Full Article Link: Nasdaq – Think Your Retirement Plans Are Solid? Stress Test Them First
Quote from Stephan Shipe
“The closer you are to retirement, the less impact each additional dollar of savings actually makes. Saving an extra $30,000 the year before retirement won’t change your trajectory nearly as much as getting clarity on whether your lifestyle, schedule and financial plan are actually sustainable.”
—Stephan Shipe, Founder of Scholar Financial Advising
Key Takeaways
- Stress Testing Is a Crucial Retirement Planning Tool
A stress test models how your retirement savings would perform under adverse conditions like market downturns, inflation spikes, or unexpected expenses. It helps expose weak spots before you’re fully reliant on your nest egg. - More Than Just a Financial Exercise—It’s a Lifestyle Check
Dr. Stephan Shipe encourages pre-retirees to conduct a six- to 12-month “test drive” of their retirement lifestyle. This includes assessing whether spending levels, daily routines, and income sources feel sustainable—while you still have the safety net of a paycheck. - Too Much Risk? Not Enough Growth? A Stress Test Tells You
Experts warn that both ends of the spectrum—overexposure to the stock market or overdependence on cash and fixed income—can be harmful. The right balance should shield against inflation without overexposing you to volatility. - Use Tools, But Don’t Skip Human Advice
Online calculators from Fidelity, Vanguard, or Schwab can simulate how your plan might perform under pressure. But professionals can layer in more realistic scenarios and suggest strategic adjustments based on your full financial picture. - A Failed Stress Test Isn’t Failure—It’s Insight
If your current plan underperforms in a stress test, it’s a call to revisit key variables:- Spending levels
- Income diversification
- Asset allocation
- Social Security timing
- Contingency options (like part-time work or downsizing)
- Healthcare and Longevity Risk Require Special Attention
Living longer amplifies all other risks—especially medical costs, inflation, and market downturns. Your plan should include provisions for long-term care and variable healthcare expenses over time. - Flexibility Is the Most Underrated Retirement Asset
The ability to adapt—by adjusting withdrawals, delaying retirement, or modifying lifestyle—is critical to long-term success. Stress testing helps identify where you’ll need that flexibility most.