a confusing time to be planning for retirement.
Dow Jones industrial average last week broke 16,000 for
the first time. But uncertainty in the economy
continues, and low interest rates still make it
difficult to find a decent rate of return.
the middle of all that, Tim Steffen, Milwaukee-based
wealth management firm Bairdís director of financial
planning, came to Charlotte, N.C., recently to speak to
his companyís advisers and clients. He sat down with
the Charlotte Observer beforehand to discuss the stock
marketís recent success and how that affects
and answers have been edited for space and clarity.
The stock market continues to hit record highs. If youíre
planning for retirement, thatís got to be a good
It is, if youíre able to participate in that. I met
with a client today who said that heís been watching
the market go up, but heís not invested in it, so heís
not been able to participate in it.
hear these studies all the time about how the market
does and what returns the actual investor gets. Thereís
usually a big disconnect. Theyíre not getting in at
the right time, theyíre getting in and out of it, theyíre
missing out on some of the runs, so the actual
investment performance is not as good. So, yeah, itís
been a great year in the market for most people whoíve
been willing to ride it out, but thereís a lot of
uncertainty out there. Thereís a lot of hesitancy to
get into the market.
Where does that disconnect come from?
I think itís a little uncertainty about what happened
a few years ago with the recession. Thereís still some
distrust with the industry. Some of it is, quite
honestly, warranted. There were some bad actors who
caused some clients a lot of heartache. For the most
part, the industry is working to clean itself up, but
there are still people who are uneasy about where the
always dangerous to go and invest at a high. Youíre
wondering, "Is this the high?" We donít know
where the highís going to be.
look at a number of things to get a sense of where the
market is heading. One of those is investor confidence.
A lack of confidence is a sign that the market has some
upside to it. When you get a lot of people who are eager
to jump in and ready to go and say, "Iím all in
on the market," thatís when you start to get a
little nervous thatís the sign of a bubble.
Where are we on that spectrum?
Itís still building but not to a level where weíre
concerned. Overall, the trend is slowly moving more
There continues to be uncertainty in Washington, from
the recent government shutdown to the debt ceiling
debate. If youíre planning for retirement, should you
be concerned? Should you be doing anything?
You canít be afraid of the market. Thatís how youíre
going to be able to build your retirement fund. But on
the other hand, youíve got to be careful and not try
to get too overly aggressive and get too greedy. Thatís
how you can blow up a retirement plan pretty quickly.
of the old rules of thumb Ö that we try to discourage
clients from paying attention to is that when you
retire, youíve got to scale back and get more
conservative with your portfolio. I couldnít disagree
with that more.
lot of people would like to retire at 65, but a life
expectancy of 90 to 95 is not all that uncommon anymore.
When youíre spending a third of your life in
retirement, you canít afford to put your portfolio on
cruise control. Those who are relying on their portfolio
to provide what they need in retirement, theyíve got
to remain invested. And then we look at, maybe youíre
relying too much on your portfolio.
you need to reconsider your retirement plans. Maybe
retirement means you stop doing what youíre doing and
start doing something a little more low-key, something
part time thatís not as demanding on you that can
still provide some income in the early years of
Is that becoming more common?
Absolutely. A lot of the plans we do include some level
of part-time work in retirement. The new retirement
means not stopping working.
used to be at age 65 you stopped working and went and
sat on the golf course every day. Thatís not the way
it works anymore, and it shouldnít be that way. People
should continue to be engaged and doing what they like
to do and finding ways to be paid for doing that.