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A good retirement plan is crucial. You don’t want to look at your balance sheet when you’re 67 and realize you’ll always need a side job. 

But designing a plan that works is hard. Your goals, situation and family are unique. Someone else’s plan probably won’t work as well for you. 

That’s why you need to design your own retirement plan. In this episode, you’ll discover the 3 considerations that enable a long, wealthy retirement. 

Show Highlights Include:

  • Lessons from a 116-year-old about having a long, healthy retirement (without running out of money). (1:52)
  • What Proverbs 15:22 can teach you about finding a financial advisor who steers you towards an abundant retirement. (15:20)
  • How understanding income distribution keeps you from running out of money in retirement. (16:13)
  • How to leave your legacy assets to the right people (instead of handing it to Uncle Sam). (18:50)

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.

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 + Police are dedicated to ensuring you take control of your finances and build the life you deserve. To find out more about me or our team here at ONE Fire + Police, you can go to our website at PensionAttention.com or you can give us a call. You can call us at (805) 409-8150. [01:06.5]

If you haven't already done so, you can go to our website, again, at PensionAttention.com. You can click on the media tab and there you can download and subscribe to the Pension Attention podcast that comes out every Tuesday every week and let us know how we're doing. You can leave some feedback.

If you don't want to go to the website, you can download the podcast on any platform where you would normally download a podcast, whether that's Google Podcasts, Spotify, or on your Apple app, and, again, leave us a comment, let us know how we're doing. If you like the show, tell someone you like. If you don't like the show, tell someone you don't like, I guess, because in today's episode, as we do many times, I like to boil some big topics down to some key factors when it comes to your retirement investment planning or overall retirement planning

With that, today on Pension Attention, I want to talk about what I would consider three key considerations as you craft your retirement plan. Now, this will go on a lot of episodes that we've talked about here in the past with regards to five things to look for in designing your retirement plan, some implementations you would need when it comes to investment portfolio structure. [02:12.8]

We're going to go a little bit deeper today and get more granular, again, on some of the key considerations as we look at an overall retirement plan, and again, a retirement plan as you leave active duty and go to your overall retirement that lasts your entire lifetime.

Before we get started, there was an article I was reading on JamesClear.com and it was titled, “116 Years Old: Lessons Left Behind From the World’s Oldest Living Person”, and it got me thinking, as we talk about retirement planning, as I talk about planning in general with our clients, those of you who are listening right now on active duty, both Fire Department and Police Department, there's a lot that we can learn from those that have already gone through it.

Many of you listening right now who are retired have your breakfast meetings. I’ve been lucky enough to be a part of some of those. I really love being invited to those because it's really great to kind of see the discussions being had by someone who has just left the job a month ago to some that are at that breakfast table that have been retired for 15 years. [03:13.7]

In thinking about this article I was reading, and thinking about what I do and what I’ve been doing for nearly 20 years now, when I talk about life expectancy, as it relates to your investment plan, as it relates to your retirement plan, a lot comes up that we want to discuss that has little to do, some but little to do with actually the numerical data or the dollar amount.

Yes, that's a big focus of ours as we get into your retirement with regards to deferred comp plan numbers and DROP in making sure those work for you, but beyond that, as you've heard me say on this show, and many times we've talked with clients that are listening right now about your qualitative goals and objectives, what you want to see out of life—that's the values, the interests, your relationships. [03:58.1]

In reading this article, it really got me thinking more and that's why I wanted to pick up on some previous episodes where we've talked about three things to have in a portfolio, some five things to look out in a retirement plan, but honing in on maybe three or four key considerations as you craft, again, your overall retirement plan.

Now, in this article, Besse Cooper, she died peacefully about a year or so ago. At 116 years old, she was the oldest living person in the world. I found that fascinating. She was also one of the five oldest Americans in history. She was born in 1896. She actually married her husband, Luther, in 1924, and get this, he passed away sadly in 1963. She never remarried. She had four children. She has 11 or had 11 grandchildren, 13 great-grandchildren and two great-great-grandchildren.

During an interview with the Guinness Book of World Records, because, again, she was the oldest living person in the world, Cooper was asked about the keys to living a long life. You can see where I’m going with this, right? Keys to considering when you're crafting a retirement plan to the key considerations when living a long life. [05:10.3]

She offered two pieces of advice that I found kind of funny and I wanted to share. One, “I mind my own business,” and, two, “I don't eat junk food.” Now, let's just stop there for a second. That's not exactly where you probably thought this was going and neither did I when I was reading this article, but I thought it fascinating.

Let's talk about the wisdom in those two very simple but elegant statements and how we all can use it to live better, and especially as we are either in retirement right now, listening to this, or getting close to retirement or thinking about retirement.

