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How to Determine if Your Retirement Goals Are on Track – Episode 234


How to Determine if Your Retirement Goals Are on Track

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Here’s what you need to do today to retire happily tomorrow. 

On this episode of the Dentist Money™ Show, Reese and Ryan look into what it takes to become financially independent. “When can I retire?” is a question financial planners are often asked. Some try to provide a simple answer, but there’s a complexity to the question that deserves an in-depth examination.

Although individual lifestyle and economic uncertainty affect any projections about financial independence, hear what you can do right now to ensure you’re on the path to a comfortable retirement.


 

 

Podcast Transcript

Ryan Isaac:
Hey everybody. Thanks for joining us on another episode of the Dentist Money Show. Today, Reese and I talk about the big question everybody has. When am I going to be financially independent? When is work optional? When can I retire? Have you received pages and pages and packets full of projections and graphs and numbers, and still don’t have an answer? Join us today on the Dentist Money Show as we explore these things. Thanks for tuning in. Enjoy the show

Announcer:
Consult an adviser or conduct your own due diligence when making financial decisions general principles discussed during this program do not constitute personal advice. This program is furnished by dentist advisors, or registered investment advisor. This is Dentist Money. Now here’s your host Reese Harper.

Reese Harper:
Welcome to the dentist money show where we help dentists make smart financial decisions. Hundreds of episodes in I’m your host Reese Harper here with my trusty old cohost, Sir Ryan Issac.

Ryan Isaac:
I think we’re four years in named after one of my favorite punk bands, four year strong. We are going four years strong.

Reese Harper:
For those of you who don’t know, Ryan is supporting the unity pools organization today that builds a pool with integrity.

Ryan Isaac:
Shout out to unity, Phoenix, Arizona.

Reese Harper:
Great pools. I mean, it’s [crosstalk 00:01:13] By building pools with integrity, we’re talking about the construction quality and the ethics. It’s a multi variant use of integrity.

Ryan Isaac:
And the swag. That’s a good hat. That’s why.

Reese Harper:
You wore it, because you like it’s a black and white hat with an anchor on it that represents your youth.

Ryan Isaac:
Yeah. I’m holding onto the youth. Four more days till 40. So four more days in my thirties.

Reese Harper:
Here’s the thing. I’m going to tell you a story today that you’re going to really like.

Ryan Isaac:
Okay, you have a good one. You warmed me up and then you didn’t tell it to me. So I’m excited.

Reese Harper:
I’m an aging industry vet now. A lot of advisors around the country are interested in what we’re doing here. They’re like, “So, you’re doing real financial planning, huh?” And really clients seem to like it and people are excited about it. So I’ve been getting a lot of appointments on our calendar for both advisors who want to like help be a part of dentist advisors, but also other advisors that are like, “Can we use some of your process? This element’s thing you guys are doing, it’s pretty cool. And really seems like it would be helpful. How are you doing it? It seems like a lot of work.”

Ryan Isaac:
Because just for a little bit of background, those not familiar. If you’re a financial advisor in this industry, it’s not common to have a job in a company where there is a system, a process, infrastructure, support, [crosstalk 00:02:49].

Reese Harper:
…especially a clear niche market. A clear niche market that you’re focusing on, that’s also not common. So, you’ll be working with like today I met with a group of financial planners, and it was a great meeting. I think all of them are really great. I mean, I’ve known some of them for a while. There they’re coming from, we met because they had some challenges with their current organization. The big company they’re a part of, they just don’t like how slow it’s moving, technology’s slow.

Reese Harper:
They don’t like that they can’t be very innovative, that the company kind of forces them to sell certain products that they don’t want to sell. Anyway. So one of the things they asked me is I showed them our business kind of open the hood, if you will show them what was underneath and-

Ryan Isaac:
The old V8? [crosstalk 00:03:43] what he got under there.

Reese Harper:
And they were like, “Okay, so this all looks awesome. Level planning, process, love everything you’re doing.” Like I said, okay, it’s time for Q&A, we went an hour and a half in, we’ve talked about everything from micro interactions and how we’re using data to have our advisors be able to be smarter and have better advice and be more informed at every conversation. And showing them our reporting and our back office technology and the new app we’re working on. Anyway, we were walking through all this stuff and I said, “Okay, time for Q&A, got 15 minutes before we got to wrap up.” First question was, so when you sit down and you’re meeting with people how do you show them when they’re going to retire?

