Self-Sabotage
Feb 5, 2020
With all of the things in the financial world that you can’t control, why would you sabotage your own retirement by messing up the things you can control? Let’s discuss some ways that people sabotage their own financial health.
Here are just a handful of the things that we'll discuss:
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Transcript
John Stillman: Welcome in to Wright Money Tips. I'm John Stillman alongside Isaac Wright, president of Financial Dynamics & Associates, author of Navigate Your Way To a Secure Retirement. He is a chartered financial consultant and available to you. If you'd like to find out more, you can find him online at financialandestateplanning.com, financialandestateplanning.com. You can call or text if you'd like to reach out that way, 804-777-9999 is that number, 804-777-9999.
John Stillman: We continue with what is apparently self-improvement month here on Wright Money Tips. In our earlier episode this month, we talked about taking out the trash in your financial life, cleaning out all those things from your financial world that you don't need to have lingering around. Today we're talking about financial self sabotage, as I'm sure you've heard people say, "Oh, well, he's a nice guy. He just can't get out of his own way." You've heard that about Apple, right?
Isaac Wright: Absolutely.
John Stillman: So that's really what we're talking about here is not being able to get out of your own way financially speaking. Why would you sabotage your own retirement by messing up the things in your life that you can control? There's plenty you can't control as it relates to the financial world-
Isaac Wright: Sure.
John Stillman: So at the very least, don't screw up the things you can control.
Isaac Wright: Maybe leading into the things that we're going to cover, the list that we will talk about today, what I want to be clear to everybody is this is really going to be more of, again, when we talk about self-improvement month, in a way you're absolutely correct John. This is about mentally putting yourself in a better position. So I know we talked about a financial cleaning of the house a couple of weeks ago, but this is truly what I would call focusing on those things you can't control keeping a positive mindset. And with that we can go ahead and lead into our topics of the day.
John Stillman: First item of self sabotage that we see from a lot of folks Isaac is obsessing about the short term ups and downs in the market.
Isaac Wright: Well, it's easy to do. I tell people stop watching the news. We've had everything from impeachment all the way through getting to the new year and it's an election year and what's going to happen and we're in a global economy now and you name it, it's going to be on the news if it can get your attention because that's how they pay their bills. So be mindful of stop worrying about the chasing of the ups and downs. You're sitting there, if you're going to try to time the stock market, it's hard to be right twice. Getting in, getting out and having to do that multiple times. Creating a financial plan that has a stress test model, and what I'm talking about here is our Investment Cents Review, that will give you a great insight on how much money A, you may be able to afford to lose and B, maybe mentally how you are willing to, let's call it hit that unkle point.
Isaac Wright: I said that a couple of weeks ago. How much money are you willing to lose before you hit an unkle point? Now once you define that, you actually can start what I call creating the forward looking in the positive agenda of how much money should I be looking to make relative to my risk level? That's a whole lot more, I would just call it a positive mindset. A whole lot more process oriented, making decisions versus the news of the day. And sometimes even occasionally with families that we serve here, just trying to get them reanchored into those kinds of thoughts, whether the market is up or down, just puts them in a better place. And that's what we're here to do. So if you have any concerns about your investments relative to the ups and downs of the market and creating a sustainable plan, that's what we're here for.
John Stillman: Another element of self sabotage that applies specifically to retirees, Isaac, is starting social security at the wrong time. Now notice I didn't say starting social security too early or starting it too late because it all depends on your specific situation as to what the right time is going to be for you.
Isaac Wright: It is. I think that's a great way to lead into that, John, because the wrong time, granted there's going to be multiple factors of whether you want to collect it sooner versus later, but there's some altruistic ways to look at this where for example, you don't want to normally collect your social security while you're still working if you're not a full retirement age, and we do occasionally run across people that are unaware of that rule and they have to pay a penalty and pay the social security amount back that they were otherwise going to be using to help supplement their work-related income. That's a big deal. If you're married, please, before you collect your social security, understand the options in front of you whether or not you want to collect your benefit, whether you're eligible to maybe collect a portion of your spouse's benefit, there are still strategies today that allow you to understand how to maximize that overall benefit.
