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Treloar & Heisel, Inc., is a longtime partner of the AAE and supporter of the endodontic specialty. As one of the AAE’s endorsed vendors, Treloar & Heisel provides members with specialized financial services and advice to guide them through every stage of their careers and into retirement.

Are Your Investments Appropriate for Your Retirement Goals?
Aligning risks and returns to the needs of your financial plan

By Jeffrey E. Wherry 

“Are my investments appropriate for my retirement goals?” The answer is different for every person.

Before you even look at investments, consider your retirement goals:

  • When would you ideally like to retire?
  • What kind of lifestyle would you like to have?
  • Will you work still, a little, or not at all?
  • What active and passive income sources might you have?

Investment returns should fill the gap between your future income and future spending. So, before you decide how to structure your investments, let’s look at your cash flow in retirement.

Let’s look at your spending.

Looking at today’s spending patterns provides huge clues as to what future spending might look like.

Some expenses that people may be currently running through their dental practice may become personal expenses in the future. These include car expenses, and some types of insurance. Some current expenses may not exist at all in retirement: mortgages, debt, and the need to continue saving.

Other, new expenses may take their place. Extended medical care, or other household support, is expensive. There may be more travel and new hobbies.

Now let’s take a look at your income.

Your income in retirement may include Social Security payments, a pension perhaps if you worked as faculty or in a hospital that offered such a program, or rental income from properties you own. If you decide to scale back at work over time, we’ll factor in your (reduced) income into the equation. If you have assets from the sale of a practice, those, too, will be taken into consideration.

The difference between your incoming cash flows, and your projected expenses needs to be filled by your investment portfolio.

Now, let’s see if your investments are appropriate for your goals.

The first thing that we need to do is understand a person’s risk tolerance for investing. We do this by determining their ‘risk score.’ A simple questionnaire, and the use of specialized financial planning software gives us insight into an individual’s tolerance for fluctuations in the market.

Risk tolerance is important is because we want to make sure that the investment program we recommend is within an individual’s range of expectations – for both risk and, commensurately, returns.

We know the markets will go up, and we know the markets will go down. An educated investor knows that if the value of his/her holdings goes down in a particular month or quarter, this is to be expected. Alternately, if a portfolio is doing exceedingly well – beyond expectations – the person won’t get carried away and decide to invest exclusively in those assets that are top performers at this moment in time. The point is to stay the course for the long term, and make suitable adjustments along the way.

We always discuss with our clients, in advance, how they might behave in a bull market (when markets are up), what they anticipate they might do in a bear market (when markets are down), and what could potentially happen in a financial crisis. Thinking through these scenarios helps mitigate what might be a purely emotional response.

Sometimes, the return that your portfolio needs to produce in retirement is greater than what your risk tolerance will allow. At this point, we have a conversation with the client. The choices are to either increase savings, or to slightly ratchet up one’s tolerance for risk. For most people, frequently, it’s a combination of both.

Jeffrey E. Wherry is managing director, wealth management, for Treloar & Heisel Wealth Management. To learn more, visit tandhwealth.com.

Investment Advice offered through WCG Wealth Advisors, LLC a Registered Investment Advisor doing business as Treloar & Heisel Wealth Management. Treloar & Heisel Wealth Management is a separate entity from The Wealth Consulting Group and WCG Wealth Advisors LLC.

This information is for illustrative purposes only and is not intended to represent any specific investment vehicle.

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