I used the phrase “Post-COVID World” in the title of this article, but of course that’s not entirely true. The coronavirus is still out there and new variants continue to appear, but for the most part the high risk of death seems to be in the rearview mirror. Last year the markets were tumultuous and emotionally charged, but now people are starting to get back to work and both the supply chain problems and ongoing shortages are decreasing. So, does that mean COVID-19 is behind us?
If you’re retired or getting ready to retire, finding the answer to that question will require a little bit of homework on your part. To determine it, you need to be really honest about where you are financially and how the unwelcome surprise of the pandemic affected you emotionally. We’re going through that same process of reflection here at Mattson Financial Services.
Ultimately, I’m pleased with how we handled the pandemic. We took advantage of the market’s volatility and movement, and for the most part we had exemplary returns for our clients across the board. It’s funny to think about, but when markets are good and steady our job here at Mattson is frankly quite boring. In 2017, for example, there was very little movement in our clients’ accounts and it was a nice, even ride across the board. In the 1980s we had multiple years of that. Any time we threw money at anything, we had returns!
COVID-19 was the opposite of boring. Fortunately though, my team and I had prepared for a range of opportunities we expected might present themselves. This allowed us to react quickly to the pandemic, England leaving the European Union, cyberattacks, and wars in the Middle East that disrupted oil pricing. We were prepared; we watched and reacted appropriately for all of our clients. We made sure to harvest gains when the markets went up, and we prepared to rebalance clients’ portfolios and ready their assets to buy during market downturns.
While 2020 was the perfect storm, it was also the greatest opportunity we’ve had to show exactly how we reassess client accounts, relocate those accounts, and stay patient as they grow. This volatility created great opportunities for you as an investor. It also reminded us that the financial markets are unpredictable. If you took out a crystal ball and made a guess at the future, you’d probably be right more often than I would! That’s why we position your assets to take advantage of market movements, not predict them. COVID-19 proved over and over what a successful strategy this is. We constantly realigned your portfolio throughout the pandemic, and we’ll do it again next year, when we expect markets to fully reopen and supply chains to normalize.
So, what does this mean for you? In our “post-COVID world” it’s time for you to assess your risk tolerance, taking into account what we do for you. You may find yourself comfortable taking risks you wouldn’t have considered in 2019.You should also examine where you are financially and how the pandemic affected you emotionally. Ask yourself, “Am I taking advantage of everything I desire?”
This is the perfect time to adjust your current and future plans. If you felt bored or disconnected from the world during the last 18 months, maybe you should consider part-time work in retirement. It’s always nice to have a few extra dollars, but such work (or volunteering) can also offer social connections and mental stimulation. Just make sure this new hobby or endeavor doesn’t cause you to owe additional taxes! If your income rises above a certain level it can create downsides for your Social Security benefits, Medicare benefits, and other taxes due to the increases that we expect to take hold in 2021.
Rest assured, once those tax changes are announced we’ll go through your portfolio, examine different scenarios, and reach out to you if we need to make adjustments. We’ll also share the details of the changes with you through webinars, emails, and this newsletter, so stay tuned for that! In the meantime, remember to assess your risk tolerance, and keep us informed if anything changes for you financially. We’re here to help you to and through retirement with as little stress as possible.
Thank you for allowing us to be part of your financial plan and part of your family!
–Gary Mattson