8 Signs You're Not Ready For Retirement

Hey there, real quick, before we jump into the episode, listen, if your earnings treadmill hasn't set you free yet, running faster won't either. Listen, hustle without principles just going to burn you out. So here's what I want for you. I want you to join me for my money machine experience. Live it is three free trainings. Deep dive into how to escape the treadmill and build a money machine that actually works for you. All right, grab your spot here by going to moneymachinelive.com and I'll see you in the free training. What if you're planning for your retirement all wrong? Most people, they think that they're set for retirement until reality sets in, the money runs out too soon, or unexpected costs derail their plans, or they find themselves stuck in a lifestyle that they'd never truly prepared for. Listen, if you want to retire with confidence, without financial stress, without unexpected struggles, or running out of money, this episode's for you. I'm going to reveal the eight biggest things, the signs that you're not ready for retirement. And more importantly, I'm going to show you how to fix them before it's too late.

You think you're ready for retirement, but are you really? Let's find out. Listen, retirement isn't about an age. It isn't about a number. It's about financial and lifestyle readiness. It's about you understanding specifically what you want this to look like, how you've crafted it and what you've done to prepare for it. And the fact is that many people get this wrong. And the time to realize that is way before you ever get to retirement, you know, before it's too late. Because once you're in retirement trying to make moves and trying to make some adjustments, it's really difficult to make that happen. So here's the thing. In this video, in this episode, if you ignore these eight signs, your retirement might turn into financial stress. But when you address them, when you get them dialed in and you walk through and do the things that I'm going to tell you to do, you're going to retire on your terms, with freedom and choice. So let's jump into the eight signs. Sign number one, you're still chasing an arbitrary number. You know that myth of God, if I just hit a million dollars, I'll be fine. But this arbitrary, it's just a number. Who cares? The real key is, are you retiring to a number? Are you retiring to a lifestyle? And I'm not sure about using the term retire anyways. I don't think that I'll ever retire. I love what I do and I'll continue to do it as long as I possibly can to be able to serve, to be able to help, to be able to support, to be able to guide and everything. So I think that what we do in those years is if we're set up properly financially, we can transition to do the things that we want to do during that time. It's not that we retire and we sit on a couch, we sit on a recliner, we're watching tv, we're watching Netflix. No, we just kind of do some other things. But the question is, if you're defining retirement by a number, then that's a problem. Because retirement is a number. It's about the cash flow and the sustainability of that cash flow to support the lifestyle that you want. Okay? So rather than focus on that number, the question is, have you taken a money machine approach where you sat back and said, do I have enough cash flowing assets? The money machine that would fund the lifestyle without depleting it, without stripping it bare and everything. Listen, financial experts have, they recommend basically 25 times your expected annual spending to be able to insure yourself enough money, enough cash flow in your retirement years. Now, could it be 30 times? Yeah. Could it be 20 times? Certainly the question is really your lifestyle, you know, so what we want to do is start to shift our thinking in, in this, in this arena for this one, from a lump sum magic number perspective to an income stream cash flow mentality where we're starting to look at it and say, I'm building a machine that's going to create cash flow and if I get it right, when I get it right, it will fund my lifestyle. And that lifestyle has this price tag. And I've got a couple of tools that can help you with some of this. One is my lifestyle cost estimator. This is to kind of estimate what your lifestyle might cost you down the road. And we can make sure that we put the links below and then my affluence number freedom number calculator, which will kind of do this math for you. So we'll make sure that we put both those links below to get you, get you access to those. So sign number one is that we're chasing an arbitrary number still. Sign number two is you don't have a detailed retirement plan. This goes along with number one. But there's a lot of folks that actually guess at what their expenses might be. They guess at what they might need for retirement. They haven't done any homework. They haven't done anything. Math. They haven't done any of it. In fact, many people that I sit down and have a conversation with will.

When I ask the question, I said, well, what. What planning have you done for your future, for your financial future? Whether they're 30 years old, 40 years old, 50 years old, or going into retirement, it didn't matter. I asked, what. What plan do you have for that? And most people will say, I haven't done a plan. I don't have a plan. I don't know what that plan is. I don't know what that plan could be. And part of it is that we don't know where to start. And I totally get it, because I didn't have a plan.

