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Playwright Tennessee Williams once famously said, “You can be young without money, but you can’t be old without it.” That sums up retirement planning.

And to avoid feeling stressed over how the money you spend in retirement, you need a plan that grows and protects your assets (or you’ll hit a roadblock the first time you need to pull emergency funds)

In this episode, you’ll discoverlearn why retirement planning is more than numbers and how your mindset about money affects the income you generate today.

Show Highlights Include:

  • The “Tennessee Williams” model for planning your most comfortable retirement. (1:52)
  • What this IRI study reveals about understanding your work and forecasting your wealth right now. (8:28)
  • The “Scarcity vs. Abundance” mindset that transforms assets into streams of income. (12:05 )
  • The real reason retirees blow through their money and the financial strategy you need for living comfortably (no matter what the future holds). (17:39)

To schedule your free retirement tracking meeting, specifically for first responders, head to http://pensionattention.com/ or call us at 805-409-8150.

Read Full Transcript

Welcome to Pension Attention, the best show for first responders who want to take control of their finances.

After advising Los Angeles city firefighters for over 12 years, financial advisor, Brad Barrett now shares how you can grow your wealth, build your legacy and enjoy a life of freedom. And now here's your host, Brad Barrett. [00:19.9]

Brad: Welcome to Pension Attention, the show for you, first responders who want more out of their deferred compensation and pension plan. My goal with this podcast is to reach you where you are at whatever stage in your career you are in, in order to provide my nearly 15 years of experience working with both active and retired service members on their investment and retirement planning. My team of fiduciary advisors here at ONE Fire and Police are dedicated to ensuring you take control of your finances and build the life you deserve. To find out more about me or my team here at ONE Fire and Police, you can go to our website at PensionAttention.com or you can give us a call at (805) 409-8150. I want to thank each of you for tuning in each week here to Pension Attention, and please make sure to subscribe and leave a comment, always good to know feedback. You can go to our website again at PensionAttention.com you click on the media tab and there you can download and subscribe, or you can go to anywhere where you would download a podcast, any platform, whether it's Google, Spotify, SoundCloud, or even your iTunes app and even there, you can leave a comment. It's always good to hear feedback. [01:26.7]

As I mentioned before, in a couple of weeks, we're going to start doing listener questions. So, I'm looking forward to that. So, if you have any questions that you'd like me to go through on these weekly episodes, you can shoot me an email at bbarrett@onecapital.com. Again, B B A R R E T T@onecapital.com. And I'll make sure to ask those questions throughout the episodes each week. And we'll try to answer at least one each week as we talk about our different subject matters. You know, in thinking about this week's episode for Pension Attention, it reminds me that our life has various stages, I mean like seasons, right? Spring, summer, autumn, winter, we go through things in life. You know, seasons, they come and go each representing a segment of time that I think collectively make up the passing of a year, right? It's a process it's completely analogous to the seasons of our lives that I mentioned from beginning to end. Our lives are ever changing from young to old, from those who are listening that are early on in the job to those that are getting closer to retirement or in drop it's like Pete Seeger's song. He once wrote that everything there is a season, you know, for one generation, the sixties, the band, the birds, immortalized Pete's words. But I think for all generations, those words are immortalized in the King James version of the Bible, from which basically Pete Seeger snatched those words nearly verbatim. [02:40.8]

And I'm sure that most of you have heard another interesting expression if you haven't, it's an old adage. May you live in interesting times, you heard that one before? Now, although this adage is generally thought of as a Chinese curse, if you look it up, it's kind of like an origin of a Chinese curse, but its origins have never been traced to any Chinese roots. Rather it's actually a well-documented 20th century expression of English origin and was not meant to be a curse at all, but a blessing, a hope that your life is interesting shaped by interesting events. And my prayer for each of you every morning is that you live interesting lives and are comfortable and content with all the blessings that we've all had. And I don't think anyone would argue the point that, you know, as seasons turn, we are indeed living in interesting times. Just look at this last year, what is going on in our world. Now, because you're listening to me right now on Pension Attention, you've probably had concerns or thoughts about retirement. You've maybe heard my name to the stations, or if you're a client listening and we get to chat all the time about these topics for you specifically, and retirement is always in the mind, making sure that we have sustainable platforms in place, if you will, strategies to put together to make sure that you feel comfortable in retirement. And just like again, summer becomes winter moving from active duty to retirement. [04:01.4]