Ryan Isaac:
Oh, really? That was one of the big questions? From the advisors?

Reese Harper:
From the advisors, “Hey, when are you going to show people when they’re going to retire?”

Ryan Isaac:
What’s the projection [crosstalk 00:04:50].

Reese Harper:
What system do you use to show them all like [inaudible 00:04:53] want to see it? We are currently doing this with clients through this system, and we show that they’re going to say like, I want to know when I retire. And I said, “Well, we actually don’t do that.” And they’re like, “what do you mean you don’t do that?” I’m like, well, we think that what happens most of the time when you do that is number one, everyone wants to know that because that’s what they’re told that they should ask for when they go meet with a financial planner is like when can I retire?

Reese Harper:
And so, yeah, of course people are going to ask that question. We get that question asked all the time. But what we try to do is we try to say, “Hey, that’s important. And we know you want to be at a place where work is optional, as fast as you possibly can get there, and that’s important to you to know, am I going to make it?” Another advisor said he chimed in when I was telling the story. He’s like, “But how do you know how much to tell them how to save?” How are you going to be able to tell them how much to save?

Ryan Isaac:
What’s the number.

Reese Harper:
What’s the number they got to save to hit their goals? And it was just like opening up this whole world to me that we don’t get exposed to that much, because we are approaching this from a completely different place, which is like, we tell people what is realistic to save based on their income level. The savings rate is a number that we use and I showed them that the savings rate indicator again. And I’m like, we’re trying to tell people what is healthy for their income level. We’re not telling them how much they have to save to meet their goal because you [crosstalk 00:06:31].

Ryan Isaac:
…be realistic.

Reese Harper:
I mean that’s a different question than what is healthy for your income level. What’s a healthy savings rate. Let’s say you only need to save $2,000 a month to reach your goal. And that’s what the system tells us is okay. But saving too $2,000 a month for this particular person is way, way lower than what they have available to save. Meaning they could save 4,000 a month. We’re telling them two thousand’s plenty. Should we really just tell them save two? Or should we say, “Well, you have four, we recommend putting that away since who knows what’s going to happen in the future, and the world might blow up, and COVID might happen again.” And dentistry might change and incomes might decline. And investment returns might not be as good as we think they are. Are we trying to solve for the minimum required amount of savings, or are we just trying to say, look for what you make, this is the best you can do with what you’ve got.

Ryan Isaac:
This is healthy based on your situation. Right.

Reese Harper:
And they’re like, “Oh, I like that”, because now people instead of asking me or telling me like, “Well, you told me this was good enough, or you told me that this was fine.” Now we can have a conversation about what about the thing that matters, which is like, what percentage of your gross income did you actually save, right? Or what’s healthy, what should you do based on your current income level. It’s not like [crosstalk 00:08:05].

Ryan Isaac:
Where does that put you in the future?

Reese Harper:
Where does that [crosstalk 00:08:07].

Ryan Isaac:
Where am I going to end up?

Reese Harper:
Either way you should be focused on doing the best you have right now with what you’ve got. And you should do the best you can. And not like just what the minimum amount is that I solved for that might get you there, because that’s going to result in you just like spending more and saving less and pushing your lifestyle a little bit more than you probably should push your lifestyle. And so it was kind of interesting as all of them were really looking at, I don’t want to say all of them, like they were…

Reese Harper:
They’re probably 80%, four out of the five were just like, “I’ve never thought about it quite this way. I’m doing plans to do projections. I’m not managing to short term, current behaviors”, and then the rest, it was just a new concept. And I was just like, “Oh, wow.” We have not only the consumers that are thinking about it this way, but like advisors are thinking about this way and am I wrong? Then, of course I want to be the person that could possibly be wrong too. So I’m like, “Well, maybe I should just like give people a projection.” Maybe we should just start giving people like forecasts, and projections. And then I’m like, “Well, no, I’m not wrong here.”

Ryan Isaac:
It’s already been tried for like a hundred years in the industry, and it’s still not helping anybody.

