Month: May 2023

Mountaineering offers many opportunities for regret, especially the young climber’s formative years. The man who chased his pack into a 2,000 foot deep crevasse on Mt. Denali on May 15, 2017, surely regretted not clipping it to his harness. Years ago I regretted not putting my snowshoes on and stubbornly post-holing for two hours in deep snow, as I later shook uncontrollably from hypothermia caused by excessive perspiration. Poor choices produce painful results for retirees, too, which are generally felt when little or nothing can be done to change them. Consider the following retirement regrets, and the means of avoiding them as you plan for your own golden years.

• Regret #1: Not saving enough. A recent study published by the National Bureau of Economic Research (NBER) showed 57% of retirees regret not having saved more money.¹

  Solutions: have a retirement plan in place and follow it. Make conservative planning assumptions with rates of return, taxes, and inflation. Capitalize on tax-advantaged retirement accounts, especially those matched by your employer. Work longer and consider a part-time job in the early years of your retirement.

• Regret #2: Inadequately preparing for health care costs. The recent NBER study revealed 40% of retirees regret not more carefully planning for health and long-term care costs.²

  Solutions: assume future health and long-term care costs increase faster than other budget items in your planning. Take great care of yourself with daily sunshine, nutrition, exercise, and sleep. Formulate a plan for your late-life care and share it with your children.

• Regret #3: Retiring too early. Thirty seven percent (37%) of respondents to the NBER study felt they left the workforce too early.³

  Solutions: while working longer is the obvious solution to such a regret, the benefits go well beyond better finances. The intellectual and relational engagement a job or career provides is often critical to a person’s well-being. For the same reason, make sure your inspirations and talents continue in full function to the benefit of others when you do retire, which will be a blessing to you.

• Regret #4: A poor decision with Social Security. The NBER study indicated 23% of retirees wished they had filed for Social Security later.⁴

  Solutions: have a detailed retirement income plan at least 10 years prior to retirement, including Social Security optimization. Work part-time for the first 3-5 years of your retirement so you can delay Social Security payments, which will reduce or extinguish reductions for taking it prior to Full Retirement Age, and enlarge those payments for life.

Think about it, Shaun.

“Where there are no oxen the manger is clean, but abundant crops come by the strength of the ox.” ~Proverbs 14:4

 1,2,3,4 Financial Planning, “4 big retirement regrets – and how to avoid them”, by Nathan Place, January/February, 2023

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

https://www.fivestarprofessional.com/spotlights/90982

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Methodical wealth building (MWB) may be defined as the accumulation of wealth, or net worth, at a pace faster than inflation. It is a Biblical concept, a practical endeavor, and a noble enterprise, as the effort of one invariably blesses the lives of many. MWB prioritizes not the accumulation of money, but good stewardship, and often chooses a course with slower accumulations due to principle. The only reliable means of MWB is the consistent application of financial principles over time, as a manner of living; the tortoise beat the hare because it stuck to the plan, and the hare lost because it didn’t! While persistent high inflation makes MWB elusive, the means, as a rule, prevail, giving every partaker a high probability of success.

The practices of methodical wealth builders are simple, but often defy both the natural appetite and our profligate culture, so don’t confuse ‘simple’ for ‘easy’:

• Methodical wealth builders work hard and live simple, frugal lives. They spend less than take home pay each month, saving and investing the difference. While a miser forsakes all for more gain, wealth builders enjoy the fruits of their labor, but with discretion. A fancy automobile is viewed not as a status symbol, but as an imprudent disposition of capital. The dispensation of every resource is weighed on a scale of prudence and scarcity, as with accountability.

  “Aspire to live quietly, and to mind your own affairs, and to work with your own hands, so that you may be dependent on no one.”  ~1Thessalonians 4:11-12  

• Methodical wealth builders manage debt with scrutiny. They understand the danger of debt in certain circumstances, that leveraged investments do not match unleveraged investments in profitability, and that debt only makes financial sense when the borrowed money is invested productively (net of interest paid, after tax return exceeds inflation). They always carry a miniscule debt/equity ratio, and never fully retire with any debt at all. “The borrower is the slave of the lender.”  ~Proverbs 22:7

• Methodical wealth builders dispense capital carefully and productively. They understand prices are negotiable, and consider the value of a thing before tendering an offer. They know a company’s reported revenues and earnings can deceive investors, and that dividends and free cash flow can’t. They invest primarily in boring businesses which dominate their respective industry, have a moat of protection against competition, earn steady cash flows, and pay (and increase) dividends systematically. They speculate sparingly with minimal capital, and keep individual position sizes small. They are judicious in the deployment of their hard-earned capital. ”Precious treasure and oil are in a wise man’s dwelling, but a foolish man devours it.”  ~Proverbs 21:20  

• Methodical wealth builders are generous, and give freely to those in need, understanding this is the one instance where returns are non-financial. They give not to enable, but to empower and bless, and that “you give a child enough to do something, but not enough to do nothing”. They seek to forget every gift immediately. “God loves a cheerful giver.”  ~2Corinthians 9:7         

May these principles and practices be a blessing to you and others, Shaun.

The opinions voiced in this material are general, are not intended to provide specific recommendations, and do not necessarily reflect the views of LPL Financial.

All investing involves risk including the possible loss of principle. No strategy ensures success or protects against loss. Dividend payments are not guaranteed and may be reduced or eliminated at any time by the company.

https://www.fivestarprofessional.com/spotlights/90982

Award based on 10 objective criteria associated with providing quality services to clients such as credentials, experience, and assets under management among other factors. Wealth managers do not pay a fee to be considered or placed on the final list of 2012/2022 Five Star Wealth Managers.