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Highlights from this episode include:

  • You should be checking on your retirement accounts at least this often to ensure you’re on track (4:48)
  • The importance of an “income floor” for retirement (7:09)
  • How to ensure you have the best cash-flow plan for your retirement (7:20)
  • How to avoid a crash that can derail your retirement (10:49)
  • Mainstream financial advice could be collapsing your accounts (13:00)
  • This is the only reason to have an annuity in your retirement plan (15:20)
  • No matter how much you love your work, you MUST be ready to retire by this age (17:18)
Read Full Transcript

Do you hate the thought of working past 55 or 60? Do you hate not being able to live the life you deserve today? Do you hate not knowing what your financial future looks like? It's time to stop doing what you hate, here's your host, Mr. Harold Green.

(00:19): Hello everybody. Welcome to the show. This is Harold green of BrightTree financial and it is time, time, time to stop doing what you hate. Today's show is retired before you die. There's a lot of people now, if they're working way longer than they should and some of them should have retired a long time ago, but you know what?

(00:39): Stuck. So today I'm going to share with you a couple of different things that you guys can do to make sure that you are positioning yourself as I retired before you die on the way. How was your week? My week was very interesting. It was a very frustrating way to see people losing their minds over the Coronavirus. Now I'm not making fun of it because some people have lost loved ones. They've lost their lives in this and this situation. Just like the flu. Many people get sick every single year. Some people make it, some people don't make it from the flu. But it just depends on a lot of different factors. And I've, I've shared some things with you guys and some previous shows about this, but the week was a little, it was a little frustrating because, you know, the see people panic and to see people stress out.

(01:23): Some people had some very real fear and some very real concerns about what's going on. And also the nod it was, it was driven by the stock market and the match sell off that that we've seen in the stock market. And quite frankly, it just kind of put the market in a position of being out of control. The circuit breakers had to kick in, it halted trading. I know I had some traits that were halted. I had a client call me today and say, my God, dude, I had some great stuff in position to to go through and they stopped the trading and, and my trades didn't make it. And so it was just a, it was a very interesting weekend. That's why I say it makes sense to have a strategy like rapid retire because it is designed to help you retire and stay retired sooner rather than later.

(02:10): And so before I get into the show, I want you guys to know it's on my website. Retire now, retire wild.com and go click on the rapid retires section, download the brochure and then also click on the game changer forum. Get in touch with me after the show and I'll be in touch with you to stop to help you stop doing what you hate. Also, I want you to read the disclosure on the rapid retire program because there's no guarantees that it'll put you in a position to retire sooner rather than later and the results of the program will vary. All right, so today I'm going to dig into the rapid retire and a little bit of a, like I said, I want you to have that, that brochure handy because I'm going to explain it to you in different, in a different way than you've probably heard before.

(02:52): I'm also going to implement it in a Barron's article that I found online and it's about the kind of that makes you want to die right after you retire. That's sad, but, but I'm going to show you how to dissect this information for your consumption and implementation. You guys ready? All right. One, two, three. Let's get it. There's a lot of work in this. And so here we go. The Baron Barron's article talks about this guy named Tracy Donaldson of Orlando, Florida. This guy, it says he had an annual specious start to retirement and the market had plunged 12% and the week he retired. Now how many of you would make you sick to your stomach? He goes on to say this is a very disconcerting and very bad timing. Yeah, right? Says Donaldson, 66 years old who retired on February 28th after eight 38 year career at Walt Disney and travel logistics and coordination.

(03:48): And he says, you know, I decided not to look at my investments so I would not get the press. Let's stop right there. The brakes. Now for me, I am constantly advising my clients to log in every so often to take a look at what I'm doing right now. This can go one of two ways. They can log in and we can be real big one day and everybody's so excited that they hired me or they can log in and man we can have like that 2000 point drop and it makes them not bill. So good. And I understand that and if it's down, we talk about our strategy of short term, intermediate and long term positions in our portfolios. So I'm going to continue to says Donaldson's financial advisor says he plans to reinsure reassure the retiree during an upcoming planning lunch that he's going to be, he's going to be fine.

