 of U.S. households have some investments in stock. In 2020, an estimated 

 of the nation’s workers had access to a retirement savings plan through their employer or a union.

However, access to an asset class doesn’t necessarily guarantee people will invest in it. What is it about the current stock market that makes it so appealing to Americans?

Stocks are certainly not devoid of risk. The start of the pandemic last year was terrifying for many retirees and soon-to-be retirees. Between February 21, 2020, and March 20, 2020, the S&P 500 dropped from 3,337.75 to 2,304.92. During the same period the Dow Jones Industrial Average dropped from 28,992.41 to 19,173.98.

Those disconcerting plunges were brought on specifically by a severe pandemic that caused the global economy to grind to a screeching halt in a matter of weeks.

What’s more telling – and likely one of the main reasons so many Americans feel comfortable investing in the stock market right now – is what happened after the plunge; stocks shot right back up.

By November 13, 2020, the Dow had fully recovered and was up to 29,479.81. The S&P 500 had blown past its previous peak and was at 3,585.15 and rising. By all accounts the pandemic cratered industries across the world – but it turned out the fundamentals were left relatively intact.

Market Growth Far Exceeds Savings or Bond Growth

According to Goldman Sachs, stock market returns have averaged approximately 

 over the past 10 years. How wisely you’ve invested determines whether your investment fell short of that rate of return or beat it.

Most American workers using 401(k)s or IRAs are likely investing in a curated selection of managed ETFs and mutual funds, which usually experience relatively healthy growth if the market is doing well. Plus, stock valuations tend to naturally adjust with inflation in ways a fixed savings account, CD or traditional bond won’t (not counting inflation-protected or inflation-linked bonds).

Savers might be able to get one percent on a five-year CD. Bonds can be great for insulating your savings from volatility and risk, but the average yield for 10-year treasuries in 2020 was 

American workers who aren’t planning to retire soon often see little downside in aggressive investment strategies. Even if a newly discovered COVID-19 variant causes panic and selloffs, those investors will probably be alright because they aren’t dependent on their retirement funds for their livelihood.

The market didn’t reach its pre-2007/2008 crash valuations until mid-2013 – but it did recover. By 2017, there was strong, consistent growth that strengthened faith in stocks. A significant percentage of American retirement savers understand a buy and hold strategy, especially when it will span several decades, has a good chance of recovering from losses, even those caused by relatively serious recessions.

Most Americans Take a Set-It-and-Forget-It Approach to Investing

The average American isn’t checking their 401(k) or IRA multiple times a day. Many workers might go a year or more without even logging into their employee-sponsored retirement plan’s dashboard. When you have professionals managing funds that will grow for 20, 30 or 40 years, there’s little need to micromanage. Modern retirement savings options have made it attractively easy to invest in the market.

Whether a worker even notices the sliver of each check that gets deposited into their retirement savings account depends on their own financial situation. In many cases the bimonthly deposits are incrementally small enough that workers don’t feel a difference.

When saving for retirement is, for all intents and purposes, a pain-free and effort-free endeavor, many Americans are happy to partake.

Another significant factor that likely motivates many workers to contribute to retirement savings accounts are matching funds. An employee can essentially give themselves a five percent raise if their employer will match up to five percent. Failing to maximize matching contributions is essentially leaving money on the table, and many workers who have the financial flexibility to take advantage do so.

Yes – there are downsides to every potential investment. The drop in the market following the outbreak of COVID-19 is an obvious reminder that stock growth is never guaranteed. How Americans feel about risk is largely dependent on where they are in life. The risk inherent in the stock market is less worrisome if you aren’t forced to rely on those funds today.

Stock market performance can’t be tracked with a single metric. Growth and loss of equity value isn’t uniform across the board. This is a feature, not a bug. The diversity of equity investment opportunities allows 

good money managers and investment professionals

 to help safeguard their client’s assets even when the market takes a turn.

