Never Run Out of Money in Retirement
If you give me a room of 100 people over the age of 40… collectively their top fear is becoming a paraplegic and the second greatest fear is “running out of money in retirement.”
My expertise is not in helping you dodge a wheelchair… but I can help you with ensuring you ride out your blue hair days with cash in the bank.
One of the HUGE advantages of being a business coach is that you never really need to retire, nor stop. Warren Buffett is the highest paid business consultant in the world… he invests time and money with businesses that he can influence positively. He gets paid a little bit differently… but make no mistake, he’s a business consultant like you.
Better news… at 50 he was a rich guy but a nobody in the general population. Today at 88 years of age he’s like a rock star signing autographs and paid millions to speak for 30 minutes on stage. What other industry (other than owning a professional sporting franchise) can you go from nobody to rock star signing autographs between 50 and 88?
Good news… you’re in the same profession and should stay there. You can help business owners until the day they throw dirt in your face. A tad morbid… sorry LOL.
Here’s the deal… Over 50% of the people in North America have no idea how much money they need to retire. Not surprisingly also a lack of a plan. Calculating the amount you need is critical to get your financial house in order, but many of us just close our eyes, hope for the best and ignore the numbers.
The quicker you anticipate how much you’ll need in the future, the sooner you can anticipate what needs to happen to get you there. If you were to try and lose 50 pounds… you’d step on the scale to work out your starting point, and it would subsequently allow you to track your progress.
One retirement plan that isn’t going to work? Hoping your pension or Social Security will carry you through the golden years. 50 years ago the average retirement lasted 11 years. Today, due to longer life expectancies, it’s 21 years and growing. Therefore, planning your retirement isn’t a nice thought – it’s MANDATORY.
There are several common mistakes when people are thinking of retirement. The biggest is not starting because they feel they need a large amount to begin and get intimidated. Remarkable how stuff like this is almost always psychological.
At a minimum start with a small amount and CONSISTENTLY invest.
Warren Buffett was asked the secrets to his wealth, and he said
- Being born in America
- Good genes so he lived long enough
- Compound interest. “People have no idea the power that it really has.”
No advice on this topic is guaranteed. Professional investors give differing advice and follow different roads to accumulate their fortunes. I will tell you my philosophy is:
“OLD MONEY = NEVER SELL.”
Warren Buffett basically never sells his stocks… and he says “Never invest in a stock (company) that you do not want to own for ten years.
Here are some steps to accomplish financial freedom and to enjoy your golden years:
Step 1. Understand the secret sauce of asset allocation. This one is CRITICAL. Ever wonder how Mike Tyson, 50 Cent, Michael Jackson, Billy Joel (Johnny Depp appears destined) and countless athletes all went bankrupt after making OBSCENE amounts of money?
The fact they neglected asset allocation is the reason why. You’ve probably heard of “diversification”… asset allocation is 100 times as important so please listen up and take some notes.
Think of it this way… you need to create “3 boxes” for yourself and your family.
The first box is where you place 33.3% of your money… safe and secure with low returns. Examples are your home which is an asset but should not be looked at as an investment. Life insurance policy, cash, and cash equivalents are other examples. If you’re considering a life insurance plan, visit https://www.lifecoverquotes.org.uk.
The second box is the risk/growth bucket which is fast and potentially volatile where you can experience significant wins but also lose the 33.3%. Examples would include Equities/Stocks, real estate commodities, business, etc…
One can look at this website to get help with the legalities when it comes to real estate.
The third box is your “dream bucket” which is where you have a lot of fun and enjoy a better quality of life with a third of your hard earned money. Examples would include season tickets to your sporting franchise, crazy holidays with your new hot date or your family, the theatre, fly first class, you hand over a house to your parents…
Saving is just one step of financial freedom.
Step 2. Become an investor rather than a consumer. You can own some books from Amazon, or you can own a small piece of the company, Amazon. You can own a new iPhone, or you can own Apple.
Step 3. Educate yourself in the area of investing. If you want to be able to play hockey at the highest level… you better know the rules. Investing is no different. The fees you pay could blow your mind. Your money compounds when you open a gold IRA but so too do your Goldco fees.
1% or 3% sound pretty similar and most ppl would not bat an eyelash at 3% fees. Well if you had a $100K investment and getting a 7% return annually, paying 1% in fees, you’d end up with approximately $574,000 in 30 years. On the same investment of 100K over exact period and you were paying 3% fees you’d only have about $324,000.
Not knowing the rules of the game will hurt you. Good news: Once you know the rules a little better you can start to take advantage of the system instead of it taking advantage of you.
Step 4. Don’t psyche yourself out before starting. Most create a monstrous number they require to retire and it, therefore, stops them from even starting. I guarantee you-you’ll be surprised how much less you need than what you assume to live a great life in retirement. Bottom line, GET STARTED.
Step 5. Create a lifetime income plan. Most people pay off a home (a majority of)… sell it and then plan to retire off the money. Question: What if you live to be 120 (which I plan to do!!)? Running out of money and then having to get a job at Home Depot at 85 sounds a little rough. You don’t want to just retire with assets…. you want to retire with INCOME. An example is owning an investment property that you never sell (note: old money = never sell) and then renting it out. The house will appreciate, and that’s great (tax-free money!!) but the $3,500 per month rental income is income for the rest of your life.
Make sure you won’t run out of income for as long as you live. Income is all that matters. Assets won’t buy your groceries. They won’t let you travel. You have to focus on income. The investment community wants you to think about keeping your money in assets.”
Step 6. Invest like the 1%. This means to learn from the very best available. The book ‘Money Master the Game’ by Tony Robbins is an absolute must-read for every family in western society in my opinion. My personal roadmap entails reading each day to learn ONE SMALL THING on Wealth, Marketing or Business. Over the course of 12 months, you’ll be amazed how much you can pick up and how your roadmap will successfully evolve.
Thanks for tuning in peeps,
Karl Bryan, creator of Profit Acceleration Software™
Karl is the Founder and Editor-in-Chief of The Six-Figure Coach Magazine and Chairman of Focused.com, home of the largest private community of Business Coaches (24 countries and counting) in the world. His goal is straightforward… to help serious coaches/consultants get more clients. Find out more at focused.com