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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, and more. This show is an extension of the book How to Retire on Time, which you can grab today on Amazon or by going to www.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today on Amazon, or by going to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time. But I'm also a licensed financial adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much cover it all.
Mike:Now that said, please remember this is just a show. Everything we hear should be considered informational, as in not financial advice. If you want personalized financial advice, then request your wealth analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is mister David Fransen. David, thank you for being here.
David:Yes. Glad to be here.
Mike:David's gonna be reading your questions, and I'm gonna do my best to answer them. You can send your questions in right now to 913-363-1234. Once again, that's 913-363-1234.
Mike:Or email them to hey mike@howtorettime.com. Let's begin.
David:Hey, Mike. Do you or do you know someone who reviews portfolios for a flat fee?
Mike:I do, but I don't think that's the right way to go about it.
David:Okay. Well, tell us why.
Mike:Yeah. So I'll say this. Like, we offer flat fee services.
Mike:So if you don't want an active relationship or a collaborative relationship, you just want someone to help you with your retirement plan, we we could do that for you. So that maybe that's kind of why they're asking this question. There are few firms that will charge an hourly rate for the financial planning side of things. We are among them. But the question I think is wrong, and here's why.
Mike:Do we review portfolios? Yeah. But what's the system? You should always, in my opinion, follow systems and not sentiment. And if you wanna say, well is this a good portfolio?
Mike:What system is that based on? Because really what you're asking is for confirmation bias. Hey. I'll pay, you know, x amount of money to tell me if we think it's good or not. And if we say it's good, we've confirmed a bias that you want.
Mike:Or we tell you it's wrong and you say, well, we're just dumb. Uh-huh. And let's say that we say, no. You should make some adjustments and you make the adjustments. We can't say that it should stay that way in perpetuity or even for the next month or so because things can change on a dime.
Mike:That's an emotion based decision. It's not a system. And that's the danger of it is, and this is the kind of the danger of the Internet too is we just can find echo chambers that can confirm what we want to hear. That's a very dangerous thing. We want conflict.
Mike:We want to challenge what we believe we know and learn what we don't know. So, yeah, we could do it, but you're just asking for our opinion. It's not a system. It it may change. Here's the other part of it too.
Mike:What's your plan? I mean, really? Uh-huh. What's your plan look like? Do you have a complete plan?
Mike:Do you know how you're gonna be doing the tax minimization with the portfolio based on how it's currently invested? Do you have a plan for a flat market or a down market or high inflation? Do you have a plan for going into a healthcare facility? And by the way, I'm not saying, oh, have you bought long term care insurance yet? Look.
Mike:I've been in the industry for 10 years. I've never actually sold a policy because the reality is those who can afford it don't need it, in my opinion. And those who need it can't afford it. Right. But you still need to plan around that.
Mike:Do you have enough in the portfolio that if you were to need it, is there enough cash that you can tap into for long term care facilities for a couple of years? Or is there not? Are you spending it too much? Have you locked it up too much into an income stream from an annuity that has some sort of alleged benefit that it, you know, maybe doubles the value if you're in the facility or not? But, you know, you forgot that important note that if cash value associated with your annuity goes to 0, you don't get the benefit anymore.
Mike:And maybe you you missed the fact that, oh, later on life was I probably need it, but you didn't plan for that. So now you're kind of stuck. See, it's these kinds of things. What's the plan? How did you do your tax planning and tax minimization?
Mike:How did you account for your RMDs in the future? Where's that gonna come from? Saying, well, hey. Do I have a good portfolio? It's an incomplete question.
Mike:Because it's not about finding the perfect investments. It's what's the lifestyle look like? What do you want your plan to look like? And then what strategies do you wanna implement to make your plan more efficient? For example, the zero tax bracket is probably not in your best interest.
Mike:Mhmm. People don't realize that. Because it sounds so good. Yeah. We wanna be sold this idea of, oh, this guy is gonna help me get to the zero tax bracket, and now I'm not gonna pay the government anything else.
Mike:Stick it to him. Well, okay. How large of a price tag do you wanna pay? How much of a hit to your portfolio do you wanna give up that you may never actually recover? Because the math actually goes against for most people's situation, the zero tax bracket.
Mike:But we want people to tell us the result we wanna hear, and we wanna be sold something that maybe isn't, in my opinion, in the best interest, but it sounds nice. Mhmm. So what's the plan? What are the strategies that need to be implemented? And then we can start talking about the portfolio.
Mike:Do you have enough in equities for growth? Do you have enough in your reservoir, which we define as assets that are principal protected? And there's always enough liquidity that if the markets were to crash, you can draw income from that reservoir without accentuating losses. Very, very important. If you want to talk about probability of success in retirement, The the math is clear as day that the reservoir is a critical component to a retirement plan.
Mike:But people don't talk about this. No. So that's probably an important part of the portfolio, but it depends on the income that you want. What's your lifestyle plan? What's your legacy look like this?
Mike:So all of this works together. So don't waste your money asking us or anyone. Hey. Do I have a good portfolio? Say, do I have a good plan?
Mike:What risks am I not accounting for? What blind spots do I have? What strategies then would help me alleviate or plan for those risks? Explore it from a comprehensive standpoint. It's just too many people think they have a good portfolio when it really is just a bunch of random stocks that they believe will grow.
Mike:People that work in one sector really believe in that sector. If you work in tech, you probably love tech and have a lot of tech in your portfolio. Mhmm. If you work in the energy sector, you probably have a lot of energy stock because maybe you think you have some sort of edge on the competition. You know where energy is going.
Mike:You know where tech is going. You understand it. No one else does. Well, I can assure you that's just not true. Those are biases that can influence investment decisions.
Mike:And the reality is when you retire, do you understand the risks that you're taking by concentrating into a single sector or a couple of positions? I mean, what's the goal? Really? Is it to prove that you're right? Because the way I see it, retirement planning is typically planning for the second to die.
Mike:So who's younger? Who's expected to live longer? And do they understand what's going on? Are they on board with the investment decisions? Or are you trying to make decisions because you need to feel good about yourself?
Mike:I'm being a little harsh here. I admit that. But as we enter into the new year, I think these things really ought to be we ought to have hard conversations with ourselves and with our significant others with those who have them. What are we really trying to accomplish here? Your money has a purpose.
Mike:Don't fall for the echo chambers who tell you what you wanna hear, the investment groups where it's fun to talk about the next big stock. I can assure you that Wall Street has already made those adjustments and you're late to the game. If you're just reading about it, it's already been priced in. We wanna create realistic expectations and have honest conversations. We wanna follow systems not sentiment.
Mike:We want to follow principles first and then let the preferences be second. What's your system? What's your plan look like? And are all parties involved on board with that? I think that's really the question that needs to be asked here.
Mike:Not is my portfolio good? Let's be more expansive about it. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time.
Mike:Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist. Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www dot yourwealthanalysis.com today to learn more and get started.