Learn how there are fewer companies on the stock exchange than their used to be and why to be aware of that. We also go over the six steps to financial planning.

Main Questions Asked:

What should I expect from my financial advisor?

What are my financial goals and why should I share them with my advisor?

Will I get help implementing my new recommended financial plan?

Key Lessons Learned:

How There Are Fewer Companies to Invest in Than There Used to Be

• There are fewer companies than there used to be traded on our US exchanges. The market is about half of its peak in the 1990s.
• Certain companies are having a bigger impact on the market index. Take out Apple, Google, Facebook, Microsoft and the market would be flat.
• We need to be careful. These companies have a larger impact than they used to.

The 6 Steps of Financial Planning

1. Establishing and defining the client planner relationship. The client should understand what the relationship will look like. The planner defines how often we review, adjust, and how you measure things.
2. Gathering client data and including goals. Sometimes this doesn’t happen. We want to know what your concerns are and what your goals are. It is important to know these things at the beginning of a relationship.
3. Analyzing and evaluating the client's current financial situation. This is important to make sure that goals and current plans align. These need to be discussed with your advisor.
4. Developing and presenting recommendations for your client to access. This process takes time and is developed after your analysis. This is important to take time creating the plan and walking the client through the recommendations.
5. Implementing the recommendations. Some planners just present the recommendations. Clients need to be coached and persuaded to implement their plan.
6. Monitoring those recommendations. Once these recommendations have been implemented they need to be monitored, because any plan may need adjustments.

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Fewer Listed Companies: Is That Good or Bad for Stock Markets?

The Stock Market Is Shrinking. That’s a Problem for Everyone.

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Main Questions Asked:

Will I have enough income to last my retirement, longer life expectancy, and outpace inflation?

Am I being smart about planning my retirement while still helping my kids and looking out for my parents?

Do I have lazy money that is not earning a good return?

Key Lessons Learned:

The Glory Days of Retirement Planning

• Fewer people have pensions these days. Companies are also trying to buy out pensions. We are on our own a little bit more.  
• Longer life expectancies. Living longer is great, but we need more money to last longer. Many people will live past 100. We also will need to keep up with the cost of living.
• Taking care of parents and kids. It is harder for the sandwich generation and there is an emotional component. There can be a high cost with long-term care and kids in college.
• More takers than contributors to Social Security. Working people pay in now for those who take it out now. There will be a shortfall when more baby boomers retire. Have extra savings to offset the possibility Social Security could get cut.
• Retirement planning is more difficult with 1% interest rates. Lower expectations and don’t reach for risk to make up the returns. No one has been hurt, but it will change.

Lazy Money That’s Not Earning a Good Rate of Return

• What is lazy money? It’s money either earning a very low return or money that is just sitting around in cash. This excludes emergency fund money.
• How to help people who have too much lazy money? Help find investments that limit the downside and use different products to get a higher rate of return safely.
• The instinct not to have money exposed to the market is correct. But if you are not earning enough to keep up with inflation, you are going backwards. You need a solid plan. Only emergency money should be at the bank.

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The Lump Sum Pension Payment Guide: 7 Crucial Factors of Your Decision to Take Monthly Payments or Rollover a Lump Sum

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Learn answers to the common 401(k) questions that many people have. Learn how to use your 401(k) to your utmost advantage and keep an eye on your investments.

Main Questions Asked:

How can I get the most out of my 401(k)?

Is now the time to rebalance and protect some of the gains that my investments have made?

Key Lessons Learned:

Listener Questions

• What do I do about health insurance when retiring before age 65? Before retiring, you need to create an income plan and see if you have enough money to retire and afford your insurance premium.
• Which is better: term life insurance, universal life insurance, or whole life insurance? This depends on your circumstance, but for most people term insurance with 10x your income is a good idea.
• Can I spend money after retiring? Sometimes this is fear based. A financial plan can ease your mind. It could be a family philosophy but having a good plan can ease fears about spending after retirement.

