For the past week we’ve been up at Glacier National Park and the surrounding towns. We’ve been meaning to make our way up here for years and finally got to it this year. While we were on our flight the Reynold Creek Fire broke out in the eastern portion of the park and quickly escalated into a Type 1 Incident (Type 1 is the biggest) that included closures for some of the park’s most popular spots.
 
There is still plenty to do but a couple of the biggies are still closed as I write this on the weekend. Obviously we adapted our plan and ended up seeing some spectacular things in the park that we might not have otherwise seen and also got some pretty neat pictures of the fire.
 
The need to adapt translates directly to investing and financial/retirement planning. The stakes for a trip are small while the stakes for a financial plan are potentially huge. Investors need to be able to adapt to two different kinds of events; market related like a bear market starting two months after retirement and life events like one way or another being forced to retire (or at least forced out of a high paying job) much sooner than originally planned.
 
Adapting to the unexpected can become more difficult as people get older, there are studies that indicate we take more risks (not just with investing) when we are younger. Where investing is concerned someone who is 55 or 60 has less time to recover from a catastrophic investment loss than someone who is 30 or 35.
 
Just because someone is less able to endure a catastrophic loss doesn’t mean they won’t have to, with the tech wreck and financial crisis being examples of top down losses but there are bottom examples where people simply make poor decisions.
 
One person who claims to have made poor retirement planning decisions is Alicia Munnell, the director of Boston College’s Center for Retirement Research and one of the most quoted retirement experts out there. While it is not obvious from the linked article that she was ever actually in trouble she did make some changes in her life to more accurately align with whatever her interest in retirement might be (she is 72 and chooses to work).
 
In life there are some surprises that can be somewhat planned for like losing a job or have a large health related expense. Active engagement in markets is in a way the constant task of avoiding the next land mine. Practically speaking this is about maintaining proper diversification which I think most advisors would agree with and I would argue also means having a defensive strategy in place as well as being willing to make changes to how assets are allocated based on the market cycle as well as modest exposure to diversifiers as a way to buffer the occasional periods of extreme equity market volatility.
 
Everyone confronts some form of adversity in their lives but these are problems to solve for ourselves as no one can care more about how we overcome negative surprises more than us. This means learning more and being more willing to embrace change than feeling like a victim of change.