Blue Bell PWM


2019 Guide to Retirement

Alex LaRosa, CFP®

Alex LaRosa, CFP®

Investment Advisor Representative

March 22, 2019


Last Tuesday JP Morgan had its annual call that discusses the changing trends and topics in the retirement landscape. We wanted to put together a summary of the most important points brought up during the call along with some of our thoughts.

Market Outlook

JP Morgan’s Chief Economist Dr. David Kelly pointed out that July will mark our economy’s longest expansion since the Civil War. He believes that there is a possibility the expansion could continue for a few more years but points to slower growth moving forward. Dr. Kelly also reminded us that the late stages of an expansion brings with it increased volatility. We saw this in Q4 2018 when many of the major indices fell nearly 20% followed by a market rebound in the first quarter of this year. This increase in volatility highlights the importance of having some downside protection in your portfolio. Dr. Kelly also pointed to lower expected inflation moving forward which he attributed to consumer markets becoming more competitive helping keep prices lower.  This is a trend to keep an eye on in the coming years as inflation poses one of the biggest threats to your retirement assets.

*This is a chart that tracks the volatility index or VIX. As you can see in 2018 there were two separate spikes in the VIX above 40.

*This chart shows the moves in CPI or consumer price index which measures inflation.


Average life expectancy continues to increase and retirees to be prepared for the possibly of 30+ years in retirement. According to the chart below if you are 65-years old and married today you have a 74% chance to live to 85 and a 48% chance to live to 90. This increase in life expectancy means that you cannot afford to become overly conservative in retirement or you run the risk of losing purchasing power. We explain to all our clients that are entering retirement that they must maintain the mindset of a long-term investor.

Dollar Cost Ravaging

Withdrawing the same amount each year in retirement, grown by inflation, regardless of how your portfolio performs can result in an unsuccessful outcome.  The chart below illustrates the benefits of adjusting your withdrawal rate based off portfolio performance.  The adjusted withdrawal strategy (purple line) increases the duration of assets by over 5 years. It may be wise to adjust your withdrawal rate based on market conditions in order to extend the life of your assets.

Medicare Concerns

The rising cost of health care is becoming a major concern among retirees. Annual health care inflation going forward is expected to be 6.5%. A 65-year-old today can expect to pay $5,160 annually in 2019 and $18,180 annually in 2039. This rapid increase along with uncertainty about Medicare highlights the risk of your portfolio becoming too conservative during retirement. The current yields in bonds and cash cannot keep up with the rising inflation of health care.

There is no one way to plan for retirement, it is always a case by case basis. Every person will have different needs in retirement and each year will bring new problems. At BBPWM what we try to instill in our clients is the importance of a solid investment plan. This plan involves getting invested, staying invested, and diversifying your portfolio with assets that provide downside protection and growth potential.  We are here to help and will gladly sit down with you and discuss your retirement needs.

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2019 Guide to Retirement

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