Common Questions Asked About 401(k) Plans

• Should I use the advice from my company plan? This advice is better than nothing. It’s basic asset allocation advice. It’s not true financial planning.
• Should I contribute as much as I can? Most should. Especially up to the max. Save 15% of your income.
• Should I use a target date fund? It’s better than nothing and takes emotions out of it. You are better off talking to a qualified financial advisor.
• Is taking a 401(k) loan a bad idea? Yes. Don’t touch this money.
• When should I roll over my 401(k)? When you leave the company. Consolidate and talk with an advisor for a plan that covers the whole picture.

Income Planning Essentials

• Plan on being retired for decades not just years. Retirement has changed. People are living longer. Plan to be retired for 30 years.
• Don’t ignore inflation. If you live longer, you need to get raises each year to protect against inflation. The power of inflation and the cost of living can make people run out of money.
• Taking social security at the wrong time. The less money you have, the longer you should wait. People with more money should take it earlier. It depends on your circumstance.
• Understand all of your income generating investment options. Bonds, preferred options, REITs, and many other options are out there.  

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The Ultimate 401(k) Guide

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Learn whether or not you are on the right retirement track and how to avoid making mistakes as you enter the financial red zone. The economy has picked up for some. Interests rates are starting to go up which will reward savers. Bonds and bond funds will go down when interest rates go up.  

Main Questions Asked:

Is my investment strategy able to mitigate risk in a market downturn?

What do I need to pay attention to as I near retirement and enter retirement?

Do I have too much exposure to the market?

Key Lessons Learned:

The Financial Red Zone

• Why people need to pay attention in this stage of life? Because time is different. Save 10%-15% while working to live like no one else.
• Within 10 years of retirement, you want to transition to preservation mode. There have been times when it has taken 12-14 years to recover from a downturn.
• Have some of your assets set up so you can tap into it for income. There needs to be strategies and changes when you enter the financial red zone.

Common Red Zone Financial Mistakes

• Taking too much risk. There is no reason to take unnecessary risk. You can have a balanced portfolio and have some of your money safe.
• Not having a plan. You need a financial plan. You need an advisor that talks about a financial plan, not just investments. If you don’t have a financial plan, you could be in trouble.

The Fun and Easy Part of the Financial Red Zone

• The reward for all your hard work is here. You deserve a quality retirement. You probably have a retirement age in mind. You have anticipation of your retirement.
• You also have predictable retirement income streams. Social security and pensions.
• You are more likely to be out of debt and have a paid off mortgage.
• You also have a clearer picture of what you want to do with your life. Write out your dream retirement if money were no object.

Listener Questions

• Emergency fund? Three to six months expenses. Start small when saving for your emergency fund. Set up automatic payments.
• The money should be safe such as in the bank or a money market account.
• An emergency is a medical emergency or something with your home or vehicle. Once tapped into, focus on building it back up.
• 401k money after retirement? Who is the client? Usually it’s the company you work for. Take the money out and roll it over to an IRA. Work with a fiduciary who is legally required to invest in what is your best interest.
• Start brand new and fresh after a divorce. Start with a brand new financial plan, and make sure you have your emergency fund and are invested for your retirement. You need a protection and investment plan.

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Learn why you should be careful when comparing your portfolio to market averages. Understand the role a good financial advisor plays with legacy and estate planning. Learn the five signs of good financial health.

Main Questions Asked:

Are you taking risks that are inappropriate for your situation?

What is really going on in the markets?

Is my financial advisor acting under the fiduciary standard?

What role does my advisor play in legacy planning?

What are the five signs of good financial health?

Key Lessons Learned:

Legacy Planning

• A financial advisor plays a big role in the estate and legacy planning conversation. Guiding clients down the path of figuring out their values, in terms of what they want their money to do for their family, is a huge part of the advisor’s job.  
• What desire do people have to leave a legacy? Most people want to leave something behind for their kids and grandkids. One of the biggest fears is that the grandkids won’t have the opportunities that they had.
• Joel’s legacy plan. He has been married for 31 years and has four boys. They set up trusts for each child. They can take income, but they don’t have access to the principle. The trust can be stopped if they get into trouble. They get their first distribution at 35, 40, 45, and the rest is paid out at age 50. There are also protections for divorce, death, and grandkids.

