Jason and Emilia discuss creating your sound retirement plan for 2018.


Here is a link to the article that was mentioned in the show.  visit: www.fool.com/retirement/2018

Below is the full transcript:


Announcer: Welcome back, America, to Sound Retirement Radio, where we bring you concepts, ideas, and strategies designed to help you achieve clarity, confidence, and freedom as you prepare for and transition through retirement.

 Now, here is your host, Jason Parker.

Jason: America, welcome back to another round of Sound Retirement Radio. So glad to have you tuned in this morning. It is my good fortune to have Emilia Bernal in the studio with me this morning. Emilia, welcome back.

Emilia: Thank you. Hello.

Jason: 2018, Emilia.

Emilia: Exciting already.

Jason: Let’s start the year right two ways. First, we’ll renew our mind and then I’ll have you share a joke with us.

Emilia: Sounds good.

Jason: This first verse comes to us from Matthew 6:19, “Do not store up for yourselves treasures on earth where moths and vermin destroy and where thieves break in and steal.” That’s a good one.

Emilia: Yes, a good one.

Jason: Then you’ve got a-

Emilia: Yes.

Jason: … joke for me.

Emilia: My joke today, why do the French like to eat snails so much?

Jason: I don’t know.

Emilia: They can’t stand fast food. I think that’s going to be my New Year’s resolution, too, no fast food.

Jason: Have you ever had snails, escargot?

Emilia: No. I don’t think I could do it. It’s a texture thing for me. I just think they’re going to … No.

Jason: Have you tried the crickets at the Mariners ballgames?

Emilia: I think you handed me some, actually, and I did. Yes.

Jason: Did you eat them?

Emilia: Yes.

Jason: I never.

Emilia: Yeah. I think I took a little leg or something. It was spicy.

Jason: Oh, yes. What’s the world coming to?

Emilia: Yes. We eat snails and-

Jason: Spicy crickets.

Emilia: … crickets. Well, great.

Jason: Here we go, 2018. Now I wanted to ask you before we get started in today’s … I’m excited about this program because we’re going to be talking about creating a sound retirement plan. We’ve got people out there that want to retire, if not this year, maybe in the very near future, and so we want to talk about how to do that. Before we do, since it is a new year and I’m going to my goal-setting session tomorrow, which I’m very excited about … Every year I do this. I get together with a small group of guys, and we just kind of lay it all out and encourage one another and challenge one another and hold each other accountable.

 Before we go there, as you think back about Christmas and your time with your family, what’s your number-one favorite memory there?

Emilia: Well, first, I was very lucky to get to travel home this Christmas. Being away from my family, it’s a huge honor to be able to go home and visit with them. I was in New Mexico, and it just turned out, and maybe this isn’t very common in most families, but taking our family portrait this year turned out to be the most exciting thing for me, because we haven’t done this in, I want to say almost 10, 15 years.

Jason: Okay.

Emilia: It was just beautiful to see all my family members together and see how much it’s grown. Being able to spend time with two of my sisters, who are expecting babies soon, so just seeing my family grow and just realizing that I can be a part of that in any way that I can, even if it’s just to visit for Christmas. It was just great, I think just being there and having my family close.

Jason: That’s awesome. That’s really good. Thank you for sharing that, Emilia. The other thing I wanted to talk about, one of the things, one of the exercises we do, and we just had a family meeting. For our listeners out there who may be driving down the street, driving down the road in Seattle this morning that don’t know, I’ve got a fairly young family. My son’s 12 and my daughter just turned 10. At our family meeting, we were talking about our goals as a family for 2018, and we always like to start our family meetings by going around and complimenting one another. Everybody shares a compliment about everybody else in the group, and then including something that they complement themselves on. I think it’s hard to sometimes compliment yourself, so that’s how we start the meeting.

 Then we got out our phone and we looked through 2017 just as a year in review in pictures. I have to tell you, Emilia, after going through that exercise, I don’t think it would be possible for me to have designed a better year than 2017. 2018, it’s going to be really, really challenging to try to envision a better year than 2000 … I’m sorry, 2018 it’s going to be hard to envision a year better than 2017, because it was just absolutely wonderful.

