– Is there a right way and a wrong way to retire?
In this episode, Jeremy Keil speaks with Brad Barrett, Managing Director at One Capital Management, about the complexities of retirement planning with a focus on how to secure the right path to retirement. They emphasize the importance of individualized planning, considering both quantitative and qualitative factors. Brad emphasizes the importance of focusing on retirement income rather than total savings, and also talks about the color of money and bucket theories for investing in retirement.
- Why it’s important to customize your retirement plan to your own needs
- What led him to becoming a CFP® and specialize in working with clients who have pensions
- How money can affect the non-money parts of life
- What the color of money theory and bucket theory are
- Why retirement income matters more than a lump sum of savings
- Why money is a great employee but a terrible boss
- How to find a good financial advisor
- The importance of seeking counsel from a financial advisor
- And more
Securing the Right Retirement Path
Why Do You Need To Customize Your Retirement Plan?
Customizing your retirement plan is not just a luxury; it’s a necessity. Your path to retirement is unique, just like your life.
In a world filled with financial advice from various sources, it’s easy to fall into the trap of assuming that what works for others will work for you. However, the reality is quite different. Your life is a complex interplay of quantitative and qualitative factors, and what may seem suitable for someone else might not align with your specific goals, objectives, family dynamics, or financial structures.
Not every retirement path is the right path, and having the counsel of a financial advisor is key to achieving financial success. The wrong way to approach retirement planning is relying on hearsay, generalized advice, or one-size-fits-all strategies.
Instead, the right way is to embark on a journey that considers the unique math and science behind your personal financial situation.
So, as you dive into retirement planning, remember that securing the right path requires an individualistic approach tailored to your life and your goals.
What Is The Color Of Money Theory?
The Color of Money theory isn’t about the traditional green color of cash but rather a unique approach to retirement planning.
It’s a color-coding system designed to simplify the complex world of finance.
This coding encompasses three primary colors: red for growth, yellow for liquidity, and blue for protection. These colors are associated with different financial goals and investment strategies. For instance, red signifies investments that aim for growth and higher returns, while yellow represents readily available assets for short-term needs. Blue is linked to strategies that provide protection and guarantee, especially vital as you near retirement.
By color-coding these categories, financial advisors help clients customize their portfolios according to their unique goals, stage of life, and risk tolerance. It’s about creating a financial tapestry that combines these colors in the right proportions to meet the specific needs of each individual’s financial journey.
Understanding the principles of the Color of Money theory is pivotal to effective retirement planning, providing an approach that bridges the gap between well-designed wealth forecasts and portfolio structures. It helps create a diversified strategy that caters to your unique circumstances and goals, ensuring a comfortable and secure retirement.
Why Does Your Retirement Income Matter More Than A Lump Sum Of Savings?
Focusing on retirement income over a lump sum of savings is a fundamental shift in the perspective of retirement planning.
The traditional question of “How much money do I need to retire?” often leads people to fixate on a seemingly arbitrary dollar amount. However, the true essence of retirement readiness is understanding your required income, not a final lump sum.
This paradigm shift acknowledges that you live your daily life with the cash flow from your income, be it Social Security, pensions, or other sources. Your financial life is centered around these periodic payments, not a static pile of money.
By identifying your necessary income first, you create a clear target. It’s about recognizing the income gap — how much you need to support your desired lifestyle beyond what your guaranteed sources provide.
Once the income need is established, you can work backward to determine the assets required to generate that income sustainably.
Commonly, a rule of thumb like a 4-5% withdrawal rate is applied to calculate the asset base. This method ensures that your savings are geared toward providing a steady stream of income throughout retirement, offering a secure and comfortable financial journey.
Why Money Is A Great Employee But A Terrible Boss
Money holds a unique role in our lives — it’s a powerful tool, but its influence can manifest in two distinct ways. It’s either a great employee or a terrible boss.
Viewing money from this perspective underscores the importance of taking control and directing your financial journey.
Many individuals fall into the habit of letting money control them, resulting in a sense of financial imprisonment. To achieve financial freedom, you need to change your relationship with money and make it work for you.
Money should be a valuable employee, executing your financial plans and working towards your goals. Rather than being aimlessly driven by money, envision your financial journey as purposeful and goal-oriented, akin to driving with a specific destination in mind.