5 Signs of Good Financial Health

• You spend less than you make. Avoid wastes of money like leasing cars. Always save off the top and spend what is left. Save 15% of your income right off the top.
• You understand the future tax implications of your savings. You could be creating a tax time bomb. You could be better off by paying taxes today. Such as having a Roth or some life insurance policies.
• Can each spouse manage the finances without the other spouse? Spouses need to understand where everything is. Don’t just rely on one spouse. Have a plan in place if the other spouse isn’t around.
• Having a retirement income plan in place. Investments are tools. Have a plan to deal with inflation and market volatility to have the income you need for retirement.
• Not worrying about your financial future. If you have knowledge of finance and understand that your money will last for the rest of your life. You have a solid plan in place and you are not worried.

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We are going to talk about Joel’s new book The Wealthy Think Differently: How to discover and challenge your financial philosophy and about late bloomers or people who get started planning their retirement a little late. We also talk about how to deal with retirement planning after you have retired and the consequences of cutting corners.

Main Questions Asked: What does taking shortcuts really cost? What does wealth really mean? How the wealthy think differently?

Key Lessons Learned: Defining What Wealth Really Means

• If you live in the United States, you are wealthy relative to the rest of the world.
• Wealthy can frequently get confused with income. Wealth and income are two different things.
• Wealth is having enough money set aside to live for the rest of your life in a lifestyle that you have become accustomed to.
• Wealth is about creating a pile of money that can take care of you without you having to go out and work.

Joel’s Book: How The Wealthy Think Differently

• The relationships that wealthy people have. The wealthy value relationships a lot more than they value money.
• The general philosophy that they have. How their thought pattern and mindset could come out of their childhood. Money philosophy could also come from big setbacks that you have had.
• The difference between a scarcity mindset and an abundance mindset.
• The crowd is usually wrong and how it applies to financial planning. Wealthy people are aware that the crowd is usually wrong, and they have advisors for different areas of their lives.
• The odd lot theory is a technical analysis theory based on the assumption that the small individual investor trading odd lots is usually wrong. The crowd is usually wrong.

Ways That People Cut Corners When It Comes to Retirement Planning

• Taking too much risk to make up for not saving enough earlier in life. Don’t chase something in the future if the cost will hurt you in the present.
• Never getting their legal documents in place. It’s so important to have a proper state plan in place.
• Avoiding that long-term care discussion and sticking your head in the sand. You need to be prepared in case there is a catastrophic situation.
• Never taking the time to get organized and figure everything out. There are those who are disorganized, and others whose financial plans are way too complicated. We can help with either of these situations.

Links To Resources Mentioned Money Map Retirement Review 1-800-757-0436 The Wealthy Think Differently: How to discover and challenge your financial philosophy The Money Map Thank you for listening!

Learn about requests people often make of their financial advisor or portfolio when they don’t really understand investing. Also discover what proper expectations are and how to get the help that you may need.

Main Questions Asked:

What don’t I know or understand?

How can my financial relationships be profitable on both ends?

How can I be more involved in the creation of my financial plan?

Key Lessons Learned:

What Makes Requests Unreasonable and Proper Expectations

• Bigger returns with little to no risk. If someone says this, they really don’t understand investments. The problem is they don’t know what they don’t know. One of the biggest dangers is not knowing what you don’t know. Bigger returns mean taking more risk.
• Can you reduce your fees for me? If you want to work with the best, there are going to be fees. If you want to save money, you won’t get the best service. It’s important to get value. Relationships need to be profitable on both ends of the spectrum.
• Can you just do it for me? If you’re going to have a customized plan, you need to participate. It’s not just about numbers, it’s about your goals and your future. A planner is there to help you make the right decision, but they can’t decide everything for you.