Isaac Wright: So if you're going to live, let's call it your estimated life expectancy, you feel you're going to be 85, 90, 100 or maybe you have a bad health history and you feel like you're only going to live to be 70 or 80, we want to make sure that you're making a good decision there. So when I say starting social security at the wrong time, that's a big deal. Some people are worried that social security is going to go bankrupt and you hear all those and read all those types of situations, please know that social security, even if we were to have an exhaustion of the trust fund, is still on par to pay out three quarters of the benefits that they are already lined up to pay. So it's not like you're going to lose every dollar of your social security. So just trying to take some of the high drama out of the equation. Social security can also be a big deal for a lot of people because they need that money for income. So please don't make that a very rushed decision, try to make that an educated one.
John Stillman: Another way that people sabotage themselves financially is pretending like the nursing home is something that is so far off in the future that you don't need to worry about it. If you're 32, yeah, I don't know that nursing home planning needs to be a big part of your financial life right now, but Isaac, a lot of people are 62 and say, "Well, this feels a long way off. I'll cross that bridge when I get to it."
Isaac Wright: Well, and I think sometimes they get nervous because they assume that the answer is buying longterm care insurance. And if you've listened to me for years, I've really under most circumstances, I have tried to be able to work on creating a financial plan and leveraging money and other fashions to where you're not spending a ton of money on an insurance premium, that very likely is going to go up on you multiple times in the future. So just keep in mind, I think that's great what you said. Yes, your 30s or 40s, I get it. You're probably more worried about putting kids through college, but I meet a lot of people that are skewing 50 to 60 and that's still young, but the kids are grown and gone. They're moving definitely towards that next transition of life for them to enjoy with the kids being gone, let's call it a situation where they can focus on what's going to make them happy under most circumstances and they don't create a financial plan that incorporates their health concerns.
Isaac Wright: And to me, yeah, maybe you get away with that, but very likely you won't because there's a chance greater than 50% that one of the two of you, you're going to need some level of care. So at least address it. Necessarily you have to sit there and worry overly about creating some type of high drama over the top plan. You may have enough money and enough, let's call it estimated income coming in and so forth and building a financial plan where you may need minimal insurance or no insurance. So this is having an advisor maybe to walk you through that and also create a strategy if that needs to change what that looks like as well.
John Stillman: Isaac, there are a lot of people who really, really love their job and they really truly enjoy it. Maybe they're in their late 50s, early 60s, maybe late 60s in some cases, and they just can't picture themselves retiring. If that's you, look, we're really happy for you. We love that you love your job that much. The element of self sabotage comes in here when you say, "Well, you know what, I don't need to worry about planning for retirement. I just, I'll do this forever. I love this job, I don't want to retire." And so we see this, Isaac. People don't have a plan in place because they right now love their job and can't picture themselves retiring. They say, "What would I do if I retire? I don't even know what I would do with myself."
Isaac Wright: Yeah, I'm just taking it all in man because what that really means is they've created a roadblock for themselves about even addressing potentially not because they are unhappy with their job, but what if again, if they have a healthcare change? What if they have a family change where they have to be there for a loved one? What if the company that they love is no longer that company anymore? So you have to create a plan B. And I think sometimes why people get a little bit up in arms about, and this is I would say less frequent now, I still run across people that have worked for a company or let's call it, run their own businesses, probably with a little bit more towards this end, running their own business and just can't see themselves ever stopping or just have such a central locus of control. Just don't want to talk about that next step if they have to sell the business, if they just want to close up the doors.
Isaac Wright: I think communication walls have been pretty good at having those type of calls conversations. If this is sounding like somebody you know or maybe yourself personally, just talk to me. That's what I want to say about this because it doesn't mean that you have to give up control. And I think that's the main thing that I find when I'm having that conversation. It's that mindset of I've been the boss, it's hard to give up that power and let's talk about that a little bit because I'm right with you. I run my own firm here. I've been doing that for 20 years. But let me just say this, at my age of 43, I have created a plan B and C and I have built a great team around me to support the fact that to be humble enough that if something happens to me that there's other people that depend upon the business and there's a lot of families that also depend upon the services that we provide here as we continue to scale and grow.