Those listening that have gone through that process, no, it's a change. And if you haven't gone through that, something I talk about heavily is that even though there's some common denominators of your fellow colleagues that have gone from active duty to retirement, yours will be specific and unique. And it's important to honor those things, especially when it comes to your savings, your investments, your tier, all the stuff that's unique to you and your wife and your kids, and understanding how that fits into an overall plan, which leads me into my topic into this week. Now, real clearly, I want to be open about something. I grew up with two younger sisters and they are very into place. They both were actresses, nothing professional by any means they just loved theater. And as you can probably imagine growing up, I was exposed to a lot of plays that I had to sit through because I was being a good big brother and supporting my sisters. But it reminded me of a playwright guy that I actually became kind of fond of and understanding his story. His name was Tennessee Williams, he was an American playwright and he wrote some of the more beautiful plays, memorable plays, most notably, A Streetcar Named Desire. He did also other ones like The Glass Menagerie, Cat on a Hot Tin Roof, things like that. [05:06.1]

But what you probably didn't know is that he made actually a huge contribution through retirement planning or at least in my eyes. When he penned the famed words, ‘you can be young without money, but you can't be old without money.’ Now I have an older wealthier client of mine who is very fond of saying when I was young, I was too poor to pay attention. Now I assure you, my client is no Tennessee Williams here, but his point is somewhat the same. Being old and poor is indeed very different than being young and poor, I'm assuming we all would agree. Now the word poor is subjective to be fair, okay. I think a lot of people, if you ask them, they're like, Hey, look, I have my needs met, but then I have my want because I'm an American and I want more. So, I feel at this constant tug of war or between the two, but I'm using those words because that was the words that Tennessee Williams had. Now, you know, Tennessee Williams, like many playwrights and many people in theater and movie scripts, they typically model many of their characters after real life people, you know, people that they know, especially family members. [06:08.6]

And if you look back on Williams, he was born in 1911. He was a really sickly child. He was raised by an alcoholic father and a mother who constantly was searching for we'll call it greater social status. He had only one sibling, an older sister who suffered from psychological disorders and physical impairments. And each of his family members manifest in various characters in virtually all of Williams's plays. When Williams wrote, ‘you can be young without money, but you can't be old without money’, he was speaking from the experience of his childhood, watching his parents age, you know, reduced to something less than they had hoped for themselves. You know, when it comes to the topic of preparing for retirement at the end of the day, we can add up all the numbers we want and couch every argument in, you know, a math-based rationale, but sometimes our own life experience to serve as the greatest guide to understanding what is actually the truth, your truth. [07:04.6]

Now, many of my clients who are listening right now have heard me talk about the fact that numbers are hugely important, no doubt, but understanding who they are, the behavioral finances of what makes you tick, what are circumcised things that you've lived through in your life, whether it's good or bad manifest itself, how we look at money. So, these topics that I bring up on this weekly program, as well as what I bring up within our client base is really important to tie the two, to tie the logical with the emotional, because they play a part when it comes to looking at your money, especially in retirement. And a major truth for Tennessee Williams was you can be young without money, but you can't be old without money. And I'd imagine the vast majority of you listening to me right now would agree. I know I would, you also realize the truth of his words, honest and pragmatic. It's kind of a cold, hard truth in a way. And perhaps some of you learned the truth, the hard way, potentially from poverty in your youth. I talked to countless clients all the time when we get into these behavioral financial discussions, that how they were raised again, good or bad financially poor or financially solvent is really vital component to understanding your specific plan. [08:16.9]

But being the investment manager that I am, when you look at the numbers, the math-based statistics of preparing for retirement, it kind of flies in the face of what we all know to be true. Now, according to the IRI, which is the insured retirement Institute, it's a Washington DC focus study group. There was a study a few years ago and I quote, American consumers are not prepared for retirement as evidenced by both low savings rates and their own assessments of how ready they are to retire. IRI research show that less than half of baby boomers and gen X-ers have any retirement savings at all. And only one in 25% say they're confident in their preparations for retirement. Now, obviously these studies that I tend to read on a weekly basis, these white papers and research papers and the economists that I follow, I filter it down to make sure that what they're talking about from the vast majority of Americans who are in the private sector, let's say I like to filter it, to make sure I fit it into understanding the methodology and the mindset of my first responder clients, because there's a difference. One is pension. The other one is loyalty and longevity. Most people in the private sector don't work for 30 years of the same company anymore. That kind of thing is dead and gone. [09:31.4]

Pensions used to keep them in, in the private sector and those have gone away. And for many of you listening right now, you're going to put 20, 25, 30, 35 years into one organization, one city that's loyal. That's great. That's honored by when you retire that strong pension, that deferred comp plan that drop, but the mindset and what this research was showing is that there's also an emotional aspect to retiring and understanding that, Hey, look, obviously the statement of it's easier to be younger without money than it is to be older, without money, but making sure that transition those seasons of life I was talking about going from younger to older are managed effectively. And if you don't have a plan in place, there is no sort of roadmap or discipline structure or some advocate, maybe an advisor who worked with you. It's really hard to attain those goals without a discipline roadmap or discipline approach. We call it our retirement track or what most of my clients know is the black book. It's essentially a custom-built wealth forecast for our clients specifically and uniquely to their situation, encompassing their inflows and outflows, amortizing their mortgages and their debt, discussing debt reduction strategies along the way, building up savings accounts all the while, talking about contributing to defer comp plan and forecasting it out based on the time of the job you have, whether it's five years or 15 years on, right. Understanding where you're going and looking backwards to make sure that what's the number you're obtaining. [10:59.5]

