How Do I Replace My Paycheck in Retirement?

Updated : Oct 26, 2019 in Articles

How Do I Replace My Paycheck in Retirement?


The problem is when you
retire and stop working your paychecks stop too. If you’re like most Americans you’ve been working for what
feels like your whole life. The government takes the
taxes out of your paycheck, and your employer likely takes that, takes money out for your 401K savings. The rest automatically
goes into your account. Then all your bills come out. And if you’re lucky and diligent you have money left over
to save for your future or maybe have fun with. In this video we’re going to show you how to replace your
paycheck when you retire so you can stop working but
also keep your paychecks still rolling in. (upbeat music) Hello, I’m Bradford Ferguson, owner and chief investment strategist at Halter Ferguson Financial. We help everyday Americans retire early with more money than
they thought possible. So in this video we’re gonna show you how you can replace your
paycheck in retirement. They don’t teach you this in school. And it sounds like it should be simple. In many ways it is. But the truth is is it’s not easy. But if you take action
today on these four steps you can see where you stand financially, eliminate your doubt and worry, because you’re gonna set
yourself up for decades to come. So let’s start with step one. Step one is saving the right amount in the right accounts. We know that relying
on just social security and pension checks will
give you a lifetime of poverty in retirement. Compared to what you’re making now it’s a huge pay cut in how you’re living. Unless you like the taste of
cat food and Ramen Noodles, you’re going to need to save
a significant amount of money. So stay with me here. What do I mean by the right amount? Well the truth is, there is no magic number
or one size fits none rule of thumb. For example the generic
advice says that you should save 15% of your income. But what we’ve found is
that if you’re living a middle class lifestyle, you may only need to save 5%. On the other hand, if you
put kids through school or you’re late to the saving game, you may need to save 25% or more in order to replace your
paycheck in retirement. As you can see, it all depends
on your specific situation. So you can’t just follow
the generic financial advice because you’re gambling
with your life savings. The right amount is not a percentage. It’s a dollar amount that depends on how far away you are from retirement, how much money you’d need to
live the life you want to live, where you stand now financially, and many other factors. Another common mistake
we see is that you may be saving exclusively in
a retirement account, such as a 401K, 403B, or a 457. The problem with these accounts is that they’re not the most flexible and you could be setting yourself up to pay higher taxes in retirement. Who wants to do that? So you gotta save the right
amount in the right accounts and look at your whole situation. And to do this you have
to create a comprehensive, date specific dollar
specific plan for retirement. That’s right, I just said
a four letter P word. Plan. Step two. Create a date specific, dollar
specific retirement plan. Maybe you don’t know where to start and creating a plan sounds intimidating. You know you need help with this and you want someone to
take care of it for you. Don’t keep watching this
video unless you wanna solve your money worries and get a
big picture of your finances. So what is a date specific,
dollar specific retirement plan? Well, let me take a deep breath. On a basic level it answers
all the important questions. When is the best time to retire? How much money you’ll spend? Whether you can travel more? Or get a second home somewhere warm? When to take benefits like
social security and pensions? Looks at the 20 to 30 factors, such as rising costs, taxes, and out of pocket medical expenses. Calculates the best cash flow, tax, and withdrawal strategies. Accounts for a long life while securing against the unexpected. Woo. So, if you don’t have all those answers, if you haven’t looked at all those angles you don’t have a date
specific, dollar specific plan. If you have questions or
concerns about your finances, you don’t have a plan. So full disclosure on our experience when we’ve created a plan
like this for our clients, we found that they’ve been
making costly money mistakes and missing out on valuable opportunities. And we seek to correct that. These mistakes are being made on a monthly and annual basis and cause people to have to work into their 70s and run out of money in their 80s. So maybe you’re thinking, I’m not gonna live that long. But over half of men who live to 65 make it into their 80s. And as you know for women
it’s more than that. So obviously to create a plan that answers all those questions you need the help of a professional. So though the media wrongly says that you can do your
investments on your own, no one in the media says
that you could somehow create a plan this complex
without specialized and experienced help. It takes hundreds of hours of study and years of experience to
know where you’re missing out and what exactly you need to be doing. Step three is how to handle the biggest checkbook you’ll ever have. So step back for a moment. Imagine you’re staring at an account where through saving and investing, you’ve managed to build up over
10 times your annual salary. Now look at all those zeros. That’s a lot of pressure
and responsibility. And the really scary thing is is when you retire they
give you the checkbook to that account. We’ve all heard about the lottery winners and people who have inherited money, and the shocking statistic
is that a third of the time they blow all that money in two years. You might be thinking, I’m smart, I won’t let that happen to me. But it’s like, when you look
at your credit card statement and you wonder how all
those charges add up to thousands of dollars. You might now what I’m about to say. Obviously you need to
become a disciplined spender once you build up your next egg. You’ve gotta plan for
all of your spending, such as that new car, or that kitchen renovation. If you don’t account for all of it, you might find yourself
wearing an orange vest at Home Depot and on your feet, instead of reclined at the
beach for six hours a day. Who wants to do that? Not me. Step four is your money needs to grow to fund the next 30 years. But if it were as easy as just, saving the money, having a plan, and spending responsibly, then your work would be done. I wish that were the case, but it’s not. Because while you spend
your account balances down, the cost of living only goes up. As a result, you need
your investments to grow in value over the next 30 decades or more. So the real risk that retirees face isn’t some decline in the stock market. The real risk is not
getting enough growth. But when we look at how
investors do in the stock market, numerous studies have
found that they leave 4% on the table every year. What that means is over 30 years if all you did was avoid
investment mistakes, you could have more than
three times as much money. So how do these mistakes happen? The answer lies in behavioral science. So we’re all human, hopefully (laughing). Maybe there’s some robots watching this. You never know with social media. But, we humans, we use our primal instincts when making investment decisions. For instance, if we’re out
in a forest with our family, and suddenly we’re
surrounded by a forest fire, these primal instincts kick in and we get the heck out of there. The same thing happens when
the stock market goes down. People feel that their
safety is threatened and they, you feel this
tremendous pressure to sell all your stocks and get away from the perceived danger. In contrast, when a store
sells something that’s 50% off in a fire sale everyone rushes to buy. With our investments, we should be doing the same thing. Running to the sale. As you can sense, this isn’t easy. And as your account balance grows to over a half million dollars the pressure only builds. While you’re working you might think, well it’s okay the stock markets down because I’m still working. I can just go out and make more money. You can no longer tell
yourself this once you retire. You can’t just go back
and make more money. And would you really want to? You worked hard to build your money now. And you need it to work hard for you. You may think you’re not
emotional about your money, but when you’re staring at the forest fire you will feel the heat. It’s at exactly that time
when you need someone to remind you it’s an
opportunity, not a disaster. Remember, after the fire, the forest grows back stronger than ever. So let’s recap. You need to be a smart saver. Have a comprehensive plan. Spend it wisely. And invest for growth. You cannot skip any of these steps. And you have to do all of these well. The good news is when you get it right, you’ll know that it’s gonna be okay. You’re gonna have enough. You’ll be able to give
yourself that paycheck and not have to worry because you’re gonna get help with this and someone to take care of it for you. So if you wanna get all
four of these steps right and give yourself the best possible chance to live your American dream, click the link to get
a free download from us and you’ll also get a link
to our free presentation. (upbeat music) The link to our free presentation is in the description to this video. To subscribe, click the circle on the lower right of this video.

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