Thinking about retirement? Whether your retirement is in the future, or you’re living there now, I’m glad you’ve decided to read this. Hopefully, I’ll leave you with something that will help you to have a more successful and prosperous retirement.
One thing is for sure, a successful retirement doesn’t just happen on its own. It takes careful planning and plenty of self-education. Sure, you’ll probably need to hire an advisory team to assist you, but no one else will feel the pain and regret of big retirement mistakes like you will.
What is a Big Picture Retirement?
Several years ago, I was talking to a local friend about the typical retirement plan. He is an estate planning and elder law attorney and was seeing the same problems I saw each day in my financial planning practice. Clients would retire and get misguided advice from their financial planner, attorney or accountant. It’s not that the advice was bad on its own, but it wouldn’t be appropriate for that individual’s specific situation, or wouldn’t work together with the advice of the other professionals involved.
For example, I had one case where a client retired and needed to invest a large sum of money from the sale of his business. When I visited with him, I noticed that he was unusually adamant about putting it all in tax-free bonds. He told me that his accountant told him he should only buy tax-free bonds. The problem was, he had other issues that posed a serious conflict with this strategy.
First, most of his investable funds were held inside of an irrevocable trust that had been set up by his attorney. The structure of this trust would only allow the distribution of interest income, meaning that he needed to generate significant income outside the trust. A portfolio of tax-free bonds would have only generated a fraction of what he needed. For the rest of his income, he would have been forced to liquidate some of his bonds. This would not only have grave consequences for the trust structure, but could place the client in the position of selling bonds at the wrong time. This recommendation didn’t consider the client’s unique legal position.
Second, tax-free bonds were seriously overpriced at the time. Buying bonds at that time would have almost certainly meant a loss within a one to two year period. There were other asset classes that simply made more sense right then, even if the trust was not an issue.
In this case, the accountant’s advice didn’t work with either the client’s financial plan or their legal plan. It wasn’t bad advice, but it was bad advice for this client because it didn’t consider their unique situation.
Advice without a big picture perspective is certainly not limited to accountants. I’ve seen lots of bad advice given by financial planners and attorneys as well. All of these experiences led me to ask the question, “What if clients could retire and get an accurate view of the big picture? What if they could get an advisory team that could work together for the proper integration of their financial, tax and legal planning?
This is is possible! But, it doesn’t come without some work on your part. There is some work to do before you can get started.
How to Get Your Own Big Picture Retirement Plan
There are three major steps that you must take for a successful “Big Picture” retirement:
1. Get organized
As life happens, messiness happens. At a certain point, you might find that you’re surrounded by a lot of clutter. Not just the kind that’s in the closet or strewn on the kitchen cabinet, but the mental clutter that comes from not being financially organized. It’s time to get organized. Today. It’s really not hard.
For a deeper dive, check out our podcast episode on how to get financially organized.
2. Hire the right guides for your trail
Now that you’ve gotten yourself organized, it’s time to begin hiring your advisory team. To begin, you need to hire three individuals: A financial planner, an attorney, and a tax advisor.
Unfortunately, choosing your professionals isn’t easy. Your cousin Sal may be an attorney, but he may or may not be the one you need. A good professional is smarter than you are about investing but knows you still call the shots. If an investing professional wants you to do something simply “because they said so,” find a new pro to partner with. You aren’t hiring a parent—you’re gathering counsel.
There are a few specifics that you should know when hiring your advisory team. Check out the podcast episodes below for a step by step guide on hiring each of your advisory team members.
Hiring a tax advisor
Hiring a legal advisor
Hiring a financial advisor
3. Prepare for the unexpected
Life can unfold in unexpected ways. Be prepared for the possibility of disability, divorce, or declines in your retirement portfolio. You’ll weather these surprises better if you have a plan for the unexpected.
One of the big disruptors of retirement is a really bad market. Here’s a podcast episode that covers the 5 lessons I’ve learned from market declines.