enough, and have enough years in the system, that could happen.
So, we have to be aware of that. And if you have enough income coming in on a guaranteed basis like that. You may not need any of your investments for income ever. You might actually have more income coming in than you're going to spend, which means you're going to add money to the pot. Not only do you not have to take any money out, you're actually going to add to it.
So in those cases, you might be a little more aggressive with your investments. Because you don't need it for income, so again, like it's not even years to retirement in that that case. Because even retirement doesn't matter to that particular client because they don't need the money for income. That's why I say it's not age, it's not years to retirement, it's how long until we need the money for income. If you're two years from retirement and you know what your retirement income needs are, and your social security and what other income streams you might have.
Falls two or three thousand dollars a month short of that income need.
Okay, well now we know you're going to need money from your investments, and we have to invest accordingly. We can't afford another big downturn. We can't have a 2008. We can't have a dot com crash type of downturn. That yeah, you might eventually recover from, but not within two years.
It doesn't recover before you need that money for income, and so that's when we have to take some risk off the table. And if you're someone that likes to. Maybe be a little risky too, John, and you like this maybe scratch that. It's something you can still do, right? You can still pull a big portion to the side that you know you need for income, but also have a little bit left that that you can actually invest in and try to take on a little more risk.
Right? I'm sure you work with people that feel that way. Yeah, well, that's the thing. It doesn't have to be all or nothing. Yeah, we need to be much more conservative with the money that you do need for income.
But you don't need all of your money for income the day that you retire. Even in that case that I just described, where somebody needs a couple thousand a month out of their investments, well, if you're going to live another twenty or thirty years in retirement, you're going to need that money for income from your investments two decades down the road.
So the money that you're not going to touch for 20 years, well, that can still be more aggressively invested. A lot of people get caught up in this idea of, well, I can't have any risk in my money because I need it soon.
Well, yeah, but you don't need all of it the day you retire, unless you have, you know, a lot of motorcycle riding and helicopter piloting plans. You know, you're probably going to live for quite a while. In retirement, so let's not pretend like you need all of it for a paycheck next week.
Well, if you're in the position too, or you're trying to figure out, hey, when do I start pulling back? Am I invested appropriately? Want to get a second opinion from John and the team at Rosewood Wealth Management? You can do that now. Just go to meetwithjohn.com to get on his calendar to have these kind of discussions and begin that planning process.
Learn more about how Rosewood Wealth Management can help you prepare for retirement. And if you're already in retirement too, help make sure that you have that confidence to spend that money and to go enjoy life like you've been working so hard to do. But we appreciate you watching another video. Please subscribe. Subscribe if you haven't done that already, and get in touch with John if you have any other questions.
We appreciate you watching. We'll talk to you again soon. Carolina Wealthwards, doing business as Rosewood Wealth Management, is a registered investment advisor in the state of North Carolina. The material presented is intended to be general information and should not be construed by any consumer as the rendering of personalized investment advice.