I didn't know what my number was. I didn't know where I needed to be. And it wasn't until I had my bike accident. Someone smacked me in the face and said, hey, do you know where the finish line is? Do you know what it even looks like? Have you defined what your life's going to be like? So here's the thing. Rather than guessing at your expenses, I think it's important for you to map them out. Yes, you're going to have to make estimates. If you're 40 years old and you're not retiring for two decades, do you know what it's really going to cost? No, you don't. But the cost estimator will help you kind of navigate that and say, if it cost me this much to live today, here's what it may cost me in a decade or two decades or three decades. And at least you have a better estimate than I have. No clue. Okay? I'd rather have an estimate that is a bit off than nothing at all. And as you get closer and closer to that day, you refine it and you get more and more precise. You know, I am, at the time of this filming, is 63, going to be 64. And I had a plan. When I was 50, that plan changed. You know, I had. I got married, then we had grandkids came along, the plan changed and we adjusted and I got older. And as we got older, we got more precise, we got more data, we knew more things. But I had a plan in place in my 40s to really start to dial this in. So rather than guessing, it's a matter of planning, because your cost of living is going to change. You have health care, you have inflation, you have taxes, you have all kinds of things that we're not thinking about. And when you look at just Costs themselves. There's estimates out there that health care alone during retirement years for a couple will exceed $300,000. So if I have a $300,000 expense for a healthcare loan for me and my significant other during my retirement years, how have I planned for that? Have I planned for it? And so how you fix this is you do what we call reverse planning. You know, we start with the end, we figure out what the end looks like, we decide what we want for now, it'll change, and then we do our best job of trying to come up with what it's going to cost to make that happen, and we affect it by inflation and we calculate the costs. That's, that's the game. Okay? But if you don't have a detailed retirement plan, especially if you're getting close to those that retirement age, you need to have it in place because where's, where's, where your expense is going to get paid from? Do we take it out of a 401k? Do we take it out of Ira? Do we take it out of the Roth? Do we take it out of just a regular account? Do we have a pension? Do we get Social Security? Should we take Social Security at 67 or 70? Take it early? All those decisions go into the plan. And it's important to think about that. So that's sign number two, Sign number three. You have debt that will follow you. All right, now I have debt. So I'm just full transparency. I am not debt free, but I can be debt free. I can write, write a check right now and pay off the mortgage. But the mortgage is a 2.75. No reason to pay it off right now. And so we're making more money with the investments than we are paying on the mortgage and we just kind of leave it alone. But what I do not do is carry high interest debt. I do not do car loans. I do not do credit card debt. Because when you have debt that is 8%, 28%, 25% on credit cards, things like that, it will destroy you in your retirement years. It destroy you on your way to retirement. We want to avoid and eliminate destructive debt. It's why it's one of the, it's the second step in the wealth priority ladder that I talk about in my book building your money machine. Because when you think about it, in your retirement years, you end up in a fixed income situation. If I wanted today, if I wanted to go generate more income, I can go, I can go get more clients, I can go speak some more. I can put out any other program, I can do things to generate more income. But once someone stops and they retire, their ability to raise their income, it becomes limited. It's not impossible. You can start a side gig, you can do other things, but who wants to do that? Once you stopped, you wanted, you wanted to transition to this other thing. But that combination of now on a fixed income and high debt, the only thing that, that equates to is, is, is financial stress. And we need to eliminate it. All right? So just as much as the time value of money compounding can work in your favor when you're investing, it can work against you dramatically if you're paying it out in the form of interest. All right? So as you're coming into your retirement years, if you want to be completely.

