Think back to 2016.
Had you known the S&P 500 would start with the worst opening in United States history, experience the largest quarterly rebound in 83 years by the end of March, and then end the year up 10 percent, you wouldn't have gotten spooked, sold off valuable assets, and gone to cash.
Had you known that something called Brexit, predicted to set off a global economic meltdown, would only send US markets down for two trading days, you would have laughed off the dire warnings and stuck with your long-term game plan.
Had you known Donald Trump would shock the world by winning the Presidency, and the market not only didn't tumble as most expected, but rallied on its way to a record setting year, you would have invested differently.
But you didn't know these things would happen and you have no way of knowing what the future will bring. There have always been events that have surprised and impacted the financial markets, and there always will be. If you spend your life reacting to events, you'll develop a retirement problem, and a nasty ulcer.
Here are 7 smart retirement steps to take regardless of what the future throws at you:
1. Hire a financial advisor
You hire, and pay, professionals to cut your grass, style your hair, tailor your suits, and fix your car. Isn't hiring a professional who can help make sure you don't run out of money before you die at least as important?
2. Develop a comprehensive plan
There's a lot more to retiring well than just an investment plan. Be sure that financial advisor you just hired is considering your insurance needs, estate plan, education funding, and family dynamics.
3. Have an income plan
Running out of money is the problem you're trying to avoid. Make sure your investments are built to do that, so you don't have to liquidate assets, return to work, or both. An income plan can also insure you don't file for Social Security too soon or too late.
4. Know when and how you'll take income
Have a plan for tapping your tax-free buckets of money as well as tax-deferred. If virtually all of your income is taxable, not only will it eat into your income stream, but also subject your Social Security to a bigger tax bite.
5. Plan to reduce taxes
Disinherit Uncle Sam as much as possible by using income producing assets that carry little or no tax burden. Municipal bonds are federally tax exempt. Dividends and long-term capital gains are generally taxed at lower rates than regular income.
6. Regularly check your Risk Speed Limit
The amount of risk you could accept at 55 is not the same as at 65. Adjust your investments as necessary, or remove some portion of your money from the market entirely for protection. You don't want your investment risk traveling faster than you want to go.
7. Prepare for skyrocketing health and long term care costs
At least 70 percent of Americans 65 or older will need some type of long-term care before they die, and the average cost of a three-year stay in nursing or assisted living care is $150,000+. Healthcare costs inflate 5 to 7 percent each year. Your retirement budget, and the income plan that feeds it, must account for rising health care costs.
The future will always be uncertain. Having a dedicated, logical retirement plan can prevent you from making rash decisions, and help you sleep better at night.