Oct 3, 201610:01 PMFinancial Perspectives
with Michael Dubis, CFP
Some initial thoughts on a possible low-return investment environment
(page 2 of 2)
Finally, if you’d like to read some more about this issue, here’s a good article: “The Titanic Risks of the Retirement System.”
If you don’t have time to read the full article, here’s the best highlight:
“With interest rates extremely low and the prices of stocks and bonds at historic highs, finding safe investments that can help guarantee a comfortable retirement has become increasingly difficult.
“Policy makers and investment managers should consider three fixes. First, be a lot more realistic about the returns that can be achieved within traditional risk tolerance parameters. Second, put in place policies to boost savings and income, so people — particularly the most vulnerable — will have more money available to put aside for retirement. Third, be transparent with retirees about the risks that are being taken on their behalf, also offering less risky options with explicitly lower expected returns.”
Planning in a social science is difficult as it is, especially in a scenario we haven’t seen in our professional lifetime. Ideally this bad case never happens and we’d just be better off. But if it does happen thinking about it today could pay a lot of dividends.
Control for what you can today and plan for things you hope don’t happen.
MICHAEL DUBIS is a fee-only CERTIFIED FINANCIAL PLANNER™ and president of Michael A. Dubis Financial Planning, LLC. He previously served as lecturer at the University of Wisconsin Business School James A. Graaskamp Center for Real Estate. Mike can be reached at firstname.lastname@example.org.
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