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The news has been jumping between data and emotions so much, it can feel impossible knowing where to turn. Or what to believe. And retirement dreams are drowning out in news headlines.

Is there a point to retirement planning when you don’t know what the world is going to be like in ten years?

It’s easy to get swept up in the stream of everyday news. But you still need to set a course on making your money grow (and work for you).

At the end of the day, our emotions and logic are speaking the same language. 

In this episode, I reveal how to plan and reach your retirement goals (without the data or drama getting in the way).

Show Highlights Include:

  • The ‘Blaise Pascal’ way to balance between emotions and rationality in your planning. (3:12)
  • Using the Normandy Invasion to make smarter financial decisions today. (7:26) 
  • How to make the most rational decision when your mind is in ‘data overload’ mode. (11:39) 
  • Why reaching all of your retirement goals starts with acting like a ship captain. (14:22)

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 Capital Management are dedicated to ensuring you not only take control of your finances and build the life you deserve. And to find out more about me or my advisor partner, or any one of our advisors here at One Capital Management, you can go to our website PensionAttention.com or give us a call. You can call us at (805) 409-8150. And before we get started on this week's episode of pension attention, I want to thank every one of you who listen here each and every week. And again, if you haven't already done so you can go to our website, which is again, PensionAttention.com. You can click on the media tab and there you can download and subscribe the Pension Attention podcast. And remember to leave us a review, let us know how we're doing. It's always really good to get feedback. And if you like the show share with so many, like, and I guess if you don't like the show, as I always say, don't share it. But nonetheless, this week's episode, I'll be honest, it's going to be a little bit of me ranting, and here's why. [01:44.0]

It's going to be thoughtful ranting, I think. You'll let me know, I'm sure. But I want to talk about some things that I been seeing in our discussions with clients and our prospective client meetings. And it just has to do with logical versus emotional or rational versus emotional. In this moment right now, summer or ending of the summer of 2021, if we look back for a second, we've seen a lot. Now so much has been happening over the past really 18 months or so that we almost lose sight of what's kind of going on in the world, let alone on the job, let alone in our decisions that we have to be making for our job. And ultimately some of the questions around retirement. And I've seen through many, both on the police department side and the fire department side, that some is feeling that retirement dreams are slipping away or aren't necessarily what they had designed them or dreamt them to be. They're sliding further and further, maybe from your grasp and a grasp that at one point maybe pre 2020 felt pretty firm. And all of us are rooting for a swift recovery here. We're all Americans, right? We're the most optimistic people in the world. We all want recovery from the medical and economic ills of COVID-19, but we also may be and need to be realistic. [03:09.8]

Blaise Pascal you've heard of him before was a French mathematician, a physicist who live in the mid-1600. Pascal lived a well a rather short life. He died just 39 years old, but he lived a meaningful and I think thought impact that continued for centuries. This is where you're going to start hearing me rant a little bit. Now from a young age, it was apparent that Pascal was a, well, I guess we'll call a mathematical genius, a prodigy whose mind was awash in the precision and certitude of numbers. For me personally, something I relate to heavily. I don't know why, but for my entire life, I've always had a very interesting kinship with numbers. Maybe it's why I do what I do, now when I've thank God every day for what I get to do, when it comes to advising and investment management and working numbers, as my father-in-law always says, you got to run the numbers because knowing your balance sheet, knowing your P & L knowing your cashflow is so important for all of the decisions that you'll make in your investing life. [04:14.5]

But Pascal, he was also a theologian who became interested in the social sciences and the philosophy of things. Now, mathematics and philosophy, one, a very exact science, the other, an inexact study. This is where it starts combining and why I've thought about Blaise Pascal. And while I was researching him for this week's episode. It really combines the numerical data and the qualitative data that I speak so heavily here on Pension Attention podcast, as well as for those clients listening, you hear me talk about often in our meetings. And for those of you who have set meetings with us, or thinking about setting meetings with us, you're going to find that here at One Capital Management, our advisors and myself included, we take an approach to basically understand the rationale, the rational approach and the emotional approach. Because mathematics and philosophy can go hand in hand, depending on how you look at it. But in the 1600s, both of those mathematics and philosophy formed an intersection in this vast universe of Pascal's intellect. [05:20.6]