At Fullerton Financial Planners, we’re committed to using our extensive knowledge and experience in the stock market to help grow the wealth of retirees and soon-to-be retirees. We can help you develop a plan that takes advantage of growth while protecting your nest egg from unforeseen market forces that can put it at risk.

 Why Is America’s Stock Exposure at Historic Highs? 

Stocks, or equities, are little slivers of a company. When you buy a stock, you’re technically become a part owner in that business. As the valuation of the business increases so does the value of your share. You can trade that share to someone else or buy more shares. A company that pays dividends is letting stock owners share in their profits.

Bonds represent a unit of debt – or money that’s been lent to either a company or government. You don’t own any of that company or a piece of the government, but since you own some of their debt, they technically owe you money. Bonds include a fixed interest on that debt and a specific term of repayment of the principal, which is frequently referred to as the face value.

With stocks you’re buying a piece of the business. With bonds you’re essentially owning a tradeable unit of business or government debt.

The Similarities Between Stocks and Bonds

There’s a reason both terms are often used in quick succession. The way in which stocks and bonds are traded are fairly similar. Anyone can easily open an investment account through which they can purchase and sell stocks and bonds. Many retirement savings vehicles, like 401(k)s or IRAs, allow you to purchase stocks and bonds.

Some mutual funds and ETFs hold both stocks and bonds (often referred to as “hybrid funds”), so you could technically be getting both small ownership interests in some companies and a small bit of debt through one purchase.

And they both serve the same fundamental purpose as investment tools that can be used to grow and protect your money. Equities have a much greater potential for growth but also far more risk. A company’s valuation can increase dramatically due to a new product, service or patent. Bonds, especially treasury bonds (treasuries) or municipal bonds, tend to be far lower risk since they are backed by the U.S. government or a municipality.

Although bonds may not be risky, there’s also not a lot of reward. You get a little bit of interest on the debt you own and a guarantee that you’ll be paid the principal. You know exactly what you’re getting at the end of the term when you buy the bond. Stocks are very different. Some companies might crash and burn while others grow exponentially. They’re never guaranteed.

Is There a Difference Between Stock, Shares and Equities?

Not in the way the terms are frequently used in modern parlance.

The idea of equity – like the equity in your home – and equities as stock are essentially the same concept. The equity you have in your home is the value that you own. If your home is valued at $300,000 and you still owe $100,000 on your mortgage you have $200,000 of equity.

From a financial standpoint you don’t really own your entire home until it’s totally paid off, just like when you buy a share of stock you don’t own the entire company – you just have some equity.

Even the greatest bond advocates will admit the chance for hitting it big is non-existent with bonds, but they are one of the safest investments. Investing in bonds may be an effective way to insulate your portfolio from market volatility, downturns or crashes. Some people who are retiring or are about to retire begin reallocating their assets into bonds to minimize their risk.

However, not all bonds are inflation proof. Equities are usually a better way to protect your money from inflation since the market tends to do better during periods of high inflation. High-dividend stocks might decline temporarily, and markets can become more volatile, but valuations tend to rise to keep pace with the dollar’s buying power.

Bonds are generally static. The terms, rate and principal on a 10-year treasury note remains static regardless of inflation or deflation during that 10-year period.

There are Treasury Inflation-Protected Securities (TIPS) that are designed to protect against inflation. The principal of a TIPS bond is adjusted based on inflation as measured by the Consumer Price Index (CPI). You are either paid the adjusted principal or the original principal depending on whether there’s been inflation or deflation (you’ll always be paid the larger of the two).

That doesn’t mean TIPS are risk free. The Treasury sets a floor on TIPS value but there are scenarios in which deflation causes traditional treasury bonds to outperform TIPS.

 are uniquely personal and should be based on factors like the size of your nest egg, personal risk tolerances and the lifestyle you envision. The right 

 for one retiree might be completely different from another.

 in Phoenix and Tempe have dedicated their careers to giving honest, transparent advice on retirement planning and investment management. Your best interest is always our highest priority. Give our team a call at (623) 974-0300 to 

 What Are the Differences Between Stocks and Bonds? 

