The Cashflow Process To Early Retirement

Even if they feel confident that they've saved well for retirement, there is a scarcity factor when they go to retire and they start to show up as a lesser version of themselves. Valuable content are going to be shared, and we're literally impacting lives. There's been a lot happening this year with our current administration that is affecting our clients. Hey, everyone. I want to welcome you to this video. We're doing a special collaboration series with my good friend, Denzel Rodriguez. For all of you in the finance geek community, I'm Daniel Ronberg, and I specialize in helping people step into their purpose and move into retirement in an abundant mindset. And in today's video, I'm going to share with you how the process that you've been working through following Denzel is similar and in alignment with the process we use at Nations First Financial when Denzel brings us in to help somebody set up their retirement income. So when you're looking at doing an accelerated payoff strategy, you're really removing some pretty key risks, right? While you're working and you're in that phase of life where you're accumulating assets, you're paying down debts, you're preparing for retirement, you're earning money, you're building your business, there are certain risks that come along. And for those of you that are building a business, you know, the definition of entrepreneurship is the ultimate financial risk. And so being that you're all in on that, putting your livelihood on the line, typically entrepreneurs want to mitigate risk along the way with other things that life has in store for them that they could easily remove with things like insurances or just being prepared and knowing what to do ahead of time. And so even if you don't own a business and let's say you have a career, you also have substantial risk, right? In a way, you kind of have one client, which is your employer, and you have the risk of potentially losing your job or having a gap in employment. And that's where accelerated payoff strategies work so well. They give you flexibility. They can help you maneuver through life's difficult seasons when maybe income is changing for you or not coming in at all. And so being that we're working on the process of removing debts, which are monthly obligations, it's really, to me, what I see is that as through the lens of removing risk. So, for example, one of the best things that I love about my first lean HELOC strategy is if there is a season in my business where we're investing into the business or for whatever reason, there's just a tight season that happens throughout the year sometimes for all businesses. It can happen easily. You know, it gives me flexibility to maneuver my monthly expenses so I don't have to be too concerned. I don't have those monthly obligations that are drilling down on me relentlessly that I have to continue to meet, even though impact on the cash flow could be pretty significant. So, you know, when we're looking at removing those key risks, I think that the pre retirement risks that I want to focus on, that accelerated banking does a phenomenal job of and that I know specifically Denzel talks about a lot on his channel is going to be, you know, what happens if you lose your job or your employment? Right. That could go for your business as well. What happens if you're unable to work? Right. If you become disabled, that could be a problem. And then what happens if, God forbid, you lose the breadwinning spouse or you are the breadwinning spouse or you both work and, or it's just you. And what happens to the income if somebody passes away? And those three financial risks are addressed on this channel? Right. You can be proactive with your debts and your income and set up a accelerated payoff strategy where you can significantly reduce your monthly obligations, giving you more flexibility, more cash flow or more liquidity to deal with difficult seasons that are going to come up in life. If for some reason you don't die, but you're in an accident or something happens and you're disabled, how are you going to be able to address that? Right. That can be tied to number one, and you can accomplish that with some accelerated banking proactively, or you can just get disability insurance. Right. You can get a DI policy that'll kick in and be able to pay and replace your income if you're no longer able to go work and provide that income for you or your family. And number three, I know Denzel is very vocal about having the proper life insurance in place, especially for entrepreneurs or families where you have a lot of the income on one spouse or if you are the single income earner and you want to make sure that you're providing and protecting the people you care about. Having the right life insurance policy is the way to transfer that risk to an insurance company. So when we're looking at risks that we can deal with, there's some that you're going to take head on and you're just going to shoulder in pre retirement, but there's some that you can easily over offset and just get rid of. You can transfer those risks to institutions and companies that are built to handle risk. Pull it over a lot of people and make sure that if you're the one person it happens to, you're going to be protected. And that's going to be forms of insurance. Now, when you move into our process in retirement, right, it, it translates so well because if you think about it, what is the way you boost retirement income? There's only two ways. You can reduce your monthly obligation from your debts, right? You can, you can get rid of those and that will free up cash flow. Or you can boost your income from your assets and that'll also increase cash flow. Now, what we've learned about retirement income is oftentimes it's much better for you to focus on paying off debts than trying to put money to work and create income. Getting a meaningful income from an asset can be challenging. There's all kinds of things that you have to do to get that to come out right. But if you remove paying off debt, that's something you can control. And it's almost like a guaranteed boost to your income because as you reduce that down, you're just getting more and more income each month. So in working with Denzel for the pre retirement preparation, when you move into the nation's first process and we're looking at how do we secure income, it comes down to removing key risk. So our process@Nations First Financial is so simple. Everybody says, well, how do you retire? You know, I get all these different opinions, I get all these different things I read about or videos I watch. And everybody has a different philosophy on retirement. We use Tom Hagna's model. He's one of the foremost authorities on retirement in the world. And he came out with this framework 20 years ago, 25 years ago, a while ago, that just works so well. And it's a framework that you can use to see yourself within to say, okay, this is encouraging, this is hopeful. I can figure out a way to operate with this and it's going to make sense for me in my situation. So here's the framework. It's very simple. There's two steps. Number one, you have to make sure you have enough guaranteed lifetime income. What is guaranteed lifetime income? There's three sources. There's Social Security, there's pensions, and there's annuities. That's it. It's a guaranteed income paycheck for the rest of your life. Why is that important? Well, because when you're working or you're running your business, you're bringing in money. And it used to be that everybody would go and retire with a pension. So they would end their working career, they'd get about 80% of their income for them and their spouse for the rest of their life. And they had no challenges, they never ran out of money, they knew how much they could live on. And there was no retirement planning industry. People just got