Pascal himself, once wrote “The heart has reasons that reason knows nothing about.” The heart has reasons that reason knows nothing about. So succinctly stated, I think. The emotional mind versus the rational mind. You're probably thinking, Brad, where are you going with this? Well, hear me out. You know, in psychology, it's believed that 80% of human decision-making is based upon emotion and only 20% is based upon logic or rational thought. Oftentimes our gut tells us more than our brain. Kind of a trip, right, when you think about it. And rationally all know that there are certain things we should be doing, we all know this. But our emotion lead us to do something else, I'll give you an example. For me, at least at the height of the COVID-19 shutdowns, a period of time when gyms were closed, we all knew we should be getting out of bed and starting our day with a little exercise, at least that was my routine, you know, crunches, pushups, whatever, whatever we can do, but instead we might wake up and yet another day of isolation, I pull the covers over my head and retreat, further into a collective quarantine. [06:32.1]

I don't know about you, but that was my thing. I really wanted to get out and kind of work out. And that was my, that was my jam for a while, you know, and then it got, it got shut down. And so, my habits got changed around in my personal life, nothing bad, just an interesting example, as we talk about rationales and our emotions that lead us to do something else. My emotions, in my example, overruled, my rational thought. I think it was Plato who once wrote the mind is pulled by an emotional elephant and a rational pony. Remember in psychology, it's believed that 80% of decision-making is based upon emotion. And although it's true that at times our emotions can lead us to make irrational illogical decisions. Sometimes our emotions, our gut can also lead us to the correct decision. [07:25.0]

Now, let me give you an example of that, and this was something I was thinking about recently, in fact, in June. And I was kind of thinking about this as to write about it and discuss it on this podcast as an example. A good example here is World War II the day invasion of Normandy, which happened on June 6th, 1944, as we all know, 77 years ago. And since 1942, a couple of years prior to that day, Nazi forces were entrenched in the French seaside town of Calais, which was the most Western point on the French coast. Now, quick side point here, kind of a World War II nerd. I've just been fascinated since I was a kid understanding the demons and just the atrocities that were happening over there. And it was one of the best superpower allied force war I can think of. And I just always been fascinated by it. So, I use it as example sometimes, and this one really stuck out. Now, Calais, if you understand that at all, it was just 21 miles across the English Channel from Dover, England. [08:24.2]

So geographically Calais is the closest point between France and England. And the Nazis were convinced that given Calais proximity to England, it was the most logical and rational choice for an allied invasion of France. It was reasoned, it was practical. It was a reasonable and practical conclusion for the Nazis, the Germans to make. And so, the Nazis at this time, heavily fortified clay making the town militarily impregnable. It was like a fortress, but they left many of the areas of the French coast, less fortified, including Normandy. Now normally is a seaside town known for its really choppy water conditions and insanely difficult to maneuver cliffs. Normandy, if you look at it would be a very illogical nonsensical choice for an allied invasion. And the Nazi concluded that too. They thought that if the allies invaded France, the invasion wouldn't happen during nasty, severe English Channel weather they logically believed an allied invasion was only possible under certain favorable weather conditions, yet, despite all the Nazis logic allied forces, as we all know, invaded Normandy, not Calais. [09:41.4]

And the invasion began during a fierce storm when there was a momentary break in the weather, creating a limited window of opportunity for allied forces. A great read and a great study, if you want to look at it. You see in their gut allied leaders, men like President Roosevelt, Winston Churchill, and their trusted generals knew that the Nazis were logical. And so, Roosevelt and Churchill plan, the most illogical invasion. I almost think it's it's beauty in a way. And thereby they changed the course, as we all know of that battle of that invasion, they changed the course of World War II. You know, when you hear stories like this, I don't know if you're like me. I wonder, you know, in our own lives, when we look back on important pivotal decisions, the ones that you know, change the course of your life, maybe for you think right now, it's my decision to get on the job. My decision to go to a hand crew, to learn my training, learn my craft. Maybe it's a decision to marry your spouse or have kids. There's a lot of decisions that we make in the course of life, where they change the course of our life, usually for the better, hopefully for the better.

Now, if you think about it, were they mostly logical or were they based upon your gut? Perhaps we could call it a hunch if you will, or a feeling you had about, which was the correct route to pursue. I think Pascal would tell you that your gut feeling is an essential aspect of your ability to reason. [11:10.0]

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. [11:26.1]

So, I do think, and you've heard me say before many times on this podcast, if you listened each week or if we've met, have you heard me at stations talk about this is that we have two brains. We have our logical brain that above our neck and we have the emotional brain that below our neck, our gut, our bellies, and they communicate constantly. You can't tell me you walk in somewhere and see somewhere. We all know, we're not supposed to judge a book by its cover. And I'm not saying anyone should, but you have a gut reaction towards someone. If there's a fear that's coming around. If it's, I don't trust this guy, if it's, oh, he's really, there's, there's a gut reaction you had that comes from experience, comes from rationale. They talk to each other. So, your emotions, isn't just that it's not just, just your emotions. There is some rationale behind it. So, in this moment of COVID-19, we're being bombarded with data about the virus. You know, how many tests have been given? Gosh, how many vaccines have been administered? And sadly, how many people have died? [12:25.9]

