We are using a broken model. Today we are taught that we need to grow our assets to a sufficient number. If we do grow our assets to a magical number then one day we will be able to convert that number into a stream of income. But here lies the problem. Retirement has nothing or very little to do with this ambiguous number.
Problem #1 – We don’t know the Real Goal
We are sold a bill of goods from main street media, Wall Street, and big financial groups that is not in keeping with the real goal. Without a real goal in place we spend so much of our time, effort, and energy doing something that is completely wrong.
Retirement actually has to do with how we create income off that number. The financial world in general specializes in getting you to accumulate a large sum of money by putting your money here or there (asset allocation, asset diversification, the whole bill of goods) in order to reach retirement. Their expertise begins and ends in the accumulation phase of your life when you are working hard and able to save.
Most financial planners don’t know how to strategically help you enjoy retirement in the distribution phase of your life. That’s not to say they don’t want for you personally but at the end of the day they work for a company and it’s not a product they sell.
Growth is only HALF of the intended strategy. THe real strategy is no matter how much we have grown – we want to be able to turn that into income.
The number #1 goal in our retirement plan is to generate income. How we generate income is largely dependent on how we choose to grow our assets and where. If we choose to grow our income in market based accounts or 401k we will as a result have a lower stream of income because we chose to grow our money in the wrong location.
When we know that our goal is income we can now base all of our financial decisions as to how we grow our money and how we position our money accordingly.
The retirement plan we use today is predominantly built on assumptions. What havoc building out a financial plan on assumptions will wreak in the long-term. Your average financial advisor doesn’t sit down and go over with you these questions….
- How much accumulated assets do you need to retire?
- How will inflation affect this number?
- How does life expectancy affect this number?
- How much annual income can you safely take from your assets?
- How does volatility impact the longevity of your assets?
- How will taxes impact my spendable income?
There are a lot of very serious questions here that are critical to draw a map for a financial plan that most people out there are bold enough to assume work out okay and hope for the best.
Building your financial plan on a pile of assumptions is akin to building your house on a lot of quicksand. It’s only a matter of time before the whole thing sinks in and falls apart. Most retirement plans fail because they are built on assumptions.
What will make the bigger difference in your retirement plan?
Better Rate of Return or Retter Distribution Rate?
Everything we are sold is to put our money here or put our money there. We need to be focusing on how we can get our money to a place where we can get the most income from it. It allows us to retire on a far smaller number. We can ultimately take the same amount of assets we would have had using the traditional methods and generate a much larger income.
We focus on two things.
- Ensuring that our clients have the best most efficient stream of income once they are ready to retire.
- Reverse engineering a plan to accumulate assets.
We go over this and so many other game-changing strategies to revolutionize your finances regardless of where you are in your financial plan. Join the movement and Rise Up & Live Free.