This approach encourages proactive decision-making regarding your income, spending, and assets, setting you on the path to financial success and independence.
How Can You Find A Good Financial Advisor?
Finding a good financial advisor is an important step towards securing your financial future. To navigate this process effectively, it’s helpful to consider three key components.
First, experience plays a pivotal role in assessing an advisor’s capability and understanding of the financial landscape. Seek someone with a track record, a deep passion for the field, and ideally, a specialist who comprehends your unique financial situation.
Secondly, take a close look at credentials. Advisors who invest in their knowledge and hold esteemed designations like CFP and CFA are often better equipped to guide you. However, avoid getting lost in an alphabet soup of qualifications; instead, focus on what genuinely matters to you.
Lastly, independence is a valuable trait in a financial advisor. While this doesn’t imply that advisors affiliated with broker-dealers or wirehouses can’t act in your best interests, working with an independent advisor who operates without the influence of a corporate boss can provide added peace of mind.
During the interviewing process, don’t hesitate to ask your prospective advisors a range of questions beyond the standard “Are you a fiduciary?” inquiry. Dive deeper into their experience, background, and the services they offer to ensure that you’re choosing the right advisor to lead you toward a secure financial future.
If you’re looking for more information about finding the right financial advisor for you, we have a number of episodes dedicated to exactly that. You can find them at Keilfp.com/blogpodcast/category/find-a-financial-advisor/
Why Should You Talk To An Advisor About Your Social Security?
Discussing your Social Security options with a financial advisor is a wise decision.
There’s no such thing as a “vanilla” answer when it comes to Social Security because the system offers numerous options, each tailored to specific situations.
Changes have occurred over the years, and the flexibility of Social Security benefits can be perplexing. To avoid making a costly mistake, it’s essential to consult with a qualified advisor.
An experienced advisor can guide you through the intricacies of Social Security, offering insights into how to maximize your benefits. This advice is especially valuable given that Social Security decisions are permanent once made.
The right advisor can help you uncover opportunities you might not have been aware of, such as unique solutions for those in divorced relationships or strategies that align with your circumstances.
So, while it might seem like a simple step, it’s important to discuss Social Security with an advisor to ensure you’re making informed decisions that will benefit you over your entire retirement.
To learn more about securing the right path to your retirement, check out the resources below!
- We Energies
- Retirement Revealed: Find A Financial Advisor
- Retire Right: Secure the Right Path to Your Retirement by Brad Barrett
- Make Your Money Matter | with Brad Barrett
- Free Retirement Planning Video Course: 5stepretirementplan.com
- 3 Things You Should Know Before Choosing A Financial Advisor
- 7 Questions That Could Make or Break Your Retirement
- Subscribe to Retirement Revealed on Google Podcasts
- Subscribe to Retirement Revealed on Apple Podcasts
Connect With Brad Barrett:
Connect With Jeremy Keil:
- Keil Financial Partners
- LinkedIn: Jeremy Keil
- Facebook: Jeremy Keil
- LinkedIn: Keil Financial Partners
- YouTube: Retirement Revealed
- Book a call with Jeremy
About Our Guest:
Brad is a Managing Director with One Capital Management. He advises private individuals and families on their personal investment and advanced planning needs. In addition, he oversees the firm’s Retirement and Corporate Services practice. Previously, Mr. Barrett spent four years as an Investment Advisor with a boutique private wealth management firm in Los Angeles. Brad was head of Corporate Services Business Development for American Financial Network for three years. His experience and knowledge as head of the firm’s Corporate Services division has allowed him to provide essential research, analysis, and strategy recommendations for high net worth individuals and the companies they own or represent. Brad earned his Bachelor degree in Economics and Political Science from Arizona State University.
Results and figures presented within the above links are hypothetical, unaudited and are intended for illustrative purposes only.
Keil Financial Partners assumes no liability or responsibility for any errors, omissions, or other issues with the links and their respective contents. This includes both the website content and any potential bugs, viruses or other technical threats.
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Keil Financial Partners does not provide any tax advice. No information or results from the links should be interpreted as tax advice. Please seek guidance from a qualified tax professional for any and all tax-related matters.
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The content and information provided through the links should not be interpreted as being investment advice or a recommendation of suitability for any particular security, portfolio of securities, transaction, or investment strategy, or related decision. Please seek assistance from a qualified investment professional for any and all investment matters.
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