I talked about this last week, if you guys tuned into that one about what is your retirement number and bringing up those publishers clearing house ads about that $5,000 a week, all that kind of stuff used to hear on the marketing campaigns of things. This was very heavily done in the nineties, right? And you think about those kinds of things and essentially that's your pension. That's that stream of income coming in that you worked for. Now, if you have a pension, that's going to give you $8,000 a month in retirement, but you have a $10,000 a month need, as I've spoken about heavily on this program, that $2,000 a month isn't coming from sod anymore, you're no longer working. So, understanding where that's coming from multiplying that by 12 to get an annual number and dividing my that by the amount of assets you have in retirement. And the assets I'm talking about are liquid assets, deferred comp plan, drop IRA, liquid cash. [11:48.0]

Do you know how much you should be contributing to your deferred compensation plan? Are you getting the most out of your current investment options? Looking at entering or about to exit the drop program? Go to www.pensionattention.com to find out how we can help. [12:04.0]

Putting real estate involved that is important. Most people think just because I'm an investment advisor, I don't like real estate. I have real estate; I actually love the asset class. But the difference I'm trying to get at is the difference between liquid and illiquid. You know, you can't go tap on your wall of your house and ask for grocery money that day, right? You can do that in certain cash accounts and liquidity accounts. So, liquidity is King in retirement. Understanding what those liquid investments will be able to generate for you in retirement is the difference between basically living in retirement without any money. Also understand the abundance versus scarcity concept that I'm going to be talking about here real soon, understanding that there is a environment to live in, in retirement, not in fear. The one thing I want for all my clients that they go from active duty to retirement is to not fear the unknown, not fear, being able to work for your money and having someone else work for it, or in turn your money working for you. The concept right of the whole work smarter, not harder, but for many of us for 30 years, you look at your hands right now you're like these hands did that. You know, God gave me breath in my lungs, but these hands worked to make the money. When you went on a trip with the family, you knew, okay, I can go work an extra sod day to pay for something. And that was kind of your mindset for 30 years. [13:19.6]

So, shifting from active duty with that mindset into retirement, knowing that your account now will be doing the work can be sometimes problematic for people. So going through that, discussing those emotional aspects around your money, contextualizing what that money will do for you on top of your pension and putting it into a plan that fits you, not necessarily your buddy or your engineer or your guide at the station, or a friend, you know, or a neighbor, you, you and your wife, you and your family, because all those things are vastly important to understanding how your overall retirement plan actually works for you. And that also answers a lot of questions around, do I have enough money to retire? When is it appropriate for me to retire? Brad, I'm 50 years old and I have 25 years on, my body feels good, I love my shift, love my station. Should I retire? You probably thinking about that? A lot of guys do I have that question constantly. So, we go through these discovery processes, filter through the planning, make sure that you see all the numbers first and you then can articulate your own decision. [14:22.2]

My job as an advisor to be a good one is to do a few things. One to grow your assets relative to your income needs. Two, protect those assets and three arm you with the education and the knowledge around your money and this world of money management, so that you can make decisions along with your advisor, someone like me to be able to better your retirement life, whether that's through income strategies, whether that's through reallocating debt, we'll have all those conversations together, but you're involved in that and that's important. And going back to the IRI’s study, there's 56% of people that do indeed plan to use retirement savings to generate retirement income on top of social security or pension plans. Now, for those of you listening, most of that's going to be pension and a few of you will have some social security from quarters earned prior to getting on the job. And it's very logical, if you think about it, 56%, I would say majority of people do plan to use their retirement savings and I'm sure you're probably thinking the same thing to supplement your retirement life on top of your pension. Now I gotta tell you consistent with the study’s findings. I'm sure you're well aware of what I'm going to say here in my practice, nearly 20 years and 15 years specifically working with first responders that's exactly what we see. [15:39.3]

For the majority of our clients, the pension is a base of retirement income upon which we will, you know, layer sources of income. And when you add everything together, our goal is to satisfy a hundred percent of our client's retirement income need. After all, remember Tennessee Williams did say you can't be old without money. So, you may be asking what's the best way to deploy savings to generate retirement income? Well, first off here's what the IRI study wrote. For the most part, “consumers are aware that their retirement savings are or will be a vital source of retirement income. However, they lack the clarity as how they will use those savings to generate sustainable income. And to some extent their beliefs are at odds with their expectations.” So, it's interesting and that’s why I wanted to quote this study for example, based upon the research, there seems to be a dichotomy between consumers recognizing the need to use savings, to generate retirement income and how much income their savings will actually produce. Now to further complicate things more often than not there's a lack of clear strategy to convert a portion of their investible assets, into streams of income. Understanding how your deferred comp plan and drop becomes income generating for you. And this is through the portfolio management process that we do here at ONE Fire and Police. [16:56.0]

