DIY Retirement Plans: Are They Worth The Risk?

Your hosts are Bowman Wealth Group financial advisors who , for more than two decades , have provided financial leadership for those they serve .

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So every episode with these podcasts we like to focus on specific topics or just specific questions in the financial realm that people often share , and today's unique topic of conversation is do-it-yourself retirement plans . Do-it-yourself planning Should you do it yourself ? All of these questions are things we're going to cover today .

So if you've scoured the internet maybe seen on YouTube or Reddit or any other internet source you're often going to find some people that have some pretty good suggestions in terms of the core foundation for a retirement plan , but does it work ? Does it fit for everybody ? Should we even look at or consider some of these cookie cutter solutions ?

Recently , many people have been opting for these self-directed retirement accounts . During the period of economic stability , when things are going well , winning investments are everywhere and it seemed like every investment was a winner .

And it was easy , I think , to overlook the need for protection against possible losses , because everything looks so good when things are going well economy's great , stock markets booming , you know , felt like nobody could lose . You know , there's periods of times like that , you know .

But many people probably believe that their retirement funds were , were , secure in the beginning of 2022 . Right , just even looking back a couple years , year and a half . However , as the market , the economy , retirement regulations changed , do it yourself , retirement plans could come with more risks than expected .

So let's talk about some of the pitfalls of planning for your retirement solo , by yourself , and why professional guidance may be key in preserving your wealth and your retirement trajectory . So you've been working all these , all these working years and accumulating retirement funds , retirement assets .

The biggest thing is preserving that wealth and making sure that we don't run out of money when we stop working . So some questions to ask ourselves when putting together a retirement plan without any help , if we wanted to go that DIY , that do it yourself route , what are some things to kind of keep in mind ?

Well , the first thing , can you keep your emotions out of it ? You know this is your money , it's your future , your legacy . People make the biggest financial mistakes when they panic and they sell low in a bad market when the market's already down , or maybe they get greedy and buy at the high of a really good market . Both can be detrimental .

So can you keep your emotions out of the equation ? Because you know , we always say it's . It comes down to math over emotions sometimes , and when you're too close to the thing that you're analyzing and working with , sometimes it can be problematic .

Okay , who's going to stop you or give you a dirty look if you decide to make an impulsive decision with your retirement accounts , with your retirement accounts , with your retirement savings ?

If you're on your own , you won't have somebody to talk through decisions with , or you may not even know that you're making an impulsive decision if you're doing it solo , okay , something else to consider Do you have the time ? This isn't just about talking to a family member brother-in-law , cousin , aunt and uncle about making some stock picks .

To make good choices you need to do usually a lot of research and make sure you filter each decision properly and making sure it fits your overall financial goals also factor in . You know the spousal situation .

You know how does that play into into your plan , right , if we're getting generic advice from the internet or some other source , you know a lot of times sometimes they're talking about just an individual . But you know it's important to take into account a whole household financial situation , including spouse's income , spouse's social security , spouse's retirement assets .

How does that all come together in the larger puzzle ? If you enjoy doing your own financial legwork , why not consider maybe keeping control of a smaller portion of your portfolio and letting the advisor or an advisor take care of the rest of it ? So that way ? You know , some people are like this .

They really do enjoy the nuances of finance and some of the retirement planning .

Maybe they like tracking the markets and they like to retain some of the responsibility and being invested in their own investing for lack of a better term mental stimulation this way , if you just hang on to a smaller portion of your overall portfolio and any mistakes that you maybe make won't have such a large impact on your overall retirement .

You know most professionals , probably including us , wouldn't mind discussing your do it yourself piece if it's a small portion . You know bouncing ideas back and forth , as long as the main plan right , the bulk of your plan is still being managed properly to account for all of the things , account for the risk , so on and so forth .

One thing to keep in mind is it's it's possible to make mistakes , right , it happens , everybody does . It's it's especially if you're doing it on your own . It's easy to invest in the bull markets . If you've never heard of that term . The bull market is is just when the stock market is doing well and appreciating , it's growing .

But bear markets , which is the opposite of a bull market , you know they're , they're bound to come around . In the long span of somebody's retirement You're likely to experience both and it and it's hard to plan for a bear market . They don't announce when they're coming around .

We can see maybe certain markers , indicators , but over the course of somebody's retirement you're bound to experience both . It's important to work with a professional that understands the cycles of these things and can kind of mitigate losses , because both will happen . Another question to ask yourself how are you protecting yourself from the downside , from downside risk ?

