Stop Worrying About Retirement: Build a Better Plan with Patrick Negado - Ep-580

I've also developed this thing called, uh, my questionnaire called the Retirement Vision Statement, Developing Your Retirement Vision Statement, because it helps clarify how you envision retirement. And then the question is, is can we structure your plan around your vision? Secondly, if assuming you're married and you have a family, then the rest of your family understands how you envision your retirement to look like.

If you've spent decades building your portfolio but still feel uncertain about your future, The Retirement Illusion reveals why more money isn't the answer and what actually creates lasting financial peace. Welcome to Streams to Impact, brought to you by Steve Talker Capital. I'm your host, Dr. Allen. There comes a moment in every high achiever's life when success begins to feel less like freedom and more like obligation, where your income is strong, but your wealth isn't Fully working for you. And that's exactly what we explore here on Streams to Impact. If today's conversation resonates, I'd like to extend a more personal invitation. Join me for a Path to Prosperity discovery call. It's 15 minutes of focused enlightenment where we examine your current financial landscape, clarify what genuine prosperity looks like for you, and we identify the first deliberate steps toward Securing it. To reserve your time, visit our website, www.steedtalker.com. Before we step into today's episode, just a brief disclaimer. All information shared on Streams to Impact is for educational purposes only. It is not to be construed as investment, financial, legal, or tax advice. All investments involve risk. You should not invest if you're not prepared to lose 100% of your investment And you are always encouraged to consult your legal, accounting, and tax advisors before making any investment. Well, what if everything that you've been taught about retirement is just incomplete? Well, today's guest, Patrick Nagato, believes retirement isn't simply a finish line. It's a new season of life meant to be lived with freedom, fulfillment, and purpose. As the founder of Canoe and Current Wealth Strategy, he helps individuals and families move beyond uncertainty by designing retirement income plans that allow them to stop worrying about and start learning or living. With a philosophy centered not on cashing bigger portfolios, but on building the right structure, Patrick challenges the conventional thinking that leaves so many retirees feeling financially insecure. Today, he's here to help us rethink what it truly means to be prepared for retirement and how to navigate it with clarity and with confidence. Patrick, welcome. We're glad that you're with us today. Patrick, every philosophy is born from experience. So, I'm just curious, what was the moment in your life when you saw firsthand that the traditional approach to retirement was falling short and felt like a calling for you to do something different.

Alan, thank you very much for that wonderful introduction. Yeah, so basically, in our business, it's always been one of those things and this has been going on for quite some time. I'd say maybe since the early '90s where the idea behind a successful retirement strategy is to basically once Once you're kind of at retirement phase, you start reallocating funds from less equities to more bonds, and then hopefully be able to generate between 3% to 5% dividend and yield. And so over the years, our industry has also come up with all kinds of things like the Monte Carlo analysis, which is rather interesting. And then based on that, you have a probability of success. However, as most people in our industry would eventually find out if you hadn't figured it out yet, is this business is not necessarily about math. It's about managing emotion. And so, when you're looking at the 4% rule or the 5% rule and you run different numbers, in some cases it works, in others it doesn't. Because at the end of the day, we can't predict what the markets do. There are trends, and over time, markets tend to do well. But if you happen to be in the wrong sequence of returns, then that 4% or 5% rule is going to really devastate you. If you're in the right sequence of returns, that 4% or 5% rule will make you even more wealthy. So I came up with a concept essentially By saying, what if we took care of your monthly essentials with as much guaranteed income as possible so that you don't have to worry about how your money's invested on the other side? So the canoe portion of the canoe and the current is making sure you have enough guaranteed income to cover your monthly obligations through retirement. The current portion then says, we no longer have to scale back your investments let's say with less equities and increasing your bond portfolio, we can theoretically be more aggressive with it and just have a time-segmented strategy to make sure that we cover your short-term, your midterm, and your long-term objectives when it comes to investing that money. So really, I just wanted to simplify it to help people emotionally accept it and be able to say, oh, we no longer have to worry about what if another COVID hits, when we retire or earlier this year, the Iran war that caused some market volatility. As long as our monthly obligations are paid for, our investments can take care of our discretionary spending.

