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Controlling What You Can

 

The need for long-term financial security is real, but sometimes financial choices are more heavily driven by pressing needs and wants along the way. If you find yourself falling short at retirement time, you may continue working in your current career (if you can), find employment in a different way, or adjust your future lifestyle plans.

In fact, people are working later in life. Almost 30% of those between 65-74 are still part of the civilian labor force.(1) Most are driven primarily by the desire to remain engaged and active, but a healthy percentage are also influenced by financial needs.(2)

Surveys aside, we all wonder about our financial security, especially when the stock market is as stressed as it was recently or as it will be in the future. What can we do to manage our concerns?

Take control of those things that can be controlled. Two simple but powerful questions to ask are:

  1. Am I saving enough? What can I do to increase my savings rate? COVID has caused some of us to realize that expenses can be reduced, and that it’s OK.  Before you return to your previous spending habits, consider ways to direct more into savings.
  2. How are my savings working for me? Do I really understand how my savings are allocated among cash, stocks, bonds or real estate? A cash reserve is very important, but too much cash may hinder our ability to meet future needs due to inflation risk. Does the allocation consider risk tolerance?  Are my investments broadly diversified, one of the most basic ways to minimize risk while enjoying the growth of the markets?  The allocation of investments is a major driver of their growth.

We cannot control the stock market, but we can control our savings rate and how we invest. We can bring together our money and its meaning for financial security in our lives.

Please stay well, and stay tuned…

For disclosures, please click here.

(1) Bureau of Labor Statistics, Employment Projections, JP Morgan Asset Management

(2) Employee Benefit Research Institute, Mathew Greenwald & Associates, Inc. 2019 Retirement Confidence Survey, JP Morgan Asset Management