Why Safe Harbor
Why “Safe Harbor Retirement Planners”?
Retirement is in many cases the most important decision we will make. From both financial and personal view, planning for a comfortable retirement is a time consuming and extensive process that takes sensible planning and years of persistence. Managing your retirement is an ongoing process that lasts throughout your life.
While all of us would like to retire comfortably, the complexity and time required to build a successful retirement plan can make the whole process seem daunting. However, it can often be done with fewer headaches (and financial pain) than you might think – what it takes is some homework, an understanding of the many risks, and how to mitigate the risk in an efficient manner.
Safe Harbor Retirement Planners understands the current economic climate is challenging for retirement planning. History tells a story, and it’s critical to listen. Federal Treasury Rates are historically very low (Red line below), and the U.S. stock market is at a very high valuation (Blue line below). This dangerous combination has proven to provide the most challenging times to retire in the history of the U.S. Hence the 4% rule
Here is a quick introduction to the 4% rule: The 4% rule is a general guide to how much money a retiree can withdraw from their portfolio and "should" never need to worry about running out of money in retirement. For example, a couple retiring with $1 Million can withdrawal $40,000 (4%) in the first year of retirement. This research was conducted using historical data based on the U.S. Stock market and interest rates. Under the worst-case scenario, withdrawing 4% of your money to use in retirement has a 100% success rate under every market condition. In fact, there were only three periods 4% would have been the most a retiree could spend. This was in 1929, 1937, and 1966. Each date is circled in gray on the above chart. Take notice to the clear relationship between the Stock Market valuation and interest rates. The chart shows us the most challenging economic time periods for retirees is when the stock market is highly valued paired with low interest rates. Click here if you are interested in reading the full study conducted by William Bengen.
Also, It’s important to note and not surprising, the green circle represents the historical date that represented the best possible time to retiree. During this period the opposite relationship exist. Interest rates are very high paired with a low stock market valuation. In Fact, a retiree would have been successful withdrawing over 10% of their portfolio over 30 years, if they had retired in 1982. That means a family starting retirement with a $500,000 portfolio in 1982 would have produced more inflation adjusted income than a $1,000,000 portfolio in 1966. Only a 16-year difference!
Risk is high!
- Because risk is high, it is critical to dial back the potential volatility associated with a stock heavy portfolio (sequence of returns risk). Here lies the problem. Many low volatile (safe) investments are curently offering meager returns. Think CD's, U.S. Treasuries, High rated bonds. Each of these offer very low interest (yield). Thanks to the low interest rate environment.
- We provide a solution, and it begins with the strategic design of our advisory platform.
- We have created our firms to be independent without ties to any one investment or insurance company. This independence gives us the advantage of having many options available to help our clients.
- With access to many potential solutions, Safe Harbor Retirement Planners carefully selects investment / insurance instruments that are in our client's best interest.
- Since safety and return is a large priority, we implement solutions that provide guaranteed principal protection for a calculated portion of the portfolio. Our advantage is the growth potential of certain safe investments that is greater than Treasuries, bonds, and CDs.
- We find solutions that provide the greatest amount of growth potential while taking the least amount of risk!
- Due to the importance of avoiding significant losses in the early stages of retirement (sequence of returns risk), our retirement income planning strategies allow for a safe, predictable income stream, even in extended depressed economic periods. We have tested our strategies under the worst market conditions in history.
Safe Harbor Retirement Planners is strategically structured to allow the independence required to give you access to superior investment options, providing you advice that is in your best interest, for the sole purpose of structuring a sound retirement income plan.
Question to ask your current Financial Advisor:
What is your analysis of the current economic climate for retirees and what is your solution for the sequence of returns risk?