When you think about retirement, what comes to mind first? If you’re like most people, you probably have a specific age or dollar amount in mind. Maybe you’ve decided you’ll retire at 65, or perhaps you’ve set your sights on reaching $2.5 million in assets before calling it quits. However, we believe this approach is fundamentally flawed and potentially dangerous to your retirement success.
Why Fixed Numbers and Ages Are Dangerous
We frequently meet with clients who get fixated on arbitrary numbers or ages, and we understand why this happens. It’s easy to latch onto round numbers because they feel concrete and achievable. However, this mindset completely ignores the most critical question: What’s your why?
Recently, we had a conversation that perfectly illustrates this point. A client had set a specific number for his 401k – once he hit that magic figure, he would retire. But when asked why that particular number mattered, there wasn’t a compelling reason beyond “it would make me feel good” and wanting to “go out on top.”
The reality? Three months after retirement, that account balance he worked so hard to reach was no longer there because he was drawing from it. He got to see that number for just a few months before it started declining. Looking back, he realizes he could have retired four years earlier and spent that precious time closer to his grandchildren. Those four years are gone forever.
The Real Questions You Should Be Asking
Instead of focusing solely on when or how much, we encourage our clients to think differently. Here’s what really matters:
What will you actually do in retirement? Many people say they want to retire, but what they really mean is they want to stop going to their current job. That’s understandable – maybe you’re tired of traffic, tired of office politics, or simply not passionate about your work anymore. But retirement isn’t just about stopping something; it’s about starting something new.
What are you passionate about? If you’re currently in a job you don’t enjoy, consider this: what if you could make $20,000 to $30,000 annually doing something you love? Combined with decent retirement savings, this could make retirement possible much sooner than you think.
The key is having a plan for how you’ll spend your time. We’ve seen too many people retire without a purpose, and frankly, those are often the people who struggle most in retirement.
The Portfolio Diversification Trap
Speaking of dangerous thinking, let’s address another common misconception we encounter. Recently, we conducted a portfolio review for a couple who felt incredibly confident about their $3 million portfolio. They had approximately 150 different ticker symbols across various funds and ETFs. They were convinced they were perfectly diversified.
The shocking reality? All those funds were essentially buying the same stocks. Every fund owned Google, Apple, Nvidia, and Eli Lilly. They were paying multiple fund managers to purchase identical holdings. That’s not diversification – that’s expensive redundancy.
This story highlights why professional portfolio review is so valuable. Many people think they’re diversified when they’re actually concentrated in the same assets across different vehicles.
The Boat Analogy: Accumulation vs. Distribution
We like to explain the retirement journey using a simple analogy. Saving for retirement is like rowing a boat across a body of water. Your destination is retirement, and you’re rowing to get there.
Here’s the interesting part: when you row a boat, you face backward. You’re looking in the opposite direction of where you’re going. This makes it difficult to see how close you are to your destination.
Many people develop such strong “rowing” habits during their accumulation years that they don’t realize when they’ve reached the other shore. We’ve met with clients whose boats are literally sitting on the beach, yet they’re still frantically rowing because that’s all they know how to do.
The transition from accumulation to distribution is crucial. Once you can retire and accomplish all your goals, what’s an extra 20% return going to do for you? Not much. But losing 20% could jeopardize your entire retirement plan.
When to Stop Rowing
The timing for this transition isn’t necessarily age-based – it’s situation-based. We’ve worked with clients in their 40s who are still accumulating and others in their early 50s with $3 million portfolios who could retire immediately if they chose to.
Some people in their early 50s have military pensions and only need an additional $4,000 monthly to maintain their lifestyle. With sufficient assets, they could start that distribution today. Others in their 60s might still be in accumulation mode if they started saving later in life.
The key is understanding where you are in your journey. Are you still rowing toward the shore, or has your boat already reached land? This requires careful analysis of your financial position, your goals, and your risk tolerance.
Recognition and Expertise
Best Financial Planner in Woodstock, GA for 2023, 2024, and 2025
We’re proud to serve families throughout Atlanta and beyond with comprehensive retirement planning services. Our team has earned recognition as trusted advisors in the financial planning community, with a proven track record of helping clients navigate the complex transition from working years to retirement.
Our advisors are fiduciaries and Certified Financial Planners®. The CFP® designation represents the highest standard in the financial advising industry, requiring extensive education, examination, experience, and ethical standards. This commitment to excellence ensures that we always act in our clients’ best interests when providing financial guidance.
Your Next Steps
If you’ve been rowing for years and suspect you might be closer to shore than you realize, or if you want to know whether your portfolio is truly diversified, we’re here to help. We offer comprehensive portfolio reviews and retirement planning consultations to help you determine exactly where you stand.
Through our complimentary 3 Meeting Retirement Planning Process, we’ll help you answer the critical questions: How close are you to retirement? What will retirement look like for you? Are your assets properly positioned for the distribution phase of your life?
Don’t spend another year unnecessarily rowing when you could already be enjoying the retirement you’ve worked so hard to achieve. Contact us today at 770-485-1876 or visit www.vincentplanning.com to get started.
Not sure if we’re the right fit? Book a ‘Can We Help’ Call to speak with an advisor and determine whether we can help you achieve your retirement goals.
For personalized financial guidance, reach out to Vincent Financial Group today to schedule a consultation.