• Darryl Rosen

I didn’t go to this race for the thrill of victory. I simply wanted to run a local race with some friends. So, one Sunday morning, I toed the line at the ultra-prestigious Deerfield Dash 10K and 5K. It was a recreational crowd. Lots of people running with their children and dogs, a guy wearing a velvet sweatsuit in the middle of summer, and some runners carrying steaming cups of latte.

There weren’t too many serious runners. (By the way, I didn't see anybody smoking a cigarette on the start line. I've seen that before which, I have to say, caught me off guard!)

Anyway, the race started and, after a few hundred yards, I realized that I was in first place - a position completely new to me. I came in second place once – and yes, there were more than two runners. Anyway, there I was, right behind the police car.

Could this be the day? Could I be destined for Deerfield Dash greatness? Was I going to be forever immortalized in the Winner’s Circle – making me someone the locals would talk about for years to come? Would I be on the cover of the Deerfield Review? Would my finisher’s photo be tweeted and retweeted? Would I have something to post on my Facebook page besides what I ate for breakfast? (The “likes” would be off the charts!)

Ok, ok. I’ll get on with the story. The police car continued with the 10K route, while I followed the 5K route - all by myself. There were no other runners in sight, and, you guessed it - that’s when the trouble started.

I reached the proverbial fork in the road: A four-way intersection with no signs. And yes, I went the wrong way. Instead of going straight, I turned. I don’t think even the scarecrow from The Wizard of Oz could have saved me that day.

Needless to say, a map would have helped me know where to go. (At least I got a free T-shirt...)

So do you have a course map (a plan) for the busy race known as your financial future? Or, are you running ragged without a clue of how to get to your retirement goals?

If you have a plan, review it regularly. We don’t live in a static world. Things change. One year, you may need to put a new roof on the house. The next year, the market might suffer a mighty correction, which may affect how you meet your spending needs.

And just when you think you have it all figured out, something like the COVID 19 strikes, changing everything.

The point is that your lifetime financial map will be loaded with course corrections. Every year, spend time accessing what has transpired, what it means, and what needs to be changed in your plan so you don’t take a wrong turn.

Each year, decisions should be made in an effort to extend the longevity of your assets based on what’s happening in the markets or in your personal life.

I hope you experience the opposite of my day at the “Deerfield Dash.” I went from euphoria to embarrassment in the blink of a wrong turn.

After a few minutes, I realized something was a tad amiss. My watch suggested I had run more than 3.1 miles, which is not a good thing if you haven’t finished a race that equals 3.1 miles and you can't see the finish line!

I was finally able to re-join the correct course in time to come in 3rd place. Yes, I know this begs the question. You went off course but still came in third place? The competition was terrible. I didn't say it was the World Championships!

The guy who came in 2nd place was a man pushing a twin baby jogger! Ouch! You’d think the diaper bag would have slowed him down . . .

Anyway, I wish I had looked at the course map because glory might have been mine. And it can be yours as well during your retirement years, as long as you stay on course!

  • Darryl Rosen

Saw this little guy on my driveway.

Besides an unfortunate reminder of how fast I'm running these days, this turtle should be a constant reminder of how money grows most efficiently.

Most retirement calculators like the ones you might find on the Internet assume a linear rate of return. That is - if you enter 5% growth, the analysis will factor in a linear 5% return.

How can I say this diplomatically. That's sort of a scam.

Money DOES NOT grow that way. Assuming linear growth might make the results look good, but if you rely on this level of investment growth to determine your spending in retirement, it may come back to bite you.

Scenario one: we are assuming a constant 5% rate of return and a nice bit of compounding. (NOTE: This only works if you are getting the same return year after year!)

In the end we have 28% growth. The average annual rate of return is 5%, but because of compounding, we got that extra bump. This is like the turtle. Slow and steady.

What if the returns are more volatile?

In Scenario 2 - we lose almost 5% in the first year, as compared to scenario 1 - a 5% increase. This would leave you with nearly 100K less after one year and, unfortunately, you would be one year closer to retirement. Not good!

In Scenario 3, there is one bad year followed by a few muddling years - then a good one! (20%). Because of the big loss in year one - after 5 years your retirement funds have only increased by 9% overall. You had some compound returns, but you started at a lower base because the first year returns were so bad.

Here's the point:

Do not assume a linear rate of return like most retirement calculators use. Lower yearly returns (with a chance at COMPOUNDING) is a more favorable scenario. Certainly, when compared to years of up and down (volatile) returns. As you get closer to retirement, this concept is even more magnified.

Compounding is a well mis-understood topic. It only works when you avoid large losses. This is why when choosing between the tortoise (in this case the turtle) and the hare, always choose the turtle.

  • Darryl Rosen

We can all agree that the COVID 19 Pandemic has wreaked havoc on our economy.

Congress acted quickly but what are the long-term effects of all this stimulus?

We know the deficit was rising even before this calamity.

We know state and local governments will be strapped for years to come

The question is how does this affect your retirement?

Well, if the bulk of your investments are in 401ks, IRA and other tax-deferred accounts, you WILL be affected because you haven’t paid any tax on that money yet.

So, what do you do?

Sure, you can vote for politicians who might keep your tax rates low, but you know they’ll get you somehow. Whether it’s in smaller social security benefits, or less Medicare help, I think we can all agree that the bill will come due at some point.

Most people think they have to just sit there and take it.

Taxes will be higher, and they’ll have less money for retirement or give less to their heirs and so it goes.

We think that’s wrong. There are things you can do. There are ways to save taxes in the future.

So, if some tax-free growth would improve your retirement outlook, or

If tax-free retirement income makes sense or

If living benefits might help you in the future

If legacy is important to you

You owe it to yourself to be informed on all the available tools.

Since you’re likely not getting any younger, schedule a virtual consultation with us today.

You shouldn’t have to live with the concern that higher taxes in the future will reduce your nest egg.

You shouldn’t give one penny more to Uncle Sam – than you have to.

There ought to be a better way!

And there is – ask us how to save money on taxes today!

Schedule a 30 minute virtual conversation here!

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