Howard Hook of EKS Associates joined The Final Round to discuss why retirement should be about circumstance, not age and gives his best tips for deciding when to retire.

Video Transcript

- We have the S&P right near its record high, closing in on 3,400. For more on this, I want to bring in our next guest. We have Howard Hook. He's EKS Associates. And Howard, let's just talk about the market hitting all-time highs this week, further highlighting this disconnect that we've been seeing between Main Street and Wall Street. But I'm just curious about the impact that it's having on retirement plans, because what do you think is the best way to approach retirement savings when you're in an environment like this, when there's so much uncertainty, yet the stock market continues to push higher?

HOWARD HOOK: Yeah, so I think that, you know, this question always seems to come up when we have a drop in the market, and maybe even a recession. You know, all of a sudden, all those people that are getting ready to retire, plan on retiring, and then boom, this happens, and now they question whether they can-- they can financially retire.

Now, the interesting thing is, this time around, the markets have recovered, at least so far, like you said, you know, come all the way back to the lows in February. So now it's a question of are those lows going to-- are we going to keep off those lows, market going higher, or not? But for us, you know, financial is just one component of this, right? There's an emotional aspect to retirement, as well. Clearly, a lot of people, emotionally, are concerned. But are they really emotionally ready to retire, as well, even if they're able to financially?

- Yeah, Howard, that was interesting because I think a lot of people, when they think about retirement, they focus on age, or what age they want to be when they retire. But you actually say that that's not something that you should place emphasis on, and except-- or instead, I should say, you should focus on whether you can afford to retire. But what do you need to retire right now? I mean, how do you know if you can afford to retire?

HOWARD HOOK: Well of course, as a financial planner, I'm going to tell you that the best way to know whether you can afford to retire is to do a financial plan, right? I mean, you want to not only figure out, you know, what you have now, what you're going to be able to save, and what you're going to be able to need when you retire, right? I mean, it's, to some degree, as simple as that. What do I have, what am I able to save, and what am I going to need. So once you're able to do that, and you protect yourself against some of the risks that could sort of knock you off track, then it's, OK, then financially I'm ready to retire at age x, right? Whatever that is.

But again, what am I retiring to? Right? I'm retiring from a job, I'm going to stop my work, maybe I don't like my job, but what am I going to do? You know, retirement for a lot of people for the first two weeks feels like a vacation, right, because we've all vacationed from work. But once those two weeks are done, now what, right? Like, it's not vacation anymore. Now this is the rest of your life. So we find that clients that are not emotionally ready to do something else struggle, even if they're financially able to retire.

- Howard, one thing that we've been talking about here on the program has been people delaying their retirement specifically because of the COVID-19 outbreak. I'm just curious if you're hearing that from your clients, or if any of your clients have had to shift their timeline because of what we've seen transpire over the last six or seven months.

HOWARD HOOK: So again, I guess with good planning, events like what we're going through, they may affect somebody's thoughts about retiring, but we like to prepare our clients years in advance for this. And one of the things we stress is being able to understand where your cash needs are coming from once you're retired. So if they're not coming out of the stock market when you initially retire, then we feel that you should be able to withstand the drops in the market, right?

So you know, while we're setting aside cash needs for our clients in fixed income or in cash or in money markets, and if we've set aside-- we're able to set aside enough, let's say hypothetically 18 months or two years or three years worth, then, you know, two or three years now, the likelihood is that the markets will be higher than they are today. So that's what we sort of get our clients to understand ahead of time, that your cash needs are not going to come right from the stock market initially, and that you could withstand a drop, because that's the case.

- All right, Howard Hook, great to have you on the show. Thanks so much for taking the time to join us. We hope to have you back. Have a great weekend.

HOWARD HOOK: You, too. Thanks.