(04:35): Okay. Even though Corona has driven the market mad and you know the market has lost quite a bit, so let's stop right there. Now he plans on re reassuring the retiree during an upcoming planning launch. I think that's fine, but also think that you need a lot more communication with your financial planner and your advisor, especially in the year leading up to your retirement. You guys ought to be talking to every week, every, every month or so because this is a very big deal. I call it landing the plane. I used to be a former air traffic controller and this is where the takeoff and the landings are the most, the most deadly and the turbulence in the air is minor compared to those two. There's a lot of communication going on. When that plane takes off, he's getting this. Backers are telling him where to go.

(05:15): Same thing when he lands that there's a lot of trapping going on. So you might be looking at retiring and boy I tell you there is a lot of traffic. There's things going on in your cash flow. We could be about to hit a bear market, who knows, but you have to constantly be in contact with your, with your planner and he has to be giving you vectors on where you need to go. All right, so I'm going to continue on. Donaldson has a guaranteed pension from Disney along with social security. Even an unlikely downturn, he should be able to cover his living expenses with that income without touching his retirement accounts until it recovers. Keywords here, he will be able to cover his living expenses. Would that income without touching his retirement account until it recovers? That's a very important, and this is part of what in the rapid retire program of what I call flooring assets of flooring income.

(06:05): And I'm going to get into that in a minute. Continuing on, but noting other financial advisors say the retirees could be in more fragile position in a bear market because they do not have Donaldson's guaranteed income. That is absolutely correct. This is one of the reasons why I think it's better for a client to retire early and take their pension, especially when the market is up and roiling, right? So pretty soon I think we're going to be in position to hit that restart like a NASCAR where you know, you know you have a wreck. And so in our market right now, we have had a tremendous pileup. And so once they clean away the debris, they clean off the track and get it all straightened out. You gotta be in position or the restart. But backing up when they retire and you take your pension early, I call that phase one of rapid retire.

(06:50): So phase one is where you retire and you find something else to do. But I encourage clients to find something else before they walk out the door. But you also have to make sure that you have your income poor set and your buckets in place. And so the bucket strategy we're going to get into and get into that in a moment. So what's the income floor? So the income floor makes sure that you're covering all your basic necessities of life. They must be accounted for or in your cash flow management system. And by the way, you guys got to have an awesome cash flow management system in place that looks at your inflows, your outflows. It has projections for many years to come, but a lot of clients, I don't see them with those cash flow projections. And so that's one of the first things we get into when you come in as we make sure you have the right type of cash flow management system in place.

(07:41): I'm going to continue on here with the article companies have largely ended defined benefit pensions in recent years in paper of defined contribution plans like 401k's. What's more, the market disruption comes after an 11 year bull market that has inflated Americans' retirement savings, 401k, millionaires, anyone and left many people wrong-footed now this is, this is very important. I don't think the market is inflated. The fundamentals are there, the economy is still strong. We've had some very strong job reports come out and a lot of data, we've had rate cuts, things that should be sending the market through the roof, but they're not because people are antiquing and they don't know what to do. So I'm going to advise you that if you have a 401k that allows you to open up a brokerage link inside to hold individual stocks, you got to get in touch with me ASAP anyway.

(08:33): Five two one four four zero one and let's have a conversation about building out a portfolio inside of your 401k that puts you in position to take advantage of this restart. And here's why I think this is so important. If we are managing your 401k correctly versus sitting in a bunch of mutual funds and riding it up and down, which a lot of 401ks do. And I did, I did a show on this previously about why 401k suck. And it's just because of that very fact that you can't take advantage of the restarts and the market by buying some of these stocks that are down tremendously. And the other thing we get to do inside of your 401k is we get to look at the winners and losers and whoever's not performing, we get to move them out and put them into things that are performing.

(09:15): It puts you in better control over your account. I'm going to continue on now. Now people want to know if this is the next bear market. I don't think so, but you never know. It would go check and make sure you have a good quality portfolio. Now, Scott Bishop is a financial planner at S T a wealth management. It goes on to talk about a recent Vanguard Serbia 44,000 and do it yourself. Investors for instance, found that many had become more exposed to risk in the stock market during the bull run than they might have intended to or that were appropriate for their proximity to retirement. There's that word, proximity to retirement, landing the plane. On average, the survey found investors were far short of the bond allegations that usually help cushion portfolios from sharp losses. The average bond allocation was 23% just as during the bull market.

