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It’s a confusing time to be planning for retirement.

The Dow Jones industrial average last week closed above 16,000 for the first time. But uncertainty in the economy continues, and low interest rates still make it difficult to find a decent rate of return.

In the middle of all that, Tim Steffen, Milwaukee-based wealth management firm Baird’s director of financial planning, came to Charlotte, N.C., recently to speak to his company’s advisers and clients. Beforehand, he discussed the stock market’s recent success and how that affects retirement planning.

Q: The stock market continues to hit record highs. If you’re planning for retirement, that’s got to be a good thing, right?

A: It is, if you’re able to participate in that. I met with a client today who said that he’s been watching the market go up, but he’s not invested in it, so he’s not been able to participate in it.

You hear these studies all the time about how the market does and what returns the actual investor gets. There’s usually a big disconnect. They’re not getting in at the right time, they’re getting in and out of it, they’re missing out on some of the runs, so the actual investment performance is not as good. So, yeah, it’s been a great year in the market for most people who’ve been willing to ride it out, but there’s a lot of uncertainty out there. There’s a lot of hesitancy to get into the market.

Q: Where does that disconnect come from?

A: I think it’s a little uncertainty about what happened a few years ago with the recession. There’s still some distrust with the industry. Some of it is, quite honestly, warranted. There were some bad actors who caused some clients a lot of heartache. For the most part, the industry is working to clean itself up, but there are still people who are uneasy about where the market’s at.

It’s always dangerous to go and invest at a high. You’re wondering, “Is this the high?” We don’t know where the high’s going to be.

We look at a number of things to get a sense of where the market is heading. One of those is investor confidence. A lack of confidence is a sign that the market has some upside to it. When you get a lot of people who are eager to jump in and ready to go and say, “I’m all in on the market,” that’s when you start to get a little nervous that’s the sign of a bubble.

Q: Where are we on that spectrum?

A: It’s still building but not to a level where we’re concerned. Overall, the trend is slowly moving more positive.

Q: There continues to be uncertainty in Washington, from the recent government shutdown to the debt ceiling debate. If you’re planning for retirement, should you be concerned? Should you be doing anything?

A: You can’t be afraid of the market. That’s how you’re going to be able to build your retirement fund. But on the other hand, you’ve got to be careful and not try to get too overly aggressive and get too greedy. That’s how you can blow up a retirement plan pretty quickly.

One of the old rules of thumb … that we try to discourage clients from paying attention to is that when you retire, you’ve got to scale back and get more conservative with your portfolio. I couldn’t disagree with that more.

A lot of people would like to retire at 65, but a life expectancy of 90 to 95 is not all that uncommon anymore. When you’re spending a third of your life in retirement, you can’t afford to put your portfolio on cruise control. Those who are relying on their portfolio to provide what they need in retirement, they’ve got to remain invested. And then we look at, maybe you’re relying too much on your portfolio.

Maybe you need to reconsider your retirement plans. Maybe retirement means you stop doing what you’re doing and start doing something a little more low-key, something part time that’s not as demanding on you that can still provide some income in the early years of retirement.

Q: Is that becoming more common?

A: Absolutely. A lot of the plans we do include some level of part-time work in retirement. The new retirement means not stopping working.

It used to be at age 65 you stopped working and went and sat on the golf course every day. That’s not the way it works anymore, and it shouldn’t be that way. People should continue to be engaged and doing what they like to do and finding ways to be paid for doing that.