Reese Harper:
Yeah. It’s like, well, we run projections with every client and still savings rates are abysmal and people are retiring and the government’s national deficit is blowing a hole in our economy again. And probably what will happen in the future is people won’t save quite enough money and no matter what the projection says, they will underachieve it. Or it won’t be as good as what they thought because the assumptions used in the projection are too aggressive [crosstalk 00:09:59] Financial advisors will put returns that are too high, savings rates that are too high, and I think rather than doing that, Ryan, and I kind of… We want to just talk today about how we really try to expose to people what it is that’s with in their own control. And to me, it’s like kind of surprising to us to have a financial advisor conversation today where I was just left feeling like, “Hm, this is not just a client issue, man. This is a whole industry issue.”

Ryan Isaac:
It’s funny, hey, you do this for four years and then your brain’s just start to think the same way. So this morning, probably while you were in that meeting, we had our twice weekly advisor meeting where we talk about Q&A, and current issues. And this was the subject of the full hour this morning, which was clients, listeners, they want to know where am I headed? And when am I going to get there? And the topic today was our advisors asking like these are the questions consumers are, and clients and customers are asking, where does this put us? So it just [crosstalk 00:11:06]

Reese Harper:
…advisor internally in our own firm too, that is saying like, “Hey, we got to show a projection.” Right? Or what it [crosstalk 00:11:14]

Ryan Isaac:
Yeah. We’ve got new team members, we’ve got new advisors people taking clients, new clients, for the first time in their careers. And yeah they’re just learning these things. They’re asking these questions because they’re hearing it from customers and listeners and what you said. So it’s really interesting. What you said, I think, is the truth. People don’t ask that question like, “Hey, can I get a projection of where I’m headed?” Because they really think that’s the answer they just asked you because that’s what our industry has taught people to ask. Just like people are taught to ask, “What return do you get me?” and that’s not even the answer to the real question, but they to know the question. So I’m glad you brought that up. It’s really ironic and cool that you had the same conversation, just be in a different context.

Ryan Isaac:
So, today, like you said, we’re going to talk about how we show our clients where they’re headed, what actions they take today, how they affect the future. What do you have control over today and how to try to start projecting when you have enough data that you’ve tracked for a little while, how to try to start projecting that into the future, to give you some kind of idea, because you can at some point, so we’ll take a quick break and then we come back. We’ll just start diving into that and get right to it. [inaudible 00:12:25] We wanted to take a break for just a second to remind you how easy it is to book a free consultation with one of our dental specific advisors. What you do is you go to dentistadvisors.com and you’ll see a big green button that says book free consultation.

Reese Harper:
Can’t miss it!

Ryan Isaac:
Click that button and book a time that works for you, or you can just call us at 833-DDS-Plan. Let’s start a conversation about how we can help you with your finances. [inaudible 00:12:51] All right. And we’re back. Okay. So Reese, let’s start with the end first and let’s give a brief overview of what we consider quote, unquote, done, or retired or financially independent. If you go to our website, dentistadvisers.com, this is a topic of, there’s hours of discussion on this. It’s something that we call total term. If you go to our website and just type in total term in the search bar, you’ll come up with podcasts and webinars and articles that explain this concept, but let’s start there, Reese, what is done? What is retired in our definition?

Reese Harper:
It’s when you have a big enough personal net worth to where the growth of that wealth or the growth of that net worth gives you the income that you need for the rest of your life. Basically you have a big enough pot of money that the interest on that money or the growth on that money is paying for your monthly living expenses, right? You’re now financially independent. So there’s a level that you can get to that’s measurable for any person that lets you arrive at three different levels of financial security. You can arrive at one where your wealth is going to grow faster than what you can spend. You have so much wealth and your spending is so low that you’re going to pass on many millions of dollars more than you have when you start quitting work or when you reduce your hours. Then you have the one where it’s like, you kind of are going to keep the same amount of money that you had at the beginning.

Reese Harper:
So, you retire, you live on the interest. And when you pass away, you kind of have a similar portfolio to where you had when you started, or the most common is the scenario where work is optional, but you’re going you’re going to deplete your portfolio to some degree if not all the way to zero, you’re going to deplete it a lot of the way. You don’t exactly know how long it’s going to last. We have some good guesses about it. And our total term score tells us what kind of a person we’re likely dealing with. Are we dealing with a person A, person B, or person C? Person A might have a score, like a 100 total term score or something where it’s just like this person’s out of control wealthy. [crosstalk 00:15:18].

