Three Halves of Life
Long before the rest of the financial world began talking about retirement planning, Tony Walker was there. Tony realized that his role in the retirement planning process – along with the role of every other financial advisor and institution – was simply to invest and grow consumers money. Up until then, no real thought had been given to a plan of action dealing with not only the consumer’s “financial personality” but also, the various stages one goes through over their lifetime. Thus, the three-halves of life and the 3 personalities of money was born.
Taking Control Where We Can
Following the events of 9/11, Tony was hit with the realization that he had little or no control over the stock market. His clients were frustrated that they had no game plan that allowed them to use, enjoy and protect their money. And most importantly, tony realized that not everyone is an investor – in other words, contrary to what the financial world was saying, not everyone wanted all their money at risk in the market.
Since then, tony has conducted thousands of interviews and hosted hundreds of financial workshops gaining valuable feedback about the realities of these truths: that not everyone enjoys risking their money, and for Savers in particular, they feel as though the financial world is more concerned about the making more money on the Savers money than the Saver. Through Tony’s research gathered while working in the financial trenches, the worryfree retirement is that unique alternative to simply blindly trusting the financial world in hopes that things work out. His three halves of life takes the real-world view of Savers and breaks them down into the appropriate phases of life that the vast majority of Savers will experience.
With over ½ of his 1,500 clients over the age of 65, Tony knows first hand the needs and worries of Savers. AS well, since beginning his work in the trenches in 1984, Tony has worked with all ages and represented, trained and sold just about every financial product imaginable. Tony is one of those rare individuals that doesn’t follow the rest of the financial herd. His training is broad and his background and experience is deep. AS tony likes to say, my mission in life is simple: help more and more Savers worry less and less about their money – to use, enjoy and protect their hard-earned money.”
3 Halves of Life
1st half – ages 21 – 50
Savers just starting their careers or who are several years away from retirement who have as their main objective to build a foundation of the following in order of importance:
1) adequate liquid savings account or similar liquid account to provide for emergencies and upcoming big ticket items, i.e. purchase of a car, furniture, vacation, etc.
2) permanent life insurance with adequate cash value to protect the integrity of the death benefit from lapsing in retirement. Policy for Savers should be dividend participating whole life with added term rider or separate term life policy if desired.
3) investments with possibly more growth, yet acknowledged risk. Due to this age, the Saver should be willing to take additional risk; however, the amount of money invested into such account should not be more than 40% of their overall savings and investments;
4) consideration of long term annuity that will provide in retirement guaranteed Mailbox Money for life. This may or may not be practical given the need for the other three categories to be funded first. In addition to their savings, insurance and investments, 1st half Savers should have at a minimum the following documents in place: simple will, durable power of attorney and any health care related documents which legal counsel may feel is appropriate.
Replacing all of my future income as a result of either a death or disability
Accumulating too much debt at an early age
Not understanding the difference between ‘good debt’ and ‘bad debt’
Not having access to my money in the event of an emergency
No plan in place specifically earmarked for children’s education
No investments in place that are specifically earmarked for my retirement
No basic understanding of money and how it works – where to even begin to plan for my future
That my current job or vocation is not satisfying to me and/or no growth potential
That I will pay too much in taxes and fees over my lifetime without even knowing it
That I will one day have to take care of my parents in their latter years due to health issues or finances
Halftime – ages 50 – 70
Savers who anticipate retiring in the next five years or who have recently retired and wish to use and enjoy more of their money for an additional limited number of years, i.e. 5-10 years after actually retiring. Halftime Savers recognize the limited period of time left to truly enjoy their money and therefore wish to have more income now, vs. later as well as having access to additional monies for trips, helping kids and grandkids, etc. Savers in Halftime typically have as their main goal to now begin converting capital saved into a regular stream of income to replace their working wages. They also are even more concerned with losing money and therefore will want to lower risk expectations by potentially reducing the amount of investments in the stock market, unless those stock positions carry less risk and/or higher dividends.