Now it's all pretty grim, but it's factual data. But COVID-19 is, as we all know a novel coronavirus, meaning that it's a new strain and there's a lot of unknowns. So, we combine the known pieces, the factual data, the information that our brain can logically process. By the way, if you look on social media anywhere, and you probably we're all guilty of this at this point, we're running data against data, just pulling numbers and saying, well, this one's right, and this one's right. And it fits a certain person's agenda. Sadly, that that's the case right now, but it's true. But we also rely on our gut to guide us through the unknowns of the virus and how to best deal with it. And personally, I believe that's a personal choice to deal with that. How you want to perceive the information you are receiving. That's no different than receiving information, say on a financial topic. You know, there's some sort of gut reaction, Ooh, that sounds risky. Or, Ooh, that sounds aggressive. Let's talk with our advisor about that. Let's see if that fits into our plan. We do that rationally and emotionally, somewhat all at the same time. Wouldn't you agree? [13:29.4]

It's our brain's ability to reason coupled with our brain's emotional capacity. And from there, you know, we make decisions about what we want to do, whether it's a financial decision, something about a vaccine, something about the fear or anxiety, what we want to have about what people are now calling a global pandemic or have been calling a global pandemic. And honestly only in hindsight, will we know whether we were right or wrong. Wouldn't you agree? That's all like the decisions we make early on in life, whether it was the right decision to do whatever the question was, it's in hindsight. And we look at that and we want to have good counselors around us, seek the advice and the counsel we can find to make sure that both our emotional brain and our rational and our logical brain are talking and they're speaking the same language. [14:17.1]

Now in Pascal’s Day, in the 1600’s in France, in seaside towns like Normandy or Calais, people relied more heavily on the 80% of their brain that was intuitive commonsensical, if you will, because you think about it, technology wasn't around. So, in severe stormy weather, like the allied forces encounter on the night of June 5th, 1944, the Eve of D-Day Mariners would most likely, never venture out to see if it weren't for technology. There was definitely more technology in 1944. Then there was in the 1600’s. There even banneds by the way, in 1600’s on voyages during the winter months or venturing out when storm clouds were seen. So, every precaution was made to avoid what they perceived as a catastrophe to avert misfortune. And after all, in the unforgiving waters of the English Channel, it is really a matter of life and death. Those are gnarly channels to cross. So, you know, centuries ago, sophisticated technology, as I mentioned before, was lacking. It just wasn't there. So, people relied heavily on common sense. [15:26.2]

If the weather looked bad, guess what? Ship stayed in port safe, protected, didn't go out. But over time as trade progressed, shipowners grew a little bit more concerned with profits. Look, let's be honest, there's a nasty side sometimes with capitalism, but it's the truth. They grew concerned with profits and maybe the safety of those Mariners were a little bit less down the totem pole. Greed in a way can win out sometimes versus the prospect of financial loss. So, risk took a back seat maybe, and ship sailed even into bad weather. Now I'm using that analogy for a second to think about your portfolio. Think about your deferred comp plan. Think about as you're approaching retirement. Understanding that you are the captain of your ship, you can find the people to put around you to make sure that that ship is heading in the right direction. As we all know for our allied forces, we were going right in to defeat evil. For you, you're going right in to succeed in retirement, to succeed in your deferred comp plan savings goal. Don't have a goal. Don't understand what that even means. Find out. It's really important to make sure you seek that counsel, to be able to say, you know, what, what is my goal with the deferred comp plan? [16:41.6]

The captain, when I first got on, just told me to put as much as I can in there, put it in the aggressive model. And it's been like 5 or 10 years and I really haven't looked at it, sound familiar. By the way, when I go to stations, I ask that question and happens all the time, so you're not alone. I, I, one of the main reasons for this Pension Attention podcast was to share a lot of the stories over 15 years of being in stations, growing up in the household of a fireman as well, knowing what you all live through, it's really important to note these kinds of things and know that there's a lot of men thinking the same thing that is really important to make sure we all discuss it, especially as it relates to your finances. And having a goal in mind is really important with your deferred comp plan. [17:22.8]