Gold can be a divisive topic when it comes to asset discussions. Some would argue gold is an ideal inflation-adjusted asset since its price movements have historically been inverse to the value of the dollar. A segment of investors also like gold as a hedge against stock volatility. These attributes can be useful for some portfolios, but how useful it is or whether it will help your portfolio depends entirely on your goals.

Although gold isn’t exactly renowned for its growth potential, it is a finite and sought-after commodity and therefore has strategic value. There’s also an attractive simplicity to gold. An ingot doesn’t have any cash flow statements or balance sheets – it’s a hunk of metal.

At the same time, there are a lot of borderline-predatory actors in the gold market who make big promises about gold’s potential. These promises are frequently coupled with doomsaying about economic, monetary and societal instability, suggesting gold is the best hedge against all of these uncertainties.

Some gold advocates truly believe in the long-term potential of gold, and they have well thought-out and evidence-based arguments to back up their beliefs. Others are just looking for a way to make money off impressionable, risk-adverse investors. That doesn’t mean gold isn’t a good asset for your portfolio, but you should avoid allocating a significant percentage of your portfolio into the precious metal without doing your due diligence first.

The Difference Between Strategic Asset Allocations and Tactical Asset Allocations

Many people hold gold as a strategic asset in their portfolio. The idea of strategic asset allocation is to maintain a mix of various types of assets – bonds, equities, precious metals, ETFs, etc. – that meet appropriate growth expectations for your desired level of risk.

The goal with any investment portfolio is generally to maximize returns while minimizing risk, but it’s especially important if you are soon to be or are already retired.

Strategic asset allocations often involve setting long-term targets and then holding the right asset mix to meet those targets. Those strategic asset mixes might be maintained for decades.

The argument in favor of strategic asset allocation is it prevents investors from taking rash, short-sighted actions. Although a strategic plan doesn’t require frequent changes, asset portfolios should be rebalanced fairly frequently to maintain the targeted allocations.

Tactical asset allocation has the same fundamental goal – invest in the right asset mix for the investor’s risk preference. However, a tactical investor changes the weight of their allocations based on short- and mid-term changes in the market and economy. In theory, a skilled and experienced investor can maintain risk levels while maximizing returns with a tactical approach, but it’s far more labor intensive than a strategic asset allocation plan.

Gold and precious metals might be an important asset class in either a strategic or tactical investment strategy, but its risk-reducing attributes – especially in the long run – make it an attractive fit for some strategic asset allocation plans.

Be wary of anyone who definitively tells you exactly where you need to invest your money. Every person has unique needs. No two workers, soon-to-be retirees or retirees have the exact same financial situations. Your income needs or retirement expectations are unique to you, which is why your retirement savings or 

 should also be customized to match your growth needs and risk tolerance.

For some retirees gold does make sense as an asset that historically increases in value when the dollar goes down. Others might be better served with more aggressive, higher-risk alternatives. Your 

 may suggest alternatives that will provide better growth with comparable risk.

Before you buy physical gold or invest in a gold fund based on an ad you heard on the radio or a conversation you had with a friend, consider speaking with a certified and experienced investment advisor. Our team at Fullerton Financial Planning would be happy to discuss your 

 and help you determine which investment strategies would be the best fit for you.

 Is Gold Still a Reliable Strategic Asset for Your Portfolio? 

While the looming threat of extreme weather remains ominous, the transition to net-zero offers significant investment opportunities.

Scientists attribute extreme weather events all over the world to a global warming trend. Since the late 19th century, the average global temperature has increased by 2 degrees Fahrenheit (1.1 degrees Celsius). 

To reverse this phenomenon, scientists say we must reduce 

and maintain the average global temperature increase to 2.7 degrees Fahrenheit (1.5 degrees Celsius) above pre-industrial levels. 

