DIY Retirement Plans: Are They Worth The Risk?

With the abundance of online advice and self-directed retirement accounts gaining popularity, many are left wondering if going solo is the right move for them. In times of economic stability, it's easy to overlook potential risks and losses, especially when every investment seems like a winner. However, as markets fluctuate and retirement regulations evolve, the DIY approach could come with more risks than expected.

Here’s some of what we discuss in this episode:

• Can you keep your emotions out of the equation? 
• Do you have the time to put in the research needed to reach you and your family’s goals?
• How are you protecting yourself from market downturns?
• As you approach retirement, it’s going to get more complicated
• The benefits of working with a financial professional + creating a plan that aligns with your goals

WAYS TO CONNECT:

Book a 15-minute discovery call with the team here: https://calendly.com/rachel-bwg

Visit https://bulmanwealth.com/marcos-lemus to learn more about Marcos Lemus and the other members of the team.

If you have any questions about what we discussed or anything else in your financial plan, email us at [e-mail]. You can also reach the team by phone at [phone].

Episode Transcript

Speaker 1 (00:01):
We've all come across advice online for
do-it-yourself retirement plans.
Do they work for everyone?
What benefits come from workingwith a financial professional
as opposed to doing it solo?
In today's episode, we'll coverall of this and more.

Speaker 2 (00:22):
Welcome.
You are listening to the BowmanWealth Group's Financial
Compass Podcast, a showdedicated to helping you
successfully navigate to andthrough your retirement.
Our Financial Compass processgoes beyond traditional holistic
financial planning.
We care as much about you andyour lifestyle as we do about
your plan.
Your hosts are Bowman WealthGroup financial advisors who,

(00:45):
for more than two decades, haveprovided financial leadership
for those they serve.

Speaker 1 (00:50):
Hello, this is Marcos Lemus.
I'm a financial advisor atBowman Wealth Group in Roseville
, california and you'relistening to your Financial
Compass podcast.
I want to thank our listenersfirst and foremost.
If it's your first timelistening, I want to thank you
for, first and foremost.
If it's your first timelistening, I want to thank you
for tuning in and sharing yourtime with us.
If you've listened to ourpodcast in the past, welcome

(01:13):
back.
Certainly appreciate all thesupport.
So again, if anything sticksout or resonates with you, if
you have comments, questions orjust have some feedback, please
always feel welcome to reach outto us at our email address.
It's the best way to get incontact with us.
That email is ask atbullmanwealthcom, that's A-S-K.

(01:36):
At bullman B-U-L-M-A-N.
Wealthcom.
So every episode with thesepodcasts we like to focus on
specific topics or just specificquestions in the financial
realm that people often share,and today's unique topic of

(01:57):
conversation is do-it-yourselfretirement plans.
Do-it-yourself planning Shouldyou do it yourself?
All of these questions arethings we're going to cover
today.
So if you've scoured theinternet maybe seen on YouTube
or Reddit or any other internetsource you're often going to
find some people that have somepretty good suggestions in terms

(02:19):
of the core foundation for aretirement plan, but does it
work?
Does it fit for everybody?
Should we even look at orconsider some of these cookie
cutter solutions?
Recently, many people have beenopting for these self-directed
retirement accounts.
During the period of economicstability, when things are going
well, winning investments areeverywhere and it seemed like

(02:42):
every investment was a winner.
And it was easy, I think, tooverlook the need for protection
against possible losses,because everything looks so good
when things are going welleconomy's great, stock markets
booming, you know, felt likenobody could lose.
You know, there's periods oftimes like that, you know.
But many people probablybelieve that their retirement

(03:04):
funds were, were, secure in thebeginning of 2022.
Right, just even looking back acouple years, year and a half.
However, as the market, theeconomy, retirement regulations
changed, do it yourself,retirement plans could come with
more risks than expected.
So let's talk about some of thepitfalls of planning for your

(03:25):
retirement solo, by yourself,and why professional guidance
may be key in preserving yourwealth and your retirement
trajectory.
So you've been working allthese, all these working years
and accumulating retirementfunds, retirement assets.
The biggest thing is preservingthat wealth and making sure
that we don't run out of moneywhen we stop working.

