4 Tips for Retirement Planning from Investment Pro Larry Swedroe


This post was previously published on December 13, 2019. It was updated on January 29, 2020.

Do you have a plan for your retirement?

My friend Larry Swedroe has a lot to say about retirement planning. He’s the author of the #1 book on the Wall Street Journal’s list of the best books about retirement and aging of 2019, Your Complete Guide to a Successful & Secure Retirement. Larry is also the chief research officer and board member with Buckingham Strategic Wealth, a member of The BAM Alliance.

I recently had the pleasure of moderating a fireside chat with Larry during the Greater Miami Chamber of Commerce’s South Florida Economic Summit – 2020 Vision, where we discussed “The New Retirement Landscape.” I also hosted a private luncheon with Larry where he shared tips for retirement planning with a few of our clients and friends. Here are four takeaways that he shared.

1. More than half of us don’t have the right plans in place for retirement.

More than half of working families are at risk of not being able to maintain their living standards after retirement, according to The National Retirement Risk Index from the Center for Retirement Research at Boston College. 

The “four horsemen of the retirement apocalypse,” Larry’s personification of the risks of insufficient retirement planning, are particularly hazardous for those who underestimate their retirement needs. These four factors – stock valuations at historic highs, bond yields at historic lows, increasing longevity, and the unaffordable cost of long-term care – can combine to create a real disaster.  Proper planning includes an assessment of your current situation, evaluation of your appetite for risk, and review of tools that can protect you, like long-term care coverage. 

2. You may be very smart, but it’s unlikely you’re smart enough to beat the market.

There are two basic theories of investing – active and passive. Those who follow an active strategy believe that markets are inefficient, and that intelligent people can spot undervalued or overvalued stocks, or can “time” the market to take advantage of economic shifts. Advocates for a passive investment strategy trust the market’s efficiency, believing that the price of a security is the correct price – otherwise it couldn’t be maintained.

Larry’s position is clear. He writes: “while markets are not perfectly efficient…they are highly efficient.” Taking advantage of tools for passive investing creates the “habit” of saving for retirement, without the need to be an expert or give your portfolio constant attention.

3. The financial plan isn’t the only planning you need to do.

Planning for retirement is more than just investment strategy. When you step back from your career, your excitement may be mixed with anxiety. What will you do? Who will you see?  Your status has changed, and so have your relationships. Depression, divorce and even suicide rates are surprisingly high among older people. 

Larry’s excellent advice is to plan for more than your finances: create a vision for what you want retirement to be. This could include health, relationships with family and friends, a passion for a cause, or a learning plan.  Envisioning your future will help you put the building blocks in place that enable you to achieve it.

4. You may be late, but you’d better get started.

One guest at our lunch asked a compelling question. Between finishing his education, starting a career, and starting a family, he hadn’t started the investment habit. “What should I do?” he asked. 

Larry’s advice, like much of the advice I’ve seen him share for many years, was a bit blunt and very practical. “Where can you cut your spending?” he asked. 

It’s true – we can all think about how to save. What kind of coffee do you drink? What kind of car do you drive? Where do you go on vacation? Starting the saving habit now – and taking a bit of a lifestyle hit before it’s too late – will help build the resources to make retirement the reward we all desire.

Jay Pelham, CFP®, is President at Kaufman Rossin Wealth, LLC, a Registered Investment Adviser.

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