To facilitate this worldwide effort, 200 countries have signed the Paris Agreement, an accord designed to reduce global warming. To ward off the most destructive effects of climate change, scientists say, carbon dioxide emissions worldwide need to be cut in half by 2030 and, by 2050, reduced to net-zero. 

What does net-zero emissions mean? It is a balance between the 

amount of greenhouse gases produced, and the amount removed from the atmosphere. Achieving this will require a remarkable transformation of today’s global economy: Scientists say we must replace fossil fuels as our primary source of energy with more environmentally friendly options such as wind and solar power. It also will require removing what emissions remain via solutions such as restoring forests and generating carbon capture and storage capabilities. 

The effort to reverse global warming is measured via “temperature 

alignment.” This is a forward-looking benchmark that compares the level of emissions today against the potential for reducing them by a certain date in the future. The measurement is applied to both macro and micro entities, such as governments, individual companies and even investment portfolios. 

One approach to measuring temperature alignment is to weigh the role a single company plays in the economy today and evaluate its emissions trajectory plan by 2050. That data is then extrapolated to provide a picture of the overall global economy transforming at that same speed. The more aggressive the efforts to reduce emissions, the more favorable the global economic outcome. 

While the looming threat of extreme weather remains ominous, the 

transition to net-zero offers significant investment opportunities. It signals a move to long-term planning, which is a departure from the past two decades when reaching quarterly performance goals was a key factor among public companies. Moving forward, businesses will be held to a higher standard, which includes transition plans for net-zero carbon emissions pertaining to all aspects of their operations — including the acquisition of raw materials and shipping/transportation capabilities. 

Each industry and market sector are expected to be affected by this 

transition. It is not just a matter of investing in green energy sources. Every company will need to adopt long-term net-zero sustainable solutions to meet these benchmarks, from retail and manufacturing to technology and health care. According to U.S.-based asset manager BlackRock, today’s markets have not fully priced the future impact of climate effects into the value of securities. 

Therefore, companies with optimum transition plans will be better positioned  

for long-term returns. Unfortunately, the reverse may be true as well. Even long-established blue-chip companies could suffer if they do not adapt to the changing global economy. The demand for compliance will come from consumers, workers, shareholders, legislators, voters and institutional investors who increasingly experience the financially devastating impacts of climate change. 

When it comes to investing, we generally talk about the risk of losing money due to market volatility, inflation, liquidity, concentration or default. Going forward, many asset managers believe the greater risk will be caused by climate change itself. In short, how much will it cost to continue restoring and rebuilding communities affected by extreme weather without implementing mitigation strategies to prevent these disasters? 

Investors share the same risks as the securities they invest in. For 

example, companies bear the physical risk to assets and their ability to stay in business in the wake of changing weather patterns and natural catastrophes. Analysts also have identified a transition risk, which is the potential for short-term revenue losses and long-term profitability due to a company’s transition to a low-carbon model of business (e.g., energy companies with large fossil fuel reserves). The greatest risk of loss may come from companies that continue to depend on producing or consuming fossil fuels longer than is feasible in the net-zero economy. 

In 2020, BlackRock conducted a survey of corporate and public 

pension plans, sovereign wealth funds, insurers, asset managers, endowments, foundations and global wealth managers. Among them, more than half (54%) considered sustainable investing to be a foundational consideration for analysis and decisions moving forward. However, an interesting caveat was how much opinions varied by region. Not so much in theory, but rather in how quickly they are integrating this investment strategy. 

For example, 86% of survey respondents from the region of 

Europe, the Middle East and Africa (EMEA) were actively analyzing sustainability data, while those in Asia-Pacific (APAC) and the Americas (AMRS) were in the early stages of this process. 

Many of the portfolio strategies that institutional asset managers use 

to evaluate and select investment holdings also can be deployed by individual investors. Consider the following guidelines to align your investment allocation with the objectives for a net-zero economy: 

The trend of incorporating environmental, social and governance considerations into investment research and decision-making have been emerging for quite some time. Now it is poised to take the spotlight as a leading measure by which companies are evaluated for investment prospects. This creates an interesting opportunity for both investors and consumers to put their money behind their beliefs. 

