In the world of traditional financial planning, clients are often put on a budget in order to reduce spending and increase savings for retirement accounts. By cutting out that daily latte you love or eliminating your monthly cable bill and investing that money instead, they say, you’ll end up a millionaire by 65.
We don’t agree with this approach. Part of our philosophy is that you can enjoy life now while at the same time setting yourself up for a very secure – and very comfortable – retirement.
So while we believe in the idea of maximizing your retirement, we don’t believe in cutting out the little pleasures of life to do it. Instead, when you take a holistic approach to planning with the aim of retiring with 100% of your pre-retirement income (yes, it’s possible!), then you’ll find places to cut costs. Here are two that you may not have considered before.
Term life insurance
We don’t recommend term life insurance (except as a short-term solution in select situations) even though it’s less expensive than whole. The problem is that term life costs you in three different ways: the premiums, the associated opportunity costs, and, going by the statistics, the loss of the payout itself (approximately 99% of people outlive their term life policies).
Whole life insurance is a cornerstone of our clients’ Financial Treatment Plan. But for most people, term life isn’t fundamental to their financial plan; it’s an expense in their budget. If you’re paying premiums for term life insurance because you were told to get it but don’t know how it fits in with your retirement plan, then this could be an expense to cut.
Unnecessary fees and commissions
We see far too many dentists paying outrageous fees for financial planning that falls short and/or commissions on products that aren’t a good fit. Many go to a planner, get a fancy plan in a three-ring binder (which then sits on the shelf), and every so often meet with their financial planner to hear about the latest financial product that they absolutely need to get in on now (for a hefty fee, of course).
This is no way to approach retirement planning! Why is it that the financial products suggested two years ago are no longer good products? If the plan had been sound from the beginning and truly created with a long-term view, then the planner wouldn’t call like clockwork every year or two to fundamentally change it. Paying fees and commissions for this type of piecemeal, incohesive retirement planning is not a good use of money and should be cut from your budget.
Enjoy life now
You’re working hard to become the best dentist you can be and build a thriving practice – do you really have to wait decades to enjoy the fruits of your labors? We say no. You can live your life now without sacrificing your lifestyle and build strong retirement accounts. To learn how, check out our book, Your Retirement Smile, or visit our website.