All right, so let's take the first one. “I mind my own business.” Look, stress is a killer. It's a silent killer. We all know it I think more than ever. We realize it now more than ever. Again, it can take years off your life and, in some cases, it can end it all together—and, by the way, it's not lost on me who I’m speaking to right now. I’m talking to men and women who are on the frontlines in stressful situations, seeing stressful things on a constant basis, so taking care of self is priority number one. [06:12.4]

It’s an analogy I’ve used quite often. I’ve said it on this program before. I’ve said it in stations, and for those clients listening, you've definitely heard me say this in planning meetings before, but it's the oxygen analogy, right? When you're on an airplane, and any parents out there listening, right, we know this, and it's kind of like we roll our eyes a little bit when we're not parents because we're like, That seems odd. But when they tell you to, if something happens on a plane, put your oxygen mask on first, and the idea behind that is if you don't and you do it for your kids, because that's who you're trying to care for first and you pass out, you can't do it. Right?

So, taking care of ourselves has a lot to do with taking care of others and there's no doubt that Besse's mantra of minding her own business helped her avoid, I would guess and I would say, unnecessary drama, maybe useless comparisons, that “keeping up with the Joneses” mentality and unwanted stress. [07:00.4]

That's a good lesson to learn and it's a deeper wisdom than it appears, I would say, on the surface. Even though we say, I mind my own business, that's some old savvy lady just kind of being interviewed, but I think there's more to it. Given how much we focus on our own lives, it would be easy to convince ourselves that we're minding our own business, when, in fact, we are doing the exact opposite.

We care about the job we have, the house we live in, the clothes we wear, and the car we drive. We are in California. Let's just admit it, that's a part of life, whether we like it or not and there's nothing wrong with that, all right? Except that in many cases we think we are minding our own business, but really we are slowly being sucked into comparing our lives to our peers, our neighbors, our community.

You've heard me say sometimes, the Kardashian effect, that old keeping up with the Joneses, kind of seeing what they have and trying to one up, it's stressful and, trust me, I’m guilty of this. We all are. I'm human. I like being respected and praised as much as the next person. We all do. We're human, right? [08:00.3]

Truly minding your own business has nothing to do with comparison. It means knowing what you stand for, distancing yourself from, let's say, the unimportant and unnecessary drama that always has a way of seeping into your day, and living your life for the people around you and your community, instead of comparing it to the people around you or not in your community.

I’ll get off my soap box, but I thought I’d want to build on that and it was something, again, on JamesClear.com. That's a really great article, so you want to go over there and take a look at it. It's actually great. Let's talk about the second piece of that. She talked about “I mind my own business” and the second thing she said was, “I don't eat junk food.”

Now, this one stuck out to me because I don't know if I’m talking to anyone like myself, but I love junk food. I’m going to be very open about that. Oreos, you bring me some Oreos, I will devour that whole box, there's not just one or two with me, or Thin Mints Girl Scout Cookies. Man, when I see those girls outside of Vons, I’m walking up there with $40 easily and buying boxes. I’m a good supporter of that. So, junk food is high on my list. [08:58.8]

Now, Besse apparently didn't eat junk food and I suggest that we all probably shouldn't either, but this piece of advice is, I think, about a lot more than what you put on your plate. If it's not a good idea to fill your stomach with junk food, then it's probably not a good idea to fill your mind with, quote-unquote, “junk thoughts” or your day with junk energy, or your life maybe with junk people.

Now, I don't want to go down that rabbit hole, but you get where I’m going with this. The work you do, the enthusiasm that you bring to life, the people you hang out with, these aren't just life decisions. They're health decisions, wouldn’t you say? So, we want to fill our plate with real food instead of processed junk, and you'll go from maybe overweight or dissatisfied with the stuff you're putting in your body to overjoyed maybe. Trade maybe watching TV for going on a, I don't know, photography adventure, and you'll go from consuming to contributing.

Surround yourself with people who are doing things that you find value in or purpose. I’ve always said this before, whatever you do, do it with purpose. It has a lot to do with the context of money, but also, again, the qualitative goals and objectives you have. Find purpose in what you're doing. [10:07.8]

One of the books that I’ve sent out to many clients and those of you listening right now is The Purpose Driven Life. It's a book by Rick Warren. It was a great book and it's very profound, and literally the first sentence of that book of the first chapter, the first sentence is “It's not about you.”

It brings to light this idea that if you have a giver's high, as it has been researched and studied, that when you give and you're out there, your stress goes down and you get some endorphins around that. I think we've all seen that and, by the way, again, look who I’m talking to here. You guys are the givers of all givers. You are sacrificing your time with your family, what you do, your sleep for those of you that are getting cranked a bunch of times after midnight. You are giving constantly and there's good in that, but making sure we take care of ourselves as well.