Ryan Isaac:
Out of control, wealthy.

Reese Harper:
Yeah, they’re worth in that particular case, a 100 score would be like, you’re worth $10 million. You got $10 million in the bank and you’re you’re you spend like eight grand [crosstalk 00:15:34] Yeah. [crosstalk 00:15:35] Right? Like that person’s like really, really never-

Ryan Isaac:
Which I feel like that describes quite a few people, actually. There’s quite a few people in that sweet spot.

Reese Harper:
Yeah. It would seem, but you could also be the person that’s worth 10 million. And if you spend a hundred thousand dollars a month, which we see, it does happen, then instead of being at a 100 score, you’re at a 10 score. Meaning same people, two with $10 million each one person is going to be out of money within like eight years, and another person is going to be…

Ryan Isaac:
Having hospitals named after them.

Reese Harper:
Yeah, colleges founded after them.

Ryan Isaac:
Yeah, exactly.

Reese Harper:
And it’s the same amount of wealth. And so we look at that and then the second tier might be someone who’s keeping the wealth they have. They’re going to be in the thirties and forties kind of a score, maybe that kind of a range. And then people that are depleting their wealth, they’re going to be in the twenties or high teens, or mid teens. There’s nothing wrong with being in that place. There’s many times where I’m just like, I am not either one of the top two people, I’m going to be customer C, I’m going to be the guy that just like loved life so much and had such a good time and enjoyed every last moment that when I die, like my kids really get each getting five grand and I’m kicking 10 grand to the red cross, and that’s it. And the CFP board gets $2,000 and an honorable mentioning [crosstalk 00:17:03] on my program for my funeral.

Ryan Isaac:
Your tombstone. It’s basically how my wife drives her car. It’s just enough gas where she knows she’ll probably arrive at the destination without running out and having to call AAA or me, but no reason to fill it up [crosstalk 00:17:20] I like fill it up when it hits like a quarter. I’m going, I’m filling it back up.

Reese Harper:
Yeah. So, that’s how we look at it and that’s the definition.

Ryan Isaac:
Cool. Okay. So, and by the way, I was just checking this out. We do a monthly webinars on all of these different topics. If you go to our website, dentistadvisers.com, you’ll see these 12 main subjects that we cover. We call them elements. This element of total term is probably the most important one. And the one people want to know about the most. We did a webinar it’s 90 minutes of deep dive into this subject. So go to dentistadvisors.com under the education library, you’ll just see webinars. And there’s a total term webinar, or just type in total terms [crosstalk 00:18:00].

Reese Harper:
…we call this element financial independence, total terms, the calculation that we use to measure people, but usually we’ll call it financial independence. Is this kind of stuff.

Ryan Isaac:
That’s the normal human relatable term. [crosstalk 00:00:18:13].

Reese Harper:
Ryan sticks, and lives with adviser language.

Ryan Isaac:
Yeah, that’s true. Okay. So, but all right. So knowing that that’s the end point, which by the way, when this question gets asked from a client or listener, and they’re like, “When am I done?” By the time you spent 10 minutes explaining the concept of total term? I feel like it erases the previous question, which has given me a printout of my projection and it starts putting the right questions in people’s heads, because then they go, “Oh, all right. So I’d never knew that. That’s a great target to know that seems achievable. I can kind of compute that in my head.” Now they start wondering, “Where am I today? Then what’s my total term right now. And how do I grow it?” That’s kind of the next step. So let’s take it from that perspective, now, of someone who’s realizing what the end point is, how it’s defined, and then back that into today. So what kind of things do we have control over? How do we grow this and how does that relate to the future? [crosstalk 00:19:13].

Reese Harper:
Do you think, in your case though, when you explain that to people, do you find yourself still needing to… Does that give most people closure? Like you say, “Hey, you’re going to want to get this score to at least be like 25”, but each person needs a little bit different score, right? It’s not like that precise. You can’t say like has to be a 25 or it has to be a 20 or 30 or 35, but it’s like it’s relatively easy to explain. And people, I think can concretely wrap their head around that more than they can a projection. Because when someone shows you a projection and tells you you’re going to be okay, then you have to like tell them all the variables you used in your projection to come up with their outcome.