 One of the things I’ve learned in our goal-setting group every year is that’s a really important way to start, as you start designing the new year, is to really find what it is you’re grateful for for the year before and approach it with a sense of gratitude for all that we’ve been given, for our health and our families and our experiences and just really cherishing that before we start thinking about the new year. Otherwise, what could end up happening is you make a list of goals out of lack instead of abundance. We live, especially in America, we live, we just have this abundance around us all the time. It’s a wonderful place to be planning from. Thought I’d throw that out there as a tip for some of our listeners. Maybe they’re getting ready to kind of dial in their goals for the new year.

 Let’s talk about retirement planning because … Oh, wait. Actually, before I do, and this is one last question I wanted to ask of our listeners to kind of play along. If you’re friends with us on Facebook, I would love for you to answer this question on Facebook. I’ll post the question there, but here’s the question, because this is something I’ve been thinking about for 2018. It’s one of the reasons we’re doing this episode today. The question is, if you should and you could, but you don’t, what do you call that? If you should and you could, but you don’t, what do you call that? Not an answer I expect you to have, Emilia, or our listeners right off the top of their head, but if you’re playing along on Facebook, I would love to hear your response. What do you call that, if you should and you could, but you don’t?

 Okay. Let’s talk about 2018 retirement planning and creating a sound retirement plan, because that’s what we help people do.

Emilia: Absolutely. As we enter 2018, there are a lot of people out there who are getting ready to retire. What do people tell you they enjoy most once they retire?

Jason: I actually want … This would be kind of fun, too, but to create a contest, a video contest for Sound Retirement Planning. Here’s the contest. Maybe we should just do it, but to have people showing different ways that they destroy their alarm clock. The number-one thing that people tell me they love about retirement is not having to wake up to that alarm clock anymore. I could just see our listeners from around the country taking baseball bats and crowbars and shotguns and throwing the thing out the window. I would just love to see some videos posted for killing your alarm clock.

Emilia: I think it’s a great idea. I think that would be like trending on anything, on the Internet. That would be interesting, because things that come up … But that is a good thing. I wish every morning sometimes I could do that now, but you have to wait till you retire, right?

Jason: Yes.

Emilia: It means more when you’re retired.

Jason: Zig Ziglar says it’s not called an alarm clock. It’s called an opportunity clock. I grew up with my dad playing the Zig Ziglar tapes, all those cassettes all the time. When my alarm clock or opportunity goes off at 5:00 a.m., I am excited to get up and go jogging and start my day, have that first cup of coffee. I’m kind of weird that way. Maybe that’ll change.

 The other thing that we hear from people a lot is just the time freedom. Now, they own their time 100%, completely, and they can do what’s most important to them, be with the people, like you said, that are most important to them and just involve themselves in activities of life that they’re most passionate about. At the same time, I’ve met with people just recently who have retired, and they said, “Jason, I’m kind of bored,” or they say, “I’m having a hard time getting my bearings.” They feel adrift in an abyss.

 It’s interesting because there is some structure that’s lost. When you have a purpose to get up every morning, you know you have tasks to get done. All of a sudden, time can start to blend together and people just don’t find themselves as productive as they once were, which is what retirement is all about, not having to be productive anymore.

Emilia: Is that one of the things that they miss the most, or what would be one of the things they miss most? Is that organization, that structure or …

Jason: See, I’m always asking. The reason I wanted to bring this up to start with because I’m always asking people the questions. I’m curious. I think curiosity is an important characteristic that I try to embrace, and I want to be a curious person. I want to ask people a lot of questions. One of the things I always ask them, what do you like the most, after they’ve retired. The other question I like to ask them is, what do you miss the most?

 Actually, the structure is one piece, but the other piece is the relationships. A lot of times there’s a lot of community that’s taking place at work. You get to connect with people and ask them how their day went and what’s happening in your life. There can be a little bit of a disconnect there. It’s one of the reasons things like Facebook is so cool is because it helps us stay connected with one another even though there have been a lot of research studies done that say people that are connected on social media are less happy than people who are not. It does make you wonder if maybe life would be better if you just unplug from some of this stuff sometimes.

Emilia: Yeah, you can see that. It’s very important to stay connected, especially with people that were such a big part of your life for so long.

Jason: Absolutely.

Emilia: We need that.

Jason: Yeah.

