Financial advisor TJ Stearns, president and founder of TJ Stearns in Arlington Heights and host of Protect and Grow Chicago and Retirement on AM560, joined Chicago’s Morning Answer to discuss the challenges of retirement planning in today’s volatile market.
The Risk of Overconfidence in Booming Markets
Stearns warned that many investors have become complacent, forgetting the steep market declines of the early 2000s and 2008. He cited cases of retirees with 70 to 80 percent of their portfolios in stocks, calling it “insane” given the risks of a sharp downturn. Younger analysts who have never lived through a true bear market, he added, may also be fostering unrealistic expectations.
The Importance of Diversification and Risk Controls
Rather than chasing market highs, Stearns emphasized the need for diversification into uncorrelated assets and tactical strategies that use stop losses and “floors” to protect portfolios. His philosophy rejects simple “buy and hold” approaches, especially for those nearing retirement. “You need to share in the upside without sharing fully in the downside,” he explained, framing the balance as essential to protecting decades of savings.
Retirement Realities Beyond Investments
Stearns said nine out of ten baby boomers don’t have a comprehensive retirement plan, and many carry dangerous misconceptions. Contrary to the belief that retirees will fall into lower tax brackets, he noted most expect taxes to rise. He also stressed the need to budget for health care, long-term care, and rising property taxes, which can erode fixed incomes even if a mortgage is paid off.
Generational Perspectives and Family Planning
The conversation also turned personal, as Stearns described how his own children—raised by a financial planner—grew up with a healthy skepticism about flashy spending. His son Jake, now part of the family firm, was singled out as an “old soul” who already understands that appearances can be misleading when it comes to wealth.
Building a Plan for a 25–30 Year Retirement
Stearns underscored that a retirement plan must anticipate decades of spending, potential market downturns, and unexpected medical costs. The key, he said, is not a single number in the bank but a portfolio designed to generate reliable income, withstand shocks, and adapt over time.
Listeners can hear more of Stearns’ advice on Protect and Grow Chicago and Retirement, airing Saturdays from noon to 1 p.m. on AM560.