What Can You Expect from a Good Financial Advisor

• Reviewing your tax return. Certified financial planners know how to look at a tax return and see where you are being inefficient with your planning. Don’t miss the money-saving advantage of paying less taxes.
• Evaluating the fees and costs of your investments. Even if you think there are no fees, there is some type of time commitment on the money. There are all kinds of fees in mutual funds even hidden ones. Understand fees and costs. Cheapest is not always the best.
• Reviewing family goals and legacy plans. These are the tough conversations like special needs. A comprehensive financial advisor should be talking about all of the things that could come up.
• Is your advisor discussing and planning your retirement income? Retirement is all about income. There is a point where these investments need to be turned into income.

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Money Map Retirement Review

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Thank you for listening!

How hot stock tips usually happen after the stock has had its run. Invest to create income. Your retirement isn’t something to play around with. Today, we learn what a good solid overall retirement plan looks like and the retirement pyramid. We also talk about risk aversion.

Main Questions Asked:

How to create a plan that generates income for the rest of your life?

How to structure a solid retirement plan?

What are the main parts of the retirement pyramid?

What is risk aversion?

Key Lessons Learned:

The Retirement Pyramid

• The bottom part of the pyramid should protect against risk. These are things like life insurance, home owner’s insurance, long-term care insurance, and maybe some type of umbrella policy.
• Without insurance protection you could lose everything. Insurance simply covers the risk that can take away your assets. It makes sense to have insurance.
• Long-term care insurance. This is a big one everyone should analyze whether they need long-term care insurance, because if you do need it you could be paying over $10,000 a month.
• The middle part of the pyramid should be guaranteed income. This is consistent income that you can count on living on for the rest of your life. This includes things like pensions and Social Security.
• Guaranteed income. This means anything you need to create paychecks for life. Social Security, a pension guaranteed by a big company, a portfolio that is structured for income. You could even have some insurance products like annuities or guaranteed investment contracts.
• The top part should be your long-term investments. These are stocks, bonds, CDs, and mutual funds. These are discretionary as you can change investments from time to time and take income out.
• Some people make their investments the foundation of their pyramid, but if you think about it the pyramid is flipped upside down and unstable. Once your risk is taken care of, it is then time to grow your network.
• Now it's time to decide if you have the right portfolio based on your risk tolerance and things that have happened in your life. The investment piece needs to be on the top of the pyramid.

Risk Aversion

• People rarely say that they are risk averse. It's important for a good financial advisor to listen to a client to understand what they are describing when it comes to their tolerance for risk.
• When people say words that mean they are risk-averse, their financial advisor needs to be cautious with managing their money. They need to explain the risk of a downturn in the market, and make sure that the client is comfortable with that.
• It's a professional’s job to probe into what the client is telling them and completely understand their potential for risk.
• Often, people don’t understand that their portfolio is filled with all kinds of risk. Sometimes they are getting bad advice, or they are managing their own money and don’t understand what could happen in a downturn.
• The market will drop. When this happens, people need to be prepared for that. Part of the problem is not having a plan. You need to do more than just go over investments.

When An Investment Isn’t Conservative

• Analyze your portfolio to understand the percentage you could lose when the market drops. When an account drops it is tempting to get out of the portfolio.
• Finding a good financial advisor has everything to do with how someone will behave when the inevitable market drop happens.

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Learn about all of the different gaps that you need to be aware of when planning your financial and retirement plan. Along with, how to replace the income lost within those gaps.

Main Questions Asked:

What are some of the financial gaps that come up during retirement?

How to create paychecks for life that make up for money lost after stopping working?

