If you need an example of a person who is generous, wise, and strategic with finances, look no further than Justin Forsett! A former running back in the NFL and entrepreneur, Justin lays out his story from humble beginnings to managing new money during his time in the NFL to transitioning into new endeavors with his company, Hustle Clean.
In this blog post, we’ll break down a few major takeaways: managing new money, investing in the next stage of life now, and having a strong Why.
Managing New Money
Sometimes, we find ourselves with more money than we’ve ever had before. Maybe you grew up in humble circumstances. Maybe you’ve made a big financial leap in a small amount of time. How do you keep a healthy relationship with money in that moment?
Justin discusses how money can do a lot of good, but it can also do a lot of damage. When you come into new money, finding the right balance of giving and saving is key. Especially if you come from humble beginnings, you may be tempted to go one of two directions with new money: spend it lavishly or hoard it selfishly. He talks through his experience of learning from the right people to strike that balance between planning and giving.
Invest in the Next Stage of Life… Now!
Justin also poses the question, “Does my bank account reflect what I say I value?” If you want a life of supporting others and being “famous in your own home” until your last days, does your money flow toward things that support those goals?
Investing in future goals starts in the present. Planning and saving money is a vital piece of having a generous and creative retirement. Justin calls out that we were created to create and invest in others, and that those desires will continue into retirement.
Have a Strong Why
Adversity and obstacles are coming your way regardless of the path you walk. When you meet them, having a strong Why behind your endeavors will help you stay the course. A weak Why will threaten your longevity and success because it won’t be sustainable when you have to work through adversity.
Justin is passionate about giving back and helping others live a life of purpose. With that strong Why propelling him, he founded Hustle Clean, a hygiene and self-care brand, so that people can stay healthy while living lives of action. And through Hustle Clean, he’s been able to help people around the globe when disasters fall.
With strategic planning and generous hearts, a life–and retirement–of purpose and fulfillment is possible.
Disclaimer: Since we don’t know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Streamline Financial Services, LLC or its members cannot be held liable for any use or misuse of this content.
Affiliate Disclaimer: This post may include affiliate links where we may earn a payment when you click on the links at no additional cost to you.
Disclosures: Securities offered through LaSalle St. Securities LLC (LSS), member FINRA/SIPC. Advisory services offered through LaSalle St. Investment Advisors LLC (LSIA), a Registered Investment Advisor. Streamline Financial Services is not affiliated with LSS or LSIA. LSS is affiliated with LSIA.
How much does it take to be considered wealthy? There is an answer, and it might surprise you.
It surprised me because when Schwab did this survey asking people how much they thought they needed to be wealthy in the US, their answers led to something called the Wealth Paradox Effect. I’m going to share some of the top findings from this study so that you can improve your financial life and then find out how to achieve that feeling of wealth that you might be looking for.
Time Is Money
When they asked, “At what level of net worth would you say a person is considered wealthy,” the average answer that they gave was $2.2 million. They also asked those same people, “Do you feel wealthy?” And almost half (48%) of the respondents said, “Yes.” The average net worth of those people that said yes had 560K, much less than the $2.2 million in the previous answer. There are a few important parts of the survey that you should know, especially if you are retired or you’re thinking about retirement, and a few thoughts you probably have not heard before coming from a financial advisor and a CFP professional.
The first thought is that time is more important than money. Americans feel that having time is more important than money, especially for people who are 57 and above. Our clients often spend more money in retirement on things that save them time because they’re at the point where their money is making more money, but it’s not able to make more time. As you get older, we’re reminded how much time we actually have left, and time becomes our scarcest asset – more so than our savings in the bank or our investments.
What’s More Important Than More Money?
The next thing I liked was how, for those 57 and above, they cared the least about how they compared to others. This is great because we know that comparison is the thief of joy, and feeling wealthy is up to you. It’s not a number that somebody else tells you you should be. Now the third surprise was how only a third of these individuals had a financial plan, but of the people that did, 92% of them felt confident that they are going to reach their financial goals. That feeling of confidence is just so important for overall wellbeing and not feeling stressed about money. This brings us to the next point in this study that says over 70% of people said not stressing about money is more important than having more money than others.
