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How to keep up with retirement in the wake of job changes

Eric Siss, CFP at Wealthstream Advisors, talks about planning, saving, and re-thinking risk as workers change jobs and even careers during The Great Resignation.

Video Transcript

- All right, not the week you want to be looking at your 401(k). But over time, things have been growing and they've been growing to the right side. They've been going up. Let's talk about retirement, as part of our Retirement Series brought to you by Fidelity Investments. Eric Siss is a CFP at Wealthstream Advisors, helping us understand as we watch lots of our colleagues and even friends, in some cases, relatives, take part in the great resignation.

The big question is, have they prepared for retirement? And it's good to have you here. The reason I set it up that way is I got a very close friend, a buddy of mine, back in Cleveland, is going to be part of the resignation. And personally, the guy is way too young, I think, to be calling it quits. But apparently, has it lined up with the financial advisor to do the off ramp. What advice do you have for people who might be considering the off ramp before the usual age?

ERIC SISS: Yeah, it's a great question, Adam. And also, great to be here. But one of the big things that I talk about with my clients is making sure that they're saving not only in their qualified retirement accounts, but in savings accounts and taxable brokerage accounts because that's what's going to allow them to have the most flexibility should they want to pull the ripcord early.

- My buddy, by the way, just so you know, has been working since about 17 years old. So I totally get why he's pulling the ripcord. When you're setting up the off ramp, what are the key questions, especially now. Because for instance, if you're about to exit this market, we're down about 4% if your 401(k) is tied to an index fund, the S&P 500, certainly not cause for panic. But you're going to have to go through the next non-working years of your life with the ups and downs of the market. Are there ways to prepare for that?

ERIC SISS: Yeah, of course. One of the biggest things that we always preach with our clients is making sure that they have their cash reserves set and thinking about what that burn rate is going to be. Because a lot of people aren't thinking about stopping working and then doing nothing for the next 50 years. A lot of them want to do things like volunteer at nonprofits, or they'll have some sort of income. But it's all about making sure that we're matching what those income needs are, with the resources that are available, and then also making sure that their portfolio is set up in a way that the risk and return profile matches what they need.

- You also advise your clients to save outside of the traditional retirement accounts. When you have those discussions with them, what are the factors that help determine how much should be sitting, not earning interest at Chase or Citi or to the side?

ERIC SISS: Yeah, so actually, I'd like to go back to an example much like you brought up. I had a good friend, who's ready to start his own business. And one of the frank conversations that we had in the year leading up to that point, I told him, you know, maybe it doesn't make sense to be putting money into a 401(k) right now. That money is going to be locked up and unable to be touched until your late 50's. So it's not very financial planner traditional advice that you'd think you'd get, but you really have to make sure that you know what your burn rate is going to be and make sure that you have that amount of money set aside, so that you can accomplish your goals.

- And for people who are paying attention to this discussion, who are thinking about an off ramp, some people run-- I think it's called the Monte Carlo scenarios. It's every possibility under the sun. How reliable are those?

ERIC SISS: Yeah. So as with anything, a Monte Carlo analysis is only as good as the assumptions that you put into it. So you really have to get under the hood and talk with your financial advisor, and make sure you understand what they're showing you. That's my best advice.

- All right, a new client who walks through the door today, and I'm just going to throw out an age here. Say, that individuals 35 years old. What's the first thing they should be doing? I can't imagine they're going to be part of the great resignation unless they're working for themselves. But if they're working for an employer, what advice do you have for them?

ERIC SISS: Yeah. I always like to think of things in tears. You got to be thinking about what are your short term goals? If you're 35, you might have kids, you might want to buy a house. So again, putting money entirely into your 401(k), while it's great for the long term, it's not going to set you up for success in the short term. So the first conversation I always have with my clients is more around goals and less around the actual investments themselves. We talk about the investments and the strategy after.

- OK, and now, I have to confess and tell on myself. I'm envious as hell of my buddy, who's during the off ramp. He planned very well. Some of us-- what is it in "Monty Python?" He chose right-- no, no, it's "Indiana Jones." He chose unwisely. That's me, not my buddy. Thank you so much for being here, Eric Siss, CFP at Wealthstream Advisors. All the best to you.