How to Prepare for the Next Big One

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How to Prepare for the Next Big One

The last event I attended prior to COVID was the Daytona 500 in February 2020.

You may be wondering how a NASCAR race relates to the topic of retirement income planning?

The Daytona 500 is a superspeedway (fast track), and the drivers are always concerned about the next "The Big One" which is a crash involving multiple cars. This happens on a regular basis.

You can imagine when racing at speeds close to 200 MPH a crash can have a terrible result. On the last lap in the 2020 race, there was a horrific crash that happened just in front of our seats. Fortunately, the drivers were all ok.

So, why were they ok?

They Prepared Ahead of Time

NASCAR race teams know that crashes occur regularly, so they prepare ahead of time how to best protect the drivers and fans. They have designed the car and track knowing crashes will occur. They have a strategy in place.

The same concepts apply to retirement income planning. A market correction or crash occurs regularly, but you don’t know exactly when. COVID is a perfect example of this.

You could have 6 Bear Markets over your Retirement

Since 1956 the Canadian Stock market has had 12 Bear Markets, which is about one major market decline every 5 years.

Jack Lunsden

In a retirement span lasting 30 years or more, on average you may have 6 market crashes, corrections, or downturns. It might happen, you just don’t know when. You need to be prepared ahead of time and have a strategy in place.

As an example, if you retired 30 years ago in 1991, you would have gone through the bear markets in 1998, 2000-2002, 2007-2009, and the drop last year.

When preparing your retirement income plan for the Next Big One, the following are some resources and concepts that you may want to consider in developing your strategy.

Key Concepts to Consider

1. Understand the difference between saving for retirement and creating a cash flow for retirement.

2. Develop a diversified portfolio.

3. Review the retirement income planning options.

4. Understand the risks to retirement income planning.

5. Review how much income you need in retirement.

6. Pay less tax.

7. Hire a Certified Financial Planner CFP®.

Be Prepared!

The Big One will happen several times over your retirement lifespan, so be prepared to adjust and adapt!

For more information you can refer to Preserving Wealth: The Next Generation - The definitive guide to protecting, investing, and transferring wealth by Jack Lumsden, MBA, CFP®

For your FREE e-reader copy CLICK HERE

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Jack Lumsden, MBA CFP® Financial Advisor, Assante Financial Management Ltd.

Jack Lunsden
This material is provided for general information and is subject to change without notice. Every effort has been made to compile this material from reliable sources however no warranty can be made as to its accuracy or completeness. Before acting on any of the above, please make sure to see me for individual financial advice based on your personal circumstances. The information provided is for illustrative purposes only. Commissions, trailing commissions, management fees and expenses, may all be associated with mutual fund investments. Mutual funds are not guaranteed, their values change frequently, and past performance may not be repeated. Please read the Fund Facts and consult your Assante Advisor before investing.

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