(03:48):
So some questions to askourselves when putting together
a retirement plan without anyhelp, if we wanted to go that
DIY, that do it yourself route,what are some things to kind of
keep in mind?
Well, the first thing, can youkeep your emotions out of it?
You know this is your money,it's your future, your legacy.

(04:12):
People make the biggestfinancial mistakes when they
panic and they sell low in a badmarket when the market's
already down, or maybe they getgreedy and buy at the high of a
really good market.
Both can be detrimental.
So can you keep your emotionsout of the equation?
Because you know, we always sayit's.
It comes down to math overemotions sometimes, and when
you're too close to the thingthat you're analyzing and

(04:34):
working with, sometimes it canbe problematic.
Okay, who's going to stop youor give you a dirty look if you
decide to make an impulsivedecision with your retirement
accounts, with your retirementaccounts, with your retirement
savings?
If you're on your own, youwon't have somebody to talk
through decisions with, or youmay not even know that you're
making an impulsive decision ifyou're doing it solo, okay,

(04:57):
something else to consider Doyou have the time?
This isn't just about talking toa family member brother-in-law,
cousin, aunt and uncle aboutmaking some stock picks.
To make good choices you needto do usually a lot of research
and make sure you filter eachdecision properly and making
sure it fits your overallfinancial goals also factor in.

(05:19):
You know the spousal situation.
You know how does that playinto into your plan, right, if
we're getting generic advicefrom the internet or some other
source, you know a lot of timessometimes they're talking about
just an individual.
But you know it's important totake into account a whole
household financial situation,including spouse's income,

(05:41):
spouse's social security,spouse's retirement assets.
How does that all come togetherin the larger puzzle?
If you enjoy doing your ownfinancial legwork, why not
consider maybe keeping controlof a smaller portion of your
portfolio and letting theadvisor or an advisor take care

(06:02):
of the rest of it?
So that way?
You know, some people are likethis.
They really do enjoy thenuances of finance and some of
the retirement planning.
Maybe they like tracking themarkets and they like to retain
some of the responsibility andbeing invested in their own
investing for lack of a betterterm mental stimulation this way

(06:25):
, if you just hang on to asmaller portion of your overall
portfolio and any mistakes thatyou maybe make won't have such a
large impact on your overallretirement.
You know most professionals,probably including us, wouldn't
mind discussing your do ityourself piece if it's a small
portion.
You know bouncing ideas backand forth, as long as the main

(06:48):
plan right, the bulk of yourplan is still being managed
properly to account for all ofthe things, account for the risk
, so on and so forth.
One thing to keep in mind isit's it's possible to make
mistakes, right, it happens,everybody does.
It's it's especially if you'redoing it on your own.
It's easy to invest in the bullmarkets.

(07:09):
If you've never heard of thatterm.
The bull market is is just whenthe stock market is doing well
and appreciating, it's growing.
But bear markets, which is theopposite of a bull market, you
know they're, they're bound tocome around.
In the long span of somebody'sretirement You're likely to
experience both and it and it'shard to plan for a bear market.

(07:31):
They don't announce whenthey're coming around.
We can see maybe certainmarkers, indicators, but over
the course of somebody'sretirement you're bound to
experience both.
It's important to work with aprofessional that understands
the cycles of these things andcan kind of mitigate losses,

(07:51):
because both will happen.
Another question to askyourself how are you protecting
yourself from the downside, fromdownside risk?
Do you even know about some ofthe products that are out there,
or tools, financial vehiclesthat are out there that may help
protect your stream of income?
A good financial advisorattends classes, stays up to

(08:14):
date on different financialstrategies.
Tax law changes things like thatin the form of continued
education or really just stayingconnected to what's going on in
terms of law changes, if any.
Another thing to keep in mindit's going to get more
complicated.
Everything does.
The further you get intoretirement, you're pulling on

(08:38):
retirement assets.
Those are getting drawn down.
When you hit the lovely age ofwell, it's changing, but it's 73
now for RMDs.
Any qualified retirementaccounts are subject to RMDs
when you hit that age.
That can be something that maybe confusing for people to plan

(08:58):
for, especially if you have morethan one qualified account For
a portion of somebody'sretirement timeline.
Maybe it's more straightforward, but certainly things are bound
to get more complicated at acertain point.
There's so many variables thata lot of folks don't account for
.
It's hard to account for thosethings in a cookie cutter.

