Wearing Your FInancial Jersey

Kevin Wray Income Planning, Insight Investing Articles, Investing, Investing & Planning, Retirement, Retirement Planning

What can we learn about retirement planning from the jerseys that players wear while playing sports? Actually, we can learn quite a bit…

Every Jersey has a Number

In some sports, the jersey number is random and in others it is dictated by the position you play. For instance, in the NFL, offensive linemen numbers must be two digits and start with 5, 6, or 7.  Quarterbacks, kickers, and punters must only be numbered 01 through 19.

Every retirement plan should also have a number, but it’s not the number most people think of. Most people try to achieve a certain net worth (a number), and once they reach that number, they feel they should be able to retire.

However, the most significant number to determine is not your total savings; but rather, your continued income. Once you retire, your income still has to support you and it may have to do so for the next 30 years. Not only that, but it will need to keep pace with inflation.

If you are fortunate enough to have a pension or some other type of retirement income such as rentals which provide income over and above your Social Security, that’s going to have a big impact on how much money you’ll need to have saved.

The most important number is what we call your retirement number. This is the rate of return your portfolio needs to earn every year in order that you do not run out of money. Our Simplicitree® plan will give you this number.

Every Jersey has a Name on the Back

Teams generally print the name of each player on their respective jerseys.  Some teams like the New York Yankees and the Indiana Hoosiers don’t use player names on their jerseys because they want to illustrate that the team is more important than the individual. But in most cases, the name on the back is vital for identification.

In the same way, it’s important for your retirement plan to have your name on it. Your situation has its own unique challenges and unforeseen events.

Just like the Yankees, you also need a team to help you navigate through retirement.  Your team should consist of an advisor, a tax professional, and an attorney.  Your retirement plan needs to be customized specifically to you and your team should work in sync to address your personal goals and desired retirement lifestyle.

Some Jerseys Look Great, but the Team is Terrible

Sports magazines and websites have tried to rank the best uniforms of all time; and often the same teams are mentioned over and again. Frequently, teams with the best uniforms are some of the worst on the field of play.

The Chicago White Sox of the late 80's repeatedly get lauded for their jerseys; but they didn’t have a single winning season during that period. Team USA in the 2010 World Cup sometimes gets a mention; but they didn’t make it any further in that tournament than they ever have.

What does this have to do with your retirement? It is important to remember that appearances are not everything. Whether referring to a sensational uniform or a financial plan, it can be easy to be fooled by fancy brochures and slick salesmen, but just because something “looks good” doesn’t mean that it has any real substance to it.

The problem is that most advisors will try to fit you into their box. For example, if the advisor sells only annuities, then he or she will probably pitch an annuity to you, whether or not it fits in with your personal plan. I call this “VOODOO” planning.

Keep in mind that you should be able to answer two very important questions after you have met with an advisor:

  1. Do the advisor’s solutions solve my problem(s)?
  2. Is their advice in my best interest?

If you are looking for advisors who want to help you solve your retirement puzzle in a way that is only in your best interest, then give us a call. Our team will be more than happy to help you in any way we can.

Here’s a thought for discussion:

Wall street spends a lot of time on diversifying investments and not enough time on monetizing investments.