As extreme weather events continue to wreak havoc on homes, 

businesses, major corporations and governments around the world, the individual levers of voting and spending habits could have a greater impact than ever before on household financial security and the future of the environment. 

If you are interested in learning more about sustainability-integrated 

portfolios and their potential for risk-adjusted returns, contact your financial professional today. 

 The Path to a Net-Zero Economy 

Can you live off dividends in retirement? That really depends on the scale of your dividends and the lifestyle you’re attempting to maintain. There are certainly some retirees whose investment portfolios are robust enough that their lifestyles are financed solely or primarily by dividends.

Trying to live off equity dividends may seem precarious – and it certainly can be if mistakes are made in your financial management and investment portfolio. Retirees attempting to rely primarily on dividends for their retirement income must often strive to ignore the daily peaks and valleys of market volatility and avoid making hasty decisions that could interrupt or compromise their dividend income.

Traditional retirement using withdrawal methods aren’t entirely devoid of leveraging dividends to supplement Social Security, but they often rely primarily on bond interest income and the selling of equities to finance pre-retirement levels of income. Focusing your portfolio on equities, ETFs and mutual funds comprised of high-yield dividend stocks does take a slightly unique approach.

When it comes to investing, very few things are risk free. Equities are certainly never devoid of risk. However, in the long term on average 

. This differentiates them from the more predictable interest from bonds which are essentially static.

The other big argument in favor of dividends in retirement is inflation. Dividend growth has a 

, which is understandably a significant concern for people nearing retirement and those in retirement, especially now when inflation is having a 

Should You Reinvest or Take Dividends as Income?

What you do with those dividends will likely change depending on where you’re at in life. Reinvesting dividends makes sense until you reach retirement, at which point you might take the cash to pay expenses – unless you receive enough dividend yield to both support your lifestyle and reinvest.

How much those reinvestments snowball depends on the amount of money you put in, the size of the dividends and the rate at which those companies are increasing their dividend yield each year. You can find 

 and see the potential power of dividend reinvestment after 10, 20 or 30 years, even with moderate dividend and stock price growth rates.

Finding the Right High-Yield Dividend Equities for Your Portfolio

There are a lot of challenges facing soon to be retired and retired people in Phoenix and Tempe. The past two years have been financially difficult for a lot of people, and many are likely worried about being able to maintain their lifestyle in retirement.

You might like the idea of living off dividends but may think it’s too late at this point in your career. Before you give up hope, 

. You may be surprised at how much diversity there is in the market.

Some investment options, like REITs, preferred shares and master limited partnerships, have a reputation for minimal dividend growth but high yields. Allocating your money into various high-yield investments may offer a way to quickly increase your supplemental retirement income, but the only way to know for sure is to speak with a 

Whether you’re looking for solutions for the short term or you are taking a long view on your retirement income, the team at 

 can help. Call our retirement planning and financial planning experts at (623) 974-0300 and discuss your situation with one of our certified fiduciaries. 

 Should You Retire with High-Yield Dividend Equities in Your Portfolio? 

Does your retirement plan have any of these blind spots?

You’re probably familiar with blind spots when driving. You might be trying to change lanes and 

then you hear a loud horn and realize there’s a car right there in your blind spot. It’s a terrible feeling, and it can be frightening. And, just like driving, when it comes to retirement planning, there are some equally concerning blind spots to be aware of. We wanted to cover the five biggest blind spots you may have when facing retirement, so you can avoid them, and live your dream retirement.

. And that really could be many different 

numbers. For instance, have I saved up enough money needed to sustain the kind of life that I want in retirement? And then, 

how much do you owe  going into retirement?

 Not knowing those numbers can be a big blind spot. Here at Fullerton Financial Planning, we help you find your numbers so you can have confidence in retirement.