It’s become clear in helping hundreds of people achieve their retirement that peace of mind and contentment becomes more important, especially as we get into retirement, because it could be scary for some to switch from working and saving for 30 years to all of a sudden having to spend those savings. You might think that sounds crazy, but it’s a common feeling for many people. Those who have a level 10 out of 10 confidence about their spending and their plan have a much better retirement overall.
Now, the next thing that stood out was the importance of fulfillment and purpose in your personal life over “working on my career.” The secret here is to finding a career that can really provide purpose and fulfillment where it actually doesn’t feel like work, but that’s not easy for everyone to do.
Fulfillment in Retirement
I talk a lot about these four things: finding something that you are good at, that you love doing, that the world needs, and that also pays you to do it. That’s really the ideal career. Then when you get to this point of financial independence, you don’t need the money anymore, so you might find something new here in retirement. The three Cs is something we talk about a lot on this channel and with our clients, and it’s that idea of if you can achieve these three things (creativity, curiosity, and connection), you’ve unlocked the secret to a fulfilling life. The next thing I like from this study is seeing that wealthy means different things to different people. More people referenced wellbeing over money when it comes to describing wealth. When describing wealth in their own words, Americans referenced wellbeing over money and assets. This harkens back to the four types of wealth that I talked about in a recent video if you want to check that out next!
Disclaimer: Since we don’t know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Streamline Financial Services, LLC or its members cannot be held liable for any use or misuse of this content.
Affiliate Disclaimer: This post may include affiliate links where we may earn a payment when you click on the links at no additional cost to you.
Disclosures: Securities offered through LaSalle St. Securities LLC (LSS), member FINRA/SIPC. Advisory services offered through LaSalle St. Investment Advisors LLC (LSIA), a Registered Investment Advisor. Streamline Financial Services is not affiliated with LSS or LSIA. LSS is affiliated with LSIA.
Today we’re talking about how you can do a five-minute stress test focusing on just one area of your plan. As you know, there are three key areas you want to get right: the income plan, the investment plan, and the tax plan. If you can coordinate those three things to work together, you’re going to be in good shape for retirement.
Under each key area, there are different strategies, principles, and tactics you need to follow in order for them to work. We’re going to focus on the income plan today, and a specific thing to pay attention to so that it works for you. The concept here is to run through different what-if scenarios related to spending.
Step One: Build Out the Plan
Step one is to build out the plan, and I like the new retirement software. If you’ve already built the plan, the stress test should just take five minutes. You might have your interest piqued and find places you want to pay a little extra attention to and work on a bit more. Set a timer for five minutes, and then here’s what you want to do.
Take that first guess as to what the expenses are going to be in retirement. The second thing you want to do is put in some of those what-if scenarios – take a high guess at what expenses could be for those things you haven’t planned for. What if we traveled four times a year? What would that look like? Or what if we bought that warm weather house for the winters? What would that cost? What if we supported that cause that we care about in a greater way? What if we paid for a down payment for the kids’ first house, or something like that? Whatever come to mind, plug it in.
If you can’t think of anything, I take your first guess and then add 20% to it and see what happens to the plan. You might be in a great spot and it might not make an impact at all. Everybody has an individual plan, everyone’s got individual scenarios; the important thing is to do the test, run through it, see what happens, and then go from there.
Step Two: Plan for Any Low Expenses
The second step is to look at what the low expenses would be. Give your best guess and go forward with changes and what you think is going to happen. In the plans themselves, with the software we linked above, it’s really nice to just run through all these different things that could happen. Maybe it’s a lesser amount that you spend on traveling, or maybe it’s just a few one-time wedding expenses. There are some other things out of our control, like inflation rates, or an extended bear market scenario. What impact is it going to have before you actually get to that scenario? It doesn’t hurt to think and plan that way.
The end result of doing all of this is just to feel more confident and secure as you move into this next stage. This could be the best, most exciting stage of your life. I hope this is helpful and you get to test out various expenses, the higher and the lower scenarios – it can’t hurt to do it all.
Disclaimer: Since we don’t know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Streamline Financial Services, LLC or its members cannot be held liable for any use or misuse of this content.
Affiliate Disclaimer: This post may include affiliate links where we may earn a payment when you click on the links at no additional cost to you.