Isaac Wright: So that's why I'm telling you this is a really nice conversation that I can be able to have and maybe gain some insight from me and vice versa. So reach out. Talk to me, 804-777-9999. I know if you listen to our podcasts, I create different what I call what if scenarios, but I think that's a big one, John, if we've ever even covered, but as we wrap up the podcast today, I think that's a good summary list but very powerful list of things people need to take into consideration as we start hitting into the throes of 2020.
John Stillman: 804-777-9999 is the number to call or text if you prefer, 804-777-9999. You can also find out more online at financialandestateplanning.com. This concludes self-improvement month here on Wright Money Tips. Isaac, a great life coach as always.
Isaac Wright: Yeah, next month it'll be degenerate February.
John Stillman: All right.
Isaac Wright: We'll just cover completely different topics.
John Stillman: We're going to talk about that.
Isaac Wright: Always here to help, even if it's a general conversation.
John Stillman: Degenerate February will include how to make the most of your trip to Vegas and all that kind of stuff. Speaking of life coaches, Isaac, when is the life coach craze going to go away? I met somebody the other day who says he's a life coach. He is otherwise unemployed and is currently on his fourth marriage. Doesn't everybody want a life coach who's been married four times and can't hold a job down? That makes sense to me.
Isaac Wright: Well, in the world we live in today, everybody can jump on Instagram, Facebook, let's call it build a brand to whatever degree that may mean. And I don't have a fault for somebody trying to go after a goal if they're passionate about helping others, but maybe being more thoughtful of calling yourself a life coach. Maybe you just got to redefine and reposition that is maybe a divorce coach. I would actually probably, and what I mean by that is things that I've learned in life about preventing divorce. If I've been divorced four times, at least the guy has had what I would call probably several experiences, but I'm just.
John Stillman: Here's what not to do.
Isaac Wright: But it's, yeah, it's... We enjoy being the financial coach and I've been there for 20 years and I've, knock on wood, I have been pretty successful at doing that. So I don't want to knock anybody else's, let's call it ambitions, but something to definitely take note of.
John Stillman: I'm more than happy to knock other people's ambitions for you guys so you don't have to play that role. Good cop, bad cop routine. All right, well, thanks for tuning in. We'll talk with you next time right here, same place on Wright Money Tips. Have a great week.
Announcer: Information is for illustrative purposes only and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action.
Announcer: Advisory services offered through J. W. Cole Advisors, Inc., JWCA. Financial Dynamics and Associates, Inc. and JWCA are unaffiliated entities.
John Stillman: We continue with what is apparently self-improvement month here on Wright Money Tips. In our earlier episode this month, we talked about taking out the trash in your financial life, cleaning out all those things from your financial world that you don't need to have lingering around. Today we're talking about financial self sabotage, as I'm sure you've heard people say, "Oh, well, he's a nice guy. He just can't get out of his own way." You've heard that about Apple, right?
Isaac Wright: Absolutely.
John Stillman: So that's really what we're talking about here is not being able to get out of your own way financially speaking. Why would you sabotage your own retirement by messing up the things in your life that you can control? There's plenty you can't control as it relates to the financial world-
Isaac Wright: Sure.
John Stillman: So at the very least, don't screw up the things you can control.
Isaac Wright: Maybe leading into the things that we're going to cover, the list that we will talk about today, what I want to be clear to everybody is this is really going to be more of, again, when we talk about self-improvement month, in a way you're absolutely correct John. This is about mentally putting yourself in a better position. So I know we talked about a financial cleaning of the house a couple of weeks ago, but this is truly what I would call focusing on those things you can't control keeping a positive mindset. And with that we can go ahead and lead into our topics of the day.
John Stillman: First item of self sabotage that we see from a lot of folks Isaac is obsessing about the short term ups and downs in the market.
Isaac Wright: Well, it's easy to do. I tell people stop watching the news. We've had everything from impeachment all the way through getting to the new year and it's an election year and what's going to happen and we're in a global economy now and you name it, it's going to be on the news if it can get your attention because that's how they pay their bills. So be mindful of stop worrying about the chasing of the ups and downs. You're sitting there, if you're going to try to time the stock market, it's hard to be right twice. Getting in, getting out and having to do that multiple times. Creating a financial plan that has a stress test model, and what I'm talking about here is our Investment Cents Review, that will give you a great insight on how much money A, you may be able to afford to lose and B, maybe mentally how you are willing to, let's call it hit that unkle point.
