A lot of folks mistakenly believe that I only work high income people who aren’t retired yet and/or millionaire retirees. Or that I might limit my clientele to those near or already in retirement.
It’s true that all of those types of people make up a good percentage of my clientele. But I have a number of clients in their 30’s and 40’s who are serious about planning for retirement. And of course, many of my other clients are Baby-Boomers that would not be classed as high income or having achieved a high level of investable assets. In fact, a number of them wouldn’t have enough assets to qualify for most investment advisor firm minimum asset levels either.
Let’s face it, saving enough for retirement is tough. That’s true whether one earns $75,000 or $300,000. And the goal of retiring for 25-35+ years with a similar lifestyle to one that was enjoyed before retirement is also a challenge for many newly or about-to-be-retirees.
I’ll explain how I and our large group of like-minded advisors safely help many younger people make $300,000 – $1,000,000 or more additional in their future net worth in a moment.
I got in this business to help people greatly improve financial planning for their future. As I’ve stated many times before, I’m not a magician and cannot make money appear from nowhere. But the strategies and planning that I offer those who work with me can make a substantial and dramatic financial difference.
My clients are willing to do their part too. They also agree with me that it makes no sense to take more risk that you need to in order to achieve your primary financial goals. They believe that taxes are going higher for almost everybody in the future, they are wary of putting all of the eggs in the “buy, hold, hope… and pray” risky stock market basket and understand the same risks with the coming of the bond “bubble” bursting.
All of my clients come to understand the 3 buckets of risk and the 3 buckets of taxation and how to work those into their plans. They learn how thinking “outside of the box” can really add to their retirement in so many ways. Reading my books and learning about things such as “sequence of returns risk” and Social Security filing strategies are just the beginning or foundations of that education. They realize that my books and BLOG posts only scratch the surface of the true and comprehensive retirement planning that I can help me clients with.
Anyway, so how can I add up to $1 million or even more in a younger person’s future retirement assets and income — without changing their current lifestyle?
Well it starts with helping them become more efficient with their money. No, I don’t mean convincing them to forgo Starbucks and “Dave Ramsey” things like that. It’s usually begins with helping them optimize the way they pay for their home and contribute to their retirement plans at work. Or how they save for their children’s future college expenses or how to save on current and future income taxes. The first two items are usually the biggest and make the most meaningful improvements since their home and retirement plan at work are usually their largest assets.
My longtime readers know that it makes little financial sense for most people (especially the young) to be in a rush to pay off their home mortgage. And in these times of historically low mortgage rates, it’s even truer. Now the math does not lie, but I certainly understand the emotional (sleep at night) factor for those nearing retirement.
We believe that everyone should have their house paid off. The question is how are you going to do it? Having your house paid for is certainly a safe position financially. Would you like to know a way to have your home paid off and still control the money?
Most people believe that once they have their house paid for, they have no more housing costs. They do not have to write a check once their house is paid off; however, they do not get a check either. They must also consider the impact of the lost opportunity cost on the money that has been put into the house, which is no longer earning interest.
And I put my words into action for myself. We recently signed a 30 year mortgage that will have me debt free when I’m 89! And once rates go down again the next time we are in a housing recession, I’ll likely refinance it again. I’ll surely die with my mortgage in place since I believe that I can safely earn more than the after-tax cost of my mortgage interest. And I understand how having a fixed mortgage can actually help me profit from inflation.
Anyway, the young can learn to fully understand that there 30 year fixed mortgage is their best financial friend. Inflation can also have a large impact, especially if the client is prepaying on the mortgage. The dollars they have today are the most valuable dollars they will ever earn. Dollars used to pay future mortgage payments will have less and less purchasing power over time.
This “mortgage move” as our group calls it can easily add $100,000’s of additional retirement assets (and bigger tax deductions along the way too). It can also give them more control and access to their savings.
Principal payments reduce the loan but also reduce liquidity use and control of the money as well. Once in the house, access to the money, if necessary, may be difficult or even denied. And think of all of the people whose homes have lost permanent value due to natural disasters such as flooding, sink holes, forest fires, earthquakes, etc. Insurance might pay for losses relating to the building, but never for the cost of the land.
Most folks also know that I think you shouldn’t put one dime more in your retirement plan at work that you get a company match for. Take advantage of the full company match but then look to ROTH IRAs and other tax-free vehicles to save for retirement and get the onerous IRS rules out of your present and future life. But don’t get me started on this one…
I’ve gone on too long in this BLOG post but making those two financial moves will greatly improve the finances of most Americans.If you or your adult children could benefit by learning more about these proven financial strategies, please contact me so we can put some real dollar “improvement” numbers next to each strategy.
all the best… Mark