A few years ago, I was talking with a couple who were about 2 years away from retiring. They had no idea how they were going to live. Don’t get me wrong, they had a pile of money and lots of assets, but no plan as to how or where the income they needed would come from. As we looked at their investments and assets literally everything except about $50,000 was invested in the markets, all at risk, and really nothing that would produce a consistent income. The $ 50,000 in cash was a small percentage of their overall net worth. They had done well over the years, he had a good job, above average pay, but now, if they had a major market set back, it could negatively impact their retirement – massively. I asked them what their most important objective was and they said, to have an income they could rely on. They wanted to find a safe place to invest and get income from that they wouldn’t have to worry about. They wanted to travel and enjoy retirement without worrying about income and how long it would last. He didn’t have a pension through his work, the company had opted for a 401k instead. At that point, it was all invested in the mutual funds chosen by the 401k. Most were about average, nothing stellar, and none of them were protected in case of a market decline. Then he made a very interesting comment – he said, we’d rather take our money from an ATM rather than a slot machine. I loved it, what a great visual - I thought that was a perfect analogy of what so many people face when planning for retirement. You may get lucky, and the slot machine might pay off, or you could find yourself pulling your pockets out, wondering where’d your money go? On the other hand, there are ways, that you can assure your income will come from an ATM instead. Of course, I’m not necessarily encouraging you to put your money in a CD and literally take it from an ATM, but you can have the safety and predictability of an ATM. I often talk about what I call the danger zone. This is the 5-7 years before you retire and the first 5-7 years after you retire. If you’ve got a pile of money, and this money needs to last as long as you do, then you need to be aware of the danger zone. It’s during the danger zone period that you simply can’t lose money! If half your pile of money goes poof due to a market decline, it’s more than just a setback, it could be devastating and implode your retirement plans. We saw it in 2008. Many who wanted to retire had to put it off as their 401k turned into a 201k when they lost half their retirement funds. It’s during that danger zone period where you can redirect where your assets are, and protect them. You can also set up guaranteed income for life – if that’s something that’s important to you. The earlier you get these plans going, the better. There are several ways to do this, and because not every situation is exactly alike, don’t presume that because so and so did this or that, that the same strategy will work for you. The other thing I’ll caution you on is not to be biased against a particular product or investment. Often times we hear other opinions or experiences and then assume if it did or did not work for them, it will or won’t work for us. That may be true, but as an example, if everyone fit in the same box, then there would be just a few investment’s or products to choose from. However, products and investments vary because every situation varies as well. I can tell you that with EVERY product or investment – there is one truth. It can be the best or the worst – depending on the situation. If it works, fits, and accomplishes an objective – then great, I really don’t care what it’s called – it makes sense for your situation. If that same exact investment, makes no sense and puts you in a worse situation – then that same investment is a horrible investment for you. See, often times advisors don’t understand then they try to make a square peg fit in a round hole. They are more interested in a product fitting you, rather than you fitting a product. Now, there are some bad investments, some that I’d run from like the plague and never touch. However, there are others that are great investments for some, but terrible for others. There is no such thing as the perfect investment. What you have to do is understand the pros and cons, and find the investments that give you the most pros! Use investments that accomplish the majority of your objectives – then you’ve got a good fit. What’s hard for me to watch is when advisors don’t understand the best fit and sell you something that simply won’t work for you long term. I can’t tell you how many times I’ve had to tell people, you know what, this particular product or investment strategy really doesn’t work well for your situation and then list the reasons why. When you have the wrong investment or if the investment is way too risky, well that’s slot machine investing. When it works, when it fits, when the income is solid and predictable the money is safe, then that’s taking money from the ATM. So, how do you know if you are taking money from a slot machine or an ATM? Would it be kind of nice to know? Oh, and the sooner you can plan, the longer you have, the more money can come from the ATM. Way too many people, whether on purpose or not, take the slot machine route. They don’t have to. With just a bit of knowledge, coaching, and having someone who helps them assess their best route they can live off the ATM too. And that makes for a happy and stress-free retirement! Well, that’s about it for this video. As always you can email your questions in. I get a high volume of questions, which is great, so don’t hesitate to ask. Send them to [email protected]. Till next time, Take Care!