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READY FOR THE WORST The Value of Preparation
What a winter! It’s been years since I found myself reaching for a scarf. I moved here from up north; and during my first winter down here in Florida, I remember scoffing at anyone who complained about how cold it was. When you grow up in a place where the winter lows average less than 30 degrees, celebrating Christmas in 50-degree sunshine is a dream come true. Of course, I soon got used to the hot summers, and my tune changed drastically the next year when anything below 60 was “freezing.” This year, we got a taste of the winters I remember as a child. The “bomb cyclone,” aka “Winter Storm Grayson,” stretched from Maine all the way down to here in the Sunshine State, and it brought some freak winter weather. Tallahassee even saw a measurable snowfall for the first time in While we should always hope for the best, the smartest move anyone can make is to plan for the worst-case scenario.
28 years! Stranger still, the sudden cold snap caused iguanas to rain from the trees when their body temperatures lowered so drastically they were literally frozen — granted, most of them warmed up in the sunlight and scurried away soon enough. I wouldn’t go so far as to say the winter weather caused mass panic, but there’s no doubt many Floridians weren’t prepared to handle the sudden cold. Who else found themselves wishing they had a thick jacket and some gloves stashed away in the hall closet? The unexpected winter reminded me of the value of preparation. Being prepared is a mindset I encourage in retirement planning. A healthy dose of optimism is good for the soul, but don’t let it blind you to the reality of your situation. While we should always hope for the best, the smartest move anyone can make is to plan for the worst-case scenario. When times are good, like they are in the market right now, we can forget how easily the tides can turn. But many who were preparing to retire in 2007 can tell you how great things seemed then and how much they lost in 2008. A lot of people spent the last decade trying to rebuild their portfolios to where they were pre-2008. Many people had to put their retirement plans on hold, except for those folks who prepared well in advance for the inevitable “worst-case scenario.”
History tends to repeat itself. Just because snowfall is uncommon in Florida doesn’t mean it has never happened before or that it will never happen again. When a cold snap is forecast on the weather report, those who already have a jacket are better off than those who have to run to the store, paying extra due to the sudden demand of warm clothing. Or worse, those who have to go out in their T-shirt still because they couldn’t get the winter coat soon enough. When it comes to retirement, if you don’t prepare for the “downfall,” you’ll be a lot worse off than not having a jacket during a snowfall. The ice has long since melted, but I encourage you to remember what it felt like not to be ready for the cold spell. Make sure you’re doing everything you can to prevent that feeling from extending to your retirement plans.
–Adam Wolf, CPA, CFP ®
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