Reese Harper:
So, most people are used to hearing [crosstalk 00:20:03] save three grand a month and you’re going to retire just fine. Or if you just put the money in this 401k and do this, you’re going to be fine. And that’s what they remember is, “If I just do this 401k and then I’ll be fine.” Well, at the time they ran that projection, it might actually have made some sense, but now your spending has gone up. Right now you’ve added a couple of [crosstalk 00:20:26] And all these things have changed. And instead of you remembering, I need to have 30 times my annual spending piled up. You just remember, they said, “You just got to do this 401k or get this thing set up, and you’re good.” You’re good.

Ryan Isaac:
And you’re like, “Oh, I still have 10 grand leftover every month on top of the 401k, this is excellent. It’s time for the boat.

Reese Harper:
Yeah, so I get to spend more.

Ryan Isaac:
Which could be true also. I mean, that’s the other side of it. That’s why more, so to your question, do people get, I think people understand just having some closure around what the end point looks like. Because it’s hard to grasp until you put a calculation to it. So 30 times what you spend in a year is going to give you plenty to live on forever and die with money leftover. And I think that gets people to conclusion, the question becomes what actions happen today? What do you have control over? What are people doing today with their debts, and their investments, and their business, and their real estate and the savings. And how do you pull that into the future a little bit? What am I doing today and how does it affect my ability to get to a 30 or 25 or 40 total term as fast as I possibly can?

Ryan Isaac:
So I’ll just start with today in our advisor discussion, I was just explaining to our team and for our listeners, part of our service that people hire us to do is on the quarters. We do a net worth kind of report card. We just show all the stuff on your balance sheet, because we track all that stuff in detail and we just sum it all up in assets and debts. And we show a net worth report card every quarter. And we’re just showing, how is this changing every three months of your life? And it’s actually one of my favorite things that we report on because it shows me if there’s progress being made how much is it? And where’s it coming from? Did your net worth grow up because we just said your house is worth a quarter million dollars more than last quarter?

Ryan Isaac:
Or did you save a hundred grand or did you pay off 50 grand of debt or did your accounts grow? So I guess we can start there because I was just telling you advisors today, when a client’s asking that and I can show someone here’s your net worth and here’s the last four quarters of growth to score one point of your total term mathematically, you got to grow your net worth over a year, by as much as you spend, that’ll get you one point of total term. So if you spend [crosstalk 00:22:57]

Reese Harper:
…one point, you mean if I’m worth zero and I grow my net worth to be a hundred thousand, but I spend a hundred thousand, I’ve just got to a one total term score at the end of the year, my net worth went from [crosstalk 00:23:11] zero to a hundred thousand, now, it’s a one… I’ve lived for a year. I’ve gotten ahead a year.

Ryan Isaac:
Yeah. You got a one total term. And if you used to be a 10 and you spend 200 grand a year and your net worth went up 200 grand, now you’re at an 11 total term and the goal is 30. So I give people the context of, how that relates to their spending. And I can see as an advisor, okay, here’s what happened. This person spent 200 and they grew 200. Great. We added one point of total term in the last 12 months. Now, how did that happen? Well, they saved five grand a month in the brokerage account and three into the 401k, and they pay down 40 grand of debt and the practice became worth more and so on and so forth.

Ryan Isaac:
So to me that shows me, it’s a lot of information that I can say, here are the things this person has control over today, and if historically we’ve been going at a one total term, or growing it by one point every year, then if nothing changed, your accounts kind of grew at the same rate your practice did, your debts went down at the same rate, you saved the same rate, and you kept spending the same. Then, 30 minus, however many years you’ve already got saved up. If you’re at a five total term now, and you’re going at an average rate of one point per year, then we’ve got 25 years left, approximately, if nothing changed. But that’s kind of the funny, silly caveat, because nothing ever stays the same. You will have more or less debt, more or less income or less spending savings. Those things change, which is why it’s super important to track this stuff so periodically and frequently.

