Retirement Reality Check

How to Spend All Your Money and Still Leave an Amazing Legacy

Josh Jalinski

• Publisher: HarperCollins Leadership
• Year: 2019
• ISBN:
  9781400212156
• Topic: Personal Development
• Subtopic: Personal Finance

HOW TO RETIRE IN A VOLATILE MARKET

Whether you have ten or thirty years until retirement, Josh Jalinski shows you how to maximize your retirement saving and spending plan, while still having something to leave behind for your family, friends, and favorite causes.

Looking at your 401k in a volatile market can lead to panic and poor financial decisions. Even if you have already made some decisions you regret, or you waited until forty-five to think about retirement, there are steps you can take today that will help you reach your financial retirement goals.

Josh Jalinski, host of the popular Financial Quarterback™ radio show, offers his SWAN (sleep-well-at-night) retirement that works for people in all stages of their careers. This proven system for secure retirement planning lets you enjoy your money, and teaches you:

• To challenge fifty years of conventional retirement planning with fresh strategies tailored to today's volatile economic climate.
• Tax-saving strategies that maximize the amount of money you have available to spend on experiences, travel, and expenses.
• Understanding how to identify the right investment portfolio mix for your individual circumstances.
• How saving cash and different life insurance options help you weather volatility and ensure you can pass wealth on to family members.

The truth is, a 401(k) is not enough for most retirees. Its time create a new paradigm, one that will stand up against market volatility and be there when it's time to enjoy the years you worked to earn.

PART I

START YOUR RETIREMENT REALITY CHECK

1

REALITY CHECK

QUIT WORRYING ABOUT YOUR MONEY. MOST RETIREMENT PLANNING ADVICE IS WRONG.

MEET KENNY

“If you lose my money, I’m going to kill you.”

What would possess a 58-year-old man to say that to me? Kenny is six foot five with the build of a lumberjack. His grip nearly crushes the person on the other side of a handshake—in this instance, that was me. I was scared.

When I first met him, Kenny hated financial advisors. His first two advisors had shipwrecked his life savings.

Kenny was so mad at his previous financial advisors that he vowed never to speak to one again. He woke up in the middle of the night in cold sweats from worrying about his future. For Kenny, retirement didn’t beckon; it loomed.

Sound familiar? Millions of people like Kenny, and probably you, have either been failed by the conventional approaches to financial planning or have been too confused or scared to even get involved with them.

You’re not to blame, but much of conventional financial planning wisdom is flawed.

Most of what is sold as sound financial advice is either outdated or marketed as a one-size-fits-all package. It often doesn’t work for people with out-of-the-ordinary circumstances or preferences.

A lot of people I see have dabbled in financial products they’ve seen advertised on TV or the web or heard about in books by financial gurus. These products—and yes, they’re very much products, like a washing machine or a new car—range from stocks and funds to annuities to long-term-care insurance to whole life insurance to bond ladders, and more. They’re all legitimate and can be used in constructing your financial plan.

But . . .

Any financial product is a tool. It can be used for either good or ill, depending on the financial plan. As I will say over and over—it’s the most important thing you should take away from this book—get a plan before you get any product. Plan and process should precede product.

A LEGACY

This book is dedicated to my parents, Bill and Marilyn, who loved Jesus, their family, and Mickey Mouse. They left me a godly legacy of love and selfless service to others. They devoted their lives to helping others struggling with addiction and both recently passed away within six months of each other. They didn’t want to worry about their money but had to due to their many disabilities. They did what normal people were supposed to do—cancel their insurance policies and buy index funds. If they would have followed some of the strategies in this book, they wouldn’t have needed me to give them a job. The reason I wrote this book is because the vast majority of Middle America is misinformed, as my parents were, about money management and protective strategies for their money.

Kenny, like my parents, made bad decisions in part due to a legacy of many decades of rigid, poorly explained advice from countless personal-finance websites, newspapers, and magazines. This information only got more rigid and more poorly explained as computers took over from economists scribbling formulas on chalkboards. Poor advice also abounded with the exponential growth of financial cable networks and the financial celebrities they helped make famous.

Many of these people mean well, but those who book guests for these shows or author these stories are usually former English majors hired for their ability to craft a compelling financial piece. Or they are social media mavens who know how to generate web traffic. There’s nothing wrong with this, except that they generally borrow stories from groupthink or conventional wisdom. Many times, they do not have access to cutting-edge financial information.

