When Smoke Clears: Lessons from Bedrock & Lookout Fires for a Guaranteed Retirement Income


(Photo courtesy of Rosell Wealth Management)

Navigating the Hazy Realities of Unpredictable Times, Both in Nature & Finances

Life has a knack for tossing us curveballs, whether in the form of roaring wildfires or economic downturns. Let’s compare the Bedrock and Lookout fires to the eerily similar journey of securing a steady retirement income. So, grab your marshmallows (for toasting or stress-eating), and let’s explore how.

Nature’s Pyrotechnics vs. Retirement Rollercoaster

These flames showed us Mother Nature’s unpredictable, smoky side — she’s got a sense of humor too, it seems. But wait a minute, isn’t this smoky spectacle reminiscent of our financial lives? When we think we’ve got it all under control, a sudden market downturn strikes like a sudden gust of wind on Elk Lake. Boom! Our retirement funds go up in smoke, leaving us with that familiar taste of uncertainty in the air. It’s like trying to plan an outdoor concert at Hayden Homes Amphitheater without knowing if the skies will be clear or clogged with smoke — talk about stage fright!

Clear Skies and Clear Plans

We all love the crisp, clear Central Oregon skies that September historically provides as it opens possibilities for outdoor adventures, picnics, and live music under the stars. But just as we can’t always predict the weather, we can’t predict the stock market’s behavior. That’s where the idea of guaranteed retirement income comes into play — the financial equivalent of ensuring that your outdoor event happens rain or shine.

Imagine a retirement where your essential expenses are covered, no matter what economic storm clouds roll in. You might call it the “clear skies retirement plan.” Just as we hope for clear skies during a concert, we hope for financial stability during retirement.

Sympathy for the Smoky Times

Facing the uncertainty of a smoky atmosphere during the many fires surrounding our community is no joke. It’s been affecting our daily lives, health, and outdoor plans. It’s a parallel journey to those nerve-wracking moments when retirement funds take a hit during a financial crisis. It’s hard to laugh when your plans are clouded with doubt. Let’s look at one of the strategies I incorporate to remove doubt and provide peace of mind for my retired clients.

If you ever took a Psychology 101 course in school, you probably learned about Dr. Abraham Maslow, a renowned American psychologist best known for creating Maslow’s Hierarchy of Needs. His hierarchy is displayed in the shape of a mountain. The base of the mountain is made up of the most basic needs, which consist of food, water, sleep, and warmth. Once these lower-level needs have been met, you can move on to the next level, eventually advancing to the more complex needs towards the summit. As you progress from the base towards the peak, the need for personal esteem and feelings of accomplishment take priority. The zenith is where the need for self-actualization occurs. This is when you reach a state of harmony and understanding because you are engaged in achieving your full potential. This level explores your morality and spirituality. What does this have to do with your financial planning? I have borrowed Dr. Maslow’s Hierarchy of Needs to help you create your personalized financial hierarchy and find solutions for the ideal approach to turn your retirement accounts into an income stream. Today, we’ll focus on just the necessary or core expenses in retirement.

The Base of the Mountain: Core Expenses

Maslow shared that one’s needs are predetermined in order of importance. The more advanced needs only come into focus once the lower needs are met. As you prepare for your retirement, the most critical level of your financial mountain is the base, which I refer to as your CORE EXPENSES. All retirees face these required expenditures — the costs that cannot be avoided. They include food, clothing, housing, transportation, taxes, insurance, and health care. Considering the detrimental effects of past recessions and the fact that we average a recession every 8.8 years¹, I believe it is necessary to have a guaranteed income stream for life to cover these essential expenses.

How can you best accomplish this? Social Security is undoubtedly a good start, but for most people, this will only cover a portion of their core expenses. For example, suppose a newly retired couple has annual core expenses of $100,000. They receive annual Social Security payments of $35,000, guaranteeing 35 percent of these expenses, and they are fortunate to receive a yearly pension of $30,000. Between Social Security and pension, $65,000 or 65 percent of their $100,000 of core expenses is guaranteed, leaving $35,000 that is not protected.