(10:07): They just let money run up, which is true. A lot of people, when the accounts were going great and they wouldn't, you know, everybody loved look at it and say, Hey, you know, this made this much that day and then the other. But when it's down, people aren't looking at it. And so the article also goes on to say that advisors frequently recommend that people on the verge of retirement landing the plane, okay, I call it land in the plane, established portfolios that aren't invested. 60% in stocks, 40% in bonds and on and on and on and on. The idea is to mitigate sequence of return risk or the risks that along stock may plunge early in retirement that could derail long term income potential and exhaust savings while need it to cover bills later in retirement. Now let's stop right there that, that was a mouthful.

(10:51): All right. And so when you're reading stuff on the internet and you're trying to do it yourself and you're trying to reposition your portfolios according to this kind of strategy, I'm going to tell you guys right now that this is one of the main reasons why people are not successful in retirement. They're reading stuff on the internet and they're trying to position their retirement based on what they read, and this is where they hit something called portfolio failure and their plan. In other words, they're running out of money, all right? They don't have enough in there. Why? Because they haven't set their positions up into short term, intermediate, and long term. All right? I'll call that the bucket approach and the rapid retire. We do have buckets, and so the goal of the short term bucket is to make sure that we have at least five years of income in there.

(11:30): That's a, that doesn't fluctuate much. It may go up and down a little bit, but not a whole lot. And so that is your short term bucket and the goal was to spend all that money in the first five years of retirement. I don't care what you do with it, you can blow it. You can go to Vegas every day or every month. I could care less, as long as we have enough in that bucket to last five years. That's the deal. Then we have the intermediate bucket and then we also have the long term buckets and these portfolios are built. It's based on a time horizon type of deal, so short term is five years, intermediate is 10 to 15 years and long term is 15 to 20 years because hopefully if you retire at 55 by the time you're 70 that's 20 years away. We want to make sure that we are rolling the assets up and these buckets.

(12:08): In other words, we go from longterm to intermediate, intermediate to short term, and we're constantly filling up that short term bucket with cash every five years and this will help us avoid that, that portfolio failure type of thing. At a client come in, he says, you know when I retire, I'm going to have $1 million, and they're saying based on the 4% withdrawal strategy, Harrell, that's only $40,000 a year. And I can't live on $40,000 a year. And I said, well, that's why we have a rapid retire program. All right. It goes on to say, to keep that risk from striking retirement savings advisors typically review portfolios each year and move money from overinflated stock portfolios into bonds. Let's stop right there each year, really about once a quarter. How about having your account reviewed once a quarter? I know that's what I do with my clients.

(12:54): I review them more times than not. I think it's like once a week for some clients once a day for some clients once a month. For other clients it doesn't mean I'm necessarily getting in contact with them, but I am reviewing their accounts as much as I feel that they need to be reviewed and sometimes I think I'm doing a little bit too much, but when it comes to my clients, I want to make sure that I'm doing everything that I can and not leaving anything, anything on the table, I want to make sure I'm giving it everything I got. And so people are just letting their accounts run up. And the problem is they're asleep at the wheel or they really don't know what to do. And so you're probably asking yourself, Harold, what does any of this have to do with retiring early?

(13:32): Well, it has a lot to do with it. All right, so first of all, how many people are what I call incorrectly positioned for retirement to begin with? Why? Because the way they set the retirement up is not based on any kind of real strategy or financial plan. I say it's like getting in your car and put a bunch of gas in it and then just driving it until it runs out. Then what? So the conventional methods are causing people to lose more money than they should and it's putting them in some very bad positions. And so when people find out that they're in bad positions, because what they do when they're losing more money than they should, they tend to overreact. And I've seen situations, you know, being an air traffic controller and knowing about aviation and watching aviation shows and all these different types of things where, you know, the pilots tend to over-correct.

