BEWARE
If you make this mistake you WILL regret it all the days of your life
The typical Retirement Planner's approach to YOUR RETIREMENT is predictable. He (or
she) will put your retirement assets (your money) into an annuity that will pay you a
certain amount for a period of time.
The challenge is to stretch those payments out long enough to cover ALL of your
remaining years.
But if you live too long, you will probably end up broke. You will be forced to live with
your kids (or grand kids, if they will have you). And you will probably have to eat dog
food straight from the can.
Almost EVERY Financial Planner uses this same method for retirement planning. While
you are still working you will ACCUMULATE money, but when you retire you will
SPEND DOWN your assets until you are broke. This is STANDARD PRACTICE.
They "Believe" that your working years are to be used for wealth accumulation and
your RETIREMENT years are to be paid for by spending the accumulated funds. It is
simply a matter of throwing the switch from ACCUMULATION to SPEND DOWN.
The problem is that inflation and your longevity can throw a monkey wrench into the
works.
Maybe you have enough money accumulated to pay all of your living expenses for the
next 15 years. So, at age 66 this will be enough to carry you across the finish line
provided we don't experience inflation and YOU don't fool everybody by living into
your 90s.
But, let's face it, inflation is almost a certainty and people are living longer.
Better stock up on DOG FOOD.
You WILL go broke using these tried and true strategies.
If you really want to retire (and maintain your lifestyle) you will need an on-going
source of income. That means NEW MONEY coming in each month, not an annuity
(which is just a way to SPEND DOWN your existing wealth).
Most FINANCIAL PLANNERS make several fundamental mistakes when setting up a
RETIREMENT PLAN:
1. They rely on MORTALITY TABLES to tell them how long you will live.
2. They expect your living expenses to go down when you stop working.
3. They expect your TAX RATE to be lower when you retire.
Every one of these assumptions is wrong. You will probably out-live the mortality
tables.
And most importantly, your cost of living (maintaining your lifestyle) will undoubtedly
go up at least 20- 25%. Remember, once you stop working EVERY DAY IS SATURDAY.
And since you will need more money to maintain your lifestyle, you will probably need
more income to provide that money. You can forget accumulating enough money
while you are working so that all you have to do is spend it down to zero.
Get Real
You need to replenish those funds if you want to continue to have money to spend for
ALL OF YOUR LIFE and not out-live your money.
So you can forget moving into a lower tax bracket. It ain't going to happen. As your
income goes up, so will your taxes.
Retirement is EXPENSIVE. The best way to prepare for it is to establish several sources
of recurring income that will continue AFTER YOU QUIT WORKING. This is generally
referred to as RESIDUAL INCOME.
You need a WEALTH COACH who will help you build wealth every day of your life, not
just spend it down.
Fire that Financial Planner who will spend you into the POOR HOUSE.
Hire a Wealth Coach who will help prepare you for ALL of your remaining years.
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