I received my retirement plan by my CFP and guess what? It is all good. My first read of the plan had me shaking my head and morose. Now that I think about it, I think that is just my old stinkin’ thinkin’ about money.
As I dug further into the information and we had hashed everything out on Zoom, I see that his plan makes sense. His plan believes I can retire at Age 67, but not collect Social Security until Age 70. I will not need to work even part-time unless I want too. He is helping guide me along the path I have wanted.
Here is the good and the bad:
· I have to work full-time and continue working until at least age 67. Argh. Also, it would be much better for me to wait until age 70 before taking Social Security. OK, I was already headed that way.
· He ran the model on me reaching age 100. Wow, that would be over 30 years of retirement. He is required to run it to 100 unless there are extenuating health reasons. This gives me a buffer, I hope.
· At first glance, there wasn’t enough fun. I need more fun (meaning travel). However, once we walked through the report on a long, thorough Zoom call, he pointed out that any work bonuses were not in the model and could be allocated to more travel. OK, that gets me to where I want to be.
· I need to back off my aggressive stock investment in my 401k. He wants me to re-balance things a bit more. Currently I am 83% stocks and he wants me to back it down to 70%. When we walked through the numbers, he convinced me. His financial modeling showed me that the potential gains were minimal and offset by the increased risk. It made sense once we discussed it. Plus he likes my 401k plan a lot and picked out two very inexpensive target index funds, so I just have to switch it over and not worry about any re-balancing. That’s great news.
· It would be helpful if I can pare down the cost of the home I will purchase ($200K versus $250k). It will be prudent to be patient and increase my savings so my Emergency Fund is fully funded, and I have more $$ in the bank. He wants me to have a big number in my account before I move ahead with a home purchase. I can get that by mid-2022.
· He agreed I should cash in the Whole Life Insurance policy. He and I had the same thoughts, but he had me get a bunch of additional information from the insurance company before he made his recommendation. He asked for reports I didn’t even know existed including having them tell me if I would owe any taxes (nope). Fascinating.
· He suggested I move my stock account to a company with less fees. He caught the fact that my brokerage house was charging an excessive fee for an index fund. Like he said, it’s not much right now, but why pay it?
· The vast majority of my 401k is tax-deferred. I have only been contributing to the Roth 401K with this new job. He suggested I keep doing that to balance out my tax-deferred and post-tax retirement monies. But….
· He said that my 10% contribution with the company 3% match was sufficient. He explained that he would rather see me keep my post-tax savings in a more liquid, more easily available account. That was a really interesting approach when we talked about it. He said that I have the discipline to not blow it, so I should keep it more readily available as part of my Emergency Fund. I never would have thought of that.
· He described me as an educated and motivated on personal finance matters. Aw shucks.
· He said I have a good income for my lifestyle with no debt and a disciplined savings plan in place. Yep, that is a hard-won position.
· However, I need to watch out for lifestyle creep… don’t we all? He was gently reminding me to be careful about this particularly after I purchase a home. He’s right.
Before our call, my Rebel self was thinking that if I took all of my cash including the cash I will get from my Whole Life Insurance I will be cashing in, I could play it in the stock market on an Index fund or two and maybe make 10% to 15% in a year or 6 months. That would accelerate my savings quickly and dramatically. Yeah, my more rational self quashed that idea. That was one of his concerns was that I would get “too smart” for my own good. My words, not his. I am convinced I need to step away from the gambling table.
He made an interesting point. If I stay the course, I will have money for my entire retirement. He adjusted for inflation and different things. If something happens, all I might need to do is trim expenses or work a little more, but for the most part, it would probably only be a minor course correction.
This came up as we discussed what would happen if I lost this job. Hey, I have lost enough jobs to know that nothing is forever in corporate America. The key component of this plan is that it centers around me keeping this job. Keeping it for the next decade. I think I can do that. I hope I can do that… I mentioned it to him and he said well, we work with what we know. When that changes, we modify the plan.
I like this guy. We had a great conversation. He had very sage advice. We agreed on many key principals about personal finance. I am relieved, grateful and ever so happy. All I need to do is stay the course…