What’s Your Risk Number? Balancing Growth and Security for Retirement
- Jud Tolmen
- Jun 13
- 5 min read
Judson Tolmen President & Owner 📧 jud@tolmenfinancial.com 📞 (219) 608-5498 |
When it comes to your money, "risk" is a word that often carries a heavy emotional weight. For some, it sounds like opportunity: the chance to grow a nest egg and beat inflation. For others, it sounds like a threat: the possibility of watching years of hard work evaporate during a market downturn.
The problem for most investors between the ages of 50 and 70 is that risk is often discussed in vague terms. Are you "conservative"? "Moderate"? "Aggressive"? These labels are subjective. One person’s "moderate" might be another person’s nightmare.
At Tolmen Financial, we believe that if you can’t measure it, you can’t manage it. That is why we utilize systems like Nitrogen Wealth (formerly Riskalyze) to help our clients pinpoint their exact Risk Number.
In this article, we’ll explore what that number means, how it should evolve as you approach retirement, and why a guaranteed income floor: like the Tolmen Financial Life Pension: is the secret ingredient to a lower-stress financial future.
Understanding the Nitrogen Scale: 0 to 99
Imagine a scale from 0 to 99. This isn't just a random set of numbers; it’s a quantitative measurement of your "financial gut." It determines exactly how much downside you are willing to tolerate in exchange for a certain amount of potential upside.
The Two Extremes:
The 0 (The Mattress): A Risk Number of 0 means you are taking absolutely no risk. Your money is effectively "under the mattress." While your principal is safe from market crashes, you aren't gaining any interest. In fact, you’re actually losing purchasing power every single year due to inflation.
The 99 (The Rocket Ship): A Risk Number of 99 represents a hyper-aggressive stance. You are heavily invested in high-volatility assets. While the upside potential is massive, the risk of a 30%, 40%, or even 50% drop in value is very real.
Most people fall somewhere in between. The goal isn't to find the "highest" number; it’s to find the right number for your current stage of life.
Why Your Number Should Change Over Time
One of the biggest mistakes we see at Tolmen Financial is "risk inertia": the tendency to keep the same aggressive investment strategy you had in your 30s well into your 60s.
When you are 30 years old, time is your greatest asset. If the market drops 20%, you have decades to wait for a recovery. Your "pot" of money is relatively small compared to what it will become, so a percentage drop doesn't feel like a life-altering event. At that age, a Risk Number in the 70s or 80s might make perfect sense.
However, as the "pot" gets bigger and you get closer to retirement, the math changes.
The "Pot" Factor
If you have $50,000 in your 30s and the market drops 20%, you’ve lost $10,000. It hurts, but it’s manageable.
If you are 62 years old with $1,000,000 and the market drops 20%, you’ve just lost $200,000. That is two, three, or even four years of retirement income gone in a flash. As your portfolio grows and your "time to recover" shrinks, your Risk Number should generally trend downward.
Our goal at Tolmen Financial is to help you "pivot" from the accumulation phase to the preservation and distribution phase without losing the growth you need to outpace inflation.
The Danger of Sequence of Return Risk
For those in the 50-70 age bracket, the biggest threat isn't just a market crash: it’s the timing of that crash. This is known as Sequence of Return Risk.
If the market crashes while you are still working, you can keep your head down and keep contributing. But if the market crashes in the first few years of your retirement: while you are simultaneously withdrawing money to live on: the damage can be permanent. You are selling shares at the bottom just to pay your bills, leaving fewer shares to participate in the eventual recovery.
This is why pinpointing your Risk Number is critical. If your current portfolio is a 75, but your emotional and financial capacity is a 45, you are essentially driving 100 mph toward a brick wall without realizing it.
The Tolmen Financial Life Pension: Your Financial Floor
If the thought of lowering your Risk Number worries you because you still need growth, there is a solution: Guaranteed Income.
At Tolmen Financial, we often talk about the importance of multiple cash flows. While your 401(k) or IRA is subject to the whims of the market, a Tolmen Financial Life Pension (a custom-tailored annuity or life insurance strategy) provides a "floor" of guaranteed income that comes in every single month, regardless of what the S&P 500 is doing.
Why Guaranteed Income is a Game-Changer:
Psychological Peace: When you know your mortgage, utilities, and groceries are covered by a guaranteed check, you don't panic when the market enters a correction.
Increased Risk Tolerance for the Rest: Paradoxically, having a "Life Pension" can actually allow you to keep a slightly higher Risk Number on the rest of your portfolio. Because your "needs" are met, your "wants" (the market-based portion) can afford to be a bit more aggressive for long-term growth.
Tax-Free Options: We specialize in strategies that provide tax-free cash flows, giving you the ability to pivot in retirement when tax laws change.
As Judson Tolmen often says, "Our goal is to raise financial literacy and help you make educated choices. You need a plan that accounts for different cash flows, especially those that are TAX FREE."
Building Your Multi-Pillar Retirement
A secure retirement isn't built on a single stock pick or a "lucky" market run. It’s built on diverse pillars of income. We like to think of it like the groundhog: prepared, diversified, and looking ahead to the seasons to come.
By combining your Nitrogen Risk Number with a Tolmen Financial Life Pension, you create a balance between the growth you want and the security you need.
Your Action Plan:
Get Your Number: Don't guess. Take the Risk Test here to find out exactly how much risk you are currently taking with a quantitative tool like Nitrogen.
Audit Your "Pot": If you are within 10 years of retirement, evaluate if your current risk matches your time horizon.
Secure Your Floor: Explore how a guaranteed monthly income stream can protect you from market volatility.
Ready to Find Your Number?
Retirement shouldn't be a guessing game. Whether you are 50 and just starting to get serious, or 68 and ready to pull the trigger, Judson Tolmen and the team at Tolmen Financial are here to help you navigate the complexities of your financial future.
Start by taking the Risk Test here, then contact us to review your results and discover your personalized Risk Number strategy.
Contact Judson Tolmen:
Phone: (219) 608-5498
Email:jud@tolmenfinancial.com
Website:www.tolmenfinancial.com
[Image: Tolmen Financial Logo] | Judson Tolmen President & Owner 📧 jud@tolmenfinancial.com 📞 (219) 608-5498 |
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