pensions from working for good corporations for long periods of time. In the late 80s, early 90s, we switched from what's called defined benefit to defined contribution. And that's a fancy way of saying we switch from pensions to 401ks. And so then all the onus, the responsibility, the outcome was then shifted to the retirement saver and the workers. So you know, how much you should be putting away, what you should be investing those assets in, when you should be rebalancing and how much you can pull out all became the worker's responsibility. And you fast forward to today, massive problem. People don't have enough money for retirement. The average 401k balance is less than $200,000. There's a lot of issues with modern retirement today. People just don't have the means to. They didn't do the planning, they didn't have the knowledge when they first started working, they were worried about keeping their job or just putting food on the table. They weren't thinking about 30 years later in retirement. And so as you can see, there's a lot of distress in the retirement sector today. And so this step number one is so important because we don't know how long anyone's going to live. We have to make sure that you have enough guaranteed lifetime income that's going to last you for your whole life. And the proof for that is the system worked before we came in and broke it. Wall street and whatever you want to say, I'm not, you know, I'm not going to go down the conspiracy theory rabbit hole. But there's a lot of profitability in managing 401ks. And because companies wanted to privatize it and be able to monetize that, you know, you see that they weren't really focused on the financial education consumer piece. They were more focused on the business and how they could make more money. And so, you know, that is a significant problem. Right? We kind of ruined the system, but it worked really, really well before we came in and broke it. So having guaranteed lifetime income is step number one. And it's essential, whatever your basic need for expenses are, right, knowing your numbers, whatever those are, cover that with guaranteed lifetime income. That's going to make sure, you don't run out of money. But step number two is equally as important because you got to remove the key risks. When you're saving for retirement, you have pre retirement risks. When you're in retirement, those risks change. Right. And what are the key retirement risks? Well, we dealt with number one, which is the most severe, which is running out of money. We call that longevity risk. But there's several other risks that you want to be aware of, right? What happens if the stock market goes down and your income is coming from that? There's so there's market volatility risk, there's interest rate risk. What if you're a bank saver and you like high yield savings and CDs but interest rates are declining, your income is declining. What if taxes go up, your income goes down? How about inflation? Right? If we get you enough for your basic need and expenses today, we all know from this time period that we're living in right now, inflation is a very real problem. That's a pre retirement risk as well. And dealing with it in retirement can be challenging because now you might be on a fixed income and not able to earn any more money. So inflation is a key risk. What happens if somebody dies? That's also a retirement risk. We call that the economic impact of losing your spouse. That could be challenging for couples who are planning their retirement together. Again, what happens if you get sick and need long term care? You might be temporarily disabled or permanently disabled pre retirement, and the same could happen in retirement as well. Now, having a temporary disability may not be as threatening to your overall financial health and well being. But having a long term chronic disability, where you need a lot of money to be cared for at the level you want from home, could be catastrophic. That's a huge risk that 70% of people are going to deal with if they live to life expectancy age in retirement. And then you have what's called sequence of return and sequence of withdrawal risk. So sequence of return risk matters. And I explain it like this, right? When you're in pre retirement, what are we taught? Well, you want to buy and hold. That's how you build wealth. If you look at the stock market, the real estate market, doesn't matter. If you look at the beginning to now, as long as you held over any duration of time you made money. Now, people always go, well, yeah, but it goes down well, yeah, but what I'm saying is as long as you hold, buy and hold will always work. It always goes up over time. It always has. What's the problem with that? Well, when you enter retirement, the rules flip. It's no longer buy and hold, it's hold and distribute. And so you can't just buy and hold assets forever. You need income from them. And so if you're selling when things are down, that's how that doesn't work. And you can fail and run out of money substantially earlier. So when you take your return, when you get your returns and retirement matters, and when you take your withdrawals matter. And so those have a massive impact. Right? Like I said, if the market's way down you and you're withdrawing in those early years of retirement, the probability you're going to run out of money before you run out of life is much higher than if the market's doing well in those early years when you're retiring. So those orders matter and you can deal with all of those. We have a process at Nations First Financial where we make sure you have enough guaranteed lifetime income. We have an intentional strategy to deal with each of those key risks. And then that's how we help people step into their purpose, into that abundant mindset. Once they know they have everything covered, they it liberates them, not only financially and for more money to be able to use for things they love, like charity or building their wealth even in retirement or maybe a future fun business venture they want to be a part of, but it also liberates them mentally, emotionally, and really in some ways even spiritually. People can show up even more for their church or for the organizations they care about, or even helping people with the causes they care about even more because they have the freedom. They're giving themselves permission to, to enjoy and spend and have a great retirement. And so that's the process. And so having these frameworks can be super helpful. So what I would encourage you to do from this video is go back to Denzel's content, see what pre retirement risks you might have, assess other risks. There's a ton of other ones we didn't even talk about. But if you want help with that, reach out to Denzel, reach out to me and my team. I personally am going to be helping to reach out and talk to everybody that watches these collaboration videos that wants more information. I will be here to help. That's been my commitment to the finance geek community, to my friend Denzel, and I'm so excited. The conversations we've been getting into are just phenomenal and so I want to continue to be a part of that. It's very fulfilling and I love being involved. And then if you do have questions about the retirement risks or the process or that framework, or how you fit into it, or what you need, or what you're missing, or what you want to look at, reach out. I'm happy to help and go through that process with you. It's simple, but it's highly effective. And it's customized because everybody's situation is completely different. And so we need time, we need several meetings to sit down and get clarity on all the things that are priorities so we can continue to help you to make sure that you have the best retirement possible. So I hope you enjoyed this video, and please feel free to reach out anytime. I can't wait to see you all very soon. Take care.