My dad was quite the connoisseur of pumpkin pies and looked forward to Thanksgiving every year to get his fill. As a financial advisor, it is not surprising that one of my favorite analogies refers to the retirement planning process as baking a pie.
First you need to decide what kind of pie you want. Apple? Cherry? (or Pumpkin, of course, it's Thanksgiving) In the same way, you need to decide what you want your retirement to look like. Travel or not? One round of golf a week, or five? How bad do you want to spoil your grandchildren?
The best way to choose your pie (financial goals) is to work with your favorite financial advisor, Tom Stark. I then help you find the right recipe to bake your pie taking into account your personal preferences and tastes. I also check for allergies-many people are allergic to market fluctuations to some degree!
Just like a recipe will have ingredients such as a cup of this and a teaspoon of that, I look over your investment portfolio with the intent of getting things into the correct proportions. You may be diversified but is it in the right diversification for you and your goals? If you have ever tasted a pie with too much or not enough sugar, you know how important it really is to have the right quantities and the right ingredients.
Now for the baking stage. In this analogy the heat is your risk tolerance. Baking at 350° for 60 minutes is not just a suggestion. Too often we think that by turning up the heat (taking more risk)we can get the pie finished quicker and retire earlier. Often you will just burn the pie. And after experiencing stock market swings a lot of people instead turn their oven down to 200°. At that temperature the pie will never get done in time and you’ll end up with a mushy mess at retirement. Determining your acceptable and appropriate “heat level” is an important component of your retirement plan.
When it is time to eat your pie, we must be careful to eat in moderation and not take too large of a piece all at once. Close attention needs paid to the timing and amounts of your withdrawals. Having an extra late-night slice of pie at Thanksgiving is perfectly okay, but your retirement pie must last the rest of your life.
Contact us if want to discuss your “recipe” or any other financial issues. Or maybe we could discuss over coffee and a slice of your favorite pie…
Advisory Services are offered through IFG Advisory, LLC, a registered investment advisor. Golden Isles Financial Advisors and IFG Advisory, LLC are separate entities.