When the Social Security Administration was created and the idea of retirement was institutionalized, retirement generally lasted maybe ten years, give or take. You didn’t need your retirement income to last very long. But so much has changed, and now we’re living much 

longer than previous generations. It’s important your retirement income can go the distance.

 is another common blind spot that tends to trip people up. We 

help make sure you have a retirement income plan designed to last as long as you do.

Another blind spot that catches people off guard is 

 The world is constantly changing. As you know, pensions are becoming a thing of the past, and old rules of thumb that used to work in retirement, are no longer effective. Ask yourself, are you talking to an advisor using modern solutions? Do they have their pulse on the latest strategies and innovations to help you get to the finish line with confidence?

And here’s another blind spot you might not be aware of - 

. You know, it seems like there’s a financial advisor on every corner. How do you find the right one? Are you working with the correct advisors for your stage of life? Do they care about helping you create a comprehensive plan, or are they simply selling a product? Are they focused on growing your money, or do they understand what it takes to generate income in retirement? Finding the right advisory firm is very, very important. Don’t let that be a blind spot to you.

 If you don’t have a plan, guess what? 

 we believe strongly in planning for the future. It’s planning, not products or fancy gimmicks that will help you achieve all you want out of retirement. Remember, a written, well-thought-out plan is crucial. And, if you don’t have one, make today the day you reach out to get started. Don’t let these five blind spots trip you up on your road to retirement. 

 5 Blind Spots You May Be Missing in Retirement 

Most savers are contributing pre-tax dollars to their traditional IRA. A Roth IRA lets you contribute post-tax dollars. A person who leaves their job can roll their employer-sponsored 401(k) into a rollover IRA without paying taxes on the funds. 

Why Do You Have to Roll Over Your 401(k) After You Quit or Get Laid Off? 

You don’t – at least not always. Whether you will be forced take any action with your 401(k) after losing a job or finding a new job depends entirely on the employer or management company’s rules and the size of your 401(k). 

If your 401(k) is under $5,000 you may be forced to move that money into an IRA. However, the company is legally required to help you set up a rollover IRA if you have between $1,000 and $5,000 in the account. If you have less than $1,000 in your 401(k) the company may just send you a check. 

Rolling over any disbursements you receive into a retirement account is the only way to avoid having the money taxed as income, plus being forced to pay the 10 percent early withdrawal penalty the IRS will levy on the money. 

If you have more than $5,000 in your 401(k) when you leave your job you will likely be able to leave the money there indefinitely. However, there are some potential drawbacks for parking a 401(k) with an old employer: 

Can You Rollover a 401(k) from an Old Job into Your New Employer’s 401(k)? 

Yes – many companies do allow you to rollover an old 401(k) into your new plan. This is what’s known as a “direct rollover.” Direct rollovers do not count as disbursements so you will not suffer any penalties or taxes. 

I Have the Option for a 401(k) Rollover at My New Job – Should I Do that or a Rollover IRA? 

This is a really personal question that you should probably discuss with a financial advisor, but there are some important features of both 401(k)s and IRAs that make them appropriate for different types of retirement savers. 

If you’re interested in diversifying your portfolio, putting your retirement savings into specific stocks or ETFs, or you’d like to invest in precious metals or cryptocurrency, a rollover IRA might be the better option. 

Most 401(k) plans have a limited number of investment options geared towards the saver’s risk preferences. In most cases you can choose to spread your 401(k) money over a dozen or so mutual funds that often fall into one of the following categories: 

Rolling a 401(k) into a self-directed IRA, either a Roth IRA or a traditional IRA, essentially allows you to invest the money however you want. As long as you follow the rules pertaining to withdrawals and stay within contribution limits, you’re free to buy and sell equities, bonds, ETFs and even real estate or precious metals. 

Can I Rollover My 401(k) into an IRA While I’m at the Same Job?

In some cases, yes – it really depends on the employer and their retirement savings management provider. Whether that’s a good idea often depends on how actively you want to manager your retirement savings. 