In terms of savings, investment and insurance, Halftime Savers should continue to have:
1) adequate ‘liquid’ savings in the bank or similar risk-free market investments to meet spending habits and needs of Halftime.
2) permanent life insurance that includes asset based provisions for terminal illness and other long-term care needs that may arise.
3) less investments that carry market risk with less percentage of assets in these types of investments. This could be from 30% to 0% depending on the desires of the Saver in question. The question of whether to take any risk at all is of importance to consider. The decision on riskier investments will be driven by the current monthly after-tax needs of the Saver and whether it is determined that these needs can be met with less or no risk.
4) legal documents may still only include simple will, durable power of attorney as well as health care related legal documents but special consideration must also be made to future planning and documents that provide more protection for either the transfer of wealth now and /or protection against long-term care costs. These documents might include living trusts, irrevocable trusts, gifting of more current assets/money, as well as LLC’s, etc. While the WFR will discuss and consider such documents, the WFR does not provide such documents and will refer those planning objectives to attorney’s of the Saver’s’ choice for final determination of the need for such documents.
Uncertain if I can comfortably retire now, and if not now, when
That I have too much of my money at risk
That I don’t have a game plan in place that is safe, simple and easy to understand
That I am paying too much in fees and taxes on my money
Whether to leave my 401k at my existing employer or move it to another investment
Whether I need life insurance or long term care insurance, and if so, how much and what type
That I will one day run out of money
I do not have an advisor who is working for me – looking out for MY best interests – not theirs
whether to take my pension plan as a lump sum or in monthly installments
that I don’t understand the taxation of social security and when to begin taking it
2nd-Half – over age 70
Savers who have truly enjoyed the fruits of their labor and now at a point in life that the “frills” of travel and other major lifestyle expenditures are diminished. At this stage Savers may be considering downsizing from present homes, wish to start giving more money to kids and grandkids and even begin serious planning for the prospects of asset protection and other financial considerations that go-along with aging, such as long-term care expenses, etc.
Savers during the 2nd-half should have very limited exposure to risk unless those types of investments include higher dividends and/or other income provisions within them. Savers should also have in their game plan a plan of attack on how best to deal with the Tax Tumor that most certainly will be buried in any and all “qualified” accounts, including but not limited to: ‘pre-tax’ 401k, 403b, Thrift Savings plan, 457 plan, IRA and lump sum pensions. Special consideration should be given to exercising assets that include Mailbox Money for Life such as fixed and fixed indexed annuities. Due to the concerns over aging and keeping finances organized for the rest of one’s life, the Saver in the 2nd half will enjoy the many benefits of Mailbox Money since they cannot run out of money and the income from such sources of investments will not require constant monitoring.
Investments and savings during 2nd half may include:
1) larger percentage in bank type products than the other halves, i.e. money markets, CD’s, savings, checking.
2) larger portion of annuities with some of those annuities exercising lifetime income provisions now rather than on deferral.
3) minimal amount of money at risk.
4) legal documents with emphasis on “elder care” issues provided by attorney qualified in this stage of life for dealing with these type of documents required. 2nd-halfers should have already communicate their wishes to at least one family member and organized their finances in such a way as to provide ease of transition of those assets either during their lifetime or immediately following their death.
That I have too much money at risk
That I have no plan in place to deal with nursing home or other long-term care costs
That there will not be anything left for my loved ones when I die
That I will one day run out of money
That my finances are disorganized and I am unable to simplify things
That I do not have my funeral arrangements in place and/or proper legal documents in place
That I do not have an understanding of how much I can legally give NOW to my family
That I am paying too much in taxes and/or fees on my money
That I do not have a trusted advisor (fiduciary) working in my best interests
Whether I should invest in an annuity or if already possessing an annuity, how best to use it
Copyright Tony Walker 2017. All rights reserved.