If you’ve ever played chess, roulette or poker, you know some games rely on skill and some use luck. In this episode of The Retirement Huddle podcast, Mark Howard explains how financial decisions are like playing these games.
Trying to time the market
This is definitely like playing poker or roulette. You can use skill to study stocks and trends, but the market doesn’t always react logically.
“Many times I’ve called the stock market the Wall Street casino because it really does seem that way sometimes,” said Mark.
It’s best to stay in the stock market instead of trying to get in and out based on guesses.
Deciding how much IRA money to covert to Roth
“That’s definitely chess, because we can get down to the pennies as to whether that is a good decision and how much money should be transferred from an IRA to Roth,” said Mark.
You have to pay taxes when we move the money over, but taxes are lower than they’ve been in many years.
“Would you rather get taxed on the seed or taxed on the harvest?” said Mark.
Deciding when to retire
This is like poker, because it’s not always up to us when we retire. You might get sick or laid off, for example.
The pandemic has become a dress rehearsal for some people’s retirements. As it drags on, more people are being nudged toward the finish line a little faster than they planned. In some cases, their jobs went away or they didn’t want to put their health at risk by showing up to work every day.
Other financial decisions
Listen to the full podcast to hear Mark’s thoughts on choosing the right pension options, picking stocks and determining when to start Social Security and how those are similar to chess, roulette and poker.
Thanks for listening! We’ll be back for another show every other Thursday.
[1:24] – Darth Vader
[3:10] – Wicked Witch of the West
[4:43] – Ivan Drago (Rocky IV)
[7:13] – How to prepare for meeting with financial coach