If you’re just a passive investor and you’re content with your 401(k) provider’s allocation options then you likely won’t want to start a rollover IRA while you’re still employed by the same company. 

However, if you think your employer’s 401(k) management company has lackluster performance or a lack of investment diversification, a rollover IRA might be right for you. 

You should always speak with a financial advisor before making any big decisions about your retirement savings. The team at Fullerton Financial Planners would be happy to advise, 

 What’s the Difference Between a Traditional IRA, Roth IRA and Rollover IRA? 

Planning for retirement is a lot like a race, and the final lap could be the most critical. 

Planning for retirement is a lot like a race. And, if you’re a fan of motorsports, you know 

the final lap can sometimes be the most critical. Races have been won and lost by the right moves, or sometimes just small mistakes in that final lap. When it comes to retirement, we want you to avoid a potential retirement “crash”, and instead see that checkered flag as you cross the finish line into retirement.

Many people don’t realize there are several phases of their life when it comes to investing. The 

first phase is the accumulation years. This is approximately ages 20 to your early 50’s. And your main focus of your investments is to save as much money as you can, and hope that money grows, so you can one day feel confident enough to retire. During this time, you might see the stock markets go up – which is a positive because you might see your nest egg grow. 

You might also see the market dip during this time. This is not as concerning because you’re still contributing into your investments – even in the lows of the market. Through dollar cost averaging, you typically will still see your investments grow over time as the market rises and falls. During your accumulation years, having the appropriate amount of risk, while being diligent to contribute, can help put you into a position to one day, hopefully, be able to retire.

However, there comes a point for all of us when we move from the accumulation years – which can 

be a long stretch of time – just like a long race – into the final lap. And, the final lap represents the last five to ten years before you retire. So, this might be in your mid-50’s, to mid-60’s. This is a time where mistakes can really cost you. 

It’s when market corrections can have a tremendous impact on our ability to retire, or retire successfully. For instance, if the market were to go down 20-30% in the final lap before retirement, would you have time to recover? One mistake we see families make, is that they don’t begin to reposition themselves in the final lap. Instead, they assume they’ll get into retirement, and then make the changes they need to make when it comes to risk in their portfolio. And, for a lot of families, it can be too late. 

A good example of that are people who had hoped to retire in 1999. We saw the market take a tremendous hit, and those individuals had to delay their retirements up to five, even seven years. We saw that happen again to people who planned on retiring in 2008. The market dropped significantly, and we saw families having to continue to work just to get back to where they were. We always hear people say, “I’m never going to let that happen again.”

But, look where we are now... Sitting atop a bull market. And, of course, we like when the 

The plan that got you to retirement may not be the same plan you should use to get you 

 BEFORE you get to retirement. You also need to think about setting up a comprehensive retirement income plan. And make sure you’re accounting for taxes, and how those could impact your retirement income and lifestyle. And, finally, planning for estate and legacy needs.

So, when you’re working, it’s all about growth. And, investing in the market, is a great way to 

accomplish that. But, keep in mind, that plan may need to change, as your goals and needs change. We always need our money growing, so there is a place for the market within a retirement plan. But providing predictable, sustainable, reliable income becomes the top priority when you reach the final lap before the finish line of retirement. So, maybe you’re wondering if it’s time to start 

 At Fullerton Financial Planning, we believe if you’re in that final lap – the five to ten years from retirement, it’s time to 

 Preparing for Retirement in the Next 10 Years 

We often talk on this blog about the risk of outliving your retirement savings given that so many people today live long, healthy retirement. If you’re physically healthy and financially prepared, your retirement could last for decades. During that time, it may go through several distinct phases, with changing levels of income and expenses that require different approaches to budgeting. Even with a shorter retirement, you’ll likely experience much the same stages, just in a condensed time frame.