Ryan Isaac:
But anyway, that’s what I was explaining on how I found it being helpful to clients, and listeners when they’re asking, how do I know what I’m doing today? And what kind of progress am I making? Because if you’ve got enough data, again, this goes back to, are you organized? Is someone holding you accountable? Are you measuring where you’re making progress? Because if you do that and you’ve got enough history, then you can start to say, all right. If I kind of keep on this track, I could reasonably expect to be done in this many years based on if nothing too big changes. So, anyway, that’s where the direction of the conversation went. I’d be interested to know where it went with the advisors you talk to today or what you think about it.

Reese Harper:
Yeah. I showed them a few different samples of clients I’m working on myself right now. And I’ve got some clients who are already getting close to a 30 or over a 30 TT score. And they’re having to make a decision on whether they’re going to retire. But then some people are going like, “Well, I have this ha I have this like vacation property, though, that I have paid off and it’s part of my net worth, and I’ve just decided I want to keep it forever.”

Ryan Isaac:
Yeah. I don’t want to include it.

Reese Harper:
And I’m like, “Well that’s okay.” Then we we just probably have to add four more years of work if we were going to keep that property, and they go, “Well, okay, maybe not then. I might not want to have that property. That rental, that vacation property, maybe I’ll just sell it. What would that do?” I’m like, “Well, if you just sold it, then you’re kind of done.” Financial independence is achievable. Alternatively, you probably need to work four more years to pay for that. Because if you never want to sell it or you got to get a line of credit against it and borrow against it. And it was amazing though, when you give… No matter what, it comes down to being at that moment when you’re 50, when you’re 55 or when you’re 60 or when you’re 65, whenever you’re at this point where you’re like, you’ve achieved this amount of wealth, that’s in this reasonable range of where work is optional, right?

Reese Harper:
It could be anywhere above a 20, even for people that we’re not wanting to pass any money on, they were just kind of wanting to like live comfortably and be fine. I mean, most of us straight up, we’re just not going to accumulate the ideal amount of money. We’re just going to accumulate a good enough chunk and we’re going to be good enough. That’s how most people are going to shake out, and there’s nothing wrong with that. That’s your best effort? So, when you get to that [crosstalk 00:27:23]

Ryan Isaac:
…you mean like you retire, you’ve got enough. And then you deplete it slowly until your last breath. And then it’s mostly gone.

Reese Harper:
My point is like knowing the projection 25 years in advance of what is going to happen in 25 years and the choice you’re going to make, it’s like an absolute waste of time. It’s just a waste of time. What matters right now is, well, you make this much money, what percentage can you save? Let’s work on improving that. You have this much debt, these interest rates are at this level. How can we reduce those? You have this much personal spending. How can we cut that by 10%? you have this much practice profitability. How can we increase it by this percent? These are the things that are going to improve the probability that your future self is happy with your results.

Reese Harper:
And any projection you make right now is just a waste of time. It doesn’t teach you anything, because when you get out there, you’re going to have the same choices. You got to make the same choice. It’s like, “Well, the projection said this I’m here. What do I do?” And I find that no matter how much projecting or how much future forecasting I do, we end up at retirement and people asking the same question, which is like, “Should I sell this? Can I do that? Can I buy this still?” It doesn’t change. They’re in retirement. And they’re asking the same things. [crosstalk 00:28:50].

Ryan Isaac:
The only thing that’s different is you’re not working now. [crosstalk 00:28:53]

Reese Harper:
You’re asking the same questions. It’s like, well, can we buy that? Can we do this? [crosstalk 00:28:59]…lot by our house, and we want it. Want that lot, or [crosstalk 00:29:05]

Ryan Isaac:
…housing is not solved at 65.

Reese Harper:
Yeah. I got this old boat and I just want a new one. Can we afford it, or should we sell it? And it’s like, you’re going to be making all these changes you didn’t even think about, so what should you focus on? The things you can control. That’s not the projection. It’s the individual elements that we’re tracking through our process that drive net worth higher. How much liquidity should you maintain? What is your savings rate? What is your burn rate? What is your debt to income ratio? How low is your effective tax? And then let the future just be the future. It’ll be fine. You’re going to be okay. We’re going to figure it out. We’re going to take care of things and we’re going to make it good, no matter what. I mean, if you literally get [inaudible 00:29:55] retirement and you have 25 grand in the bank, and that’s all you were able to accumulate, we’re going to look at this situation. When I say like social security pays this much, and you’re not [crosstalk 00:30:07].