Isaac Wright: I said that a couple of weeks ago. How much money are you willing to lose before you hit an unkle point? Now once you define that, you actually can start what I call creating the forward looking in the positive agenda of how much money should I be looking to make relative to my risk level? That's a whole lot more, I would just call it a positive mindset. A whole lot more process oriented, making decisions versus the news of the day. And sometimes even occasionally with families that we serve here, just trying to get them reanchored into those kinds of thoughts, whether the market is up or down, just puts them in a better place. And that's what we're here to do. So if you have any concerns about your investments relative to the ups and downs of the market and creating a sustainable plan, that's what we're here for.
John Stillman: Another element of self sabotage that applies specifically to retirees, Isaac, is starting social security at the wrong time. Now notice I didn't say starting social security too early or starting it too late because it all depends on your specific situation as to what the right time is going to be for you.
Isaac Wright: It is. I think that's a great way to lead into that, John, because the wrong time, granted there's going to be multiple factors of whether you want to collect it sooner versus later, but there's some altruistic ways to look at this where for example, you don't want to normally collect your social security while you're still working if you're not a full retirement age, and we do occasionally run across people that are unaware of that rule and they have to pay a penalty and pay the social security amount back that they were otherwise going to be using to help supplement their work-related income. That's a big deal. If you're married, please, before you collect your social security, understand the options in front of you whether or not you want to collect your benefit, whether you're eligible to maybe collect a portion of your spouse's benefit, there are still strategies today that allow you to understand how to maximize that overall benefit.
Isaac Wright: So if you're going to live, let's call it your estimated life expectancy, you feel you're going to be 85, 90, 100 or maybe you have a bad health history and you feel like you're only going to live to be 70 or 80, we want to make sure that you're making a good decision there. So when I say starting social security at the wrong time, that's a big deal. Some people are worried that social security is going to go bankrupt and you hear all those and read all those types of situations, please know that social security, even if we were to have an exhaustion of the trust fund, is still on par to pay out three quarters of the benefits that they are already lined up to pay. So it's not like you're going to lose every dollar of your social security. So just trying to take some of the high drama out of the equation. Social security can also be a big deal for a lot of people because they need that money for income. So please don't make that a very rushed decision, try to make that an educated one.
John Stillman: Another way that people sabotage themselves financially is pretending like the nursing home is something that is so far off in the future that you don't need to worry about it. If you're 32, yeah, I don't know that nursing home planning needs to be a big part of your financial life right now, but Isaac, a lot of people are 62 and say, "Well, this feels a long way off. I'll cross that bridge when I get to it."
Isaac Wright: Well, and I think sometimes they get nervous because they assume that the answer is buying longterm care insurance. And if you've listened to me for years, I've really under most circumstances, I have tried to be able to work on creating a financial plan and leveraging money and other fashions to where you're not spending a ton of money on an insurance premium, that very likely is going to go up on you multiple times in the future. So just keep in mind, I think that's great what you said. Yes, your 30s or 40s, I get it. You're probably more worried about putting kids through college, but I meet a lot of people that are skewing 50 to 60 and that's still young, but the kids are grown and gone. They're moving definitely towards that next transition of life for them to enjoy with the kids being gone, let's call it a situation where they can focus on what's going to make them happy under most circumstances and they don't create a financial plan that incorporates their health concerns.
Isaac Wright: And to me, yeah, maybe you get away with that, but very likely you won't because there's a chance greater than 50% that one of the two of you, you're going to need some level of care. So at least address it. Necessarily you have to sit there and worry overly about creating some type of high drama over the top plan. You may have enough money and enough, let's call it estimated income coming in and so forth and building a financial plan where you may need minimal insurance or no insurance. So this is having an advisor maybe to walk you through that and also create a strategy if that needs to change what that looks like as well.
