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Retirement Planning: Throwing Good Money after Bad November 12, 2008

Posted by retirementwithaplan in retirement.
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There are numerous ways to look at retirement planning and over the next several posts we will examine some of the numerous ways you can approach what is proving to be a drastically altered environment.

Looking at the questions you have about a retirement is almost as important as the actual act of retiring. What you plan to do with your time (and yes, everyday, folks retire and face these questions – some are forced to leave the workplace and others are simply at that age) can cause almost as much anxiety as saving for it has.

This topic unfortunately is intricately tied to the question of “will I have enough money to retire”. We spend a great deal of time discussing work/life balance (a curious phrase that has popped up in recent years to determine how much work you do measured against how much leisure time you have). Truth is, there is no such thing as a work/life balance. When you are employed, your life revolves around the quest to earn.

wsign111208signNo balance can exist in such an environment, no matter how much the human resource folks suggest otherwise. Work invades the commute to and from, the breaks you take and the conversation you have at dinner and even when you are simply hanging out with friends. It shapes who you are and what folks think of you.

That, my friends, is not balance. Add to that the stresses of simply using that work/life to stay economically even, and the balance, if there ever was one – and it was surely tilted with the scales tipped much too far to in the other direction. Work dominates as it never has before. It is who we are and what we are.

So why then, do we feel as though the post-work life we are seeking will be fraught with questions about what we will do, when we will get up, and will we miss what has become a life-long appendage. This is not retirement planning.

Retirement planning consists of three basic elements:

1. Creating future income from present income.

2. Understanding how to allocate current income to achieve future income.

3. Never losing focus.

Do you need a planner to help you with these goals? No. And I will tell you why. Most planners are salespeople, working (like you) to make a living that is, in their case, financed by their ability to sell you products. No one can accurately do that, without a keen interest in their own personal quest to create their own future income. Their “future income” is financed by you.

For many of us, we have made our way through college, into the workforce, learned a trade and/or begun a life with piecemeal advice from folks who have no vested interest in charging you for their guidance. You earn good money and at some point, you decided that, I need advice on what to do with it. Instead of taking advantage of the wealth of information available, you decide to be up-sold on products that your financial adviser suggests.

Consider this guidance offered by the Financial Life Planning Institute or the Kinder Institute of Life Planning:
“Within the profession of Financial Planning and advising, a new approach has emerged from a core group founded in the USA by George Kinder and Richard Wagner. Shifting the emphasis of the planning relationship to assisting clients in formulating their “life of choice” first, advisers then establish the financial decisions that will support the unfolding life plan and its financial requirements.”

In other words, get cozy. Get to know your client. This will enable you, the financial planner/adviser/consultant to better construct a product that will suit their needs. Even better yet, build a product line that makes the most sense and spend the rest of time making it seem like the right choice. This is planner cum therapist and neither is what they pretend to be.

You financial planner is not your friend. They are not your confidante although you will enter their office and pour your financial life on their desk. You will show up unprepared. You will arrive with a certain anxiousness that will be palpable. You will do so in the hopes that they will answer those three tenets of retirement planning and in the process, give you something you can believe in.

Although this analogy may be just a little far-fetched, ask yourself this: If you went to the grocery store and received good customer service, good products at a good price, you would probably return. But take one of those three elements away and you probably would not shop there again. Your financial planner offers you questionable products backed by probable results masked behind unusually good customer service – something they are trained to do – and you keep coming back even as the results of that plan has disappointed you.

Do you really need to throw good money after bad? We are a do-it-yourself nation and we do not do it any better than when we pay for help. I can understand hiring a plumber. But not a planner.

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