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Don’t DIY Your Retirement

Don't DIY Your Retirement

Originally aired 4/21/2021

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You need more than a hammer and some nails to build your dream house, and you need more than a few investments to retire! On this episode of the Get Ready For The Future Show, we’re talking all about why you shouldn’t DIY your retirement!

You’ll learn:
– One thing you need to boost the dollar amount of your retirement accounts
– Emotions that can stand in the way of your financial independence
– Strategies and mindsets to avoid as you approach retirement

Downloadable Content:

What’s the Plan? A Manifesto for Your Life, Your Worth, and What Happens Next

Links:

Get Started on Your Personalized Plan

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SHOW NOTES

Love It or List It

  • You need more than a hammer and some nails to build your dream house, and you need more than a few investments to retire! On today’s show, why you shouldn’t DIY your retirement!
  • You don’t know what you don’t know.
    • You could do a quick google search and find an infinite number of articles and tips on how to build a house, what tools you need, and where to buy supplies.
    • But if you’ve never built a house, is this enough to prepare you for the complex process?
      • Even the best, most detailed YouTube video in the world won’t give you the knowledge and experience required to take on something of that scale.
  • The same is true for your retirement
    • You could do a quick google search and find an infinite number of articles and tips on how to get rich quick, get a good rate of return, and build a DIY retirement plan.
    • But is this advice valuable and trusted?
      • Is watching a YouTube video the same as a one-on-one consultation?
    • Articles that suggest you can DIY your retirement actually have statements in them like:
      • “The precise weighting of stocks and bonds in your portfolio should be derived based on your age, investment horizon, income needs, and risk tolerance.”
        • Do you know how all these factors specifically weigh in?
        • Are you confident enough in your knowledge to bet your life on it?
      • And the real kicker: articles like this get their tips from financial advisors.
        • Why? They’ve spent their careers studying how money works.
  • Consider this:
    • A Morningstar study took five separate issues related to making good financial decisions and compared how DIY investors typically react to the issue as opposed to those following the suggestions of a financial advisor.
    • The study evaluated:
      • Allocating clients’ total assets
      • Income planning and account decisions
      • Retirement planning product options
      • Leveraging tax advantages through allocation and withdrawal strategies
      • Considering expected retirement expenses
    • The study concluded that the methods recommended by advisors could boost clients’ retirement accounts by 22.6% over the methods of a DIY investor.
  • You’ve worked hard your entire life for your money.
    • The real question is: why do you want to DIY your retirement plan, and is it worth the possibility of missing out on the benefit an advisor can give you?

Fixer Upper

  • Financial planning is arguably as much about managing emotions as it is about managing money.
    • We aren’t always the best at managing our own emotions to make logical decisions.
  • Stories? People who have been so happy (to help a family member, to pay for something, etc) that they made a bad money move OR people who have been so scared they made a bad money move.
  • We’ve seen these emotions stand in the way of financial independence:
    • Fear
      • Market fluctuations play on our emotions.
      • The perceived loss of money can make people panic – but unless you sell, you haven’t actually lost money.
      • On almost any given day you can turn on the news and find someone telling you all the reasons you shouldn’t invest
    • Competition / Comparison
      • If you’re trying to beat the guy at the watercooler with your rate of return, you probably aren’t really acting in your best long-term financial interest.
    • Doubt
      • “I don’t know enough”
      • “I’m not worth more than what I have”
      • “It’s too late”
  • An advisor can help you:
    • Navigate and mitigate your fears
    • Prioritize what really matters
  • The reality:
    • The media makes money off of your fear.
    • If you stay frozen in fear rather than investing in your financial future, you’re accepting more risk than you think.
      • Trading market risk for inflation risk: is it worth it?
        • We’ll talk a bit more about the impact inflation could have on your plan later in the show
      • It’s about time in the market, not timing the market
        • Equities are long-term investments.
        • Go out 10 years and you see that history shows the threat of a negative return on a 10-year rolling basis is less than 6%
        • 16 years: History indicates that there has never been a 16-year rolling period of negative returns on the S&P 500.
  • Feeling secure about your future starts with how you see your future.
    • We’ve got 10 ways to shift your perspective about planning in our free download What’s the Plan: a manifesto for your life, your worth, and what happens next.
    • Click here to get your free copy

