Wisdom and Wealth Episode 49: Expense Planning In Retirement

Welcome to this episode of Wisdom and Wealth. We are focusing in this year on our financial planning calendar and our process for clients. In today's episode I share my philosphy for expense planning. More specifically how I'm often more concerned with clients not deriving meaning or purpose from their wealth and independence than I am with their spending habits. I.E. the most sophisicated planning minds money can buy cannot tell you if you will run out of joy during your hard fought financial independence. Please listen in for more on how we seek to fufill our calling by enabling our clients to fulfill their own unique calling. 

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JOSH KLOOZ, CFP®, MBA
SENIOR WEALTH PLANNER

Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
 jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570
The Woodlands, TX 77380

Music by bensound.com

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JOSH KLOOZ, CFP®, MBA
WEALTH ADVISOR

Phone 281.719.0036
Text 281.699.8691
Fax 281.719.0156
jklooz@carsonwealth.com

1780 Hughes Landing | Suite 570
The Woodlands, TX 77380

Music by bensound.com

Transcript

Joshua Klooz  0:01  
Welcome to the wisdom and wealth podcast, a series of conversations designed to equip our listeners with helpful insights necessary to simplify the critical decision points of life. We believe true wealth is the thing Money cannot buy, and death cannot take away. Furthermore, we also believe our calling is to enable others to fulfill their own. And to that end, we endeavour investment advisory services offered through CWM LLC, an SEC registered investment advisor. 

Welcome in again to another episode of wisdom and wealth. I'm Josh Klooz, the senior wealth planner for Carson wealth here in The Woodlands, Texas. Last time, we talked about how in the coming year, we're going to be following our service calendar here locally from a financial planning perspective. And we talked about the beginning of a financial plan and how that starts the discovery process and how that discovery process is ongoing. It never stops. 

Today, we're going to be talking about expense planning. And from the outset, I believe that typically, we start from the wrong premise, the wrong beginning point. I don't know if you've ever fallen into this trap. But often, you know, we have misplaced worries and are not asking the right questions. Typically, we're asking, you know, do I have enough? And how long will it last? And somehow we, in our minds, I think we envision joining Giorgio Nina banks shuffling along a sidewalk in our bathrobe to use the the "Father of the Bride" analogy. But whether or not you identify with the Diane Keaton and Steve Martin characters from that show, you probably have encountered those same questions at some point. I push back politely on those things, because I believe that they're both coming from a place of fear. One party is worried about the money running out. The other party is running, worried about their experiences not measuring up or missing those experiences, and not being able to match money in the experience at the appropriate time. I don't know about you. But I've never made the best decisions in life, when I was worried about the outcome, because that worry tied up a lot of extra creativity that otherwise could have been used correctly. 

So wherever you are at on that spectrum, I want to start by saying that I'm more worried about you running out of purpose about you running out of meaning than I am, you're running out of money along the way. Ultimately, we know intuitively we know psychologically, that money can't buy happiness. But yet we let it play too big a role in that process. Rather than dreaming about the future, we worry about the measurables of life. And for many people that you know, they just don't fundamentally understand that. You know, I'm more worried about their daily activities, and whether they're going to find those meaningful or not, you can't be on vacation every day, all day. There are only so many days in the year that you can do that. So those routines are going to be very, very impactful. 

I recently spoke to a gentleman. And he told me he said, Josh, you know, I was accountable to people around the globe, around the clock. All the more enjoyed what I did, and then all of a sudden, that all stopped. And it wasn't that no one cared where I was, it just was that life had moved on. And I wasn't moving with it. And that was a problem. This is not uncommon for a lot of people. And it's one of the reasons why I push back on the word retirement. I commonly use the term financial independence because you're now financially independent, and you can do what it is you want to do. 

And this is where I focus on what Arthur Brooks has called or termed that the happiness portfolio. He talks about how our happiness in life can depend in large part on our genetics sometimes, a part of it depends on big life events. But 12% of our happiness studies have found, according to Brooks, that it depends on our routines, and he calls this our happiness portfolio. And within this portfolio, it's divided into what we believe in our faith, our family, our friend, community, and meaningful work and within American culture, sometimes I think we've all missed Off have fallen prey to the fact that meaningful work has choked out those other three areas. So you can imagine the tension, when you remove that meaningful work from someone's lifestyle. Often it takes on a form of our identity. You know, coming from the military, you know, especially an infantry officer or Ranger qualified infantry officer, a lot of your identity, whether you like it or not, is wrapped up in that culture. And when you stop being that it's as if someone's prying away a limb, right. So I can I can sympathize with, you know, someone who's had a 30 or 40 year career and, and now is starting over from scratch. 