Being able to put a portfolio together that both attains the growth we need subject to your income needs, and then the distribution process of how we would do that. And if you haven't met with someone that's doing that right now, looking out for you when you retire, what those income needs are going to be and how your deferred comp plan currently is being done, you can give us a call. You can call us at (805) 409-8150. You can also go to our website at PensionAttention.com and you can schedule some time with me, with Toby, with one of our advisors here to go through your retirement plan, because these stats, all of their stats across the United States, they're important understand that there will be most likely overwhelming majority of so a need to pull from your retirement. So, a couple of things, one making sure you have enough money to sustain and live the life you want to live is pretty important, I would assume. And two being comfortable and understanding of that, the sooner the better, so sitting with to help you go through that is really important. If you aren't talking about that with your advisor and you want to talk with someone again, give us a call (805) 409-8150. [17:58.1]

And you gotta remember markets move up and move down. So, understanding your portfolio and the strategies that are in place with your advisor, something that we do here at ONE Fire and Police is really important. Understanding why active management is so important, why rebalancing your portfolio is so important. Why being globally diversified in multi-asset class structures of the 3 billion and dollars that we manage for our clients here at ONE Capital management, it’s important that each one of those are custom built for our clients to build based on their wealth forecasting. The allocations are custom to what you need for your retirement and understanding what that is and being able to talk openly with an advisor about your unique situation is really important. And that's why spend each week talking about that because I'm such an advocate for it. And if it's not me, that's fine. Find someone that's credentialed and experienced in this category and start that trust today. [18:51.2]

Now, as I mentioned before, to further complicate things. In other words, many people, they lack a comprehensive retirement plan. One that actually includes a distribution strategy, something I've been talking about today. And because of that, many people that retire default to simplistic strategies. You know, the IRI study found that pretty much across all age groups, more than half of all consumers simply plan to tap into and I quote there “savings by withdrawing money as needed to cover basic and discretionary spending.” You know, which of course is an approach that carries potentially a higher risk of depleting assets, you know, running out of money, especially for them, those who live to an advanced age. If you're living longer, longevity is something to be talked about here when it comes to being able to afford and having assets in retirement. And sure, many of you read articles, you know, heard stories about retirees who use simplistic strategies, and eventually run out of money. We don't want that to be you. They should have heated the advice maybe of Tennessee Williams. [19:46.7]

And you'd always remember, like I mentioned before, markets move up and move down. So, in a year, a markets moved down understanding that withdrawal money from your account is really important. So, reallocating and having that active management is so important when you get into retirement. And for example, there's much more beyond asset bases in retirement that can be depleted. For example, some retirees just overspend. They simply withdraw too much money too quickly. In fact, according to the IRI study of factors contributing to consumers, exhausting financial resources, overspending accounts for 62% of cases, wow. They also noted healthcare spending and long-term care costs play a significant role as well, as well as poor decision-making cognitive impairments as we age. So, there are other contributing factors that we can control and others that are beyond our control. [20:34.5]

So, such as, like I mentioned, unpredicted and unforeseen events that may cause market losses. And, you know, again, in my nearly 20 years in the financial services industry, honestly, my rock-solid belief is that the best way to generate income from your retirement savings is through a diversified strategy that has a disciplined plan that fits into your cashflow. It's really important. Most people don't think they go together, but they do. One feeds the other because knowing what you need to pull or withdraw from in retirement has a lot to do with how much you need to earn to sustain that account. To me, it's so logical, that's why I spend each week here on Pence intention and throughout my practice and for all of our clients talking about that spending as a percent of liquid assets and why that is so important and vital to the success of an overall retirement plan. [21:24.1]

Thank you for listening to Pension Attention, before acting on anything discussed today, remember to speak with a financial advisor near you about your specific situation, or if you'd like our help visit us at PensionAttention.com or give us a call at (805) 409-8150. Next week on Pension Attention. We're gonna be talking about disruption, what that means in our lives and what it means in our portfolio. Looking forward to it until then stay safe. [21:50.0]

The information in this podcast is educational and general in nature and does not take into consideration the listeners personal circumstances. Therefore, it is not intended to be a substitute for specific individualized, financial, legal, or tax advice.

To determine which strategies or investments may be suitable for you consult the appropriate qualified professional prior to making a final decision. [22:13.2]

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