You Have Assets. But Do You Have a Plan?

I recently sat down with a widow who had more than a million dollars. And she ended up in tears because she needed new tires on her car.

It wasn’t because she didn’t have the money. She absolutely had the money. The problem was she didn’t know how to use the money or that it was okay to use the money.

She didn’t know which account the money should come from. She didn’t know how much she could spend. She didn’t know that it was safe.

And she didn’t know what would happen if markets went down. Would she be okay? Would she have enough? Would she run out later on?

She had assets. But she didn’t have a plan.

One of the biggest misconceptions I see in retirement planning is that people think assets and a plan are the same thing.

And it makes sense. Many people build their accounts through 401(k)s over the years. They put money in on a monthly basis, let it grow, and eventually they have these large accounts. Maybe someone sold a business and has a large asset. They’re not used to using that money.

So it’s a big shift to start thinking, “How do I use this money?”

Just because you have assets doesn’t mean you automatically know how you’re going to replace your paycheck when you retire.

It doesn’t mean you know when to claim Social Security, how Social Security will be taxed, how much income it will provide, or whether there will be a gap you need to fund from your investments.

It doesn’t mean you know how much money you can safely spend without running out of money in retirement.

I recently sat down with a family we decided to work with. They wanted to spend a certain amount each month, and as we built that out, we had to pressure test it and make sure they wouldn’t run out of money by looking at the statistical probabilities.

You also want to know how this money will be taxed, how much you’ll pay, and how your investments should change.

Should money you’re going to spend soon be invested differently than money you’re trying to grow?

Just because you have assets doesn’t mean you know how you’re going to pay for extended long-term healthcare expenses.

An account balance is not a retirement plan.

Many times when I sit down with people, they have a 401(k) from an old job, maybe money rolled into IRAs, maybe a current 401(k), and maybe a spouse has similar accounts. Bringing this together and simplifying it is one step toward creating a plan.

I’ve sat down with hundreds of families preparing for retirement, and many have done a fantastic job saving.

Building assets is absolutely important.

But eventually the question changes.

The question is no longer simply, “How much do I have?” or “How much should I grow this to?”

The question becomes, “Am I going to be okay?”

How do I use what I’ve built?

How do I replace my paycheck once my paycheck stops?

Let me give you an example of two families I recently sat down with.

Both of these families had assets. Both already had financial advisors. Both were approaching retirement. And both had a lot of unanswered questions.

Most importantly, neither family felt confident.

The first family recognized they needed a retirement plan. They wanted answers around income, taxes, investments, healthcare, and legacy. They wanted a clear roadmap.

They decided, and we decided together, that they were a good fit for our planning process, and we decided to work together.

The second family had a different response.

They said, “Let me go ask my advisor if they do all of this planning.”

And what do you think happened next?

The advisor said yes.

But that raises an important question.

If retirement planning is what the advisor does, if it’s their specialty, their bread and butter, their expertise, and you’ve been working together for years, and they know you’re approaching retirement, why hasn’t planning already been done?

That’s a key question.

So let’s talk about what a retirement plan is.

In my experience, a retirement plan answers a lot of the questions that assets alone can’t answer.

There are five areas here.

The first one is income.

Where does my paycheck come from when work stops?

The second is taxes.

How do I avoid paying more taxes than necessary?

We call this your lifetime tax bill.

The third area is investments.

How can my money be invested to support my retirement?

Many times before someone retires, their money is in various accounts, but it’s not aligned to their goals or to when retirement is going to happen.

Is the money prepared if the market drops?

Healthcare is number four.

How do I prepare for healthcare in retirement?

Not only when retirement begins, but also extended care costs near the end of life.

How do you plan for those?

There is a real window when you’re younger and healthy where you can make decisions. Once health starts to disappear, there may not be as many choices with long-term healthcare, especially extended care.

Number five is legacy.

What happens to everything I built?

Am I going to leave it all behind?

Is the goal to leave as much as possible?

Is the goal to leave a little bit, maybe the house?

Or is the goal to move money forward and help your legacy earlier?

There are a lot of planning tools that can really transform the way you’re going to retire.

So, if you’re finding this video helpful, make sure to subscribe.

My goal is to help transform the way people retire and help them avoid costly mistakes.

Now I want to use a simple analogy.

Think about your retirement like a health issue or a heart problem.

Your family doctor may be excellent. Maybe you’ve been with them for years. They’re incredibly valuable.

But when you have a heart issue, most people don’t want a general practitioner.

They want a heart specialist.

Retirement is one of the biggest transitions of your life.

It’s full of financial challenges, opportunities for mistakes, and opportunities to create an amazing retirement lifestyle.

But it’s a huge transition.

If you’re approaching retirement, I would advocate choosing an advisor or working with an advisor who is a specialist in retirement planning, not simply growing and managing your investments.

And if you’re with a great financial advisor, that’s wonderful.

But look at the conversations you’ve been having.

Are you prepared?

Are you confident?

If you’re working with someone who has already done the planning, that’s great.

Once you’ve answered these planning questions in these five areas, something interesting starts to happen.

Your assets stop being just a collection of accounts and instead start being coordinated into a plan.

Here’s the key thing:

Every dollar has a purpose.

Some assets are there to provide income.

Some assets are there for growth.

Some assets are protected.

Some assets are there to help pay taxes or support Roth conversions.

Some are there for healthcare, legacy, and fun buckets.

That’s what I mean when I say, “Give every asset a job.”

That’s a unique process we go through in our office.

Assets become much more powerful when they have a purpose.

Let me say that again.

Your assets become much more powerful when they have a purpose.

Most people spend decades building their assets.

Very few spend enough time creating their plan.

In fact, many people spend more time planning their vacations than their retirement plan.

Assets are tools.

The plan starts to tell us what the tools should do.

Strategy leads. Tools follow.

Confidence doesn’t come from account balances, although they help.

Account balances can also accentuate nervousness and anxiety.

Confidence comes from knowing what the money is supposed to do and what you’ve decided it’s going to do.

Two people can have the exact same assets and completely different retirements.

The difference isn’t how much they have.

The difference is whether they have a plan and whether they do more with the assets they already have.

You can certainly have assets without a plan.

But it’s very difficult to have confidence without one.

If you’re wondering whether you have a retirement plan or simply retirement assets, download the guide I’ve built for you called the Retirement Ready Checklist below.

It walks you through some of the biggest retirement decisions around income, taxes, investments, healthcare, and legacy planning.

You can download it using the link below.

And if you found this video helpful, make sure to subscribe.

Thanks for watching. I’ll see you in the next video.