As an investment advisor representative, I serve highly compensated medical professionals: doctors of dentistry and medicine. Many welcome an opportunity to stress-test and audit their in-place financial plans and products to identify unnecessary risks, fees, or ill-advised tax strategies. One exception comes to mind.
This 50-something emergency room doctor was willing to meet me, but he was quick to say that he was “all good financially.” “My wife and I are really all good.” “We’re set.” “We are dialed in.” He went on to volunteer the following proof points.
“My wife and I have a million-dollar home, a chalet near Tahoe, nine cars (some for his kids and some for her kids, as well as his sister), and we do at least one European vacation a year. I make in excess of $500,000 a year, so we pretty much do what we want. Like I said, we’re good.”
• With his permission, I asked a few questions.
• “How much are you driving to retirement?”
His much younger wife answered, “We contribute the max to his 401(k) and the hospital matches up to 4 percent. I tell him that we are going to be the richest people in the nursing home!”
Fact, not fiction: the man who was used to living on more than $500,000 a year had barely $150,000 in his entire retirement portfolio. A previous marriage ended in divorce at the same time that he lost a job. So, he had to dissolve his retirement plan to survive. Did I mention that he wants to retire at 65, and that he owes $800,000 on that million-dollar home? Or that he is financing all of the cars, as well as the Tahoe property? Or, that he doesn’t have a dime saved for his and her children’s college education? And here’s the kicker. I asked, “How much money do you keep liquid, either in money market, savings, or mutual funds?” He quickly replied, “Two.” I clarified, “Two hundred thousand?” He said, “No. Two thousand.”
The facts simply didn’t support his self-assessment that he, his wife, and their kids were “good financially.” Far from being the richest people in their future nursing home, they were sprinting headlong into a very humble—and probably uncomfortable—retirement, assuming he opts out at 65 or even 75.
Enough about the doctor. At your current pace of saving, investing, and spending, how much money can you expect to have in retirement? The real-world answer may prompt you to save more, spend less or give more. But you won’t know the real-world answer without a rigorous exam.
Imagine a patient who is due for a physical walking in and saying, “physically, I’m good.” What would you say? Probably, “Here’s the cup!”
Assessment without facts is a fool’s game. Don’t be a fool. Let’s talk.
Randall E. Davey, CAP® is a financial advisor with Guide Advisors, Inc. In certain circumstances, he may offer insurance as a sole proprietor or through Guide Advisors, Inc. Randall can be reached at email@example.com or by phone at 206-486-2477.
Advisory services are offered through Guide Advisors, Inc., a Registered Investment Advisor in Washington, and other jurisdictions in which it may conduct business. The information contained herein should in no way be construed or interpreted as a solicitation to sell or offer to sell advisory services to any residents of any State other than the states listed above or where otherwise legally permitted. All written content is for information purposes only. It is not intended to provide any tax or legal advice or provide the basis for any financial decisions. The information contained in this material has been derived from sources believed to be reliable but is not guaranteed as to accuracy and completeness and does not purport to be a complete analysis of the materials discussed.
Guide Advisors, Inc. 19125 North Creek Parkway, Suite 120, Bothell, WA 98011 206.486.2477