Broker Check

Plan for a Comfortable Retirement… How do you do that?

| May 04, 2023

May Client Letter: Plan for a Comfortable Retirement… How do you do that?

We plan for retirement because we know that we may not want to work forever. An artificial retirement age set by our employer may limit our options. Health issues may also dictate when we decide to retire.

With your input, we can help devise a plan that puts you on the road to financial security. More importantly, allow you to live the life you envision. The result is designed to leave you with sufficient assets so you can maintain your current lifestyle or pursue new interests that you may develop in retirement.

We can help you with the numbers. We provide you with the monthly income you’ll need after you depart the workforce. But first, let’s ask some basic open-ended questions.

  • What goals do you have for retirement?
  • When would you like to retire?
  • What would you like to do in retirement?
  • How would you spend your days?
  • Do you enjoy traveling?
  • What are your hobbies?
  • Do you want to stay in your home or are you considering a smaller place?
  • Would you like to live in a different location?
  • Would you move closer to family or kids?
  • Or would you choose a location based on climate or quality of life?

Your goals are your goals. They are not mine. They are not your family members’ goals and they are not your friends’ goals. Your goals play a big role in how you plan for retirement.

Have you created a plan that validates your ability to retire and allows you to live the lifestyle you envision? Did you include annual inflation adjustments?

Once you are retired, are you updating your plan each year to ensure it is still valid? Have you accounted for the changing tax rates that we will all see in 2026?

FIRE up your portfolio

The FIRE (Financial Independence Retire Early) crowd puts a hefty premium on financial security. Their goal is to clock out of the workforce well before they reach the age of 65. In some cases, before they turn 40.

How do they do this? They trade today’s luxuries and perks for financial independence.

They may save 50%, 60%, or even 70% of their income. Like a runner training for an ultramarathon, discipline and focus are paramount in this approach.

The FIRE savers max out their 401k plan, going well beyond the company match. They contribute to other tax-deferred vehicles such as an IRA. But they don’t stop there. They sock away cash in taxable brokerage and savings accounts.

But it’s not simply about growing their savings. Minimizing expenses is a part of the equation. They skimp on eating out and on vacations. Cars are simple and usually purchased used. Forget about streaming services, pricey popcorn at the movies, or the latest clothing styles.

It’s matinee prices, dollar theaters, and Goodwill. Simply put, they are always looking to cut corners, increase income, and boost savings.

FIRE devotees typically want to save 25 times their annual expenses before they retire. It’s what they call the rule of 25.

For example, if your monthly outlays run about $5,000 per month, your annual expenses total about $60,000 per year. Multiply 60,000 by 25 and you will need $1.5 million in savings before you retire.

Would the rule of 25 work for you is a great question. Everyone’s situation and goals are different. It can work but there are situations when it doesn’t work. Equally important is just because all the math works today does not mean it will 3, 5, or 10 years from now. Things happen and people’s plans change. The only way to know is to first have a plan that clearly demonstrates that it works but it’s also critically important that you sit down every year and update it. When the market has a bad year, like it did in 2022, the negative ripple effects can be significant.

FIRE isn’t for everyone. Few folks can save 50% or more of their income. Do you have kids? Are you saving for college? A spartan lifestyle that focuses too heavily on savings is simply too challenging a path for most folks.

If you decide to embark on this road, be careful that you aren’t unwittingly drawn back into the workforce. Those who retire early don’t always stay retired. Meet Sam Dogen. Sam retired at the age of 34 with $3 million. He’s back in the workforce.

There are several reasons for his ‘unretiring.’ He missed the camaraderie of the workplace, and retirement can be lonely. There is only so much golf or pickleball you can play during the week.

While his investments lost ground last year, he’s also figuring out that college for his kids is not cheap.

The rest of us

FIRE is an interesting dinner conversation, but most folks want to save for retirement at a more reasonable pace. Nonetheless, we can learn from the diligence these folks display. Might we be able to modify some of the principles FIRE devotees live by? Absolutely! Here’s a more moderate plan:

  1. Set aside six months of expenses in an emergency fund. While skyrocketing interest rates have hampered stock market performance over the last year, savers can now earn up to 5% risk-free. We’d be happy to point you in the right direction.

Consider saving up to 10% of your income in your company’s ROTH 401k. If zero to 10 in one paycheck leaves you short of breath, start small and ratchet it up every couple of months. You won’t miss the cash.

But if it turns out that 10% is too difficult or interferes with other financial goals, at least to give serious consideration to capturing your company’s match. It’s free money. Why leave any behind?

Is 10% enough to reach your goals? I tell clients that “without a plan you don’t know f you can.” If you need a plan we can make it happen!

If you don’t have a Roth option, there are other ways to create tax free income for the future. You can do it for your kids as well. Ask me how?

  1. Get out of debt.This includes student loans, credit cards, and auto debt. We can talk about whether you should try to pay down your mortgage in a timelier manner.

If you need help making that happen or would like to see a strategy that  could cut the time it takes to eliminate your debt by 50% or more let’s have a conversation.

  1. Max out Health Savings Accounts (HSA).Consider fully funding your health savings account if it’s an option for you. It gives you a great tax break.
  2. Are you 50 or older?If so, consider catch-up contributions for retirement savings. For an IRA, you may contribute up to $7,500 in tax year 2023.

The 401(k) contribution limit for 2023 is $22,500 for employees. If you’re 50 or older, you’re eligible for an additional $7,500 in catch-up contributions.

  1. Diversify within asset classes and among asset classes.When you are young, a diversified portfolio that leans heavily on stocks and exchange-traded funds is probably your best choice. Dollar-cost averaging allows you to take advantage of market dips.