Do you even know about some of the products that are out there , or tools , financial vehicles that are out there that may help protect your stream of income ? A good financial advisor attends classes , stays up to date on different financial strategies .

Tax law changes things like that in the form of continued education or really just staying connected to what's going on in terms of law changes , if any . Another thing to keep in mind it's going to get more complicated . Everything does . The further you get into retirement , you're pulling on retirement assets . Those are getting drawn down .

When you hit the lovely age of well , it's changing , but it's 73 now for RMDs . Any qualified retirement accounts are subject to RMDs when you hit that age . That can be something that may be confusing for people to plan for , especially if you have more than one qualified account For a portion of somebody's retirement timeline .

Maybe it's more straightforward , but certainly things are bound to get more complicated at a certain point . There's so many variables that a lot of folks don't account for . It's hard to account for those things in a cookie cutter . You know . Do it yourself recommended plan . You know saving money . Think about when you were a kid .

Saving money was pretty easy , right ? You just dropped your quarters into a piggy bank or you put cash away in an envelope . You might have been really good at that accumulation phase . Maybe you're saving for a bike or something as a kid , or new clothes , new outfit . But the accumulation phase of your financial life is a little bit different .

The distribution and the cost preservation phase can be a scary place to negotiate and navigate on your own . So another reason to kind of tap into working with a financial professional Sometimes it's just knowing what order to start drawing on your retirement accounts .

You know there's certainly a sequence , an efficient sequence of which accounts to draw from , in which order so that it's most well , I guess just that most efficient , most effective . Obviously , keeping taxes in mind , there's certainly an order that we should pull from in terms of the different account types you may have .

Understanding your risk tolerance as you get older versus when you were young and maybe a little more fearless with your money is important . You know , risk tolerance is something that you know we've talked about in the past , but it's something that also changes all the time . I mean your risk tolerance may change every five years .

And that's true when you're younger and you're still working . You're in your accumulation phase . We're socking away saving for retirement . You're likely more aggressive because you're still working . Maybe five years down the road , 10 years down the road , you get to be more conservative , especially as we near retirement , we stop working .

That'll continue to change , even into our retirement . So understanding how that risk tolerance changes over time is critical , very important . Even if you manage to build a nice nest egg all by yourself , you may need assistance when it comes to making it last . Right . We need to make it last for 20 , 30 years , maybe more , in retirement . How do we do that ?

You know it's not always as simple as just pulling from the accounts , right ? We need to be cognizant of certain things . What if the markets are down ? How do we strategize pulling from particular accounts to allow other ones to kind of grow and recover with the markets ?

It depends on what accounts we have at our disposal , but we want to look at all of our tools in our tool belt , so to speak . So you know , ask yourself this if you wouldn't plan your own wedding or your own funeral or own family vacation without some type of help . Do you think that you should fly solo when planning your whole financial future ?

I think it warrants the question . So , while do-it-yourself retirement plans can seem like they work and maybe in some small cases they can they rarely account for all aspects of your unique financial situation and they're often unequipped to handle the sudden changes . As we mentioned . All these variables that just seem to happen as life does .

You should rarely be used as a comprehensive solution in a retirement plan . So something to keep in mind Without a financial professional , strategizing your retirement can require you to manage a lot of moving pieces . The generic plan just simply can't account for . That's not an easy task to take on solo .

Again , this conversation only scratches the surface of how you can make the most out of your retirement surface , of how you can make the most out of your retirement . It really takes talking to a professional working together to plan and execute a full , comprehensive retirement strategy that meets your unique goals .

You've worked hard to build your wealth , but it's also crucial to enjoy it and share it the way that you want . You want to have a financial professional look at your particular situation and create a strategy that works for the rest of your retirement , your retirement wealth estate plans , you need to make sure it all meets your goals .

So , whether that's Bowman Wealth Group or another fiduciary firm , you just need to make sure that they curate a plan that works with your unique retirement .

So again , guys , if anything you heard today resonated with you , you have some comments , questions or you want to dive deeper into your particular situation , always feel welcome to shoot us an email at ask at Bowman wealthcom . I want to thank you all again for listening .

Whether you're coming from Apple podcast or Spotify or Google podcast or any other podcast platform , we do certainly appreciate you taking the time to join us and using your most valuable asset , your time . Greatly appreciate your reviews , your feedback . Please join us next time on your Financial Compass .

This has been your host , marcos Limas , with the Bowman Wealth Group . Take care , see you next time .

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