(14:17): They'll either, you know, try to climb at the wrong time or descend at the wrong time or our bank return after, right? You're not the wrong side. They're trying to over-correct and it tends to make the problems way worse than it is. I see people, they do things like they sell all their assets in the market and they buy life insurance annuities and they say, I'm tired of this. I'm tired of losing money. You know, they're just, I'm just sick of this whole thing. Now I'm not against any particular product per se, but it's just kind of what I see people doing, what the market is down. They hate, they hate losing money, so they've locked to safety. I understand that. But when it's up, you know, you just can't get enough of Apple stock or Amazon or whatever it might be. Now here's the problem with over-correcting into certain types of products.

(14:58): And so once you lock yourself into an annuity, you are pretty much stuck. And I'm going to say it right here on this show, one of the only reasons to buy an annuity is if you are using it to set your income floor. All right? Or and, okay, so to set your income floor, that's if you don't have a guaranteed pension, the income floor is making sure that, you know, say you retire with a million and a half, you may put $300,000 into an annuity that guarantees you something like 40 grand a year for a 10 or you know, 10 to 15 years. That setting, you're setting your income floor, not putting your whole, you 1.5 million in an annuity. You know, because you can probably run into some serious liquidity issues down the road, especially when it comes to things like, you know, taking care of things in your house, big ticket items and so on and so forth and long term care.

(15:42): Also, I see people locked into things like life insurance. Now, don't get me wrong, I have a lot of life insurance policies as part of my cashflow management system, and it's also part of my cash reserve system. Okay? So if you don't have life insurance as some type of safe money asset, as part of your long term financial plan, you're going to run into a couple of different problems. You're gonna run into problems where you're going to borrow money from someone and pay higher amounts of ventures versus borrowing money from yourself and paying your own self back interest. And then you're also going to run into some estate planning problems where we built up your assets and now you're going to end up giving 50 to 60% of your assets in your IRAs and 401ks over to the IRS because you don't have a type of life insurance that you need to help offset the taxes for estate planning purposes.

(16:26): So by aligning your assets with your financial plan, you know what? I really feel that's going to put you in position to retire a lot sooner than most people now retiring early. I'm going to tell you guys right now, retiring early, retiring early is not for everyone, but I'm going to be honest and tell you that you have to put your position yourself in position to retire between the ages of 50 or 60 and for you guys that are in your, I'm sorry, I said 55 or 60 and so if you're 50 we've got five more years. All right? If 55 we got five more years. If you, if you're close to 60 you're almost there. We definitely have to have a conversation because we do not know what's going to happen in the economy over the next five years. It just kinda depends on who gets elected and so on and so forth and helping school with trade and on and on and on.

(17:11): And so I want to tell you a couple of main reasons why you want to make sure you put yourself in a position to retire early. Now you do not have to walk out of that, walk out that door if you don't want to. It's just that you will have the ability to walk out of that door. And you will have the ability to take your vacations and not really have to worry about it. And so that's what I do encourage some clients to do is, you know, if your income is great and you work your way up to the tops and your top and you're allowed to take your vacations whenever you want, take your vacations and kind of hang in there and earn the income, especially if you're still being productive on that job. But I'm gonna tell you straight up that job is not guaranteed. Okay? And also your help is not guaranteed. The two

(17:49): Main reasons why my clients retire early is to help. Okay. Or to to care for aging parents. And in Hawaii we have a lot of families where they're stuck in what we call the sandwich generation, where they have younger kids or they have older parents that they are caring for. Okay. And the other reason why they retire speakers, they just want to enjoy life. And so based on rapid, they're going to be able to retire and stay retired. And so I'm going to implore you to put yourself in position to take advantage of the next market run up, okay? Educate yourself in a position to walk out the door when things decide to head the wrong way, and we don't know when that's going to be, but there will be a correction in the market that we're going through right now and there is going to be a runoff. It happens all the time. The market goes up, the market goes down, but you have to make sure you have a long term plan. And so if you want my help, you want to be on board with us. You want me on your team? You met Beaver. Reach out to me by going to that retire now, retire while website, downloading the game changer for them, completing it, and then I'm going to be in touch with you to help you get ready to win. All right? You guys ready? Until next time. One, two, three. Let’s get it.

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