Question #1 – What haven’t you done that you would like to do before your life is over?This question is the most important because everything else is based on it. All of us came into this life with no money and will leave this life with no money. Money is nothing more than a vehicle to do things, have things and hopefully make the world a better place while you are here. Whenever I sit down with people over age 50 one of the comments I typically make is, “I think it is safe to say that you and I (me too!) have lived over half to two-thirds of our lives.” I don’t say this to alarm people, but to create a sense of urgency so that people get out there and live their best life NOW! One of the reasons I like collaborating with Lifelaunch is because they are good at helping people determine what their best life looks like.
Question #2 – How do you feel about the amount of money you have saved for the next phase of your life or retirement?Most people I talk to want to know one thing. Will I have enough? If you think about it, your retirement income can only come from 2 main sources. The 1st source is INCOME. This includes pensions, Social Security and possibly earned income if you choose to continue to work in some capacity. The 2nd source is the income generated from your investment ASSETS. How much income will need to be generated to supplement your INCOME sources and maintain your retirement lifestyle? The main thing you must figure out is what will your retirement lifestyle look like. Once you know this then it is easy to know if you are on track or not.
Question #3 – What is the process you use to currently manage your financial investments?Whether you do it yourself or pay someone to do it, there are 3 things that matter. The 1st is COST. You want to make sure that your investment costs are reasonable and as low as possible. The 2nd is RISK. Although everyone wants high returns with no risk, that is not reality. It is important that you are consistently paying attention to your RISK/REWARD profile. Why take any more RISK than you need to take? The 3rd is PROCESS. You should have a solid investment process in place that works in all economic circumstances. Ultimately, the GOAL is to generate investment returns that are in alignment with your needs based on taking the least amount of risk.
Question #4 – How do you feel about the amount of income taxes that you currently pay and will pay in the future?Although it is important to get an acceptable rate of return on your money, it is even more important how much you keep in your pocket after income taxes. If you think about it, money can only be taxed 3 ways, NOW, LATER OR NEVER AGAIN. Whenever I ask people which way they prefer, they usually say, “Never again”. The reality is most people have a lot of their money in the TAX LATER bucket because they have chosen to defer taxes through the years. Although tax rates could easily be higher in the future, nobody really knows what is going to happen. Therefore, it is in your best interests to have a robust tax diversification strategy in place with your money. Part of a great strategy is not only looking at the current year but looking out into the future in a more holistic way. As I like to say, “Sometimes it’s ok to lose the battle to win the war.”
Question #5 – What would happen to your wealth if you experienced an extended chronic illness and needed custodial care later in life?Although health care in general is a big concern for everyone in retirement, the bigger concern is how will you pay for custodial care if you need it later in life. Whether someone cares for you in your home or some other type of facility, the costs are high and will probably get higher over time. Everyone has basically 2 options. The 1st option is to self-insure. This means if something happens to you, you will just write a check and pay for your own care. The 2nd option is you transfer some or all the risk to an insurance company via long-term care insurance or some type of hybrid long-term care policy. Many people choose to insure themselves and many do a combination of the 2 options. Some people say their kids will take care of them. I always chuckle inside when I hear this because I have heard of custody battles over kids but I have never heard of custody battles over parents!
Question #6 – When you are gone, what kind of legacy will you leave behind?Everyone leaves a legacy which includes both tangible and intangible components. What kind of legacy will you leave behind? For what do you most want to be remembered? What I have discovered over the years is that most people just want to know that their life has mattered. I think most of what we are remembered for centers around relationships and what we did with our lives. Although you can’t change the past, you can change the future so that your legacy ultimately reflects your desires.
Question #7 – What are your plans for your wealth when you are no longer here, and is the next generation prepared to receive it?If you think about it, your money can only go 3 places when you’re gone. It can go to your family, charity or the government. Most people would prefer to cut the government out. The goal for your family should be to maximize value to them. Every family defines it their own way. One question that comes up is should you treat each member of your family uniquely or equally? Is the next generation ready to receive what is coming their way? If they’re not, it can cause some challenges. To make sure they’re ready, many families hold family meetings to communicate their plans to their heirs. Also, should you give money to your family while you are still alive? Many people want to see their families enjoy it while they’re here. If you want money to go to your favorite charities, then there are many strategies available that can help you optimize your giving. Once you have answered the above questions then you can be rest assured that you are well on your way to having a great retirement phase of life. It really is about leveraging your wealth to create your best life for the rest of the journey. Although return on investment (ROI) is important for your retirement assets, the most important thing is ROL, which is return on life! That should be the goal!!! ************************************************************************** Lifelaunch Consulting is thrilled to welcome Michael Perez as a guest author. Michael is one of the founding partners of The Schumacher Group, a large full-service financial consulting firm in Columbus, Ohio. Michael specializes in helping people over the age of 50 leverage their wealth to determine what they want to do with the rest of their lives.