Sounds like a reasonable way to go. And I like how you emphasize that this is more about emotions than it is math. And so, in challenging that aspect that retirement is not necessarily about the numbers, what have you seen happen even among high-income earners when they focus on accumulation without the structure in place?

I'm glad you brought that up. The one thing I often have to remind people when they're starting to plan for their— how they're going to structure their retirement assets or their retirement strategy is the mindset has to change a little bit. Throughout our lives, we're taught how to save. Hopefully, if we have the right people helping us, we're taught how to invest. So it's all about accumulate, accumulate, and try to get the highest returns possible, or at least the best ways we can get the return. the best returns possible. When you're starting to think retirement, the mindset has to change from how do we accumulate more wealth to how do we make sure we maximize the use of the wealth we've accumulated, right? And as I mentioned, the best way to do that emotionally anyway— now, there's the concept or the framework of the tune, The Current. The idea behind that is really to take away the risk of having a bad market, even a bad advisor, if you want to call it that. I mean, I don't expect to be a bad advisor, but certainly, if we happen to just invest at the wrong time, it'll look like we're bad because then markets dropped. But that takes away that risk. The framework takes away that risk. So the idea is, once you start retiring, once you're kind of in the mode of we're going to retire, you really have, in my opinion, have to have a really clear understanding of what that looks like. So I've also developed this thing called a questionnaire called the Retirement Vision Statement, developing your retirement vision statement, because it helps clarify how you envision retirement. And then the question is, is can we structure your plan around your vision. Secondly, if assuming you're married and you have a family, then the rest of your family understands how you envision your retirement to look like. Now, if we create the right plan for that person or that family, then the family unit, then we're actually going to multiply wealth during retirement. And then you can start planning for the sort of legacy you want to leave behind. Um, and I think at the end of the day, and maybe most people don't know this when they're in their 50s or 60s, but certainly when you hit your 70s and 80s, you start thinking about what is the sort of legacy I want to leave behind with my family? What sort of memories do I want them to remember me by, right? Um, and not only the love you gave them, but perhaps, um, the, the inheritance or the wealth you've given them, or at least at the end of the day, make sure it goes to the people you wanted to go to or the charities you wanted to go to. So creating that vision, that mission, through, through the values that you've developed over your life ensures that you maximize use of those dollars and it's not wasted. And then more importantly, whatever wealth you, you've built for your family, it hopefully preserves through the next generations. Um, and I think what happens is When money is not communicated properly, what tends to happen is the generations inherit it, mismanage it.

So you're talking about really a mindset change, a philosophical change in how you move from accumulation to really a reallocation phase. And maintaining. What is it psychologically that really seems to be the issue there? You talk about emotions over numbers, but what is the psychological barrier to helping people to move from that? aspect of accumulation?

2 things. Well, maybe more than that, but the 2 things I can think of off the top of my head is first and foremost control. Being able to give up control of it and just thinking and worrying about making that mistake because they've— most people I talk to are already successful. So why— so they're thinking, why would I make a change if I'm already successful? And basically that mindset, the mindset shift is hard because you're used to doing things a certain way and now you have to change it. So that's scary for a lot of people.

Mm-hmm.

And then second thing is, of course, they're worried about what if I make this mistake and it doesn't work out? Right? So one of the things I mention to people is once you've retired, if you were drawing a high income or if you had a business and you had a high income from your business, that's going to go away. So think about that, how that's going to affect you psychologically or emotionally. Now, now what we need to do is replace that. If we can replace that, then you're likely to continue with a lifestyle that you have. And be able to do the things you want rather than the things that you have to do. Because at the end of the day, retirement is being able to do the things that you want at the time that you want than the things that you have to do. Is that correct? I mean, that's, that's so, uh, so generally speaking, when you have people who retire, who even retire early, they don't necessarily stop working. They find something else to do they really like doing.

So yeah, I mean, that's what I see myself, is that control is definitely an issue. And, and in moving into new things, it's always frightening. Even when you're young, that can be challenging. But I think as we get older, we just get more concerned. We've made enough mistakes in our lives, we know that mistakes happen. And so as we get older, I think we just get more concerned about making those mistakes. And so that is a challenging thing to do. And I think you're absolutely right in helping them to realize that they have the assets there that can replace that income. I think sometimes it's hard for them to really feel comfortable with, yes, we've got the assets here that can produce the income that we have been used to without the business or without the job. It feels like they're jumping out of a plane without a parachute. How do you help them overcome that?