There’s also nothing wrong with doing research online, if you keep in mind that Google isn’t the internet’s equivalent to the old library card catalog; it’s one of the biggest businesses in the world for a reason. We like to search for free, and Google sells our data. For instance, if you type the word “annuities” into the website, a leading default you’re offered is “annuities are bad,” and one of the top paid websites advertised is for an advisor who famously offers lists of why annuities are bad investments. He or she pays to be at the top of the Google surf engines. It’s good marketing but often misinforms.

So why read another book full of financial planning advice? This one in particular?

A HOLISTIC APPROACH

Here you’ll find a holistic approach to your finances that can be easily tailored to any situation, while offering you a set of tools used to potentially generate more income from what you already have, spend your money in a way that you enjoy, and still leave a legacy for family or causes that are dear to you.

You’ll find that a lot of the old, outdated rules seem perversely designed to make you suffer rather than enjoy your money throughout your life. But rules are made to be broken, given the right circumstances. My approach will give you an in-your-face look at how traditional financial planning wisdom has failed you. Here are the conventional rules that are not setting you up to live your best financial life:

1. Save for a rainy day. We want the shift to savings to become a joy, not drudgery.

2. Always max out your 401(k). This isn’t terrible advice, but sometimes it’s not the best advice. I appreciate the 401(k) as a forced-saving vehicle. But if you max out your 401(k), you’re choosing to pay taxes at a future date set by the government at a future rate controlled by a future president or Congress that may believe in confiscatory taxation. Remember, a 401(k) is a promise the government makes that they won’t tax you now, but they will tax you later.

3. Buy term insurance instead of whole life insurance and invest the difference you pay in the stock market. (Also known as buy term and invest the difference.) Term insurance is akin to renting your house; whole life is like buying a home in that it builds equity. Term life insurance is a temporary tool for affordable protection of your family when you are young and can’t afford a good permanent life insurance policy. However, as you age, term becomes expensive when you need it most—when you’re older. Your focus should be on buying cash-value life insurance over time and investing the difference.

4. I’d rather die and “go to hell” than buy an annuity. Annuities can be the pension you never had but always wanted.

5. Use a Monte Carlo Simulation to test your retirement scenario. That’s one option, but we’ll give you a better game plan. After all, why would you want to follow a simulation named after a casino?

6. Make a budget and stick to it. Sure, except when you want to buy a new car, take a vacation, or go out to dinner. We’ll show you an easy way to put your savings on autopilot and have money for saving, living, and giving.

7. Wait until you are 70½ to take any money out of your Individual Retirement Account (IRA). That’s when you’re required to take some out. There are a lot of situations, as we’ll see, when you should draw down this account a bit earlier.

8. You can’t do anything to prepare for a stock market meltdown. Set up a volatility buffer to draw from when the markets get choppy, so you don’t have to spend your principal in a down year.

9. All you need in retirement is three checks: your pension, Social Security, and investments. Think again. Ten checks in retirement is better than the three-legged stool.

10. Bonds are safe. Only government-backed bonds are guaranteed but you may not make much.

11. Dollar cost averaging is the way to amass wealth. If you are not careful, dollar cost averaging may end up being dollar-lost averaging.

12. Diversify according to Modern Portfolio Theory’s pie among 60 percent stock and 40 percent bond. The pie is a lie. It failed in 2008 and may fail again. Consider diversification trading strategies, not just assets.

13. The only things certain in life are death and taxes. You can leave money that is income- and death tax–free.

14. Take only 4 percent a year out of your savings after you retire. The good old 4 percent rule. Forget it. We’ll see why in chapter 13.

15. Disability will never happen to me and long-term-care insurance is just too costly. Disability and long-term-care insurance makes sure you don’t spend all of your wealth on your health in your later years.

16. All you need is a will, and you are okay if you die. Estate planning is the ultimate act of planning for the people and causes you love.

The following are two lists contrasting the old reality with the new retirement real...

Table of contents

• Contents
• Foreword by John Mauldin
• Part I—Start Your Retirement Reality Check
• Part II—Save It!
• Part III—Spend ’Til the End
• Part IV—Leave It!
• Conclusion: Winning the Game
• Acknowledgments
• Notes
• Index