As you near retirement, you may want to gradually reduce risk by shifting to fixed income investments and reducing your exposure to stocks. I call this time period “the fragile decade.” If you want to know more let’s get together and discuss it.

There are no easy roads, but a disciplined approach that emphasizes consistent savings, a modest lifestyle based on your income, and minimal debt will serve you well as you travel the road toward financial security and retirement.

All investing involves risk and there is no guarantee that any strategy will be successful.

Dollar cost averaging does not assure a profit nor protect against loss. Investors must consider their financial ability to continue purchases through periods of low price levels. Diversification is an investment strategy that can help manage risk within a portfolio, but it does not guarantee profits or protect against loss in declining markets.

Bank failures, rate talk, and economic anxieties

Is the banking crisis finally in the rearview mirror? During March, Silicon Valley Bank (SVB) unexpectedly collapsed after it announced a plan to raise capital. Signature Bank (SB) was shuttered shortly after SVB’s closure.

At the time, it was the second and third-largest bank failures in U.S. history.

First Republic Bank (FRB) was already on shaky ground but had survived by borrowing heavily from the Federal Reserve and government-backed lending groups.

When it released its earnings in late April, FRB said it lost a significant amount of deposits in the first quarter, dooming its ability to remain independent.

Shortly thereafter, with the assistance of the FDIC, JPMorgan Chase (JPM) announced on May 1 that it will purchase the deposits and most assets of First Republic. FRB’s failure is now the second-largest failure in U.S. banking history.

How does this compare to the 2008 financial crisis? It doesn’t.

The 2008 crisis was sparked by ultra-easy mortgage lending practices that encouraged borrowers to buy homes they couldn’t afford and take out mortgages they didn’t understand.

While Signature Bank was heavy in the crypto space, the common thread in the 2023 failures was a bad bet on interest rates, not poor-quality assets.

FRB leaned heavily into jumbo-sized mortgages when rates were much lower. Silicon Valley loaded up on long-term Treasury bonds when yields were at rock-bottom levels.

When interest rates rose, those assets fell sharply in value, leading to their demise.

The decision by the FDIC to fully back the deposits of SVB and SB probably prevented a series of bank runs on mid-sized regional banks, which would have greatly increased the size and scope of the crisis.

Moreover, the Federal Reserve implemented a new lending facility to allow banks to borrow using high-quality assets as collateral, which helped shore up liquidity and calm frazzled nerves.

It’s not that these banks were experiencing the kind of troubles we saw in 2008, but the fear of a panic was real for those who had deposits that exceeded the FDIC limit.

It only takes a few keystrokes on a PC or smartphone to move cash today. Welcome to the world of 21st century bank runs.

We can’t definitively say there aren’t problems still lurking in the shadows. But JPMorgan CEO Jamie Dimon said, “This part of the crisis is over. For now, let’s take a deep breath.”

Key Index Returns




Dow Jones Industrial Average



Nasdaq Composite



S&P 500 Index



Russell 2000 Index



MSCI World ex-U.S.A*



MSCI Emerging Markets*



Bloomberg Barclays U.S. Aggregate Bond TR USD



Source: Wall Street Journal,, MarketWatch, Bloomberg
MTD returns: March 31, 2023 –April 28, 2023 YTD returns: December 30, 2022–April 28, 2023

With the banking crisis sliding to the backburner last month, investors turned to the economic fundamentals.

Inflation is gradually moderating, but it’s not yet on a path back to the Fed’s 2% annual target, something Fed Chief Powell and most Fed officials last year said was a prerequisite before ending its rate-hike campaign.

But banking jitters have forced the Fed to reevaluate the tools (rate hikes) they are using to rein in inflation. Today the Fed announced a .25% or 25 basis point increase of interest rates. It has now pushed rates above 5% for the first time since 2007. This is the tenth consecutive rate increase in an effort to battle inflation and raises the benchmark feral funds rate to a 16-year high.

The Fed also changed their message, hinting that they could pause rates. They eliminated a phrase from their previous statement that said some additional policy increases might be appropriate. Time will tell if we actually see a pause.

Talk of a pause aided shares in April. Better-than-expected corporate profits, according to Refinitiv, also supported stocks, offsetting economic concerns.

Still, economic storm clouds on the horizon likely limited gains last month.

“Usually, recessions sneak up on us. CEOs never talk about recessions,” economist Mark Zandi of Moody’s Analytics said late last year. “Now it seems CEOs are falling over themselves to say we’re falling into a recession. …Every person on TV says recession. Every economist says recession. I’ve never seen anything like it.”

Even the Federal Reserve, which rarely talks recession in advance, expects a mild recession to develop later in the year.

Given recent market action last month, investors aren’t yet betting on a recession.

Debt ceiling drama

The U.S. Treasury is running up against its ability to borrow to finance government spending, possibly as soon as early June.

Without an increase, the U.S risks default. Republicans and Democrats are far apart, but a default is almost unthinkable. We believe a compromise will be reached that raises the debt ceiling since the failure to do so would lead to catastrophic consequences for financial markets and the economy.

I trust you’ve found this review to be educational. If you have any questions or would like to discuss any matters, please feel free to give me or any of my team a call.

As always, I’m honored and humbled that you have given me the opportunity to serve as your financial advisor.

Also please feel free to send this newsletter to anyone you believe would receive value from it.

Kind Regards,

Niles P. Geary, II, MBA, CRPC, AIF™ 

Co-Founder & CEO 

Niles P. Geary, II is Registered Representative offering Securities and Advisory Services through UNITED PLANNERS FINANCIAL SERVICES, A Limited Partnership Member: FINRA, SIPC Voyage Partners Financial Strategies, LLC and United Planners are not affiliated. 

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