Here are Todd’s latest fun picks to take your financial skills to the next level...

While the bubble-in-everything rages on, let's look at how to manage the inevitable downside risk coming your way.

As you probably remember, I explained in late January how the stock, bond, and cryptocurrency markets had entered bubble territory. Since then, bonds have taken an initial downside hit, but stocks and crypto party on.

Any gains from the point of bubble status are temporary. Nobody can time the exact top, but the math of valuation is inviolable. The more the bubble inflates, the further and faster it will fall.

Today's resources focus on what a bubble top means to retirement planning...

My book "How Much Money Do I Need To Retire?" provided detailed research connecting excess market valuations to unusual risk during the accumulation phase of retirement planning. The book has been a perennial top-seller because it turns conventional retirement planning on its head. The book shows how conventional planning and Monte Carlo analysis can dangerously mislead your planning when valuations hit extremes like today.

(Tragic side note - See the 1-star review on this book at the top of the reviews section and the date it was written - yep, right when I was teaching you about the market bubble. This aggressive and naive comment is typical of a bubble top where poorly informed people kill the messenger rather than accept financial truth. Negative emotional feedback gets applied to my instruction at every bubble top. You can hear the frustration in his writing as he clings to fantasy against the reality shared in the book. Unfortunately, there's no way for me to debate the commenter, but you can let Amazon know his lies misrepresent the book by checking the "abuse" box below the review if you think it's appropriate.)

In the future, I will write a book that similarly explains how to manage risk during the distribution phase after you retire. Unfortunately, you need that knowledge now, and my next book is nowhere close to being finished. That's why I'm sharing today's resources...

Let's start by debunking the big post-retirement problem according to conventional planning - sequence of returns risk resulting in portfolio depletion. This risk is relevant right now because it always follows excessive valuation (like current) and can result in life-changing portfolio losses.

Fortunately, there are two easy solutions that demote sequence of returns risk from the lofty pedestal that conventional financial planning places it on:

1. First off, you can prevent the problem before it occurs using this portfolio management software solution I recommend.
2. Second, if you fail to manage the risk so that it bites you, then most retirees simply reduce spending to balance the decline in assets.

So yes, sequence of returns risk matters. it's a legitimate problem that must get managed. But it doesn't deserve marquee status as the big bugaboo because it's solvable.

Multiple research studies prove that real-world retirees respond to sequence of returns risk after it strikes to ward off disaster. Furthermore, other research shows that most retirement failures come from an entirely different source of risk than commonly understood.

Strange that conventional wisdom never bothered to look at the data, right?

So let's see what the research and data shows are the primary risks of financial failure in retirement...
 

Odds Are Retirees Don't Care About The Odds - PDF white paper

This paper delivers solid insights if you can slog through the academic writing style. If not, the 30 second overview involves two key ideas. The first is that Monte Carlo dangerously misrepresents retirement reality (exactly what my book referenced above points out). His arguments lead to the second point, which is how human behavior invalidates most retirement modelling while substantially reducing risk of failure. In other words, conventional retirement planning overstates risk because of unrealistic modeling assumptions. Again, I'm sorry the writing style sucks. But you'll get good ideas not found anywhere else (except my Expectancy Wealth Planning course).

Why Retirees Go Broke - The Retirement Cafe

This article is a reader-friendly overview of 2010 research by Dr. Deborah Thorne titled "Reasons Elder Americans File Consumer Bankruptcy." The research shows financial ruin in retirement is usually the result of a cascade effect combining multiple interrelated life crises into a tragic outcome. In other words, the problem isn't sequence of returns risk causing portfolio depletion as commonly taught. Instead, there's usually a negative feedback loop that got started from from an initial income or expense shock. Hat tip to my friend J.D. Roth for bringing this article to my attention.

Which Fictional Character are You?

This personality quiz had our whole family cracking up. It was created by more than 500 volunteers rating the personality characteristics of pop-culture icons. You can do a short, or long, version allowing you to get in and out with quick results if you're in a rush.

Unconventional Retirement Planning - Proven Results

Take the next step beyond conventional retirement planning. Advance your knowledge so you can accelerate your results. You get a comprehensive wealth building blueprint personalized to your unique life situation - your skills, interests, values, financial resources. The only thing standing between you and the financial security you desire is taking action. This course will show you how...

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