Adapting Financial Plans to Market Changes
Bob Powell, CFP and Co-Founder of finStream.TV interviews Professor Michael Finke of the American College of Financial Services about reviewing your spending and savings to adapt to market changes.
Key Takeaways
- Conduct quarterly reviews of your retirement portfolio performance and recalculate your success probability; if market returns underperform expectations, reduce spending to maintain your target success rate (e.g., 94-95%)
- Separate fixed expenses (property taxes, healthcare) from flexible expenses and fund fixed costs with guaranteed income sources like Social Security and safe investments—never rely solely on stocks for non-negotiable expenses
- Use only variable investment assets (stocks) to fund discretionary expenses that can be adjusted up or down based on market performance, allowing spending flexibility to weather market downturns
- Understand that initial Monte Carlo success rates (like 95%) only apply on day one of retirement; your actual success probability changes daily as markets move, requiring ongoing plan adjustments rather than a set-it-and-forget-it approach
Adapting Financial Plans to Market Changes: Bob Powell, CFP and Co-Founder of finStream.TV interviews Professor Michael Finke of the American College of Financial Services about reviewing your spending and savings to adapt to market changes. To see more videos on FinStream TV featuring Professor Michael Finke, please click on this link: https://www.finstream.tv/featured/michael-finke/