Professors, I’ve been thinking about something when it comes to investing. A lot of you have stable, predictable incomes, yet your investment portfolios are more conservative than they need to be. I understand the instinct. After years of schooling, research, and career-building, the goal is to protect what you’ve worked for. No one wants to take unnecessary risks. You invest to position yourself for long-term growth in a way that makes sense for your situation.
And for most professors, the situation is one of stability. If you’re tenured, your paycheck isn’t tied to stock market fluctuations. Even if you’re not, you’re still in a field where longevity and structured pay scales create a level of predictability that many professionals don’t have. That kind of stability is a privilege, and it allows for a different approach to investing that leans a little more toward growth and long-term opportunity.
John Grable’s research based RiskCAT model is useful here. It helps categorize investors based on both their tolerance for risk (how they feel about uncertainty) and their capacity for risk (how much risk they can afford to take). The mistake many professors make is assuming their risk tolerance should dictate their portfolio, without considering their capacity to take on more investment risk. When your income is steady, your healthcare is covered, and your pension (or a partner’s pension) is guaranteed, your ability to absorb short-term market fluctuations is much higher than someone without those safety nets.
I see a lot of academic couples defaulting to a balanced or conservative portfolio simply because it feels responsible. But stepping back for a moment, does that really fit? If you’ve got two incomes, some pension benefits in the mix, and another 15 or 20 years of investing ahead of you, there’s a strong case for increasing exposure to equities. The difference over time could be meaningful, not just in account balances, but in the opportunities you create for yourself down the road.
There’s always the concern about what happens if the market drops. And it will, at some point. But if you’re not relying on your investments for daily living expenses, temporary downturns aren’t the threat they might seem. While markets have historically recovered over time, past performance does not guarantee future results. It's important to assess your individual risk tolerance and investment horizon.
The way you invest shapes more than just your retirement. It influences the choices you’ll have along the way whether that’s taking a sabbatical, traveling more freely, or contributing to causes you care about while you’re still around to see the impact. This is just you making sure your investment strategy reflects the financial security you already have, rather than being dictated by a level of caution that may not be necessary.
There’s no single right way to do this, but it’s worth thinking about. The security that comes with an academic career creates a unique opportunity, and it would be a shame to let that go unused.
Utilizing advanced retirement income planning tools can assist in guiding clients through informed decision-making regarding investment risks because it helps guide clients through taking smart, informed risks, not just in investments, but in how they approach retirement spending and adjustments over time. One of the most valuable concepts advanced retirement income planning brings to the table is retirement income guardrails.
A lot of people think about retirement planning as if it’s static. You plug in some numbers, get a projected withdrawal rate, and hope the market behaves. But that’s not how life works, and it’s definitely not how investing works. Advanced income retirement planning allows for dynamic adjustments based on real-world conditions.
Think of retirement income guardrails as suggested income speed limits on the scenic byways of retirement. Instead of locking yourself into a rigid spending or investing plan, the system provides upper and lower guardrails that adjust based on market performance, inflation, and personal circumstances. If things are going well, you might have the ability to spend a little more (step on the gas) or take on additional investment opportunities without jeopardizing your long-term financial security. If the market hits a rough patch, adjustments can be made early (ease of the gas pedal just a bit) and in small increments (no need to hit the brakes) to avoid drastic course corrections later.
This approach is especially important for academic professionals. With a stable salary leading up to retirement, access to pension benefits, and possibly a long career horizon, it makes sense to lean into the growth potential of investments while keeping an eye on long-term spending flexibility. Instead of worrying about running out of money based on outdated, one-size-fits-all rules, guardrails allow for a more realistic, evolving approach to retirement.
The goal isn’t to be overly aggressive. It’s to match the flexibility of your financial life with an equally flexible investment and withdrawal strategy. I use advanced retirement income planning to make sure my clients aren’t just planning for retirement, but adapting to it in a way that makes sense.
Investing involves risks, including the potential loss of principal. This content is for informational purposes only and does not constitute personalized investment advice. Consult a qualified financial advisor to determine what is appropriate for your individual circumstances.