So it is very much important to know how much you have and know the basics of that. But more important, is the time that you now have more meaningful is how are you going to use the time that you have. So what's all this about? Again, I've said it in several different ways, but the most sophisticated financial planning software money can buy can't tell you if you're gonna run out of happiness, or purpose in life. But I want to ensure that I'm coaxing you pushing you along that path. So that you can answer some of those questions and that the finances can serve your life's purpose. I'm one of these crazy people that believes everybody in this life has a unique purpose. Just like they have a unique DNA, just like they have unique attributes about them. If they had those unique attributes, it would stand to reason that they also have a unique purpose in life and many purposes, probably. So again, when I talk about, you know, money can't buy those things, you know, true wealth is the thing, money can't buy and death can't take away, that's what I'm talking about. So within that, I want to make sure that clients are planning for more than just leisure, and more than just survival. I can help you segment your plan, I can help you plan for the things that, you know, bother you in the back of your head, you know, they're just creeping up. And I can help you plan for all those things. But the thing that will probably be most meaningful to you. The software can assist you with, but it can't solve for it. 

I don't know about you, but I've been to a few funerals in my lifetime. And I've never heard somebody talk about their frequent flyer miles, their Vacation Club points, whether they beat the s&p 500. That's just never been never been brought up. What I have heard people talk about is whether or not someone was there for them, the memories, the time that they spent with them, the shared experiences that they had with the people that were closest to them. So when we started out with the clarifying questions, yesterday, or in the last episode of, you know, how much do you have? Will it be enough? And, you know, stepping back, you know, if if your resources were unlimited? What would your daily routines look like? And then, you know, focusing in on if your time was limited, what do you regret? And, you know, what, how would you be different if you knew that you had a limited amount of time left, that's what we're pushing towards. So within the year, that's kind of a broad macro view of why we do what we do. Within the macro, you know, to hone in on that, we do want to be somewhat specific, and starting with your current lifestyle is a starting place. 

Studies have shown that people spend less money the older they get, because, you know, follows to reason that the law of diminishing returns applies to even our spending. But one of the things that is is important is that we don't, I don't want clients to lose sight of those one off experiences that they want to do together. And sometimes I think people will lump all their expenses together. And that's not an accurate picture. So let's let's break down what your true living expenses are. Let's break down what your healthcare expenses are, and then let's inflate those different rates. And then let's take those sometimes sporadic expenses, whether it's vacations, whether it's home maintenance, whether it's vehicles, whether it's gifts and charitable giving.

And let's try to make those more routine. While I'm on charitable giving. I try to make that a routine thing for clients. I want clients to actually see the benefit of their resources and their giving while they're still alive. Um, I will often joke that the IRS loves sporadic giving, because that increases the odds that they're going to get a higher marginal tax rate, and also increases the odds that they're going to get a bite at the apple through his state taxes. Wouldn't you like to have a say in where those resources go and actually see some of that benefit while you're still alive. So if I can help clarify for clients and help and help them understand how that affects their their financial resources going forward, that's a huge benefit, not just to me from intangible perspective and a feeling perspective, but also to clients, I'm sure. Once you've peel back those layers, it helps you understand that at the end of the day, your financial planning success doesn't, doesn't get devolved down to a number of random trials that ended success. It actually helps you quantify what's most important to you, and helps you understand how you want to get there. But if you don't do that, upfront planning, it's the equivalent I like I said, I think before of not just not looking at the box of the puzzle you're trying to put together but trying to put it up, put it together upside down. No one does that. And that's not necessarily an enjoyable experience. So why would we ever try to do that with our financial lives. 

So in summary, I want to make sure that we start by figuring out how we're going to allocate our time as a client, in how we're going to allocate those resources that are most dear to us, so that our financial resources conserve what's most important to us over time. Yes, there is a there is a number that we're going to get to. But if you don't start with if you start from a position of worry, if you start from a position of fear, I'm less convinced that you're going to end up where you want to go. And you're gonna end up at a destination that is meaningful to you long term. Thank you again for your time today. I hope this has been insightful and encouraging to you. If you have any questions, please reach out to us at infohouston@carsonwealth.com. And again, remember our calling is to enable you to fulfill your own. Have a great day. Well, that's all for today. 

Thank you again for joining us. We trust that you are better equipped to steward both your wealth and your financial resources. If you have questions or suggestions for future topics, please direct those to info Houston, Carson wealth.com that you and your family encounter truth, beauty, and goodness. The opinions voice in wisdom and wealth with Josh Klooz are for general information and are not intended to provide specific advice or recommendations for an individual as performance is no guarantee of future results. investing involves risk, including possible loss of principle. No strategy assures success or protects against loss to determine what may be appropriate for you. Consult with your attorney, accountant, financial or tax advisor prior to investing. Investment Advisory services offered through CWM LLC, an SEC registered investment advisor. Our address is 1780 Hughes Landing Suite 570  The Woodlands, Texas 

Transcribed by https://otter.ai