Yes, we're talking about a comment she made about don't eat junk food, but it's more than that, right? It's about who we surround ourselves with and the junk that we want to put in, because that has a lot to do with our context and you're going to hear me talk a lot about that. [11:07.2]

It's important because we bring our circumstances into our money context all the time. We feel like this person has this. We feel like I should have been, oh, this. I earned this. I desire this. It all comes down to “How do we get those things?” It's money, so money is a big part of the conversation we talk about when it comes to an article, again, like I’m preaching on right here, around Besse Cooper, the oldest living person in the world—and maybe Besse Cooper didn't get bogged down in the drama and the junk of life because she was maybe too busy setting her sights on something else.

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.

When she asks what advice she would give to high school graduates—this is the other part of the article I thought was astounding—Besse said, “You can do most anything you set as a goal in life.” [12:10.8]

We've heard that before, but it's pretty cool to hear from a 116-year-old woman who has seen it all. Besse Cooper didn't become the world's oldest living person by accident either. That's my opinion. She knew that what you put into your life determines how much and how long you get something out of it—and I felt that was a good segue into what I want to talk about today, which are three key considerations. There's plenty more and I’ve talked about these in previous episodes as well, but three key considerations as we look at crafting your retirement plan.

If you haven't done that yet or you are looking into that, find someone you build trust in. That’s number one, finding and building trust with someone that can help you build and craft your retirement plan that you have a gut feeling towards, that you can actually trust and build trust with and have a long-term relationship with. That's really important, so find someone. [13:06.7]

If it's not us or me, or you've heard about what we've been doing for clients and you want to find someone, that’s what I’m advocating for. It is to find that advocate, because finding that experienced advisor who has been down this before, who has seen the landscape of going from working life to retired life.

I’d like to add one other thing. For you guys, for first responders for the Los Angeles City Fire Department, the Los Angeles Police Department, in particular, find someone that knows your plan, and I’ve said this before, you guys have great benefits, earned benefits. You earned those benefits by your hard work, by your dollars that you're putting into it. I mean, I don't care what the L.A. Times says. You are putting your money, every paycheck, into your pension, and that's why it's a fully-funded pension plan for the most part and that's why it's deserved and earned.

But here's the problem. They have such great benefits between medical, your pension, your deferred comp plan, all these great things at your disposal. Find out how it works for you because it's not a one-size-fits-all. This is not a knock to the department necessarily, but I don't think they do the best job at articulating and educating around these services. [14:15.8]

That's why, like myself, just speaking of myself for a second, we've done it for over 15 years now. Having my stepdad be a part of the Los Angeles City Fire Department for 35 years and sitting in his DROP meeting and going through it with him, it was astounding to me almost the lack of advice that was really being tailored to not only the person, you guys, specifically you and your family and your structure that you want to see happen, but also the specific details about the plan that are unique to first responders that may not be the same retirement-type objectives or specific nuances when it comes to your retirement plans, say, for a business owner or someone in the corporate world.

So, finding someone that a) has experience as an advisor and you can build trust in, and b) has experience and someone you can build trust in that specifically knows your plan, that's number one as a key consideration for you guys as we look at crafting your retirement plan. [15:12.2]

Again, that kind of speaks to the article I was talking about, those relationships. Our relationships can be not only in our community and our family and our friendships, but also with our advisors, those we choose to surround ourselves with, to help better ourselves, whether that's a trainer for our health, maybe an accountant for our taxes, or maybe a financial advisor.

One of the more important aspects to figuring out if you can retire and what that looks like is finding that right financial advisor to help steward you along the way and build those relationships, because, again, relationships are multifaceted.

Just like Besse Cooper was saying, our relationships and who we fill our lives with matters. I think Proverbs 15:22 says it best. “Plans fail for lack of counsel, but with many advisors they succeed.” Finding the right advisor is the key, the first key consideration when it comes to crafting your retirement plan. [16:07.7]

All right, number two: income distribution. What's the one thing that changes when you go into retirement? Income, wouldn't you say? In fact, that's the number one thing we talk about constantly as advisors, going from active duty to a fixed pension. You go from bi-weekly payments to once a month at-the-end-of-the-month payments. You go from a certain active duty and overtime pay to 70, 80, maybe 90 percent pay. There's a difference, so understanding income distribution when you're crafting your retirement plan is key consideration number two.

A top concern among a lot of retirees, not just in the first responders’ world, is running out of money. I talk about this heavily on this program, Pension Attention, and in our practice, in terms of living a life—and a retirement life, in particular—out of abundance and not scarcity. It's critical to take steps to, again, make your money last. [17:02.5]

I’m going to say something that's going to sound a little bit crazy. There is not a magic bullet to making sure that that is guaranteed. There are a lot of people out there that will try to guarantee things and say that word, and it's, honestly, a scary word when it comes to finances because life isn't guaranteed.

