inflation

What you don’t know about your Retirement Plan might shock you! A traditional 401k Wealth Bucket Model may not be right for you. What if your bucket of money runs out before your retirement years are over? When you rely solely on that bucket of money, the expenses can drain it over time.

Wealth Bucket Model Retirement Plan is BrokenThe Wealth Bucket Model Retirement Plan is Broken.

Just like Steven Covey’s book The Seven Habits of Highly Effective People outlines, we are going to begin with the end in mind. Although small details vary between us, we all want the same thing out of life. We want freedom! More specifically, we want the time to do the things that fulfill us. Hopefully, we can make that time before we are too old to actually enjoy them to the fullest.

Rob outlines the means to this system as your Wealth Operating System, or your CORE Fund. This is the base of your financial freedom. Eventually, your CORE Fund should be generating Horizontal Income 1.3-1.5 times the amount of your Vitality Number. This is how Rob encourages members of his financial community to approach retirement planning. However, most Americans foolishly lean on a Wealth Bucket Model, which we will explain.

What Is The Wealth Bucket Model, And Why Should We Not Use It Exclusively?

The big picture on the Wealth Bucket Model? Most of us have a 401k retirement fund. There is nothing wrong with using one as a nest egg. However, when we rely on it exclusively, we run the risk of running out of money and having to go back to work to pay our bills. Rob outlines more below on the biggest expenses that are holes in the wealth bucket model.

Ignorance – The Number One Leak In The Wealth Bucket Model

When we move on from our businesses, we inevitably want to try new endeavors. We often make the mistake of thinking our new ventures will come just as naturally as our pre-retirement ones. If you must invest in new businesses and properties, do your homework, and partner up with experts in those fields.

Taxes – Tax Drag Drains Your Wealth Bucket Model

Reducing Tax Drag is a huge income stream! Rob preaches this point again and again, with good reason. If you can legally reduce your tax burden, then do it! Then invest the difference in assets that will return compound interest.

Vitality Number

Your Vitality Number refers to the cost of living you want to live within. Live within your values and not your vanity! This is the biggest number you can possibly get wrong! You want that trip around the world that your favorite billionaire influencer took. Geat real! You’re not at their level yet. Wait until you are, or you will blow your Vitality Number out of the water.

Fee Drag

Employing wise advisors is mission critical. However, keep a close eye on what they are charging you, and evaluate annually. The value may not be there anymore. Maybe they aren’t working as hard as they used to in order to get you the results you need. It is important to shop around so you can avoid Fee Drag from these providers.

Inflation – The Silent Killer of Your Wealth Bucket Model Investments

You don’t need a wealth expert’s advice to know that inflation is a wealth killer! Keep this in mind as you are calculating your Vitality Number. Create a report of your Personal P and L to find out what that number is.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the ATL Inner Circle Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business. It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Sign up today!

Last week, Rob offered a “Bathtub Analogy” detailing retirement investment ideas. What about retirement expenses that drain your money? This week, Rob explains five money drains that can eat away at your retirement savings and investments:

1. Ignorance
2. Taxes (Tax Drag)
3. Cost of Living (Lifestyle)
4. Compound Investment Costs (Fee Drag)
5. Inflation

Can you think of more money drains? How can you avoid (legally!) these drains on your wealth?

Retirement expenses may eat up your investment savings!Retirement Expenses Explained

Ignorance

When we discuss money draining retirement expenses, there are none more basic than ignorance. If you don’t do your homework before investing in that “sure thing”, you have no excuses.

Taxes

Rob quipped that “tax drag” was the main deterrent to long term wealth growth. When he said “tax drag” what did he mean? Every quarter, you need to review your finances with your CPA. Taxes may not seem urgent, but they will sneak up on you at the end of the year. Consult with a professional regularly to construct a tax strategy that will save your business considerably. A second opinion couldn’t hurt so you don’t end up making disastrous choices that eat into your investment earnings. In fact, you may have outgrown your advisor!

Cost of Living

Out of all of the retirement expenses, your cost of living could be the most uncomfortable topic. It may seem like a no brainer when we say you have to live within your means. You must draw the line where you know the number you need to live comfortably, but you don’t compromise your values. We all work hard, and deserve some creature comforts, but overspending today is a sneaky habit that can hurt our lifestyle in the long run.

Compound Investment Costs

Keep an eye on your Compound Investment Costs, or “fee drag”. These include the fees which you pay your advisors. When you make a lot of financial changes, the middle men and women always get their cut. Consider that when you are mulling your next investment move!

Inflation

Here’s a hot topic in the world of retirement expenses. As of this writing, inflation is climbing. The costs of goods and services are up in every industry. This may not be the biggest expense on the list, but you need to keep an eye on the markets to know where they are going and how you can benefit.

Join Our Community

Do you own multi-family properties? If not, do you aspire to one day? Then you should consider joining our online discussion group, the Addicted To Life Community! Each month, Rob Rowsell will teach you what you must do in order to build wealth in the real estate business.

It’s not as easy as it looks! Property taxes, liens, and legal fees can all be hard to navigate, so having a successful guide in your corner like Rob is a must! Enroll today!

video
play-sharp-fill

Kevin Bassett, Rob’s Financial CPA, was our Guest Presenter. He shared six tax strategies with the group.

Rob also did a Bathtub Review:

  1. Ignorance
  2. Tax without Strategy
  3. Lifestyle Values
  4. Fee Drag
  5. Inflation

Search

Generic selectors
Exact matches only
Search in title
Search in content
Post Type Selectors