(09:19):
You know.
Do it yourself recommended plan.
You know saving money.
Think about when you were a kid.
Saving money was pretty easy,right?
You just dropped your quartersinto a piggy bank or you put
cash away in an envelope.
You might have been really goodat that accumulation phase.
Maybe you're saving for a bikeor something as a kid, or new

(09:41):
clothes, new outfit.
But the accumulation phase ofyour financial life is a little
bit different.
The distribution and the costpreservation phase can be a
scary place to negotiate andnavigate on your own.
So another reason to kind oftap into working with a

(10:01):
financial professional Sometimesit's just knowing what order to
start drawing on yourretirement accounts.
You know there's certainly asequence, an efficient sequence
of which accounts to draw from,in which order so that it's most
well, I guess just that mostefficient, most effective.
Obviously, keeping taxes inmind, there's certainly an order

(10:24):
that we should pull from interms of the different account
types you may have.
Understanding your risktolerance as you get older
versus when you were young andmaybe a little more fearless
with your money is important.
You know, risk tolerance issomething that you know we've
talked about in the past, butit's something that also changes
all the time.

(10:45):
I mean your risk tolerance maychange every five years.
And that's true when you'reyounger and you're still working
.
You're in your accumulationphase.
We're socking away saving forretirement.
You're likely more aggressivebecause you're still working.
Maybe five years down the road,10 years down the road, you get
to be more conservative,especially as we near retirement

(11:06):
, we stop working.
That'll continue to change,even into our retirement.
So understanding how that risktolerance changes over time is
critical, very important.
Even if you manage to build anice nest egg all by yourself,
you may need assistance when itcomes to making it last.
Right.
We need to make it last for 20,30 years, maybe more, in

(11:29):
retirement.
How do we do that?
You know it's not always assimple as just pulling from the
accounts, right?
We need to be cognizant ofcertain things.
What if the markets are down?
How do we strategize pullingfrom particular accounts to
allow other ones to kind of growand recover with the markets?
It depends on what accounts wehave at our disposal, but we

(11:49):
want to look at all of our toolsin our tool belt, so to speak.
So you know, ask yourself thisif you wouldn't plan your own
wedding or your own funeral orown family vacation without some
type of help.
Do you think that you should flysolo when planning your whole
financial future?
I think it warrants thequestion.
So, while do-it-yourselfretirement plans can seem like

(12:13):
they work and maybe in somesmall cases they can they rarely
account for all aspects of yourunique financial situation and
they're often unequipped tohandle the sudden changes.
As we mentioned.
All these variables that justseem to happen as life does.
You should rarely be used as acomprehensive solution in a

(12:36):
retirement plan.
So something to keep in mindWithout a financial professional
, strategizing your retirementcan require you to manage a lot
of moving pieces.
The generic plan just simplycan't account for.
That's not an easy task to takeon solo.
Again, this conversation onlyscratches the surface of how you

(12:58):
can make the most out of yourretirement surface, of how you
can make the most out of yourretirement.
It really takes talking to aprofessional working together to
plan and execute a full,comprehensive retirement
strategy that meets your uniquegoals.
You've worked hard to buildyour wealth, but it's also
crucial to enjoy it and share itthe way that you want.

(13:19):
You want to have a financialprofessional look at your
particular situation and createa strategy that works for the
rest of your retirement, yourretirement wealth estate plans,
you need to make sure it allmeets your goals.
So, whether that's BowmanWealth Group or another
fiduciary firm, you just need tomake sure that they curate a

(13:40):
plan that works with your uniqueretirement.
So again, guys, if anything youheard today resonated with you,
you have some comments,questions or you want to dive
deeper into your particularsituation, always feel welcome
to shoot us an email at ask atBowman wealthcom.

(14:03):
I want to thank you all againfor listening.
Whether you're coming fromApple podcast or Spotify or
Google podcast or any otherpodcast platform, we do
certainly appreciate you takingthe time to join us and using
your most valuable asset, yourtime.
Greatly appreciate your reviews, your feedback.

(14:23):
Please join us next time onyour Financial Compass.
This has been your host, marcosLimas, with the Bowman Wealth
Group.
Take care, see you next time.

Speaker 2 (14:41):
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(15:02):
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(15:23):
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