Retirement Lessons from the Smartest People I know

By Arianna Capital

I was recently forwarded an article by a friend of mine who knows our company like the back of his hand. He thought Paul Merriman's article, "Ten Retirement Tips from the Smartest People I know" matched our philosophies pretty well.

In our experience, as personal CFOs, for the families that we steward several of the tips ring true. I will comment on five of his tips and add in some of my own.

Lesson one: Happiness in later life is not a direct function of how much money someone has.

There seem to be many reasons to be happy and many seeming sources of that happiness. Emotional intelligence and emotional control is a huge part of it - along with the relationships that are currently in your life.
However, another portion is having a life plan that a financial plan fits into. We call this the peace of mind plan. Having a successful plan that reaches your goals is a gigantic part of being able to forgo worry and relax when spending time with those people you have wonderful relationships with.

Lesson Two: Wealth Comes from Choices People Make Not Changes People Take

When choosing a financial adviser make sure there are no conflict of interests. I have seen to many broker/dealers sucking money right out of peoples' accounts with no value added. Also, use a fully diversified low-cost index fund or DFA based investment strategy instead of hiring an "active manager."

Most importantly, however, hire an adviser who is committed to being your personal CFO. This means that they are interested in managing your risks - investment, insurance, et cetera, and in getting you to your goals through wealth preservation, tax mitigation, wills, estates, trusts, and anything else that fits your needs.

Lesson Three: Those Who Plan Prosper

Many folk do not understand the relationship between the money they have present and how this relates to their goals be it retirement, a new home, college savings, or more. As such, it is pertinent to learn or have someone help you identify where you are and what it is going to take to get you to where you want to go.

Lesson Four: Don't Wait to Start Saving

Starting young is the best option. Saving through your employee retirement plan is a great way to defer costs - assuming the plan has decent investment options.

Lesson Five: Retirement Belongs to Those Who are Still With Us.

Your health is an extremely important asset. And it does not just include physical health. Taking care of mental health and the health of relationships is also extremely important. Life is for enjoying, so make sure to make healthy choices and build integrity for your life.

If you would like to read the other five tips the link to the article is posted at the top. I have a few tips of my own, besides the comments above that should also be considered for your financial health.

Lesson One: Think Wisely when Considering Alternative Investments

After the recent recession many investors are looking for other places to put their money. Make sure to educate yourself on these alternatives so you do not end up making the same mistakes we have seen by a few unsuspecting people.

Lesson Two: Annuities Are Superfluous

After the recent recession many people not only turned to alternative investments, but billions of dollars went into annuities. I understand the psychological reaction, however, if their advisers had properly diversified their portfolios and their risk appetites were properly analyzed there would be no need for fear.

Even the death benefits of annuities are a poor argument. One of our prospective clients was spending enough on his old annuity that he could have garnered a 20 million dollar life insurance policy instead of his 2 million dollar death benefit.

Other downfalls to annuities are their conflict of interest by the seller, large costs, actively managed funds, huge front end load, surrender charges, inability to correctly measure individual risk, et cetera.

It is possible to reach your goals without annuities using diversified low-cost index funds - give us a call for a free consultation.

Lessen Three: Gold Does Not Belong in Your Portfolio

Gold makes sense as a portfolio asset only for investors who also get the consumption dividend from gold, since this "dividend" lowers gold's expected capital gain. Thus, for investors who do not get the consumption dividend, the expected return on gold does not cover its risk as a portfolio asset. Most people do not get the consumption dividend and should just get their exposure to precious medals through an index fund that happens to have gold in their index.