Well, so the other challenge before we get to that point even is one of the problems— one of the challenges today is there's way too much information. In the marketplace, and and and when there's when you have when you have all these voices in your head, are you really going to jump with even with a parachute? Right? You're going to everybody's telling you how scary it is. With with all that information causes people to just not act, and of course information they get that. that sort of feeds into their bias, then confirms the bias. But maybe that bias is not appropriate for them. So I'll give you, I'll give you a quick example. I have a, um, I have a friend/client. Well, they're a friend first, and they've engaged me to do some business, to do some retirement planning for them. So I created a plan And they knew the concept, the current. I had them, I asked them to read my book and I believe they did. And so they knew that what we would do first is make sure that their monthly essentials are paid for. So one of the first things I need to find out is how do you expect your expenses to be once you retire? Let's work backwards. Let's figure that out. So from that standpoint, came up with a plan. And this is where I mentioned where the biases kind of come in, or biases come in. The only tool I know in the marketplace that's going to give us guaranteed income, of course, besides Social Security and pensions, if you have that, if you have those things, but that's outside of that, that instrument are annuities, guaranteed income annuities. You have a lot of voices out there that says annuities are terrible, they're expensive, so on and so forth. But nothing else gives us guaranteed lifetime income the way annuities do at a very healthy rate, uh, depending on your age, of course. So I suggested a part of their assets go into that, in this case as little as possible, right? So we got it down from 40% to 35% of their assets. So you can kind of call that their bond holdings if you want to call it that, right?

Mm-hmm.

And then the rest we would manage efficiently, you know, with as much risk as they're willing to tolerate. So the feedback after the plan was presented was, you know, we were talking to one of our friends who's a financial expert. I don't know what that means, but that's what they said. And they said— and he says that people who— that annuities only enrich the agents who sell them. It doesn't really do anything for clients. I said, okay, well, sure, if, if, if you were presented with the wrong annuity, then that's probably true. But we have a specific strategy for this, and this is to give you the guaranteed income to cover the gap that you need to cover your monthly expenses versus what you're gonna get from Social Security, um, and your pension. Um, and then of course Then the other statement was, well, I don't know if we want to pay your management fee if we're only expecting to get, you know, 5% on our investments because we're conservative investors.

Mm-hmm.

And I said, well, the whole purpose of the canoe and the current strategy is to give you the monthly income that you need so that you, you don't have to worry about making sure your monthly expenses are paid. Alternatively, the current, which is your investable assets, we can then become more aggressive with that over time and have time-segmented strategies allocated for 1 to 5 years, 5+ years, and 10+ years so that you can be more aggressive and get more than a 5% return. Because historically, in the last 10 years, they haven't used an advisor, And half their money was invested in money markets and CDs. In which case, that's a huge opportunity that they missed the last 10 years. They would have been able to double their money, if not maybe 2.5 times in the last 10 years, even with COVID and even with the Iran war. So that's really the value of what a financial advisor brings is to be able to talk to you or at least persuade you into doing something you may not want to do emotionally. So from that standpoint, again, mindset shift, right? Because they're still kind of in that mindset shift of, well, I know that I'm supposed to get 4% or 5% out of this over time, but that's not guaranteed to remain in place, or at least it doesn't guarantee you're going to have enough money once you live another 20, 30 years at retirement.

Yeah, that makes a lot of sense. So when someone is within that 5 years of retirement, what are the most common mistakes that you see them making, and which of those are the most difficult to recover from?

