Things you can (and can’t) control in your pension plan

By Steve Cruice, CPA

You read the headlines everyday like me, the headlines about what the markets might do. Will they get up? Will they crash? Will we have another decade lost? Headlines about inflation, tax changes, US debt, global supply chain shortages, rising energy prices, and stories about the latest political battle of the day also bombard us daily. As a result, we tend to focus on (and worry about) many things over which we have no control.

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Worrying a lot, medical professionals say, is not good for us. Fatigue, muscle pain, irritability, shortness of breath, and muscle tension are some of the side effects of worrying. And, it’s not my idea of ​​a big retirement.

One of my favorite pieces of wisdom related to worrying about the uncontrollable comes from Matthew 6:27; “Which of you worrying can add a cubit to your height?” (New King James version). This piece of wisdom basically says there’s no point in worrying about how to get taller because you can’t control it!

In his book, Why smart people do stupid things with money, Bert Whitehead spends time talking about endogenous risk factors, or risk factors over which we have some control, versus exogenous factors, things we cannot control. He urges his readers to focus on what they can control rather than what most people do, things they cannot control.

Here are a few examples that he makes his readers think about. Which of the following do you think will have the most impact on your financial future?

  • Interest rate movements or how much tax you pay
  • Inflation or your buying habits
  • The political climate or your personal relationships
  • The rate of return on your investments or how much you are saving for retirement
  • Globalization or the house you buy and the neighborhood in which you buy

The purpose of this exercise is to highlight that there are many actions we can take in areas over which we have some control that will have a significant impact on the success of our financial future.

In my next few articles, I’ll dig deeper into the things you can (and can’t) control in several areas of your retirement plan.

Recently, I’ve noticed that some of my clients and others are starting to express concerns about three main financial areas.

The first is inflation. In October 2021, the annual inflation rate in the United States rose to 6.2%, the highest annual rate in more than four decades. The Federal Reserve’s balance sheet has grown from $ 4 trillion to over $ 8 trillion since 2020. For retirees or those nearing retirement with more fixed incomes, rising prices and high inflation represent a challenge, especially in a low interest rate environment. Is this higher inflation short-term? Will he climb higher? Is higher inflation a long-term prospect? The point is, no one knows. For every expert predicting the fleeting nature of this recent rise in inflation, there is one who believes higher inflation will persist for some time. What will be the impact of inflation on interest rates? Housing costs? The stock market? You can’t control inflation and you can’t predict which direction prices are going to go, so don’t feel the pressure to control or know these things. In my next post, I’m going to discuss the things that you are in control of that will prepare you financially for inflation, higher deflation, and everything in between.

The second concern I hear is “the markets look pretty high – I’m afraid the market is going to crash. The markets go up and the markets go down. If your retirement plan is based on ever-rising markets, you’re going to be disappointed. But it’s a valid concern based on market valuations. However, you or I have no control over if and when the markets go down. And the connoisseurs? Again, for every expert who believes the markets will continue to rise in the short term, there are experts who believe the markets will fall in the short term. Good news anyway! There are several things you are in control of when it comes to the success of your long-term investment plan. In this series of articles, we’ll look at an investment plan for weathering the ups and downs of the market, and practical steps you can take to increase your chances of successful retirement investing.

The last major area of ​​great concern is that of taxes. There are many bills that deal with changes to our tax code. Much of the current legislation is focused on raising taxes on households with taxable income over $ 400,000 or wealthy individuals with millions of dollars. It remains to be seen what happens and what does not. But, even if nothing changes, many people’s taxes will rise in 2025 with the expiration of many provisions of the Tax Cuts and Jobs Act 2017.

Between the potential for tax increases on high-income households and the planned expiration of many personal tax cuts for income at all levels in 2025, taxes are an area people should think about. Tax law is also another area over which we have little control individually (although you can make your voice heard through the ballot box as well). However, for retirees, especially the first few years of retirement before the minimum required distributions (currently 72) begin, there are many tax planning opportunities they can take advantage of. If you’re retired, you probably have more control over your taxable income than you think. I’ll cover some of these strategies in an upcoming article.

And you? Are there other financial areas that worry you? Are there any other external factors that could affect your retirement plan that you are concerned about? Let me know – if I think there are more people with the same concern, bringing up your topic could be one of my next posts.

About the author: Steve Cruice, CPA, CFP®

Steve Cruice, CPA, CFP® is the co-founder of Three Points Financial, Inc., a fee-based wealth management company specializing in retirement assistance. He can be contacted at

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