Think Like A Marine

Lori Booth-Houle CPA, CFP®

May 8, 2020

“Improvise, Adapt and Overcome” is an unofficial mantra of the Marine Corps, and even though Clint Eastwood borrowed this phrase for his movie Heartbreak Ridge, I didn’t hear it there.  I caught wind of this slogan from TCI President Catherine Nichols, who often hears similar words uttered by her 88-year old father, a stalwart ex-Marine, as they talk together about these unsettling times.  I did a little more digging into the origins of “Improvise, Adapt, and Overcome,” and the story goes that the slogan originated at a time when the Marine Corps was notoriously poorly-equipped and received more than its share of Army hand-me-downs.  The Marines responded to the challenge by marshaling incredible resourcefulness and creativity to excel, both then and now.

Marines or not, we’re all in the midst of a crisis that is testing our physical, financial, and emotional well-being.  If there was ever a time for resilience–to improvise, adapt and overcome–this is it.  Here are some ideas to start with that will support your financial well-being.

#1:  Focus on what you can control.

This is a powerful mindset, because it diverts our energy from worrying about things we can’t influence (i.e. the markets) to areas in which we can have meaningful, positive impact.  If you’re reading this as a TCI client, you can feel comfortable that we’ve already worked together to address a number of the things you can control, including an  investment plan that fits your needs and risk tolerance, and a diversified, low-cost portfolio structured along the dimensions of expected returns.  We’re also here to support investor behaviors that are under your control and give you the greatest chance of success, such as staying disciplined and making changes based on your personal circumstances, rather than on external events such as market ups and downs.  Last but most certainly not least, you can control three hugely important levers in your financial plan:  how much you save, how much you spend, and when you start to spend down your portfolio.  These three levers are so important, in fact, that they deserve their own paragraph.  Read on.

#2:  Be willing to make course corrections to get you to your goal.

Being an investor was downright nauseating in March.  April was much better but equities are still significantly underwater for the year, with a high probability of some continued volatility ahead.  How this disruption may affect your own personal financial plan is something you and your advisor have either already discussed or will review together in the coming months.  The key to keeping your plan on track is to adopt a flexible mindset, so that you can make adjustments as needed to reach your goals.  In a best-case scenario, nothing will need to change because you already had a conservative, overfunded plan.  But if your plan does need some tweaking, those adjustments may take the form of spending somewhat less, saving somewhat more, or working a bit longer to allow your portfolio some time to recover.    In many cases, these adjustments may be short-term and/or relatively minor, and have little effect on your quality of life — yet because of their compounding nature, they can have a tremendous impact on the success of your plan.  I once heard someone say that a jet plane taking off from Los Angeles and flying to Hawaii is slightly off course most of the time it’s in the air, thanks to the jet stream and trade winds.  And yet it still lands in Hawaii, because the navigational instruments on board are constantly making slight tweaks to correct the course of the plane so that you don’t touch down in the middle of the North Pacific.  Your financial plan is like that jet in its flight path—you need to stay vigilant and make small adjustments from time to time, but by doing so, you’ll ensure landing where you wanted to without having to completely change direction (or put on a life jacket).  To carry the analogy one step further, we can’t control the jet stream or trade winds, so as discussed above, we must focus on what we can control—such as those tweaks in saving or spending, if needed.

#3:  Be open to opportunities that arise.

While not always obvious, crisis can create opportunities that provide future benefits (because we will come out of this, eventually).  Here’s a partial list of things to consider; talk with your advisor to see if any might be relevant for your situation.

  1. Refinance your debt at lower interest rates.
  2. Rebalance your portfolio, which forces you to buy low and sell high instead of the opposite.
  3. Harvest your investment losses to save current and/or future tax dollars, and consider selling old legacy positions now that gains are smaller.
  4. Consider a Roth Conversion:  IRA balances are likely lower now, and your 2020 tax rate may be lower too.  Those factors, among others, may make this an opportune time for a conversion.
  5. Suspend your 2020 required minimum distribution from your IRA or certain other retirement plans under provisions in the new CARES Act fiscal relief legislation.
  6. Fund your 401(k), IRA, or 529 plan, since your contribution can now buy more shares of the investments to be held there. 
  7. Consider waiting longer to begin taking your Social Security benefits, to take advantage of delayed retirement credits up to age 70.
  8. If you have excess cash sitting on the sidelines, formulate a plan for getting it invested, either in a lump sum or by dollar-cost-averaging.
  9. Consider whether gifting, selling, or lending assets at now-discounted values and interest rates could benefit your estate and legacy planning.
  10. Review your financial plan – that includes your insurance and estate details.

In difficult times, and especially now, resilience is your friend—the more you can muster, the better your outcome will be.  That said, you aren’t in this alone.  Now and always, we’re here to partner with and empower you.  Thinking resourcefully and creatively like a Marine, we can improvise solutions, adapt to the situation, and overcome the challenges of this crisis to help you live the meaningful life you’ve envisioned.

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