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The New Retirement Standard

Powerful Planning Techniques to Live Financial Free

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The New Retirement Standard

C H A P T E R   2


When we sit down with new clients and ask them about their legacy ambitions, a husband and wife often will look at each other in silence. They clearly have never thought about it or discussed it. But now the wheels start to turn. Now we can engage in an open dialogue about where they would like their hard-earned resources to go someday.
That’s a good place to start as they begin to work out a budget that will keep them on track toward their goals. We can work backward from the goals to determine what that budget should look like during retirement.
In our experience, only a few percent of people have a budget. Most cannot tell us what they anticipate needing, nor what they are currently spending each month. Without that knowledge, they have no idea how much they can spend in their retirement years. And so we show them a framework by which they can begin to track their spending.
Unless you know where you are going, however, how can you determine the amount of spending necessary to get there? That is why a crucial early step in our financial planning process is to help people figure out that destination. That quizzical look that we so often see on couple’s faces tells us that they have been so caught up in the rush of life that they have yet to consider what it all means. Some have been intent on saving and some on spending, but they have not gotten around to talking about what they want out of life.
In short, they don’t know. And when you don’t know, you pay consequences. We have met couples who believe that they can do a whole lot more than their resources will support. We have met other couples of substantial means who live like paupers.
One hard-working couple who had pinched their pennies for years entered retirement with multiple millions of invest- able dollars. But when the paychecks stopped, they felt gripped by anxiety, concerned that they could run out of money— though it is highly unlikely that they would. Another couple who had what some would consider a marginal retirement account purchased a motor home with the intent of con- stantly traveling, without a care in the world that they might run out of money. It is highly likely that they will.

We have met people of many mind-sets when it comes to money. If they become clients, we help them to manage those mind-sets so that they can keep their ambitions and lifestyles aligned with their resources.
Most of those who become our clients acknowledge that they have long needed a comprehensive retirement plan, but they got busy raising kids and buying a house and developing their careers. They figured they would put their plan together when they got their next promotion or raise and had a few extra dollars, but that time came and went and came again, and the planning didn’t happen. Perhaps they were waiting for some pivotal point in life that never arrived. Before they knew it, they were within a few years of retirement, and they still lacked a game plan.
Once they have concluded that it’s high time to focus on their approaching retirement, we can get started in earnest. And the first step is establishing those goals and priorities. Again, you cannot plan until you know what you want to do. When prospective clients are preparing to come in for their first meeting, they often ask us what they should bring. We tell them that if they have questions on some specific matter, they can bring those documents, but they do not need to do so.

That early conversation, in fact, often is best when you don’t bring any documents or statements. We want to start out by focusing on you. We want to learn about you and  your concerns and your dreams. We want to hear what you are trying to accomplish. At this point, we’re not concerned about examining your portfolio. We want to know about you, not about your money.
There’ll come a time and a place for the documents, but initially what is most important is that we connect with you and understand your concerns. We need to see if we would be a good fit in addressing those concerns, and we determine that by performing a three-pillar test:

  1. Can we add value to your situation? If you are doing everything right, and we can’t add value, then we will tell you so.
  2. Is there good chemistry? James and I love meeting with clients. There needs to be good chemistry present or it won’t work long term.
  3. The relationship needs to be mutually beneficial. We learned a long time ago that we can’t help everyone. Everyone needs to benefit from the relationship in order for it to be successful.

