Beyond Beating the Market: Goal-Based Investing to Fund the Retirement You Want

With the stock market always setting new highs and lows, you may be wondering if you should continue investing or sit on the sidelines until things settle down. But what’s the right choice for you and your financial goals? This decision requires some thoughtful analysis of risk, timelines, and ultimately, what you hope to achieve with your hard-earned money.

But here’s the good news.

With the right mindset and a smart, goals-based investing strategy, you can tune out the market noise and gain clarity on securing the retirement you want – regardless of whichever way the winds are blowing today. By focusing on a few key principles, your chances of investment success long-term rise dramatically despite any short-term storms.

Let’s dive deeper into the key considerations around investing in today’s up-and-down markets.

It’s Not About “Beating” Anything

Many of us share a similar mindset early on in our investing journey – we put money into the market so we can earn maximum returns and accumulate wealth rapidly. Often, we assume if our portfolio just outperforms the latest index or benchmark, we’ve “won” at investing.

But as retirement nears, outperforming the market becomes less important. Why? Because your priorities shift from aggressively gaining assets to protecting what you’ve accumulated and generating steady retirement income.

You start to realize true investment success is not how you compare to a particular index. What matters is reaching your personal finish line – amassing enough savings to comfortably maintain your chosen lifestyle post-work.

So, well before you retire, clearly identify your specific financial objectives:

• Exactly how much annual income is required in retirement?
• What is your target age for fully retiring or downshifting from work?
• How much, if any, of your wealth will you pass on to heirs?

With crystal clarity around your unique goals, you can then invest intentionally to reach those endpoints. Chasing market returns is out, and goal-focused investing is in.

Gain, Protect, Spend – Tailoring Investment Strategies to Life’s Phases

We should think of our fiscal lives in three distinct phases. Each calls for vastly different investment approaches:

Gain Phase (Working Years):

These are our asset accumulation years, where we aggressively invest surplus income to build our life savings. The priority is wealth building, so carrying more risk for higher return vehicles still makes good sense. Just as importantly, we have many years of time on our side for the markets to work through their inveitable ups and downs.

Protect Phase (Pre-Retirement):

In the 5-10 years before we retire, priorities understandably shift toward capital preservation and risk management. This is the period for rebalancing into more diversified assets that act as shock absorbers in volatile markets.

Spend Phase (Retirement):

Once retired, the name of the game is spending money and generating income from our nest egg in a disciplined, sustainable way. The investment goal transforms into creating lasting income streams that support our lifestyle without depleting the principal.

Quick Tip:

Put simply, the right investment strategies in our 30s differ vastly from what works in our 60s. We must adjust our financial game plans accordingly as we transition from Gain to Protect to Spend modes if we want to finish strong.

The Biggest Risk Most Retirees Face

Here’s an important retirement reality check – with ongoing medical advances, the average retirement now spans 25-30 years! That means most people need their investments to fund living expenses for a quarter to a third of their lives.

While no investors want to see market declines erode their savings, the biggest risk facing most retirees is outliving savings, or so-called “longevity risk.” Withdrawing too heavily in the early retirement years can prematurely deplete accounts. In addition, it’s harder on the early retirement years to absorb steep losses in the stock market, because you need your accumulated savings to last many more yeas.  This can leave retirees financially exposed should they live longer than planned, especially if portfolio growth lags.

That’s why integrating an intelligent withdrawal strategy is so vital in retirement. Proactively managing longevity risk gives your investments more time to capture market growth.

Why Goal-Based Investing Matters Now More Than Ever

Study after study shows that over long periods, diversified portfolios of stocks, bonds, and alternative asset classes successfully achieve two key goals:

• Fight the eroding effects of inflation
• Grow wealth substantially faster than ultra-conservative assets

History makes clear that time in the market beats timing the market. Yet, stock market volatility poses real income sustainability challenges when distributions rely heavily on market performance. This is especially true as the investing time horizons shrink from multi-decade wealth building to decade-plus retirement income generation.

Managing this conundrum helps explain why goal-based investing strategies take on heightened importance as you exit the Gain phase and enter the Protect and Spend phases. Rather than chasing arbitrary benchmarks that may not link to your actual needs, goal-based plans keep your sights fixed firmly on accomplishing the explicit returns required to maintain your chosen lifestyle.

Whether conservative, moderate, or aggressive, these savings and distribution objectives are your North Star guiding intelligent adjustments to asset allocations along the way. Your probabilities of first achieving and then sustaining income rise dramatically when you remain grounded in personalized goals rather than overall markets.

Transforming Retirement Anxiety into Confidence

For many, the idea of footing their own living expenses for 25 years or more with investments they accumulated over 30 years makes them anxious. And headline-grabbing market drops often compound these worries and questions.

Yet by focusing less on short-term volatility, avoiding unrealistic performance benchmarks, and framing long-range priorities in a goals-oriented context, much stress and second-guessing subsides. Investing transforms from an uncertain guessing game into a stepwise path built just for you.

So, if recent market turbulence has you feeling less confident in your retirement investing strategy, reframing objectives around your specific finish lines can restore conviction, purpose, and clarity. The historical performance says that with balanced goals, patience, and adaptability, retirement security lies well within reach in today’s environment too.

Work with Us

If the ups and downs of today’s market have you questioning your retirement investment strategy, we at Brogan Financial are here for you. We specialize in building customized, goal-driven portfolios aimed at funding our clients’ ideal retirements in virtually any market environment.

Rather than chasing stock market returns, we craft thoughtful plans aligned with your specific income needs, risk appetite, and timeline. Our personalized approach helps tune out short-term volatility worries by grounding your finances in what matters most – your retirement vision.

We would be happy to offer you a free, no-obligation consultation to discuss your retirement goals and how our purposeful investment strategies can help you achieve them. You can also learn more about our client-centered philosophy by tuning into our podcast – “More Living with Jim Brogan“.