Retirement Planning in Turbulent Times

On June 9, 1978, Bob Specas attempted to topple 100,000 dominoes at New York’s Manhattan Center. Unfortunately, his effort to break the world record was thwarted during the preparations when a television cameraman dropped his press badge—and set off 97,500 dominoes.

During October and November, many people felt like their retirement accounts were falling like Bob Specas’ dominoes. Minds raced to understand what was happening. What do I do in times like these? Can I still retire when I planned? Can I stay retired? Can I maintain my lifestyle in retirement? Will I outlive my money?

Financial planning is designed to help people handle difficult times. Here’s how BWFA answers the critical questions.


Can I retire now?

One of the hardest concepts to implement in investing is “buy low and sell high.” Our minds tell us to sell when markets fall and to buy when markets are up. Retirement planning is much the same way. People want to retire when the market is up, and they feel that they must keep working when the market is down. However, retiring during a downturn may be a great time.


Why? Well, if your retirement plan indicates that you can retire when the market is down, you will be sitting pretty when the market recovers. It’s likely that the market recovery will give you above-average returns on your assets in the future because markets tend to pull out of tough times with strong performances.

What about the extraordinary volatility in the markets this fall? Our retirement plan assumes that the market will be volatile during at least part of your retirement. We run Monte Carlo simulations with different values each time for the performance of your investments and your life expectancy. We simulate your retirement 500 times to determine the “strength” of the plan—to see if it can withstand volatility and years when investment returns are negative.


I am retired. Am I OK?

BWFA’s ongoing planning process includes performing annual financial plan reviews. The reviews consist of the following:

  • A comparison of actual asset and liability balances, with the balances projected in the plan;
  • A review and discussion of the action items identified in the plan; and
  • Identification of new issues which affect the plan.


Based on our discussion with you during the financial plan review, we determine whether your plan needs to be revised in light of new information. The new information could be external (losses on investments) or internal (a substantial inheritance or a significant health problem). If the plan needs to be revised, we will perform an update for a fee. In the update, we will revisit the assumptions in the plan and will update investment accounts to their current balances. Then, we will perform Monte Carlo simulations to determine the strength of the plan. Finally, we will suggest ways to make your retirement more secure, if the simulations indicate that tactical changes are needed.

When performing financial plan reviews, we find that most people are willing to make adjustments in difficult times. For example, some of our clients have decided to postpone major expenditures, such as automobile purchases, home improvements, or big vacations. This enables them to reduce withdrawals from investment accounts and to keep those funds invested until the market recovers.



There is an old military saying: “If you fail to plan, you plan to fail.” We find that, especially during difficult times, there is tremendous comfort not only in having a plan, but in being able to review your progress against the plan. If you would like to find out more about retirement or estate planning, please contact Baltimore-Washington Financial Advisors at 888-461-3900 or send an e-mail directly to Mark Stinson at mstinson@bwfa.com.