One may want to consider ataking a portion of your retirement portfolio and investing it in whatever investment strategy will provide them with a guaranteed annual income of $35,000 using the least amount of funds. These investments may include municipal bonds, a laddered bond portfolio, or today’s modern-day variable annuity. It has been highly satisfying for me to observe clients’ peace of mind knowing their essential expenses are covered for life, no matter what happens to the stock or real estate markets in the future.

In a world where economic fires can rage unexpectedly, having a steady income stream that covers your necessary expenses in retirement becomes a soothing balm for your financial anxieties. When the markets perform their fiery dance, your retirement lifestyle doesn’t have to be the one to suffer the burn.

The Takeaway: Finding Clarity Amidst the Haze

So, as we reminisce about the smoke from the recent fires, let’s draw a parallel with our financial well-being. Just as we crave clear skies for outdoor enjoyment, we yearn for financial stability in our golden years. While we can’t control the weather or the stock market’s twists and turns, we can choose to secure our retirement income. Think of it as erecting a metaphorical shelter against literal and financial storms. By doing so, we’re not only ensuring our sunset years are spent in comfort, but we’re also preparing to weather any unexpected turbulence. In the end, remember that smoke and uncertainty eventually clear, whether it’s the Bedrock and Lookout fires or the wild economic swings. And when they do, wouldn’t it be great to enter the light with a well-protected retirement income? So, here’s to both clear skies and clear financial plans — because in a world of unpredictability, a bit of certainty is the warm, cozy campfire we all deserve. I invite you to reach out to me with any thoughts or questions you may have. Enjoy the rest of your summer as we transition into autumn.

¹National Bureau of Economic Research

David Rosell is president of Rosell Wealth Management in Bend. RosellWealthManagement.com. He is the host of Recession-Proof Your Retirement Podcast and author of three books: Failure is Not an Option — Creating Certainty in the Uncertainty of Retirement, Keep Climbing — A Millennial’s Guide to Financial Planning, and In The Know- Turning Your Unneeded Life Insurance Policy Into Serious Cash. Find David’s books at local bookstores, Amazon, Audible, and the Redmond Airport. Investment advisory services are offered through Valmark Advisers, Inc., an SEC Registered Investment Advisor Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc. The principal value and rate of return in a variable annuity will fluctuate due to market conditions. Therefore, at any point in time, the value of an annuity contract may be worth more or less than the owner’s actual investment in the contract. Guarantees are based on the claims-paying ability of the issuing company. For more information about a variable annuity, including its product features, charges, and expenses, please read the prospectus. The information provided does not constitute an offer or a solicitation of an offer to buy any securities, products or services mentioned.



About Author

David Rosell is president of Rosell Wealth Management in Bend. RosellWealthManagement.com. He is the author of three books. Find David’s books at local bookstores, Amazon, Audible as well as Redmond Airport. Investment advisory services offered through Valmark Advisers, Inc. an SEC Registered Investment Advisor Securities offered through Valmark Securities, Inc. Member FINRA, SIPC 130 Springside Drive, Ste. 300 Akron, Ohio 44333-2431. 800-765-5201. Rosell Wealth Management is a separate entity from Valmark Securities, Inc. and Valmark Advisers, Inc. Valmark Securities supervises all life settlements like a security transaction and its’ registered representatives act as brokers on the transaction and may receive a fee from the purchaser. Once a policy is transferred, the policy owner has no control over subsequent transfers and may be required to disclosure additional information later. If a continued need for coverage exists, the policy owner should consider the availability, adequacy and cost of the comparable coverage. A life settlement transaction may require an extended period to complete and result in higher costs and fees due to their complexity. Policy owners considering the need for cash should consider other less costly alternatives. A life settlement may affect the insured’s ability to obtain insurance in the future and the seller’s eligibility for certain public assistance programs. When an individual decides to sell their policy, they must provide complete access to their medical history, and other personal information. Client name has been changed to protect confidentiality. The gross offer will be reduced by commissions and expenses related to the sale. Each client’s experience varies, and there is no guarantee that a life settlement will generate an offer greater than the current cash surrender value. RosellWealthManagement.com

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