Do people care more about beating the market and chasing the biggest returns they can get? Or, do people really just want to keep the same standard of living, enjoy time with their family & friends and live the life they’ve saved and planned to live?

Every once in a while, I’ll have a conversation with someone who is confused or frustrated about the fact that “the market” (usually defined by the S&P 500 or Dow Jones Industrial Average) might be up 10%, but maybe their personal account is only up 8%. The first question I ask is, “Are you invested 100% in the S&P 500?”

Can you guess what their answer usually is?

The two most commons answers I’ll receive are “Well, I’m not sure” or, if they do know, the answer is almost always, “No.”  Typically, investors don’t put all of their eggs in one basket (i.e. they don’t invest all their retirement savings into one stock market index), but if they did, using that index as their benchmark would certainly make a lot of sense.

Now, I’ve never had someone walk into my office and say, “I don’t care about my spouse, my kids, setting them up for a secure financial future. When I retire, or if I ever run out of money, all I care about is beating the S&P 500!”

No one says this.  But some investors are guilty of “chasing returns.” In other words, they have a strong desire to “beat the market” on a short-term basis and, as a result, they have an extremely difficult time seeing the bigger picture.

A potential root cause of these symptoms could be a direct result of “FOMO” (Fear Of Missing Out).  When we hear something on the radio, TV, or see that the market is hitting all-time highs (again), it’s human nature to want those big gains as well (or more, for that matter).  However, it could also be justifiably considered somewhat unrealistic – or even greedy – but I digress.

So, if the S&P 500 or the Dow Jones isn’t the benchmark that investors should be focusing on, then what is?

Everyone’s financial situation is different. Some people have saved really well for themselves. Maybe they have a few different IRAs and a 401k – and maybe they’re fortunate enough to have a pension as well. They may have some rental properties, which provide another avenue for cash flow, and as a result of all this wealth accumulation, they don’t need to take a ton of risk in order to achieve the retirement life they wish for.

On the other hand, I’ve talked to investors who haven’t done quite as well at saving for their retirement, or perhaps they’ve encountered some unfortunate circumstances in their life that’s kept them from having the size of nest egg they’ll need in order to retire when they want to (and never run out of money).  For these people, they may need to take more risk because they require a higher rate in order to achieve their desired life.

In either situation, that particular individual or family will have their own personal rate of return NEED. This is what we would refer to as their Family Index (as opposed to the S&P 500 Index or the Dow Index) and should be the REAL benchmark one should focus on the most.  For me, it would be the “Leedom Index.”

How would someone find their unique Family Index?

The best way is to go through a comprehensive retirement planning process, much like the process we take our clients through.  We take your income, expenses, social security, pensions, 401ks, 403bs, IRAs and all of the other pieces to your financial puzzle – including all of your specific retirement goals – and we adjust them for taxes and inflation.  Then, we use a simulation which takes 1,000 various snap shots of real market history and throws these scenarios at your retirement plan to determine a specific probability of success.

Once the plan is complete, we can then determine whether or not you’re on track to quitting work when you want. Perhaps more importantly, we also discover the rate of return needed to ensure you can travel, pay for your daughter’s wedding, buy that dream vacation home you’ve always wanted and hit every other item on your bucket list without ever running out of money in retirement.

I challenge each of you to ask yourself this question: If I told you that you could retire at your target retirement age (say 60 years of age), help your kids through college, travel 2-3 times a year, live a stress-free retirement where “every day is Saturday,” all while ensuring your money lives longer than you do (and let’s say all you need to earn is 5% per year, on average) would that be ok with you?  Think about it for a few seconds.  What’s the point of chasing something (higher returns or “beating the market”) when you can already have your own definition of “success” in retirement, but with less risk?

It’s crucial to your future financial success to block out the noise that pours out daily from the radio, TV and even our friends.  At the end of the day, how important is making more money than your friends or the market?  Is trying to “shoot the lights out” with an aggressive portfolio worth it, considering the incremental stress that comes along with such a high risk level?

I’d argue that every individual, couple, family and company have their own unique retirement fingerprint.  It’s for this reason that I’d suggest that using the concept of a “Family Index” will result in more time for traveling, relaxing and spending quality time with your friends and loved ones without the need to take unnecessary risk when it comes to investing your hard-earned savings.

If you’re interested in getting a 2nd opinion on your retirement plan, please call or email us so that we can confidentially discuss you and/or your company’s situation further.

If you have any questions about retirement or estate planning, the market, or our patented Defense First® portfolio management strategy, please reach out.  You don’t have to be a client to ask a question!

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Warmest Regards,


The opinions mentioned in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial adviser and strongly consider interviewing a fee-only financial advisory firm, prior to investing. Past performance is not guarantee of future results. Economic forecasts set forth may not develop as predicted. The views and opinions expressed in this commentary are those of Adam D. Koos, CFP® and do not represent the views of TD Ameritrade Institutional and its affiliates. Investing involves risk including loss of principal.