Free of high interest, destructive debt, lifestyle debt, now I'd love for you to be completely debt free. No mortgage, no nothing. Okay? But strategic debt that makes sense, that has, is supported by cash flow, we may be able to do. But at the beginning, at this stage, if you're, if you're balancing and you have a ton of credit card debt and you have student loans that you're still paying off, and you've got a high interest mortgage or personal loans, things like that, that tells me you're not ready for retirement. We gotta put you on a debt payment plan to make that happen, right? Sign number four, your income streams aren't diversified. It's the one basket problem. If all of my income is coming from one source, if that source gets a kink in the hose, I'm in trouble. Wealthy retirees know that. I just did an episode on the show that talked about the 12 income streams that I have right now. Okay? And we talk about diversifying a portfolio of assets, our holdings. And the reason we diversify the portfolio of assets, investments is to reduce the risk. If one investment goes bad, you have other investments that, that support it and that, that bring it back up. Okay? But if I only have one way of making money, I have one income stream that's, that's coming, coming from the 401k or from investments or dividend paying stocks or real estate or something, and there is a problem with that, then I'm done. I'm toast. Okay? And so what I want you to do as you go into this, remember in the book I talk about the five incomes. I want 80% of your or more of your lifestyle paid by the top three incomes. That's asset based income, residual based income or portfolio income. Because it takes less effort you to Earn it, but it gives you diversification. So if one or a piece of one goes bad, you still have the income flow to take in. Again, one of the reasons you need to have a plan, because you plan for this and you look at it through that way and so, so it's important for us to look at it through those eyes and just stating the obvious. Hopefully it's the obvious, but maybe not. Social Security is not your savior. It was never meant to replace your income. It was meant to support a gap in your income. And the benefits might replace somewhere between 30 and 40% of your, your income for the average worker, but that's 30 or 40%. What do you do about the other 60 or 70%? We need to build those income streams in place and have them in place prior to retirement to allow us the opportunity to, to retire or transition to this new phase of life with confidence. Right. Sign number five. You haven't accounted for health care costs. Listen, healthcare is expensive. My mom, she was ill. We just lost her in last September. She was 91 years old. She spent six and a half years fighting on dialysis with a failed kidney. So she was on dialysis three days a week. We had her in a care facility so she could have good care and her own two bedroom place there and everything. But that care for her though that six and a half years of care was over $850,000. So you know, Medicare could have paid for a portion of it, but she would never have had the kind of care that she got if we weren't prepared to take care of that. Now it's not something that you plan for in the sense of you expect you're going to get it. But it is something that happens in life. And too often we go into this with the idea that we don't think about medical, we don't think about health care costs. Healthcare's likely going to go up. Medicare doesn't cover everything. Long term care is a significant wild card, like it was with my mom. You know, like I said, we paid $850,000 over six years. It's over $100,000 a year annually. If you're in a private room, in a care facility or in a assisted living is what she was in. And so you start to look at it through those eyes. Have you prepared for that? Have you thought about it? What's your health like? Are you taking care of yourself? Are you getting checked? Do you have HSAs? Do you have long term care insurance? All those things come into play. And if you haven't even asked the question. Well, you may not be ready for retirement. Okay, that leads me to sign number six. You're not mentally or emotionally ready. Now this is an interesting one. Retirement isn't just financial, it's psychological.

