Sometimes, we try something and end up loving it. Other times, we try something only to confirm that it leaves a bitter taste in our mouth. Alcohol is the latter for me. One year, my wife and I drank green beer for St. Patrick’s Day. Based on the photo alone, you might think I enjoy beer — however, I’m actually allergic to alcohol.
On the rare occasions that I do choose to try an alcoholic beverage, I get an upset stomach and generally don’t feel good. While that may sound unfortunate, my wife and I make a great team. I go to wine tastings with her and am there to be her designated driver. For a long time, I thought, “I just need to find wine I like, or maybe I’ll acquire a taste for it over time.” But it doesn’t matter which wines I try; I always come to the conclusion that wine isn’t something I enjoy, nor is it something that makes me feel good.
Some people feel the exact same way about their finances. If you aren’t 100 percent invested in the market, it’s okay to admit that and not be there. If annuities have never been good for you, and thinking about that risk is keeping you up at night, maybe that’s not where you should be putting your money. Just because a financial strategy sounds good and has worked for other people doesn’t mean that strategy will work for you. It all comes down to understanding risk.
Some people only make high-risk financial maneuvers with their money when they’re young. Then, as they get closer to retirement, they change their strategy to be more conservative. They change their portfolio very drastically because they no longer have time on their side — their high-risk approach wouldn’t work for them because their intentions are now different.
The closer you get to retirement, the more guaranteed you want your retirement fund to be. When you are young, you have time to take the risk and make that money back, but as you approach retirement, you don’t have those 30 years to gain back lost cash.
Some people are the opposite — they are extremely conservative with their money over the entire course of their career. Being too conservative can be a hindrance too — if your goal is to have a certain dollar amount in your retirement fund and you have many years ahead of you before retirement, staying conservative can be a roadblock in getting you to your financial goals. It all depends on what your goals are.
When we sit down with a client at Mattson Financial Services, we find out what amount of risk they are comfortable with and their end goals. Then, we figure out if their comfort level of risk will get them to their end goal. If we find a need that’s not being addressed, we discuss it with them. While it may feel uncomfortable at first, our ultimate goal is to make sure our client’s dreams, goals, and desires are all being met.
Again, the key is to understand risk. Risk isn’t always bad, and a guaranteed outcome isn’t always good — it’s based on what you are wanting to achieve. While I wish I were enjoying that green beer in the photo, ultimately, it’s something I can’t drink much of. Both my desired outcome (to enjoy the beer) and the risk (feeling ill) allow me to make informed decisions. Retirement is no different.
– Gary Mattson