Ready For Retirement
Ready For Retirement
The #1 Way to Ruin Your Retirement (Most People Do This)
Can a children’s poem change how you think about retirement? In this episode, we unpack the hidden wisdom in Shel Silverstein’s “Smart” and how it reflects a common retirement planning mistake: trading time and well-being for wealth you may no longer need.
We explore why it’s hard to step away from accumulation mode—even after reaching financial independence—and how this mindset can cost you more than it earns. The real risk isn’t running out of money. It’s not recognizing when you have enough.
Learn how a clear, personalized financial plan can help you shift focus from growing wealth to living well. Discover how to align your money with what matters most.
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One of the most important lessons I've ever learned about financial planning actually came from a children's story. We all know Shel Silverstein. He wrote the book the Giving Tree, a book beloved by many. He also wrote a poem called Smart. I'm going to read this poem to you and I'm going to show you how one of the most important lessons you can learn or you can realize about financial planning comes straight from this poem. It goes like this my dad gave me one dollar bill because I'm his smartest son, and I swapped it for two shiny quarters, because two is more than one. And then I took the quarters and traded them to Lou For three dimes. I guess he didn't know that three is more than two. Just then along came old blind Bates and just because he can't see, he gave me four nickels for my three dimes, and four is more than three. And then I took the nickels to Hiram Coombs down at the seed feed store. Now it's a cute poem, it's a fun poem.
Speaker 1:We read this and this little boy of course doesn't understand that value doesn't come from the amount of something, it comes from the intrinsic worth of something. Now we read that and think how cute. But that boy is all of us. That boy in his mind is trading for more of something, for more of something that he perceives to be valuable, and what he perceives to be valuable is simply that it's more what? And what he perceives to be valuable is simply that it's more. What he doesn't realize is the intrinsic value of what he's trading is worth less and less every single time that he does it. So here's the planning application for all of us.
Speaker 1:As we approach our retirement years, we're typically in our higher income earning years. We're typically at that point where we're making meaningful progress in terms of increasing our portfolio balance, increasing our net worth, increasing that thing that we perceive to be most valuable, and that thing is very valuable that portfolio, that income. That's what enables us to do the things that we want to do. But here's the pitfall I see far too many people fall into. They get to that point where they've reached the point at which they could be financially independent, yet they keep working, and what they end up doing is they end up trading things that are more valuable, but for things that are less valuable. And what I mean by that is every single year you keep working, every dollar you keep saving after the point of financial independence. In many cases this isn't always, but in many cases you're trading something far more valuable. To get that, you're trading your time, you're trading your health, you're trading your ability to pour into the relationships that you have Now. I know these aren't necessarily mutually exclusive, but I've seen time and time and time again people who, once they are in those ending stages, those latter stages of their working years, it's so difficult for them to step away. They're earning a lot, they're paying more to Social Security, they're maxing out their 401k. It's difficult to get out of that and, just to be clear, you probably shouldn't get out of that if you're not yet financially independent, if you don't yet have enough of a portfolio to support what you want to do in your retirement years.
Speaker 1:But just like that boy, we trade these things time, health, relationships, these things that the older we get, the more valuable they become. We're not guaranteed health for the rest of our life. Let's not trade it away. We're not guaranteed any amount of time at any point in our lives, but certainly the older we get, the less and less time we have left remaining on this earth. What about those relationships? What about those experiences, these things that, by nature, the older we get, the less and less and less than we're going to have, and the less of them that we're going to have, the more valuable they become. We trade those in exchange for dollars, like this little boy who goes from $1 to two quarters, to three dimes, to four nickels, to five pennies, so proud of himself for what he did. That's us. We continue to build, we continue to get more of something that is increasingly less value over time, and we exchange the thing that's a true value. So what can we do to prevent that?
Speaker 1:Well, number one, create a financial plan. The reason you plan is, yes, to optimize the financial resources that you have. This is everything to do, from your investments to your tax strategy, to your estate plan, to your retirement strategy, to withdrawal rate. All these things should be optimized with the right financial strategy. But if that's all you're doing, you're missing the bigger picture. Don't just optimize them. Optimize them so they can fully support the life that you want to live. You can do the things that you want to do. You can prioritize your health, your relationships, your travel, your adventure, whatever a beautiful life looks like for you. Do that Now.
Speaker 1:If you're that person who's maybe watched dozens of these videos, hundreds of these videos, and you still don't feel totally confident in your financial plan? Reach out to us at Root. We are financial advisors. This is exactly what we do for our clients all day, every day. If you're not ready to work with a financial advisor, click on the link below the Retirement Planning Academy. It's your chance. It's a guided process to help you create your own financial plan, and it comes with some of the software that we actually use for our clients here at Root. But whatever you do, if you don't already have a financial plan, create one.
Speaker 1:A financial plan is going to give you that sense. It's going to give you that clarity you need to understand can I actually step away? When is that time? If it's not now, what can retirement look like? And once you have that framework, then you can answer the bigger questions of what do you want to do with your life? What do you want to do to ensure that your retirement is as meaningful and as special as it possibly can be? And then the second thing you can do is identify what you really treasure, what you really value. Now, really, this should be step one, because a financial plan should be constructed around those things that you value and that you treasure.
Speaker 1:That being said, sometimes it's easier to start with a financial plan. You have no idea what you can even dream about. You have no idea. Can I dream big? What do I need to do? What does retirement potentially look like? And sometimes a financial strategy gives you some clarity. It helps you understand. This is what you can realistically spend without running out of money. It does help you to understand those things and then you can work backwards and understanding what do I want things to look like between myself and my spouse, if I'm married, with my children, with my friends, with my community, with my health, with my sense of adventure, activities, hobbies, whatever it is. This should be a reflection of what's most important to you.
Speaker 1:The goal is to be able to look back on your life one day and not say that you accumulated tons and tons and tons of pennies, like this little boy did, but you had what really mattered.
Speaker 1:You had that true value, and your financial plan should not exist in isolation.
Speaker 1:Your financial plan should exist to support that vision. So when you can have a very clear understanding of what it is you want to do and why it's important to you and what that looks like for you to pursue it. The financial plan is one of the most powerful things you can do to actually enable that lifestyle. So, as we look back on this story, don't just look at this story and think of the cute little boy who had no idea where value really lied. Look at that little boy and say how can I learn from him, how can I not be him, so that I can ensure I'm pursuing the things that are actually valuable, not just the things that are more, not just the things that are easy to track and keep score of, such as a larger and larger portfolio balance. Once again, I'm James Canole, founder of Root Financial, and if you're interested in seeing how we help our clients at Root Financial get the most out of life with their money, be sure to visit us at wwwrootfinancialpartnerscom.