There I have watched people that have moved into their retirement years, they've transitioned and, and they are ecstatic and they are happy for about 60 days and then they are miserable because they're saying, I don't have a purpose. I'm bored, I'm depressed, I don't even know what to do. I don't know what I'm doing. My time, I feel like I'm wasting away. Okay? Many of them decide to return to work not for the money, but for the meaning. And so this is something that I think is important for us in our early years to develop these other aspects of our life, to have a well rounded life that gives us a life of richness, not just a bank account, and that we can take it into those years where we get a chance to maybe serve on boards, maybe do some consulting, maybe work, do some charity work, get behind missions and movements and causes or like for me, you know, post cancer, I'm in a season of service. This chapter of my life is to serve, to support, to speak, to teach, to help people find that path to financial freedom. That's why I do it. Okay. And so when you start to look at it, there has to be something in, in place for you, to engage you psychologically and emotionally as you move through this. Because without a purpose, without meaning, without some of those things, it's a tough road. Okay? So hobbies, travel, passion driven businesses, passion driven causes, things like that. Sign number seven. If you have a plan, you haven't tested the plan. Going from a full time career to or a full time business to zero income overnight almost. Now I don't mean zero income because if you have the money machine, you don't go to zero come, but the source of the income is different. Okay? So what we want to do is do what we call retirement simulation. Basically we say, well, let's try to do this even before you retire. Let's start to do the things we would do when we retire to see what it does, see how things need to be adjusted, what needs to be tweaked. Adjust the spending, adjust the income streams. Look at retirement. I kind of had this test run for me when I got diagnosed with a cancer because we shut down the businesses. I said, all right, turn on the machine. I'm going to focus on healing. I'M going to focus on beating down this demon, but I'm not going to be doing the active work. And it allowed me to kind of dress rehearsal, if you will. The money machine and what we did and what we were able to do. Think about the unexpected expenses. Test them out. Test them out. Okay. And that leads me to the last one. And the last one is an interesting one, and that is this. You think you can outrun inflation, something that most of us don't even think about. It is an insidious little gremlin when it comes to our wealth. Inflation. I was playing around with some numbers. Inflation erodes your ability to buy things and it does it by making things more expensive at a time where your income is probably not going up as fast. And so even modest inflation, if you look at it, even modest inflation of 2% will reduce the purchasing power by nearly 50% over 30 years. That means that a 2% inflation rate doesn't sound like a lot, but something that cost $10 will cost $20 in 30 years. Okay? And if that's not 2% and it goes to 3% or 4%, you can be in trouble. I was playing with the numbers going from 3 to 4%, it literally, it literally cut off a decade on how long the money would last. And so when we do a plan, we test for a lot of different scenarios. We test like if there's higher medical costs, we test if the market drops. We, we run these Monte Carlo simulations. This is in my Money Money Machine master plans. When I do this with clients. And, and what I want you to do is to stress test some of your plans and do this. Look at what happens if, if the market drops 20%. What happens if healthcare costs go up? What happens if income goes away for a period of time? What happens if inflation goes up 2% more than you expected? Test it and be able to see and know that we have, we have done some things to have it in place and make sure that you have the right portfolio and the right assets in place that are inflation protected types of investments, things like dividend stocks, real estate and, and other, other equities that will in an inflationary time grow with it. And then in the end, really is that to keep tabs on your plan and your money and maybe adjust your withdrawal rates year to year on a dynamic basis to make sure that you carry, have enough to carry you through all your years. Okay, so here's the thing. These are the eight signs that I think if we don't have these handled, you, you're not ready for retirement, but now you know what they are. It's time to go and fix them. So I'd love to hear from you where you are on your journey, which one of the signs are, are important to you that you say, wait, God, I didn't think about that. And how I might be able to support you in getting that fixed and getting you in the game and getting you pointed in the right direction so you know that you have the mastery of your money on your way to the financial destiny you deserve. All right. I hope you found this of value, and I hope that, that this is something that you'll take seriously because your future, it's coming. Let's do it right so you can live the way you want to live. All right? I think financial freedom, it's your birthright. So let's go out and claim it the right way. All right? I hope to see you on the road, and I can't wait to see you on the road. On your road and financial freedom. And until I do, always, always strive to live a life affluent. See you in the next one. Cheers. Thank you for listening to the affluent entrepreneur show with me, your host, Mel Abraham. If you want to achieve financial liberation to create an affluent lifestyle, join me in the affluent entrepreneur Facebook group now by going to melabraham.com group and I'll see you there.

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And that's it for this episode of building your money machine, where we help you learn how to master your money, eliminate financial stress, and live a life of choice. If you found this valuable or helpful to you, here's what I'd love for you to do. If you do me a favor, go to Apple, Apple Podcasts, or wherever you're listening to this podcast and rate and review the show. It helps us tremendous, tremendously to keep us at the top of the list so we can continue to get this information and this message out to people. Because I truly believe that financial freedom is your birthright, and I want to help each and every one of you claim it. Thanks so much.