Emilia: We’re talking about creating sound retirement plans. What is the difference between an investment strategy and a sound retirement plan, and why should people care?

Jason: This is so important. It is so important, and I want to restate your question. The difference between an investment strategy and a retirement plan, because, unfortunately, what most people have today is an investment strategy. They have an asset allocation. They’ve taken a risk tolerance questionnaire, and they have no retirement plan at all. I don’t want to go as far as saying that an investment strategy is just a product, but it is a piece of what a good retirement plan should be. It is not a retirement plan.

 Let me state this again if you’re driving down the road this morning. An investment strategy is not a retirement plan. Owning different mutual funds is not a retirement plan. Owning an annuity is not a retirement plan. Those are financial tools, they’re financial products or they’re financial investments, and there’s a big difference between having a plan and an investment strategy. Should those two complement one another? Should you have an investment strategy? Absolutely. Should you have an annuity? Maybe, maybe not. Just depends on your situation. But you definitely, everybody needs to have a plan, because what a plan does for people is it gives them a greater sense of clarity, so they understand what’s most important to them. It gives them a greater sense of confidence to know that the numbers are going to work. Then, ultimately what that does is it creates a greater sense of freedom for people.

 I was just reading just a little bit ago, Emilia. There was an article that was put out on … I’ll link to this article in the show notes, but by Motley Fool. It says that more than half of still-working Americans … This is a quote from the article, “Fifty-six percent say the most important goal for a retirement plan is to guarantee money every month to cover living expenses.” That was according to a 2017 TIAA survey.

 Here’s the interesting side note to that. If offered the ability to receive a $500,000 lump sum or a $2,700 per month for life guaranteed income; 62% of people favor the monthly income, 48% would prefer the …

Emilia: Lump sum?

Jason: No.

Emilia: Or the payment?

Jason: I’m sorry, the lump sum. Yeah.

Emilia: Why do you think that is a difference? Is it just because it gives them peace of mind to know that it’s going to be there until they finish retirement or they pass on? Or is it because they’re afraid of losing all that lump sum? That’s kind of the question I would wonder about.

Jason: Yeah. I think I just misspoke, too. I think I said 48%. I meant 38%-

Emilia: Oh, okay.

Jason: … of people, so it was-

Emilia: They came pretty close.

Jason: Yeah, yeah. That’s interesting to me that people would rather take a 6.50% cash flow from their investment portfolio. The majority of people would rather have that cash flow, but there’s 38%, 40% basically of people who say that they would rather take the lump sum. It’s interesting to think of, because if you think that the reason that you’ve accumulated money, according to this article, is to replace or to make sure to guarantee that you’re going to have enough income, yet 40% of the people out there say that they wouldn’t take the income option. They would take the lump sum. It does make you ask the question, why? Why would we sacrifice the reason that we have the money in the first place, if that is, indeed, the reason?

Emilia: Everybody’s story is different. Everybody’s plan is different, and so my next question for you, then, is how can our listeners know if they have a good retirement plan?

Jason: A good retirement plan’s not a rule of thumb. It’s not multiplying your portfolio by 4%. It’s not having just a simple withdrawal strategy. The reality is if you have a good retirement plan, it should be a written plan that you can show somebody else that’s documented and it’s on paper. I have to tell you that probably 95% of the people we meet with have no written plan.

 A written plan’s going to take into consideration when do you start Social Security. It’s going to take into consideration any pension, the other cash flows that you have. It’s going to take into consideration things like inflation and how your purchasing power’s going to change over time. It’s going to look at what happens when one spouse dies. It’s going to look at what happens if somebody ends up on a long-term care situation. A retirement plan is going to look at all of the assets that you’ve accumulated, both your liquid investible assets as well as your non-liquid assets, because you may need to tap into those at some point.

 A retirement plan is just so much more than an investment strategy. I’m telling you, I’m telling you our industry is absolutely flawed right now because what most people have as a retirement plan, or they don’t have a retirement plan. Most people have an investment strategy, and the reason they don’t have a retirement plan is couple. Number one, a lot of these brokerage firms out there do not allow their financial advisors to create comprehensive retirement plans. That’s not what they’re in business to do. They’re in business to create investment portfolios and investment strategies. A lot of times, people are trying to get retirement advice from people who don’t even have the resources and tools to be able to create the plan for them in the first place, so you got to be careful who you’re getting your advice from.

