Many people dream of a secure and comfortable retirement. They work hard for years, building their savings. Yet, as that finish line approaches, questions often arise. A common one we hear is about debt: how much should we take into retirement, and can debt ever truly be “good”? This is a crucial area we explore with our clients, as it can significantly impact your retirement lifestyle.
Understanding Debt: Good vs. Bad
When we discuss debt, it is not always a simple good or bad scenario. Some debt, when managed effectively, can even be a valuable asset.
- Good Debt Examples: We see clients with multiple rental properties, all mortgaged. If these properties are cash-flowing well and appreciating in value, the mortgage debt supports a profitable venture. This type of leveraged asset, managed properly, can be a beautiful thing.
- Bad Debt Examples: Credit card debt, on the other hand, is almost always working against you. It does not appreciate in value. It carries high interest rates, eating into your hard-earned savings every month. We recently met a client who had $20,000 in credit card debt with a 17% interest rate, yet held $200,000 in cash within their 401(k). We strongly advised them to consider liquidating a portion of their 401(k) assets to eliminate the credit card debt. While early withdrawals from a 401(k) before age 59.5 may incur a 10% penalty and be subject to income tax, the immediate and guaranteed 17% return from eliminating high-interest debt makes this a powerful strategy for improving financial health. As one of our team members highlighted, “Not only can you do it, we would be terrible financial planners if we did not make the strongest case possible for you to absolutely do that.”
We understand the allure of certain “medical loans” or other tempting offers. One of our colleagues shared his experience with a dental procedure. He encountered a medical loan with an astonishing 29.99% interest rate after an initial 0% APR period. He quickly realized, and we emphasize to you, that such high-interest debt is a significant obstacle to financial freedom. Always read the fine print!
Re-Evaluating Your Retirement Income Needs
Often, people come to us with a specific income number they believe they need in retirement. They often base this on current spending, which includes expenses that may disappear in retirement.
- Identifying True Needs: Our process involves asking “why?” We delve into your goals, not just numbers. What do you want to do? Travel? Spoil grandchildren?
- Future Expense Adjustments: We often discover that many clients need far less than they initially think. A car payment might end, or a mortgage could be paid off. For example, if you are 15 years into a 30-year mortgage, that payment will cease long before a 20-, 30-, or even 40-year retirement plan concludes.
Factoring in these changing expenses, along with potential Social Security benefits and existing savings, often reveals you are much closer to your retirement goals than you imagine.
Who Benefits Most from us?
We serve a diverse range of clients, but two main groups truly find our guidance invaluable.
Those with Abundant Resources Seeking Prudent Advice
We recently heard a story about a couple who sold their storage unit empire for $13 million. They were not “financially savvy” in their own words, simply hard workers who built a successful business. When interviewing advisors, they were pitched “super sexy” alternative investments and complex, irrevocable trusts for tax benefits. Five years later, their $13 million had dwindled to $3 million. This heartbreaking situation highlights a crucial point:
- Boring is a Blessing: When you have more than enough, you have the luxury of being “boring.” You can achieve your desired lifestyle, support causes you care about, and secure your family’s future without chasing high-risk, illiquid investments pitched as exclusive opportunities. We see too many stories where individuals with ample resources get hurt by complex products they do not fully understand. As we say, “If you’re in that situation, you need to reach out to us because that mentality is the mentality that gets you hurt more often than not.”
Those Who Feel “Close, But Behind”
This group represents many of our most rewarding relationships. These are individuals who have made retirement a priority and lived below their means but feel a tension—they believe they are close to retirement but also a little behind.
- Seeking Clarity and Trust: If you are looking for clarity and someone you can trust to guide you, you are our ideal client. We do not want to convince you to do anything you do not want to do. We aim to provide clear direction.
- The Joy of “You Can Do This!”: There is nothing more satisfying than helping someone realize they can retire, even if they initially doubted it. When we can tell you, “You can definitely pull the trigger,” it is a truly great day for everyone. We believe “everyone has baggage, everybody makes mistakes.” Do not let past financial missteps prevent you from seeking professional advice now.
Navigating Market Volatility with Confidence
We often hear from clients fearing market plunges, even during bull markets. As wealth advisor Eddie Gabor recently stated, “We’ll still see some chop as we go into the month of November, but the setup is really strong going into the fourth quarter. I think investors need to not worry about any short-term volatility and focus on where we’ll be year end as well as going into next year. We continue to say we see 15 to 20% more upside in the S&P as we look out to 2026. People are underestimating the growth trajectory we’re going to see.”
While it is easy to hear projections like this, participating in market upside requires feeling secure. As Mike Tyson famously said, “Everybody has a plan till they get punched in the face.” When market volatility hits, fear can easily derail your long-term strategy.
- Building a Durable Portfolio: The only way to truly experience market runs is if you feel safe. We help you build a “rock solid” investment plan with the right ratio of “growth dollars” and “protection dollars.”
- Strategic Allocation: We cannot give a universal “right ratio” on a podcast. It must be tailored to your unique situation. We work with you to determine the right allocation of money in safe assets (like cash) and growth assets. This allows you to ride out market storms and capture potential returns without panic.
Recognized Excellence
We are proudly recognized as a leader in comprehensive financial planning. Our commitment to client-centric advice and educational guidance has earned us consistent praise within the industry and from the families we serve. We believe our success stems from our dedication to understanding your unique needs and crafting strategies that genuinely work for your financial future. Best Financial Planner in Woodstock, GA for 2023, 2024, and 2025.
Begin Your Retirement Planning Journey Today
Are you ready to gain clarity on your financial future and build a durable retirement plan? We invite you to experience our complimentary, 3-meeting Retirement Planning Process.
Visit us at www.vincentplanning.com or call us at 770-485-1876 to schedule your initial consultation.
Alternatively, you can book a “Can We Help” call to speak with an advisor and determine if we are a mutually good fit for your retirement planning needs.
For personalized financial guidance, reach out to us today to schedule a consultation.