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Take emotions out of retirement planning

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It’s hard to prevent money matters from feeling personal — after all you’ve worked hard to save for retirement. But removing emotions from financial decisions can help set you up for future success.

“If you are watching the markets every day, it can put you on a roller coaster ride of ups and downs,” says Bryan Kuderna, a certified financial planner with the Kuderna Financial Team in Shrewsbury, New Jersey, and the author of Millennial Millionaire in an interview conducted by Athene. “And when that happens, you tend to make bad decisions with your money.”

The last thing you want to do is act irrationally and jeopardize the future you’ve planned for. That’s why Kuderna and other financial experts will tell you the same thing: Worrying about current events, policy changes and other moves that cause markets to fluctuate does more harm than good.

The best defense against your emotions is to stick with a solid long-term plan. Follow these easy strategies to help your plans stay on track for the future.

Work with a qualified financial professional

Enlisting the help of a financial professional gives you a teammate who’s not only looking out for your money, but can also take emotions out of the equation. While you should regularly check in, there’s comfort in knowing that they are helping ensure that your retirement plan aligns with your goals and objectives, even as those goals and objectives change.

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Frequently checking your bank and credit card accounts online is a smart move, but the same advice does not hold true for retirement accounts. “You shouldn’t sign in every day,” says Kuderna. "Instead, look at your statements once a quarter to see how your money is moving over time."

Don’t put all your eggs in one basket

“One of the biggest flaws I see in retirement planning is when people commingle all their assets in one account,” says Kuderna. “When you do that, it’s easy to get emotional. If that account suddenly goes way up, you get excited, but if it goes way low, you panic.” The better play: Distribute your assets into three distinct portfolio categories.

The first is for the period immediately after you retire, a five-year stint Kuderna dubs the “go-go years.” “That’s when you’re most active and using a lot of your assets because every day is like a Saturday,” he says. “So we’ll be very conservative with that money, since it’s essentially working capital for five years. That account is much more stable, slow and steady.”

The next basket is for the “slow-go years,” when you aren’t as active and therefore don’t spend as much money. “This is the cheapest phase of retirement,” Kuderna says, “so it’s where we’ll have a flex basket that’s moderately invested. If the markets are going up and down, you don’t need to worry because you’re not going to tap this account for at least 5 to 10 years.”

Then there are the “no-go years,” when you’re deep into retirement and your expenses drop but medical costs may rise. “We take a very long-term approach to this investment,” says Kuderna.

“When you have these different pockets of money you can tap into,” he concludes, “it allows you to take advantage of any dips or rallies in the market on your time and your terms rather than be reactionary.” That’s the power of having a plan.

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