Key Lessons Learned:

Gaps in Retirement Planning

• The paycheck gap. How do you supplement your loss of a regular paycheck? Fill the gap created by the loss of a paycheck with investments and money that you have saved. This takes careful planning and consideration of possible life circumstances.
• Social Security or Medicare gap. If you retire before 65, you may have a gap before Medicare kicks in. You also get a smaller benefit if you retire early. Questions about health insurance and retirement planning can be answered by creating a plan and working with a qualified advisor to find the right strategies.
• Inflation gap. Inflation is one of the most insidious things to hit you during retirement years. Depending on how long you live, expenses could triple during retirement. How are you going to triple your income? It’s important to have a plan that takes into account the inflation gap.
• Long-term care gap. Everything can be great until someone needs long-term care. You need a plan that covers contingencies for long-term care and the increased expenses that go along with that.
• Widow’s gap. The income gap that is created with the death of the first spouse. One social security check goes away and retirement plans can change. There has to be a plan in place to cover expenses lost if this gap arises. This could be income made up in investments or even a second amount of savings.

Good Things or Bad Things to Put Off

• Putting off or deferring taxes. This is a good thing when you are in a high tax bracket now. With after tax contributions, the money can grow tax free and can even be accessed before retiring. Deferring taxes depends on the tax bracket you are in today, and what the bracket will be when you retire. Roth conversions can make sense for some individuals.
• Eliminating debt. There is freedom that comes from not owing anyone anything. It’s not just about the money. Pay off the high interest debt first. Pay down everything you can even your mortgage. Although, it can even make sense for some to have a mortgage during retirement.
• Setting up legal and estate documents. Take care of this right away. Look into getting an estate plan, a trust, or even a trust where you control the way people spend your money. Estate planning encompasses asset protection, reduction of assets and fees, and control.
• Starting your Social Security. The less money you have, the longer you should wait to draw Social Security. This is another retirement asset. Look at it as another asset and decide the best strategy for your individual circumstances.

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Money Map Retirement Review

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Thank you for listening!

We are replaying one of the most popular shows and will return next week with a brand new show.

Learn how to save for retirement with a thorough and thoughtful financial plan.

Main Questions Asked:

What are some of the fallacies of fuzzy math in retirement planning?

What do I need to know about this fiduciary rule?

What is a good financial planning process for retirement?

Key Lessons Learned:

• You can’t evaluate your investment strategy based on the last five years returns because there was no downturn in that period.
• When you take money out of a portfolio, the return is not linear because the down years are amplified when you are making withdrawals.
• Your sequence of returns can make a huge difference in your balance.
• A portfolio that’s designed for growth requires a completely different mentality than a portfolio designed for preservation and producing income.
• The problem with waiting until the age of 70 before drawing social security is that it assumes you don’t have any other assets. For many people, it is better because the checks are bigger, but it depends on your life expectancy and other money.
• You may need more income in retirement than you do now. It is also still a good idea to still save and give yourself a 3% raise every year.
• There is a high probability that you won’t run out of money if you take 4% out, but it’s not guaranteed. You don’t want to gamble with your savings and rates of withdrawal.

Fiduciary Rules

• Some financial advisors have not had to act like fiduciaries, as they were held to a lesser suitability standard. All they had to do was not hurt you, but they weren’t required to act in your best interest.
• Now all financial advisors that make recommendations on retirement accounts are held to a higher fiduciary standard.
• It’s a good thing. All advisors should be held to a higher standard and act in your best interests.

Financial Planning Process

• You want an advisor that is focused on long term planning and the products they recommend are tools in the process.
• If your financial advisor makes product recommendations very early in the conversation or is pushing certain products, they may be biased for those products.
• If your advisor doesn’t gather a lot of information about you and your goals and what has gone wrong and right and what is your biggest concern, they may be just pushing product.
• If they only point out the bad things in your portfolio and all the good things they do, this could be a product pushing clue.

Joel’s Financial Planning Process

• The planning process begins with a call for an appointment. Then a call back and the time for a visit is set. The staff also gathers general information.
• Then the advisor spends about an hour trying to get to know you and see if we are a good fit for you.
• After the first visit, a one page plan is put together. There is also backup and risk analysis and estate planning.
• Then the plan is shared with you, and we take a lot of time making sure that this is the plan for you and this is what you want.

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Money Map Retirement Review

1-800-757-0436

Thank you for listening!