Having recently crossed over the 50 year young mark in one piece, (and knock on wood, no mid-life crisis to deal with thus far) my focus as a financial planner has been and will continue to be focused on retirement planning.  I’ve quickly learned that it’s one thing to be in your 30’s and even 40’s contemplating as well as advising clients on how to transition into a successful retirement, yet it’s a whole other ball game to be in your 50’s and suddenly be reflecting on my own retirement plans.  Even the word retirement has taken on new meaning for me. And who among has hasn’t received the infamous AARP welcome package only to stare at it in disbelief thinking “what, are you kidding me?”

What really concerns me about my fellow baby boomers nearing retirement is the risk they’re taking with their money. The great stock market and real estate crash of 2008 will be a memory that is not soon forgotten. One of the major fallouts from the crash, at least from my vantage point, is the undue risk people are taking with their investments in order to play the catch up game.

Here’s an illustration of what I’m seeing. Say your investments have dropped in value by 30% from the crash and your home equity took a beating as well. You’re in your 50’s or 60’s and retirement is suddenly not that far away. You’re on the web, minding your own business and everywhere you look, you see banner ads from investment and mutual fund companies bragging about the high rates of returns their funds are earning. The asset allocation you designed that would glide you into a safe and predictable retirement, well suddenly that looks as boring as watching paint dry.

So like the driver that tires of driving in the slow lane, you switch over to the passing lane, feel the rush of adrenaline as your risk level goes through the roof. You’re determined to get back the losses you suffered during the recent crash. If you’re a married man making this change to your portfolio, there’s a good chance you’re going to keep this change private until you can see positive results from the change you made. You check around with your colleagues and friends and they seem to be all doing the same thing, and that is taking much higher risks with their investments. So you say to yourself, if he/she is doing it than I’m safe doing it as well.

Long Term Investor Turned Speculator

All of a sudden, without being aware of it, you went from being a long term investor to a short term speculator or put another way, gambler. Only in this case, you’re not just risking your money, your risking your dreams and the plans you made for retirement. In the back of your mind, you’re telling yourself, if something happens, I’ll just work a few extra years. The problem is, with an economy as dynamic as ours, working an extra few years at your job may not be your option.

Perhaps it’s because I’ve witnessed up front and personal the look on clients faces when I break the bad news to them that the future they planned is not going to happen. Or the ocean view retirement lifestyle they dreamed, hoped and planned for is now going to be a garden view at best.

Retirement planning need not be a guessing game. Taking risk with your money is serious business. There are no short cuts. Taking unnecessary risk is what causes stress and often leads to trouble down the road. So as you travel on the road and plan for a successful retirement, make sure you really understand what you’re doing if or when you switch from the slow lane to the passing lane. And most importantly of all, get a second opinion.

A friend of mine is a brilliant business attorney. Similar to many of my clients, paying professional fees is not my favorite thing to do. As a business owner and someone very familiar with business law, I used to think I could do many of my legal projects on my own. That was until I almost made a huge mistake on one project that would have cost me a lot of money. It’s then my attorney friend said something that I remember to this day: Only a fool has himself as a client. I now pay my legal fees pronto and with a sense and feeling of peace of mind that is worth every penny of the fee.

It may be time for you to bite the bullet and begin working with a fee-only financial planner for your retirement planning.