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Why having a defined investment plan is vital to your retirement goals Investor sentiment surveys tell us that today, with the stock market up dramatically since late March of 2020, there is widespread optimism about future gains. When you hear that, be wary. When markets move to extreme levels, smart investors often make their largest portfolio gains – by doing the opposite of the popular sentiment. Warren Buffet once said, “Be fearful when others are greedy and be greedy when others are fearful.” Managing our finances would be far easier if we could view markets as if we were machines devoid of emotion. But we are human and powerful emotions often move markets to what some may consider extreme levels. It’s a mistake to think the stock market is based on science, a large part of what moves stocks on a daily basis is human emotion. This situation creates opportunity for those with nerves of steel and a trusted investment plan. Sentiment data, derived from surveys of individual investors, money managers or newsletter writers, can provide insight into the human emotion that drives capital markets. According to survey data from the American Association of Individual Investors as of the end of 2020, 46.1% of investors were bullish – a pretty high reading relative to historical numbers (26.8% were bearish and the remainder were neutral). As always, don’t view any data set in a vacuum, or rely on a single data point. Human beings are complicated. But this information helps active investors get an idea of the human emotion that drive the current market advance. The stock market in its simplest form is one big voting box. Each time you buy or sell a stock, bond, exchange-traded fund or any other security, you cast a vote. Even holding cash is a reflection of market participants casting their votes. History tells us we should view this data in a contrarian manner, taking the opposite action when data is at extreme levels. This means that the larger the crowd that shares a single viewpoint, the more likelihood the crowd is wrong. This isn’t always the case, but if you have too many people on one side of the teeter-totter, it just won’t work until it is rebalanced. Case-in-Point On March 5, 2009, the American Association of Individual Investors survey found that 70.2% of investors were bearish on the stock market, the largest amount of pessimism since 1990. As you may remember, the Standard & Poor’s 500 bottomed the following day, before rising over 60% through the rest of the year. Markets, whether of stocks, commodities or real estate, typically overshoot their “fair value” level, however you chose to measure it. During times of panic or euphoria, look at them through a clear lens. Having a defined investment plan is vital in order to navigate the at-times choppy waters of the capital markets. The investment world is more of an art form once you strip away the complexity. When viewed in the right light – a sensible assessment of its susceptibility to human foibles – it can be a beautiful thing

Retirement is a time for pursuing your passions, reaping the fruits of your life’s work, and making the most out of life. But there are many financial pressures facing those planning to retire in the coming months and years. There Are Fewer Retirement Benefits Than Ever Before Retirement benefits looked different in decades past than they do today. Before the 1980s, employers helped fund their employees’ retirements through pension plans. Today, few companies outside of the public sector offer pensions, and most that do are closing their plans to new employees. Some have even seen their promised pensions reduced or frozen. Retirement benefits aren’t what they used to be, but there are actions you can take to get the most out of your existing benefits. Maximize Your Social Security Benefit For social security, having a strategy is essential for maximizing the benefit. Some ways to get the best benefit include: Taking inventory of your health history, expected longevity, and lifestyle Selecting the optimal retirement age for your situation Accounting for other income streams and savings (such as pensions, a 401(k), annuities, etc.) Understanding the tax implications of your other income streams (and how to reduce them where you can) Keep an Eye on Your Pension If you were promised a pension, congratulations! But some people may experience a freeze, where employers will no longer provide pension credit for future years of work. If this is your situation, talk to your company’s human resources department to help calculate what your new payments will look like. Ask if they offer anything to help compensate for the money you weren’t putting away in retirement (for example, a buyout option). Health Care Costs Are Rising Most people have a greater need for health care as they age—and it can get expensive quickly. In fact, it’s one of the largest expenses you’ll need to consider during retirement. In general, health care is only getting more expensive. As baby boomers age, the number of Americans ages 65 and over is growing dramatically and this rise in demand will drive up health care costs. The Centers for Medicare and Medicaid Services projects that health care costs will rise to an average of 5.4 percent every year until 2028. In addition, people who reach age 65 are likely to live longer than ever before — in fact, about six years longer than their grandparents on average — prolonging the time that they require medical care. Health care needs arise whether we like it or not, but you can prepare yourself. Open an HSA Account If you’re on a high deductible health insurance plan, consider opening a Health Savings Account (HSA). HSAs offer unrivaled tax efficiencies. They allow you to contribute pre-tax dollars that can be used towards current or future medical expenses. The money in the account carries over every year—even after you retire. After a certain threshold, the pre-tax dollars in the account can be invested in securities, and essentially serve as another IRA Look into Tax Deductions You may be able to itemize your tax deduction and deduct unreimbursed medical expenses on your tax return. This strategy usually works best for people who require a lot of expensive health care services. You May Need to Financially Support Others Many people don’t just need to support themselves during retirement, but others, too. Whether you’re helping an adult child who needs support, aging parents who aren’t self-sufficient, a family member in need, or a combination of these, caring for those that rely on you can impact your retirement. Have conversations with your loved ones now—even if it’s uncomfortable. Gathering documentation and developing a plan while your loved ones are still healthy will better prepare you to care for them later. With the Right Plan, You Can Be Confident in Your Retirement At first glance, these pressures on your retirement may seem overwhelming. But no obstacle is insurmountable— especially if you have the right plan on your side. With a comprehensive retirement plan, you can enter this exciting phase of your life armed with the resources you need to thrive. If you have questions about your retirement plan or need help solidifying your plan, talk to a financial professional. Sources 1. “National Health Expenditure Fact Sheet.” Centers for Medicare and Medicaid Services, 2020. December 16. https://www.cms.gov/ Research-Statistics-Data-and-Systems/Statistics-Trends-and-Reports/NationalHealthExpendData/NHE-Fact-Sheet.  2. Zuo, Wenyun, Sha Jiang, Zhen Guo, Marcus W. Feldman, and Shripad Tuljapurkar. “Advancing Front of Old-Age Human Survival.” PNAS 115 (44), 2018. doi: https://doi.org/10.1073/pnas.1812337115.