Scaling back. So there's also the old saying of, as you get older, you want to You want to scale back your equity holdings, right? I don't necessarily think you have to do that. I think you just have to be more strategic with how you hold your equity holdings. Because again, most people don't have a structure or a strategy. They kind of do things as they're told. Another anecdote: I have a friend who's a doctor. She became a doctor a few years ago, and and I manage a portion of her assets. I don't even have everything. So, and so she's talked about how she's part of this investment. investment group of doctors and they buy these stocks that the investment group recommends. That is not a strategy. That is, let's chase what we think is going to be the best returns. Now, at times, people have to experience what it's like to lose money that way before they really realize they have to have a strategy in place. So, the whole purpose of— so, the idea is if you're within 5 to 10 years of— within 5 years of retirement, You really need to start having really fine-tuning the strategy of what you want to put in place, right? You want to start, you want to start kind of imagining, number one is, is how much longer do I have with a mortgage, right? That's, I think, the main thing you have to look at is a mortgage payment manageable or not. And then what we have to look at is what are, what would our expenses look like once we get to that point? Now, that's difficult. to figure out 5 years out, but you have an idea of what it's going to look like. And so what we start to do is we start planning around that. We start saying, okay, so here's what we'll do. A portion of our assets we'll put into these instruments that have— that's still growth-oriented, but it has guardrails. So if the market corrects, you have protection. And then we'll still continue with your long-term investment strategy to continue to make sure that we're fully invested and grow that. And then if we have to start planning for the canoe, generally speaking, you don't have to do that 5 years out. Maybe as you're 3 years within retirement, we start looking at canoe instruments to determine what your guaranteed income looks like. Because what's the canoe instruments, which in this case I'm referring to annuities as an example, um, the, the, the payouts are higher the older you are. And so that's why we want to make sure we wait as long as possible. And some of these instruments also owe— excuse me, offer what's called a roll-up rate, in which case, if the roll-up rate is attractive enough, we take advantage of it. If it isn't, we don't. We'll continue to invest in market instruments, as I said, with guardrails. So that's kind of— we look at those things per individual because everybody's different. As much as the framework is the same, the strategy behind the framework is different and how monies are allocated is different based on the individual.

So as you work with individuals and you get the canoe and current strategies in place, they get comfortable with that. How do you then help them them look beyond the retirement to really multi-generational legacy transitions.

So once we've established some sort of emotional security based on the plan— now the plan is only good today, it has to be monitored, it has to be adjusted over time— but let's say the canoe is built and it's strong. We we already know that this canoe will pay for any of our monthly obligations, so everything else on top of that is is cherry on top. Then we introduce the idea of creating a family financial philosophy. Now I mentioned earlier my book is called *The Canoe and the Current*. I have a second book that I'm going to release later this year. The current title, and it's probably going to stay this way because I've already developed a questionnaire for it, is *The Current Beyond Wealth*. And the idea is creating a family financial philosophy. So this is a— I have a 20-page questionnaire. Again, it really digs deep emotionally for people. It'll tell them how they really value money, how they want to see their wealth evolve over time, and then how they want to see their wealth treated once they're gone. So that questionnaire, once completed, I'm able to create a booklet narrative or a story for my clients to be able to share with their family. And then their estate plan is really going to be built around that, is the idea. So based on how they answer those questions will determine what sort of legacy they want to leave behind, whether it's a family legacy, a charitable legacy, or both.

Sounds like some wonderful resources there. So, together, we've explored the retirement illusion that it isn't about how much that we've accumulated, it's about how well our financial life is structured to support the life that we actually want to live. So, Patrick reminded us that retirement is not a finish line, but a transition into a new season. One that requires intention, clarity, and design. So, if there's one thing to take away, it is this, that retirement isn't about having the biggest portfolio. What's important is having that right structure. So, if you'd like to explore how to structure your own retirement with greater confidence and clarity, Patrick invites you to visit Canoe and Current Wealth And there you can request the Retirement Vision Questionnaire, which he has referred to. And with that, you can begin that process of structuring your retirement. And if today's conversation has you thinking about more broadly about how your wealth can begin working for you, not just someday, but now, I invite you to take this step and go to beyond Beyond the Paycheck. That's our private mini masterclass that's designed to help high-achieving professionals build multiple streams of passive income through alternate investments so that your wealth supports your life, not the other way around. And you can access this at www.go.steadtucker.com/beyond-paycheck. Thank you for joining us on Streams to Impact, where we help you transform your income into impact, your wealth into freedom, and your life into something truly meaningful. Look forward to being with you next time.

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