Plan for the Future

  • There’s a DIY-type show called Flip or Flop where a couple buys foreclosed/cheap homes, often without really knowing the state they are in, and renovates them to try to turn a profit.
    • Sometimes the flip isn’t enough and the property is a flop.
  • There are some mindsets and strategies that are “flops” as you approach retirement, too:
    • Investments alone: flop
      • Even if you’ve successfully managed your investments up to retirement, there’s a mindset shift that has to occur to transition from accumulation to decumulation.
        • How do you turn your investments into a reliable income stream? How do you decide what investments to sell, how much, and when?
      • 4% rule is dead
    • Savings alone: flop
      • It may feel like having money saved is as good as a plan. But it’s not.
        • Because even if you never touch it, that money won’t be worth tomorrow what it was yesterday. 
        • As an example, take a cup of coffee that costs 2 dollars today. The effect of a 3 percent inflation rate would have that same cup of coffee cost $3.81 in 20 years (nearly double the cost.)
        • While that’s a small example, imagine what that means for bigger purchases.
        • A reduction of your purchasing power by as much as 50% over your lifetime in retirement is truly a loss that you can’t recover from.
    • Social Security alone: flop
      • The estimated average Social Security retirement benefit in 2021 is $1,543 a month.
        • SOURCE: AARP
  • FLIP: Your perspective of financial planning
    • We’ve got some pretty strong opinions about planning.
      • So strong, in fact, that we believe it deserves its own manifesto.
    • Fact is, your future has less to do with a specific dollar amount, and far more to do with what that future looks like to you.
      • And that means you need a plan—one that reflects what you want, what you value, what you dream of.
    • What’s the Plan has 10 ways to shift (“flip”) your perspective of financial planning. It’s a manifesto for your life, your worth, and what happens next.
    • You can get a copy for free! Click here.

Extreme Makeover: Retirement Edition

  • The “I’ll figure it out as I go” mentality for your retirement would be the equivalent of making a Saturday morning run to Home Depot to purchase the materials to build your dream home.
    • If you were to show up at your plot of land and unload your lumber, cement mix, sheetrock, and shingles with no plan, you wouldn’t know where to start.
    • All homes are built based on a set of blueprints. The very specific calculations in the blueprints dictate how much lumber will be needed, how many bricks, how tall the ceilings are and so forth.
    • Many people show up at retirement with a truckload of investments and no idea how to build their retirement “dream home”.
  • Just because you have money in your pocket doesn’t mean you have a plan.
    • Having money is not the same as knowing how to use it.
    • A plan doesn’t hang on a single ideal number or dictate to you what you should do or want or be. The whole point of a plan is to give you options. Flexibility. We’d say hope, but fact is, you don’t need hope when you have a plan.
  • The GenWealth Ready to Retire Process covers 7 key areas:
    • Investment strategy
    • Social Security Maximization
    • Creating guaranteed income to meet your basic needs
    • Protect against inflation and providing for lifestyle income
    • Address long-term care needs
    • Reducing taxes during retirement
    • All documented in a written plan (on paper, on purpose)
  • Listen… retirement can be confusing.
    • You’ve only got one shot.
    • The help of a trusted professional can help you navigate the complexities as you plan for your future.
    • If you’re ready to get started building your personalized plan, click here.

FINAL THOUGHTS

    • A quick trip to Home Depot isn’t enough to build your dream home.
      • You need a set of blueprints, specific tools, and a certain level of knowledge to build your house.
      • You also need a plan, specific tools, and a certain level of knowledge to build a retirement income plan.
  •  
    • Maybe you think that if you were “really” independent (or smart, or savvy), you would do all of this yourself. You would save a little on fees and pick your own stocks.
      • The problem is: Few, if any, become financially solvent or cultivate wealth that way.
      • True financial independence isn’t doing this on your own; it’s knowing who to ask and when to listen.
      • You may worry that you can’t afford the fees. But what you really cannot afford is a mistake.
  •  
    • The future can’t be what you want without planning for it.
      • In some ways you can’t have a future without a plan; because all you really have is what you’re doing now and a hope that it all works out.
      • So, what’s the plan? Get our free download with 10 ways to shift your perspective of planning here.