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Mistakes Were Almost Made


I remembered sitting down with Alma like it was yesterday.  We went through all of her 401k statements and the additional money she had saved for retirement.  I went back to my office and begun to input the numbers into my retirement planning software. The numbers were not favorable, because Alma did not want her lifestyle to change at all.  I picked up the phone and dialed her cell number and I asked her the following question. “Are you sure you are not willing to change anything concerning your lifestyle going into retirement?”  She said “I would like to keep everything as is, with no changes” I told her that would be difficult to do unless we changed some of her plans heading into retirement. Ideally, no one would like to change their lifestyle going into retirement, but unless you make the same amount of monthly income and have all of your medical and dental take care of, then this would be difficult I told Alma.  Not impossible, but it would be difficult unless you planned early in the process. We recommend our clients start their retirement plans at least 10 years out, but no less than 5 years for emergency purposes.

Alma’s real problem (which happens more often than not)
She mentioned her real urgency problem was they just moved a new boss over her and she had to retire in the next three months with no exceptions, because her and the new manager did not get along very well.

Possible Solution 1

I asked Alma how much leave/vacation time did she have accumulated and she stated that she had a substantial amount of time saved up.  She said she looked forward to cashing it out when she retired. I told her, well she would still have to pay “Uncle Sam” for a large amount of those days, but I may have an idea.  She said she could also save more money in her savings for the next 3 months to have some additional savings as well. My possible idea would have Alma take the money she was going to save in her savings and spend it on a good vacation every 3 or 6 months to extend her retirement date out.  I created a win-when moment for her.  This is when it seems like you are losing, but you are really winning.  I started a podcast entitled the Win-When Vault, where I share some basic money ideas  debt management tips, and more, which I have learned over the years.  This option gives her the opportunity to decompress from work, thus adding another year or two for her pension. Adding an additional year would increase her monthly pay-out, thus presenting her with yet another opportunity to meet her monthly obligations. If she put a vacation plan together this would be one way of extending her working years and seeing the world on the company’s dime.  Most people want to try and see the world once they retire, but they have no additional income coming in, so this makes it more difficult to accomplish.

Possible Solution 2

Since she was already vested (meaning she had met the minimum requirements to even be able to receive a retirement from the plan) She could find another job and start working on another retirement plan.  Ultimately, the goal going into retirement would be to have as many income checks coming in every month as possible. If vested at one employer, then start another plan somewhere else.  Most vesting (or waiting periods) range from 1-5 years before you are fully vested in the company retirement plan. If this is determined initially before you decide to make a move then you could essentially create two income streams in less than 5 years.

We created as a destination to find retirement coaching for reasons, just like Alma’s.  Most people, like Alma make a 25 year retirement decision based on the agenda of others in the matter of days.  If you think retirement is not a serious decision, then look at all the paperwork you have to fill out once you make that declaration.  The above mentioned solutions are two out of about 5 possible solutions Alma could make, but without a retirement coach mistakes were almost made.

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