 The second reason that a lot of people don’t have a comprehensive plan, and this is one of the things I’m most excited about. It gets back to that original saying, that question, if you should and you could, but you don’t, what do you call that? A lot of times, people don’t have a retirement plan because in order to get this type of comprehensive wealth management, where you have somebody looking at your plan, your investments, your insurance, your taxes, your Social Security, your pensions, and understanding how to put all these pieces together, a lot of times most people are multimillionaires. People don’t want to spend the time to help them create that kind of structure.

 That’s the type of work that we do for people. It’s what I’m most excited about. Like I said, as I think back to 2017 in terms of lifestyle, in terms of my family’s wellbeing, I couldn’t have designed a better year. The thing that I’m most excited about 2018 is I want more people on that journey with me. I want more people to be able to go out and live a life that they’re just excited and passionate about. They look back on the year prior and they say, “I couldn’t have had a better year if my life depended on it.” That’s the type of planning that we do, and I’m really excited to help people achieve that in 2018.

Emilia: That was great. You always said that you start with a question. The questions are always kind of the route to beginning a good relationship. What is the number-one question that most people have for you when they meet with you as their advisor?

Jason: People just want to keep it simple. The number-one question that I have people asking me is, “Jason, have we saved enough? Are we going to be okay? Have we saved enough money that we’re going to be able to retire and be comfortable for the rest of our lives?” I would tell you that most of the time when I get the opportunity to sit down and have these conversations with people, they, indeed, have. It’s wonderful to be able to sit across the table from them and say, “Hey, good job.”

 They’re getting a second opinion, and that’s really what people want is they just want to have that confidence. This is a huge decision to go from working for 20, 25, 30 years plus to not working anymore, especially at a time when they’re at the peak of their careers in terms of their earning capacity. You don’t want to give that up too soon. Sometimes I meet with people and I tell them, “You know, if I were in your position, I would work a little bit longer,” or I have to tell them, “You know, if you do this, the numbers may not work.” That’s a harder conversation for me to have, but it’s an important thing for people to hear. If they’re in a position where they shouldn’t be retiring, then they really need to know that ahead of time, and the time to know it is before you retire, not afterwards when you’re trying to make up for any shortfalls.

Emilia: That’s true. Maybe now for all of our listeners who, again, are getting ready to retire in 2018 or the next year or so, talk to Jason. Come in and just get some more information. It’s the most important thing you can do is just get informed about things.

Jason: Mm-hmm (affirmative).

Emilia: With this New Year, what is the new planning process that you’ve created for 2018 and how is it different from the years past?

Jason: This is something we’ve been working on for some time, but we’ve really got it dialed in now, and it’s incredibly powerful. Malcolm Gladwell wrote a book called Tipping Point. He’s written several books, and one of them is about mastery. One of the things he talks about is 10,000 hours, the number of hours people have to work doing something before they achieve mastery. I was thinking about that this morning. I’m over 20,000 hours of helping people on this journey into and through retirement. I feel so strongly about the work that we do, not because I’m the smartest guy in the world but because I spend my time focused like a laser beam in this one area of financial management, which is retirement planning, 20,000 hours.

 One of the things that makes our firm incredibly unique is that we can be location-independent, and it creates freedom for people. You can live in Colorado, you can live in Chicago, you can live in California and know that we can serve people over the Internet. They could live right over in Seattle. Maybe they don’t want to get caught up in the traffic driving to our firm, but we can jump on digital meetings through Skype and Join.Me and some of this other technology that’s out there in order to be able to see one another, to be able to sit face-to-face and not have to be in the same area. One of the things I’m excited about is just to really be able to bring this planning, these 20,000 hours of experience to people’s lives as they’re preparing to retire.

 Emilia, we’re going to do something really radical for people in 2018, and that is we’ve got this three-meeting process. Our three-meeting process, the first meeting’s a discovery meeting. The second meeting is where we create a year-by-year cash flow plan for people. We stress test the plan. We show them how to maximize Social Security. Then we have a third meeting that is all about strategy in terms of diversifying across time.