There's no magic-bullet investment that exists that could fix the problem of making sure we know exactly how much money we need for all of our retirement. In fact, I’ve said this before, if I could talk to the Holy Above and figure out each of my clients’ last day, I’d have your plan so dialed in, we'd have the last 20 bucks, so you can spend the last Double-Double you wanted to buy in your life. We'd have that detailed. But we don't.

The ideal investment, the ideal plan, should be safe, liquid, and will show strong growth. All that relates to your risk-tolerance as well. We want investments in the portfolio that, typically, will do some combination of two of those. That's a good rule of thumb, but no investment will do all three. You can't have one that's going to be completely safe and grow a crazy amount, let's say, double digits. You want to find that balance. [18:08.0]

So, building your portfolio, the key considerations, understanding, again, the income distribution, what income you need in retirement, and you want to put it all together to understand, Okay, now I’m on a fixed pension and now I have this deferred comp plan DROP balance. How much do I need to pull from there to live the lifestyle I need, and is that distribution I’m pulling from those accounts sustainable? That's the key consideration number two.

That's what we do here at ONE Fire + Police that we do for many of our clients listening right now. Understanding your distribution rate is key number two to making sure that you have a happy and healthy retirement, and one of the things we want to look at when you are crafting your retirement plan.

Key consideration number three, and you can probably see where I’m going with this—I’m kind of going beginning, middle, and end.

Beginning: finding that right person to help you craft your retirement plan;

the middle being understanding the big key question of how much you're going to need in retirement, and building your retirement plan and portfolio around that;

and, thirdly, understanding what I call your legacy assets, what your legacy you want to be, your six-feet-under clause, if you will. [19:15.5]

We don't like to dwell on this, and so I’m not going to spend too much time here, but I want to at least state this as a key consideration in our third in particular, but eventually our lives will end. We know that. Ben Franklin told us the two certain things in life or death and taxes. We've heard it and it's vital I think to have a plan in place, so that the right assets get left to the right people in the right way.

I want to say that again. It's vital to have a plan that you're putting together that the right assets get left to the right people in the right way—and, by the way, perhaps surprisingly here, even the wealthy and the famous fall short of this sometimes. I’ve been involved in these before. Prince is a good example. When prince died in 2016, it was discovered he had no valid will, and his estate, which was very sizable, has been in litigation now for almost five years. [20:04.4]

Myself, personally, being an advisor and not an estate planning attorney, so we work very closely with many great estate planning attorneys to help craft this for our clients, but I’ve seen situations where beneficiaries weren't listed correctly or not at all and property wasn't titled correctly.

Understanding how you want these things to go through and having that conversation with that trusted advisor helps build, not only at the beginning, which is finding the right person to help craft this with; two, the strategy for the hopefully 20 or 30, hopefully 40 years maybe in retirement to make sure you have a retirement and portfolio that lasts that long. When God calls you back up, you have a plan in place that you know where your assets are going and to whom those assets are going to. So, creating a retirement plan that covers all the bases, it can be complicated. Again, consider discussing this with key consideration number one, that trusted person. [20:59.8]

By the way, if you're doing key consideration number one and you find that trusted advisor, key consideration number two, which is understanding your income distribution in retirement, that helps you sustain the assets and the monies you need to live a happy, healthy retirement, and through that process, you get to key consideration number three, which is making sure when God calls you back up, you know where it's going and you direct how and why you want to go in there—because, as I said earlier, purpose is a big part of life. It's what keeps us going and we don't want all of these years of investing and saving wisely to go to waste.
As our friend, Besse Cooper, said, let's mind our own business. Let's take care of ourselves, create that plan, and let's maybe not eat some junk food. I know I’m going to kick back on the Oreos maybe, but more than that, like I said, it's more around let's have that relationship, let's have that community of the people we want to share ourselves with and not fill our mind and our hearts with junk that we don't need. Understanding and really sitting with someone to figure out what that means in a money context is really vital and important when it comes to crafting your retirement plan. [22:08.4]

Thank you for listening to Pension Attention today, and before acting on anything discussed today, remember, speak with a financial advisor near you about your specific situation, or if you'd like our help, you can visit us at PensionAttention.com or give us a call, (805) 409-8150.

Next week on Pension Attention, we're going to be talking about words and communication, and why that matters for the psyche of finances, behavioral financial traits, what we see today in the news, how it relates to our investing philosophy and world. We're going to talk about that. I’m looking forward to it. Until then, stay safe. [22:48.0]

The information in this podcast is educational and general in nature, and does not take into consideration the listener's 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.

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