So, if you're listening here right now, and you're five or 10 years on, trust me when I say this, knowing where you're setting course for is as important as actually starting the deferred comp plan. Here's my point, back to the ship analogy. If tomorrow, you going to get granted a ship that you can do whatever you want, but you had to set out to sea and you didn't know where you were going. Be pretty hard to make that destination, right? Well, how much food to take? How many men or women you might need to service the ship? How much gas you might need? There's a lot of things that go into charting course. Wouldn't you agree? So same thing has to happen with your deferred comp plan with ultimately your drop your pension. I know these may seem like dramatic analogies, but there's a lot to be gleaned from both of them. And as I said before, I'm a little ranting a little bit only because there's a lot of stuff going on. I think we all are a little bit tired of just what's going on. There's just so much bad news and so much contradictory news that hits both our rational brain and our emotional brain pretty much every day now. [18:24.0]

A lot of us do with COVID. Then you got inflation. Then you got our president doing whatever he's doing. Then you have all of this stuff going on, especially geopolitically and the sad, sad atrocities that are going on in Afghanistan right now. We have a lot of questions in our emotional brains in our logical brains are really at odds. We're in reality, if you really think about it, they should be working together. And really what I want to make sure we focus today, cause this, our firm, as you all know, is focused on investment management, advising and forecasting the wealth that you are creating right now. Everyone thinks that wealth is some big, bad word for only the Warren Buffets of the world. Wealth is a relative term. And when I talk about wealth forecasting, wealth planning, wealth management is managing the wealth that you are working your tail off for. Making sure that it's growing with you and for you, so you're not always just working for your money. At some point, your money starts working for you. I've said this many times before, but money is a great employee, but a terrible boss. When was the last time you felt really comfortable when you have a lot of debt or a lot of payments to be made? Money is kind of controlling your world. The best part about planning is over time. And if you, do it right, and if you seek counsel and find that trusted advisor, you can now all of a sudden put money into your employment, right? You are in control. The ball is in your court. [19:44.5]

So, in the final analysis of all this safety lies in the hands of the captain, back to my ship analogy. He's the guy steering the ship and he's responsible for the safety of the ship. You are your captain. So, understanding that every captain needs to know that delegation is a part of that. It's really important to find the right team members, the right counsel, the right advisers to have with you on this course. I know it sounds like a cheesy analogy, but work with me. You know what I mean? It, it works, right? So, hear me out, find that counsel, find that advisor head towards the right course you're trying to make, when it comes to your retirement, whether it's investment planning, it could be simple questions for those of you that are 5, 10, I don't care, how many years on the job you have with regards to questions of, should I be doing traditional or Roth? How much should I be contributing each month? All of those are goal-oriented discussions that you need to be able to sit and know your goals and objectives. And if you don't know your goals and objectives for retirement or your investing, cause a lot of times, if I asked this in a station, you know, what are the goals for investing? Everyone goes well to grow it, Brad. Yes, but when we grow it at some point, we're going to need to also take from it. [20:55.2]

The whole goal about savings, it's ultimately someday be able to use it. Wouldn't you agree? So, in retirement, knowing your distribution rate, how much you need to be pulling from your assets, as well as how much those assets need to be earning for you, they go hand in hand, right? So as we think about this year, all that is going on, understanding what our rational and emotional brains are telling us, especially as we read all the news highlights every day about every topic you can imagine, as you relate that back to a simple subject of your deferred comp plan, your retirement, your pension planning, your drop planning, wherever you are on the job, whether you're a couple of years on, or you're a couple years out, either way, if you don't have that counsel find that advisor. If it's not us find that someone that you can build trust in because having that co-captain, if you will, to help you steer that shift is vitally important. [21:47.0]

And as I mentioned before, you can reach out to us. You can give us a call at (805) 409-8150. You can also go to our website at PensionAttention.com and there you can actually set some time with myself or Toby Rodriguez or any one of our advisors here at One Capital Management to help you understand your goals and objectives, as it relates to your financial planning, your wealth planning, and ultimately your deferred comp plan drop and pension numbers. I want to thank each of you for listening here today to the Pension Attention podcast, and before acting on anything discussed today, remember to speak with a financial advisor near you about your specific situation, or again, if you'd like our help, you can visit us at PensionAttention.com or give us a call (805) 409-8150. [22:32.1]

Next week on the Pension Attention podcast, we're going to be talking about a question that we get asked often. And many of you probably listening are, think the same things, depending on the time period of life you're going through, and that has to do with your car, believe it or not. Should you buy? Lease? Finance? What's the right option. We're going to be talking about that next week on a Pension Attention. I'm looking forward to it until then stay safe. [22:54.9]

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. [23:18.0]

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