Retirement Mistake: Risking Capital When You Don’t Have To

Dave and Fred Vettese explain why taking unnecessary risk in retirement can be a costly mistake.

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Now, when you go back to looking at your retirement plan in general, have you made any mistakes?

Is there anything you look back on, decisions you made 10 or 15 years ago? Even though I’m an actuary, I wish I would’ve done this a little bit differently.

I haven’t made this mistake yet, but you know, as I get older, I might not be as sharp as I used to be. One mistake I tell people not to do is if you have the lifestyle you want right now, you have more than enough to meet the lifestyle you want right now, why would you put any of that money at risk?

Why would you, let’s say you have a million dollars and you put 500,000 at risk. It’s this great investment that’s gonna be tripling your money. If you don’t need it in order to have to maintain the lifestyle that you’re, you’re comfortably maintaining right now, then why in the world would you do it? But I do hear people who’ve done this. Risking money they don’t have to risk. It’s such a good point. And I love the, the way you said that risking money, you don’t have to, you know, I’ve seen a lot of that in the last two years where people, let’s say anywhere between 60 and 70, uh, are uh, are really ahead of where they thought they would be because markets have been stronger than the assumptions they used in their plant.

And they’re now looking at it and saying, I’m where I need to be. I’m past where I need to be. I’m gonna lighten up on equities dramatically. Not because I don’t believe in equities and not because I think I’m a good market timer, but because I don’t need to take that risk. And so they’ve light, not only that to a point that you made in one of the articles, the markets are very high.

And so it’s not like they’re getting out at the bottom. They’re getting out when markets by almost any valuation are quite high. Now, again, I’m not suggesting to listeners, you try to time the market moving out, but in that particular circumstance, it makes perfect sense to me they did that. I didn’t quell it at all.

I said, yeah, I think you’re on the right track there.