John Stillman: Isaac, there are a lot of people who really, really love their job and they really truly enjoy it. Maybe they're in their late 50s, early 60s, maybe late 60s in some cases, and they just can't picture themselves retiring. If that's you, look, we're really happy for you. We love that you love your job that much. The element of self sabotage comes in here when you say, "Well, you know what, I don't need to worry about planning for retirement. I just, I'll do this forever. I love this job, I don't want to retire." And so we see this, Isaac. People don't have a plan in place because they right now love their job and can't picture themselves retiring. They say, "What would I do if I retire? I don't even know what I would do with myself."
Isaac Wright: Yeah, I'm just taking it all in man because what that really means is they've created a roadblock for themselves about even addressing potentially not because they are unhappy with their job, but what if again, if they have a healthcare change? What if they have a family change where they have to be there for a loved one? What if the company that they love is no longer that company anymore? So you have to create a plan B. And I think sometimes why people get a little bit up in arms about, and this is I would say less frequent now, I still run across people that have worked for a company or let's call it, run their own businesses, probably with a little bit more towards this end, running their own business and just can't see themselves ever stopping or just have such a central locus of control. Just don't want to talk about that next step if they have to sell the business, if they just want to close up the doors.
Isaac Wright: I think communication walls have been pretty good at having those type of calls conversations. If this is sounding like somebody you know or maybe yourself personally, just talk to me. That's what I want to say about this because it doesn't mean that you have to give up control. And I think that's the main thing that I find when I'm having that conversation. It's that mindset of I've been the boss, it's hard to give up that power and let's talk about that a little bit because I'm right with you. I run my own firm here. I've been doing that for 20 years. But let me just say this, at my age of 43, I have created a plan B and C and I have built a great team around me to support the fact that to be humble enough that if something happens to me that there's other people that depend upon the business and there's a lot of families that also depend upon the services that we provide here as we continue to scale and grow.
Isaac Wright: So that's why I'm telling you this is a really nice conversation that I can be able to have and maybe gain some insight from me and vice versa. So reach out. Talk to me, 804-777-9999. I know if you listen to our podcasts, I create different what I call what if scenarios, but I think that's a big one, John, if we've ever even covered, but as we wrap up the podcast today, I think that's a good summary list but very powerful list of things people need to take into consideration as we start hitting into the throes of 2020.
John Stillman: 804-777-9999 is the number to call or text if you prefer, 804-777-9999. You can also find out more online at financialandestateplanning.com. This concludes self-improvement month here on Wright Money Tips. Isaac, a great life coach as always.
Isaac Wright: Yeah, next month it'll be degenerate February.
John Stillman: All right.
Isaac Wright: We'll just cover completely different topics.
John Stillman: We're going to talk about that.
Isaac Wright: Always here to help, even if it's a general conversation.
John Stillman: Degenerate February will include how to make the most of your trip to Vegas and all that kind of stuff. Speaking of life coaches, Isaac, when is the life coach craze going to go away? I met somebody the other day who says he's a life coach. He is otherwise unemployed and is currently on his fourth marriage. Doesn't everybody want a life coach who's been married four times and can't hold a job down? That makes sense to me.
Isaac Wright: Well, in the world we live in today, everybody can jump on Instagram, Facebook, let's call it build a brand to whatever degree that may mean. And I don't have a fault for somebody trying to go after a goal if they're passionate about helping others, but maybe being more thoughtful of calling yourself a life coach. Maybe you just got to redefine and reposition that is maybe a divorce coach. I would actually probably, and what I mean by that is things that I've learned in life about preventing divorce. If I've been divorced four times, at least the guy has had what I would call probably several experiences, but I'm just.
John Stillman: Here's what not to do.
Isaac Wright: But it's, yeah, it's... We enjoy being the financial coach and I've been there for 20 years and I've, knock on wood, I have been pretty successful at doing that. So I don't want to knock anybody else's, let's call it ambitions, but something to definitely take note of.
John Stillman: I'm more than happy to knock other people's ambitions for you guys so you don't have to play that role. Good cop, bad cop routine. All right, well, thanks for tuning in. We'll talk with you next time right here, same place on Wright Money Tips. Have a great week.
Announcer: Information is for illustrative purposes only and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action.
Announcer: Advisory services offered through J. W. Cole Advisors, Inc., JWCA. Financial Dynamics and Associates, Inc. and JWCA are unaffiliated entities.
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