It’s a matter of priorities. To get a grip on your priori- ties, we don’t  need to immediately see your tax returns and your holdings. Instead we need to look you in the eye and see what you are all about. We want to learn what you want out of life and why you felt the need to visit us. We talk about what keeps you up at night, and then we broaden the discus- sion to talk about how you might envision your retirement. What have you always wished you had time to do? Who and what are important to you? How do you believe you will find fulfillment? Is there someone you are hoping to help? Do you dream of traveling? Those are the sorts of questions that you could be considering.
Then we can start thinking about how much money you will need to accomplish those goals. The traditional advice is that during retirement you will need about 80 percent of the income that you brought in while working. Figuring that out can be quite complicated.
We take a different approach. What most people want to do is maintain the same lifestyle during retirement to which they have been accustomed. They want to continue spending about the same amount. Therefore, it makes sense to look   at their budget and determine how much they actually have been spending.
We see two typical spending curves during retirement. One is during the first five or ten years, as people travel and play golf and pursue the hobbies that they had postponed. Eventually, the spending slows as they get a bit older and less active. That’s the usual way of looking at changing spending needs during retirement. However, we increasingly have seen that expenses do not necessarily decrease with age. Instead, people begin to face expenses that they would rather avoid. Health-care costs inevitably rise, perhaps to the point of needing in-home nursing. They may need to spend money on things that are not fun to buy, such as shower tubs with walk in access or wheelchairs and ramps. The things you hope you would never need, however, they are a big expense later in life.

After we get to know you and hear your dreams, then it’s time to take a look at all the paperwork. We will want to examine the resources that you have available to meet the goals that you have described to us.
At that point, we give you a prepared list of information needed to design a financial plan for retirement. We will want to see your most recent Social Security statement, for example, which is now available online at We will want a copy of your most recent tax return, including your W-2. We will be looking at any debts or liabilities, such as mortgages, car loans, or student loans, with associated payoff schedules and interest rates.
We will ask you to provide us with detailed investment statements so that we can see the ticker symbols of your securities. Your financial plan in part will include an investment analysis of how much risk you currently are taking and how much you are paying in fees, including hidden ones.
We also will be asking you to do some budgeting to determine how much you currently are spending and how much you anticipate you might need or want to spend during retirement. You should be thinking about what your retire- ment will look like so that we can begin designing a financial plan to make it happen.
Most people do not have all these documents at their fin- gertips. They are disorganized to some extent. That is another valuable benefit of our process. We assemble and file these documents so that you know where they are and your loved ones could access them easily in an emergency. That can save them untold hassles. Getting organized is a loving thing to do. Your records will clearly indicate custodians of accounts;
the dollar amounts, titling and beneficiaries of assets; and other estate documents such as trusts, a will, and powers of attorney. You can have all that at your fingertips. We encourage our clients to keep that information in a fireproof safe at home. Some people use a safety deposit box at the bank, but that can be challenging for beneficiaries to access.
Clients often have told us that this is the first time they ever have gathered all the documents in such a concise way in one spot. Often the information has become scattered over the years in various files in different desks. The financial plan also will include a one-page snapshot of all the accounts so that it will be easy to keep track.
How much of that information should you immediately share with your family or beneficiaries? It depends on family dynamics and personal preference. Some share all, some virtually nothing. At the very least, however, those who will be dealing with your affairs will need to know where your documents are kept and how to access them.
What is most important is to be prepared. Procrastina- tion can be painful. An early step in our process is to do a ben- eficiary review. If we find any irregularities, those can easily be remedied while you are still alive, but when you are gone those beneficiary designations will be permanent. The conse- quences could be devastating. We want to make sure that your money goes where you want it to go.
Unfortunately, life can get in the way of effective planning. You need to force yourself to take the time out of your day to secure the rest of your life and to provide for those who will live after you. Once you have your financial plan in hand, you will be able to proceed with confidence.
Together, we serve as the head coach for the overall game plan. We are the dedicated resource for our clients and their heirs. They know they can reach out to us to find out where to start and how to finish. They know whom to contact about various issues and who will have which responsibilities. Your financial plan will be clear about who should be handling your financial affairs upon your passing.
Your financial plan needs to be more than a collection of products. It needs to be a strategy for getting from point A to point B. For thirty or forty years, you have tried to put away money to grow, but you might not have had an end strategy in mind. In the accumulation years, that worked for you. The gain was your aim. Now you need a strategy to connect the dots for the highest probability of a successful retirement. That begins with getting clear about just how you define success.


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  • This guide is for informational purposes only. It is not intended to provide tax or legal advice. By requesting this guide you may be provided with information regarding the purchase of insurance products in the future.

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