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Step Climb Your Retirement

Steve Lofgren

Director of Financial Education

Last Updated
May 18, 2022
Plane flying over clouds

Just as with flying, there are many intermediate level-offs in the climb as you progress through life. As we all know, departing from busy hubs usually involves multiple stops on our way up to cruise. First is usually a low altitude: 4,000 feet, then a climb into the mid-teens with a controller change, who issues you something in the mid-twenties, then finally a climb up to altitude with maybe one more stop before hitting top of climb. The same is true with investing, and just like a good preflight will keep you out of trouble, so will planning for life’s level-offs.

The First Level-Off

Right after takeoff, when the gear is in the well and the after-takeoff checklist is complete, comes your first stop at 4,000 ft. It’s a busy time, as you’re in congested airspace and accelerating. The same is true for your wealth management plan. Getting started with a fiduciary wealth manager is a lot at first. You will share your current financial status, lay out your goals, gather lots of information and discuss a plethora of things you probably never even thought about. You’re at a low altitude, quickly accelerating to 250 knots.

Intermediate Climb

You’ve completed all your initial setup steps with your wealth manager, and several years go by. Just like your aircraft, your portfolio is climbing and things look good. Suddenly, there’s some light chop – you decide to get married. Your intermediate climb in life has begun. Because you had a good preflight and a flawless departure, your workload is manageable: your wealth manager adds your spouse and their retirement account(s) to you plan, and you grow as a couple. You’re above 10,000 feet now, accelerating to climb speed, and the controller gives you an altitude in the mid-twenties (coincidentally, you may also be in your mid-twenties).

Flight Level Hold

You level off at FL240 and are told you’ll be there for a little while due to crossing traffic. You have some time to talk to the folks in back and check the aircraft systems. In your personal life, it’s been a few years since you got married and it’s time to consider buying a house. You phone your wealth manager to discuss the best way to accomplish this. Should you take a loan from your 401(k) to use as a down payment, or should you use your savings at the bank? This is where a wealth manager can keep you from making mistakes and help you decide what options are best for your unique circumstances. Systems are all in the green, and it’s time to continue our climb.

Cruise Altitude

Traffic has cleared and air traffic control (ATC) gives you your final climb to FL370. As you level off, it suddenly gets bumpy. You and your spouse find out you’re going to have a baby. You just moved into your new house last year and you’re not ready for a family! You call your wealth manager, and they tell you it’s time to consider an estate plan, a will, life insurance, and a 529 college savings plan for your bundle of joy. The turbulence is now moderate, but just like asking ATC for a better altitude, your wealth manager puts you at ease (they go over all these items in order of priority and help you and your spouse prepare for life as parents). The ride smooths out, and you can take off your seat belt.

Kick Back and Relax

Flying out of our busy hubs comes with many step climbs and level-offs along the way. Our workload gets slightly easier with every altitude change, and above FL180 we relax a little bit because we know we’re working with nothing but pros from here on out. Turbulence occurs unexpectedly, and we adapt by changing altitudes, talking to our crew and passengers, and using resources like ATC and dispatch to find a smooth ride.

The same is true for working with a fiduciary wealth manager who has your best interests at heart. Things are busy at first, and intermediate level-offs happen in life. Turbulence at home happens to everyone. A great way to mitigate financial turbulence is by getting started as early as possible with your wealth management plan. That way, when things change, you’ll know exactly what to do and will make sure all systems are in the green as you make your level off at cruise — which, for most of us, is in our early to mid-40s.

Don’t miss my next article, where I’ll talk about the descent checklist and how, as we approach retirement, we need to prepare for a smooth landing.

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This commentary is provided for general information purposes only and should not be construed as investment, tax or legal advice, and does not constitute an attorney/client relationship. Past performance of any market results is no assurance of future performance. The information contained herein has been obtained from sources deemed reliable but is not guaranteed.

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