Meat, potatoes, and beer: I have a relative who only really likes those three things. If he’s looking at a menu, he is probably going to order meat with potatoes followed by beer. I also enjoy those things, but I believe that there should be more depth to your palate to enjoy the better things in life. It’s the same with retirement planning. Many people only want their 401K, Social Security, and beer.
I was thinking about this recently one weekend when I just craved lentil soup. it’s something that most people have not made from scratch. It is very similar to a recipe for split pea soup or let’s say chili or stew. Lentil soup requires many different ingredients: lentils, onion, salt, pepper, garlic, celery, carrots, and water. What really makes the soup though is time and the secret ingredient, ham hocks. Most people don’t even know what those are. Think of them as pig’s feet. You may think that there can’t be much meat on a ham hock, but if you leave it inside a crock pot over a long period, everything falls apart and it is a wonderful addition to lentil or split pea soup. The key is the slow simmering over time, possibly an entire day. Just like chili, it’s even better the next day.
It’s the same thing with planning for your future retirement. Many people mess up the recipe by trying to add a bunch of ingredients after the meal has already been cooked. What I mean is that yes, you can add salt and pepper to meat and potatoes, but it’s really difficult to infuse it with any other ingredients to make a difference in its flavor after it’s already been cooked. We like to take the long-term approach instead. We have found that the ingredients for your retirement menu need to be added long before your retirement occurs.
When we interview young minds that come to us from a university system, their focus is on rates of return and trying to figure out which company is doing better than the other company. They’re looking at the meat, potatoes, and (after the class) beer. I think you deserve a broader palate. So, when we look at rates of return, I also question how your homeowners, automobile, and liability insurance may affect your retirement plans. I’m concerned about your wills, trusts, and ownership arrangements. I ask about your Social Security, but also about your medical insurance coverage, especially if you retire before Medicare age. I’m concerned about disability coverage. I’m looking at your savings accounts, tax-deferred accounts, tax-free accounts, and tax-deductible accounts.
I’m also concerned about how your income in retirement will affect your premiums for Medicare. Many people don’t realize that if you have a certain amount of income, your premium goes up for the same coverage that someone else gets at a lower premium. All of these things are ingredients that simmer over time in the crockpot of your financial life. Most people just think about the main ingredients: meat, potatoes, and beer up until their retirement. Then they realize too late that there is a greater culinary discussion that needs to happen to make a recipe that will get them through the rest of their life, which could be 25, 30, or 35 additional years. Will you be satisfied in retirement with just meat, potatoes, and beer?
If you want to look at the cookbook of your financial life, go through the ingredients, the measurements, and how to put the recipe together, then perhaps it’s time for you to schedule your Financialoscopy®.
