(Photo above | Courtesy of Rodney Cook)
The Second Half of Your Financial Journey
My family and I recently had the opportunity to visit Puerto Rico, or as my mother refers to it, “La Isla del Encanto” — the island of enchantment. As a child, Puerto Rico was my second home. My mother is from Caguas, a small town on the outskirts of San Juan. I grew up swimming in the warm, idyllic waters of Luquillo Beach, playing with the lizards and falling asleep to the sweet sounds of the coqui tree frog. There is one place in particular that stole my heart with its’ lush landscape, vibrant flowers and breath-taking views — the El Yunque rain forest.
One morning we set out to conquer El Yunque. Our goal was to run to the top — a roundtrip of about nine miles. My mother, wife and I geared up and glanced at the forecast which only showed light rain. The humidity was about 95 percent; we headed out early, so the temperature was tolerable. As we approached the road that would lead us into the jungle, a nervous yet excited energy took over.
The vegetation reminded me of the jungle cruise at Disneyland, the various species of palms, leaves bigger than two hands put together, and vines hanging from the trees as if we were in a Tarzan movie. It was time to conquer this jungle by running to the top of the mountain which stands at 3,494 feet above sea level.
As we began our run, the adrenaline was pumping and the well-worn path made for a quick pace. Soon we approached a sign that split the trail. One arrow pointed up to El Toro, the highest point of the rainforest and the other arrow pointed to a trail that would lead you back to the road below. We of course headed up and immediately the trail became so technical that our run turned into a walk/run.
It was obvious that this was a path that was less travelled. It then started to mist which quickly turned into rain. It was refreshing, and welcoming as it cooled us off. As we approached the top, there was an opening through the jungle. We were able to see views of the crystal clear Caribbean Sea. We finally made it to the top and took a deep breath, followed by a little air boxing and our best Rocky Balboa impersonation. We were at the highest peak of the rainforest but realized that the second half of the journey was before us.
Creating financial plans for our clients on a daily basis brings back memories of this special day. The run to the top of this peak is similar to the accumulation phase of saving for retirement. You get your first real job, and you begin saving towards retirement in a 401(k) or an individual retirement account (IRA). This was illustrated in the first part of the run. As you start to put money away, you begin to see the growth and what compound interest can do to your savings over 10 to 15 years, and you begin to appreciate results of your efforts.
Even when it rains on the markets and they experience a correction this is actually an opportunity as you are buying more shares in your retirement account when this happens, so it’s not painful when you put it into perspective. As you reach the highly-anticipated summit, you can start dreaming about what life will be like in retirement which may include exotic trips and more time to do the things you enjoy and of course not going to work on Monday. You’re at the top of your financial mountain that moment you retire! Break out the Rocky dance! Now to live the retirement you have always imagined.
As we celebrated reaching the summit, dark, ominous clouds began to dominate the sky above. We didn’t think much of it as we began our descent and once again entered the verdant canopy. By the time we experienced the loudest thunder we had ever heard and buckets of water began to fall upon us, I began yelling like captain Dan in Forest Gump, “Is that all you have?”
Within moments the trails turned into raging streams. The slippery rocks became our worst enemy as we went for a record setting pace. Most people would have probably waited out the storm, but we were mentally prepared to run in all conditions. Yelling and yipping became part of our run with the occasional “whoooaaaa, I’m ok!” We were having the time our life in what could have been a disastrous situation. We were able to complete our run back down the trail without injuries, and with more excitement than we could have imagined. We considered our adventure a success!
Similar to our run down the jungle trail, the second part of your financial journey can be the most fun however it also takes on the most amount of risk and needs the most amount of planning. When you reach the top of the highest peak of your retirement rain forest trail. Will you be able to descend safely and not out live your money? On the way down, will you encounter financial storms, slippery rocks and raging streams?
For those of you who retired prior to the millennium, you have already experienced two major monsoons both in 2001 with the dot com bust and in 2008 with the housing and financial market meltdown. Certain investment vehicles, like the rocks on the trail, can be suitable investments on the way up or in the accumulation phase of your journey but can become hazardous or unsuitable for somebody in the distribution phase of retirement.
There are a number of ways to prepare for the financial storms that you will inevitably experience in retirement so that whatever is thrown at you, you know that your necessities will always be taken care of regardless of market performance. It is important to have proper planning that helps you stay the course and an investment strategy that should safely get you to the end of your life not out living your resources.
Rodney A. Cook CFP is the Director of Financial Planning at Rosell Wealth Management in Bend. www.RosellWealthManagement.com.
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