When you first retire is when you’ll often see the biggest changes to your budget and spending patterns. You’ll no longer be cashing the regular paycheck, unless you have a pension which is becoming more rare. Not only will you need a plan to manage your income during retirement, including deciding when to start claiming Social Security benefits, you’ll really need to plan to manage your expenses. You might also lose employer-sponsored health insurance, so make sure to plan for how you, your spouse, and any dependents will get coverage if they are on your policy. If you or your spouse won’t be old enough to enroll in Medicare yet, you’ll likely need to find a private health insurance solution. In some States there are numerous options, and in others there are more limited options. Do some brief research to find which options are available to you.

The big temptation is to go on a spending and shopping spree at this early phase in retirement. You'll typically have a lot more free time and probably a lot of pent-up wants that you’ve been delaying while diligently saving. You might want to buy that sports car you’ve always dreamed of, take an extended vacation or cruise, go to cooking school, or play a lot more golf. You might want to buy a vacation home on your favorite beach or a vacation home somewhere warm enough to escape harsh winters. If you’ve planned for it and your budget allows for these purchases and expense, go ahead! You’ve been working and saving for this! But beware the temptation and time to blow through your savings as if you'd just won the lottery.

One way to ease the drain on your savings, keep yourself busy enough to spend out of boredom, is to find a way to bring in some income. That might mean taking a part-time or seasonal job, starting a business that gives you flexibility in your hours, or even transitioning into a new career—maybe even the dream one you never pursued because it didn’t pay enough before. Earning $35,000 a year doesn’t cut it when you need $70,000, but once you’ve retired, it looks better than earning nothing, and at this point (if you have a healthy retirement nest egg), life may be more about personal freedom and enjoyment. Also, find a balance between the expensive activities that cost time and money with inexpensive or free ones: volunteer to train service dogs, teach a pottery class at your local community center, or lead hiking adventures.

While a bit of a bigger step, this stage of early retirement might be the time to move somewhere more desirable now that your job no longer ties you to a certain location. Depending on the cost of living where you currently reside versus that where you’re headed, moving could be a boon to your financial situation—or a major belt tightener!

 Budgeting in Retirement 

Annuities… you may have heard a thing or two about them. 

If your retirement is right around the corner, you probably have some questions centered around not only what it will look like physically, but also fiscally. Depending on your goals and 

, there could be multiple variables and underlying factors that you want to address in your retirement plan, you’re just not sure how to.  

No one intends to spend their retirement years concerned about income, but unfortunately that’s the reality of 

 With the aftermath of COVID-19 also playing an integral role in the 

, it’s also no secret that market volatility can upend even the most concrete of retirement plans. The latest study? 

 discovered that 1 out of every 3 Americans who were planning to retire, 

has had to push their timeline back due to COVID-19

, and that number only continues to grow.

 of a sound retirement plan. If we look only to the markets to guarantee our income, some years, we may stay ahead of the curve, while other years, 

markets may prove to not provide the income needed. 

reliable income stream and protect your principal

, while still riding the highs of the markets?

 you may have heard a thing or two about them. 

Financial professionals love talking about them, and consumers 

 With so much information out there, let’s get the facts straight about this financial product, and how it can be used to provide income in your retirement.

Before diving into how annuities work, let’s cover the basics.

An annuity is a contract you purchase from an insurance company. For the 

 until withdrawn. When you’re ready to receive income, an annuity offers a variety of guaranteed payout options through a process known as “

The array of annuity contracts on the market today include 

 are insurance products which protect against loss and generally offer a fixed

 for a period of time, and may change periodically as outlined in the annuity contract language. The insurance company invests its funds conservatively, intending to earn more than the declared 

The annuity owner earns interest on the investment; the insurance company profits from the "

" The spread is the difference between the carriers' earned interest on their investment and the declared interest crediting rate earned by the 

. Fixed annuities carry the least amount of risk of all annuities.

 allows you to choose from a selection of investments, and then pays you a level of income in retirement that is determined by the performance of those investments. These annuities can be attractive to investors who want to pursue 

, since it is directly invested into the stock market. Keep in mind that although exposure to the market and its volatility can cause significant returns, it also 

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