Disclosures: Securities offered through LaSalle St. Securities LLC (LSS), member FINRA/SIPC. Advisory services offered through LaSalle St. Investment Advisors LLC (LSIA), a Registered Investment Advisor. Streamline Financial Services is not affiliated with LSS or LSIA. LSS is affiliated with LSIA.
If you’re like a lot of our clients, you are trying to achieve a 10 out of 10 confidence level about your ability to retire – anything less than that isn’t ideal, right? Well, if that’s true, then you can’t ignore this one important piece of your retirement plan: your retirement income withdrawal strategy.
Consider this hypothetical situation:
Let’s go back to January 1, 2022, and let’s assume you were targeting a retirement date of January 1, 2024 – just two years out. If you were starting to think about retirement at the beginning of 2022, but were still a couple of years away, then it’s not uncommon for you to have a fairly aggressive investment allocation in your 401(k). Sometimes we see clients that have 80% or sometimes even more of those dollars in stock-based funds. If that were the case for you at the start of 2022, then the last 16 months or so would have been pretty scary for you. You would have seen that account balance drop pretty aggressively as you grew closer to your retirement date, and maybe you’d be starting to wonder if you’re actually still going to be okay to retire.
One thing is for sure: if this is reflective of your experience over the last year or so, you’re likely not at a 10 out of 10 confidence level about your ability to retire. You’re now stuck hoping and praying that the market recovers within the next year or you may not be able to retire on your originally intended timeline.
What can we learn from this hypothetical example? We need to have a retirement income withdrawal strategy.
Create an Income Plan
The first step in creating your retirement income withdrawal strategy is to define how much retirement income you’ll actually want or need. We find it’s easiest to think of this income in a monthly dollar amount by asking a simple question: how much income do you need or want on a monthly basis in retirement?
Make sure you think about expenses that you may not have today like additional medical expenses, travel, dining out, playing more golf, and anything that you hope to be able to do more of when you’re not working full time.
Once you have that plan set, you can actually define what you need in retirement, and how much risk you need – or don’t need – to take in order to accomplish that goal.
Build a Conservative Bucket
Now that you have your income plan, it’s wise to consider putting a few years – maybe even 4-5 years – of the annual income needed in a conservative investment “bucket.” For example, if you decided you needed $5,000/month of income in retirement, then that is $60,000 annually. That means you would want about $300,000 ($60,000 x 5 Years) in your conservative bucket. You should talk with a financial advisor, preferably a Certified Financial Planner™ (CFP®) with retirement planning experience, to determine that exact strategy.
Think back to the above hypothetical situation. If you had invested the equivalent of a few years of retirement income in a conservative investment bucket, you would have had a lot less of your dollars exposed to the market crash we’ve recently experienced, and therefore feel a lot more confident about still retiring by your original targeted date.
Now, that can work for a lot of people, but sometimes it doesn’t.
Build Your Overall Investment Strategy
With that conservative “bucket” of money now in place, you can begin to think about how to invest the rest of your assets. A common best practice is to think about creating two more buckets of money – a moderate one and an aggressive one. In order to determine how much to put in each, you want to go back to that Income Plan and decide what you need. The reality is that if you’ve saved well and you don’t need a tremendous amount of retirement income, you likely don’t need to take on much risk to achieve your goals, and can likely increase your overall retirement confidence level just by investing a bit more conservatively.
If you’re playing a little bit of catch-up or need a higher income in retirement, then you may need to take a little more risk than others. To know the answer to this, you really need to meet with a professional that can run the numbers on your plan, but to get you started, you can also use our favorite retirement planning software.
Disclaimer: Since we don’t know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Streamline Financial Services, LLC or its members cannot be held liable for any use or misuse of this content.
Affiliate Disclaimer: This post may include affiliate links where we may earn a payment when you click on the links at no additional cost to you.
Disclosures: Securities offered through LaSalle St. Securities LLC (LSS), member FINRA/SIPC. Advisory services offered through LaSalle St. Investment Advisors LLC (LSIA), a Registered Investment Advisor. Streamline Financial Services is not affiliated with LSS or LSIA. LSS is affiliated with LSIA.
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