 Well, in years past, we’ve always charged, because we’re a fee-based financial planning firm. We’re fiduciaries, which means we have a legal obligation to act in our clients’ best interest. In years past, we would charge up front our fee for people that wanted to work with us remotely over the Internet, and then we would complete all three of these meeting processes for people. Well, I believe so strongly in the work that we do that what we’re going to do going forward is we’re going to give people those first two meetings complimentary.

 We’re going to have the one-hour discovery meeting, and then we’re going to create a year-by-year cash flow plan that includes showing people how to maximize their Social Security. We’re going to do a fee analysis to help them understand the fees that they’re currently paying, because many times, we can help people reduce their overall fee structure. We’re going to show them the tax implications of all of this planning that they’re doing.

 Then, at the end of the second meeting, we will only invite people to become clients if we can add significant, meaningful value to their financial life. We’re going to show them, we’re going to quantify, we’re going to put it on paper. We’re going to say, “Here’s how we can help you, and here’s going to be the benefit to you. If you’d like to pay us a fee, here’s what the fee would be to hire us.” Typically, that fee can range anywhere from $500 to $5,000. I would say most people pay us $1,500 to $2,500 to create a plan, depending on the complexity of their situation. There’s a little bit of a variable there.

 Imagine, for most people, if they have those first two things accomplished, those first two one-hour meetings, they’re going to come away with so much more clarity just by going through that process. Then they’ll have all of the information they need to make a decision about whether or not they want to hire our firm to help them on this journey into and through retirement. I’m excited about that. It’s called put your money where your mouth is. Right?

Emilia: Wow. Yeah.

Jason: Give them the value first. Show them how we can help them, and then let them decide if they want to pay us. I think that’s really cool, and I’m excited about it.

Emilia: I think that sounds great. Sign me up. I’m not ready to retire, but count me in.

Jason: I’m telling you, 2018 is going to be an amazing year for the people that we serve, and it’s going to be an amazing year for the work that we do. I’m just really excited about all this 20,000 hours of experience I’m going to be able to bring to people’s lives over the course of the next 2018.

Emilia: Absolutely. When you’re working with people, what is it that most people are looking for in the planning that you do for them?

Jason: Most people want a second opinion. A lot of people we work with are very sophisticated. They’ve been running their own investments, managing their own investments, doing their own planning for a long time. They know that this is an important decision. They know they need a second opinion, and they want to have more confidence because there’s a lot of people depending on them. That’s really what people want from us when they engage us for planning.

Emilia: How do you recommend that people should invest in retirement?

Jason: Investing in retirement should be different than the way you invest during your working years. This is something that makes me mad. It actually makes me angry because there’s so many people out there right now giving advice, telling people to invest their money the same way in retirement that they did during their working years. The key to investing in retirement is time. See, time is the one asset that you have less of as you’re making this transition through retirement. If you keep investing the way that you did when you were 30 years old and we experience another hiccup in the market, it could totally blow up your financial life.

 I’ve walked down that road with people. I’ve seen it happen where people lost a lot of money in 2008, and they ended up having to sell their house and downsize significantly. They depleted all their resources, and it’s because people are more interested in managing investments and charging them a high fee for managing those investments than they are doing the right thing, which is creating a plan for them first, and we’re going to change it. We’re going to change it for the industry and we’re going to change it for all of our listeners. This is going to be a really important change for 2018.

Emilia: Well, I love that passion behind what you do, Jason. Why do you think most people get bad advice?

Jason: I wish I could answer that question but I just-

Emilia: Okay. No problem.

Jason: I got so fired up on the last one, and I realize we’re out of time. Until next week, Emilia, thanks for being here.

Announcer: Information and opinions expressed here are believed to be accurate and complete, for general information only, and should not be construed as specific tax, legal, or financial advice for any individual and does not constitute a solicitation for any securities or insurance products. Please consult with your financial professional before taking action on anything discussed in this program. Parker Financial, its representatives, or its affiliates have no liability for investment decisions or other actions taken or made by you based on the information provided in this program.

 All insurance-related discussions are subject to the claims-paying ability of the company. Investing involves risk. Jason Parker is the president of Parker Financial, an independent fee-based wealth management firm located at 9057 Washington Avenue Northwest, Silverdale, Washington. For additional information, call 1-800-514-5046 or visit us online at soundretirementplanning.com.