The Prosperity Path
I’ve struggled with my weight off and on throughout my lifetime. Maybe some of you can relate to this. My weight issues started when I was a child. From as early as I can remember, my dad used to make me eat everything that ended up on my plate, regardless of how hungry I was or how much extra food someone else had piled on to it, or I would face some form of physical punishment.
As a result, I got in the habit of overeating at a very young age. I lost most of the weight prior to leaving high school, but my weight has followed a pretty consistent cycle since then. Usually what happens is I do really good for a year or two. Then I slowly start eating more and exercising less. Then, over the next year or two, I add on about 20 or 30 pounds. Then I go on a crash diet, get back to where I need to be, and then repeat the process over and over. As I’ve gone through this process throughout my life, there was one time that I had more success than I did at any other time.
I believe there were two main reasons for my success. First, I was starting to experience a knee issue that was keeping me from playing basketball at the level I wanted to play at. I love recreational basketball. Second, I hired someone to help me. My own personal pain combined with someone who knew how to eliminate that pain was the secret sauce I needed for success.
Why, you ask? Because this individual is able to open my eyes to new possibilities. He did this by showing me the two paths I had in front of me. The first was the one I was on. It was going to lead to worse health issues and maybe even a future where playing basketball was no longer an option. The second path was a path where I use diet and exercise to help me not only stay active, but also to feel better about myself.
Some of you have retirement plans that look a lot like my weight issues. Sometimes you find that you’re focused and on track. But most of the time, your commitment to these plans is more like a yo-yo than anything else. I know so many of you are having issues with your retirement plans.
When it comes to your retirement, you could do 100% of the planning by yourself, which some people choose to do. You could buy your own investments, you could purchase your own annuities and life insurance, and you can even plan out your own Social Security and Medicare benefits. But, for most of you, doing this is not the best option. Not only do most of you not have the time and need to gain the experience required to handle each of these situations correctly, but if you do it yourself, you also do not have an accountability partner. When you work with that prosperity advisor, you don’t have to worry about either of these issues.
Each one of the prosperity advisors I work with has gone through a multi-year training process where they have been taught and have been able to master each of the strategies I teach. Plus, they’ve had to take an exam on the topics I teach. This exam must be passed and 80% proficiency, or they’re not accepted as one of our referral partners. The other great thing about these advisors is they’re all here to keep you on track with what it is you need to do. They do this by using the same strategy my weight loss coach used, and that is they show you various paths, so you can see what the probable outcome will look like for your retirement.
The first path they’re going to take you down is the path you’re currently on. They’re going to take the information you’ve provided them about your current retirement plan and the retirement goals you’ve set for yourself. Then they’re going to plug this information into a software program to help them project out what your retirement will look like if you keep doing what you’re currently doing.
For most people, this process can be very enlightening because it often reveals a lot of weaknesses that exist in the current retirement plans that people haven’t even thought about. These weaknesses often create some big issues when one’s trying to get to a safe and secure retirement.
The next path they’re going to take you down is the path you’re currently on, but they’re going to show you what would happen to your plan if tax rates were to double, which many economists believe is a real probability over the next 10 to 15 years. Since 95% of retirees invest their money in tax deferred assets like traditional IRAs and 401Ks, this path is usually the worst path of them all.
For most retirees, if taxes were to double, they would end up running out of retirement assets 10 to 15 years faster than they otherwise would. The biggest reason for this is because when taxes go up, you have less income to live off of. So you need to draw down money from your retirement assets faster than you’d expect it to in order to maintain your lifestyle and to pay the taxes.
The third path they’re going to take you down is what I call the prosperity path. This is where they take your facts and circumstances and match it with their knowledge to create a tax free and risk free retirement plan. For many of you, this is going to require a complete overhaul of your current plan. And this is okay. These advisors are not there to judge you on what mistakes you may have made in the past, but rather they are there to guide you in how to avoid these same mistakes going forward.
Once the advisor takes you down each of these paths, they are going to show you the price tag of an action. They show you what the economic consequences are going to be to you and your loved ones if you do not put forth the effort to eliminate risk from your retirement. But from here, the decision is up to you.
Are you willing to take the risk and stay with what you currently have, even with the risk of taxes going up? Or do you want to work with the advisor to help you get to a retirement that looks more like your dreams than your nightmares?
In my various presentations, I talk about eight main risks that face your retirement. They are social security risk, tax rate risk, lack of income diversity risk, longevity risk sequence of return risk, withdrawal rate risk, long term care risk and inflation risk. It is important you understand that as good as our advisors are, there are times they cannot eliminate all these risks in your retirement. But that’s okay. There is no need for you or them to waste your time focusing on things that would have, should have, or could have been done.
A great example of this is when someone has a pension plan. If you have a pension, you’re usually getting guaranteed taxable income for the rest of your life. As a result, eliminating tax rate risk is often impossible because not only will the pension be subject to tax, but your Social Security benefits will also probably be subject to tax as well. So rather than focusing on what you can do, what you focus on is how grateful you are to have the guaranteed lifetime income and what you can do to eliminate tax rate risk from any other retirement income you might have.
I mentioned before that a price tag can be put on your unwillingness to take action with a tax free and risk free retirement. There’s also a number of things a good retirement plan offers that you can’t put a price tag on. The first one of these is a long term care event. You don’t know if you’re going to have a long term care event or not. So there’s no way to put an actual dollar value on this type of risk. All the advisor can do is try to structure your plan to eliminate this risk. If you do have a long term care event, you’re not subject to all the financial consequences you otherwise would be subject to the second and third items.
We can’t put a price tag on our sequence of return and withdrawal rate risk. We have no idea where the market’s going to be when you retire or during your retirement. Therefore, you don’t know what role sequence of return and withdrawal rate risk will play into retirement. Since both of these risks are unknown, the best solution is to eliminate the risks, so you don’t ever have to worry about them.
The last item you can’t put a price tag on is the value of a worry free retirement. What is it worth to you to have a retirement that you know will do what you set it up to do? This is a decision each person is going to have to make themselves, but what I found is a worry free retirement is a better retirement.
At this point, some of you may be asking yourselves, what’s so different about what a prosperity advisor does and what a traditional financial advisor does? The biggest difference is a prosperity advisor is focused on not only getting you to retirement, but also getting you through retirement. They’re willing to put in the work to help you get the maximum results from the resources you have. They also have access to many other tools and information that can help you eliminate the various risks facing your retirement. The sooner you can get started eliminating the risks facing your retirement, the better chance you have of having a tax free and risk free retirement.