Ryan Isaac:
…home equity.

Reese Harper:
[crosstalk 00:30:09] We’ve got to do this, and this is what your reality is going to be. Okay. You’re going to deal with that. But to give us the best chance of you not having just the $25,000 in the bank, when we get there, we’ve got to focus on these other variables that are critical to moving the needle in a positive direction and not give you too much closure about an exact projection and date of when things are going to be perfect in the future, because there’s just way too many opportunities for COVID slash interest rates being [crosstalk 00:30:44] Investment returns are in the United States from the year 2000 to the year 2020 are not at 11% annual returns. They’re not at 13%, like they might’ve been from 99, or from 1990, till 2000.

Ryan Isaac:
Shout out to the nineties. Yep.

Reese Harper:
It’s like, you just are going to have a lot of things that are not, we don’t know. So let’s focus on what you can control and let’s not obsess about it, but let’s get a little bit of an idea. we don’t want to be totally blind, which I think Ryan and I have kind of talked about how we’d like to view that.

Ryan Isaac:
Yeah. There’s two things you mentioned, or two things that come to mind as you’ve talked about, first thing is something you said early on, which is your discussion with the other advisors. And that was about not just giving someone some target number that they’re supposed to save, but what are they supposed to save in context relative to their current situation? So when you say, “Oh, it’s going to be fine. We’re just going to focus on these other things.” I think the tendency to a listener might be, how can you say that, man? I’m really worried, the future. But what you’re saying is if you look at this whole picture of these 12 elements, which encompasses your taxes, and your debt, and your spending and your savings and your insurance and the way you invest money in all these things, if those things are okay relative to today’s situation, it means that if you continue that there’ll be okay in the future relative to your future situation.

Ryan Isaac:
And you’re controlling as much as you possibly can today, which is all you can ask for just control what you can today. Which I think is super important, man. And then the second thing that comes to mind is if you’re looking at a client and their net worth has been trending at 0.5, they’re growing their total term by 0.5 every year. You know their spending, you know their bet worth, you know all the things about them. They’re growing at 0.5 and they’re asking, “Hey, I think I need to go faster. What can I do?” I think that’s a totally fair, call it a projection if you want, you could say, “Well, look, if you just saved another 1500 bucks a month, or we could refinance this loan over here and save a thousand bucks a month in cashflow, then you’d be at a 0.75, or a 0.8.”

Ryan Isaac:
And that makes a meaningful difference over the next 10, 20 years for you. That will put you multiple years sooner assuming we kept going. So it’s kind of cool to just think about the present. If you have enough information and you’re organized enough, you have enough accountability that you can change things now that will affect your future. And then at the same time know when things do change, your spending your income, your debts, whatever, that you’ll revisit it. And you’ll do the same thing in a year, and in five years, and in 10 years, and you’ll do the same thing again when you’re 70, you’ll just always keep checking your situation, like “Where are we at? What’s net worth? What’s spending? What’s coming in?” So [crosstalk 00:33:45]

Reese Harper:
I would say we don’t want to disparage the feeling people are having to want to see the future, but we’re just trying to get you to focus more on the present, because we’re worried that as you focus too much on the future, you’re going to either work too hard or too little right now. We want you to focus right now on the right thing right now, I want you to focus on savings and spending and taxes and debt and liquidity and retirement accounts and practice profitability and real estate. We want you to focus right now on the optimal way to enhance each of these key indicators. And as you focus on that, you’re going to find that your future is going to be way better than if you project the future and let your current self be influenced by that.

Reese Harper:
It’d be like, knowing what time you needed to complete the race, you’re going to go run this Olympic race. If you were given the time that you knew you had to beat, you would only run just slightly to do less than that time. And if we knew the exact number you needed to retire comfortably based on COVID, and future, and interest rates, and projections on your spending and all these variables. If we knew that, precisely, we could tell you the precise minimum amount you needed to achieve, but we don’t. This is a race with no exact predetermined time to complete.

Reese Harper:
There’s an unknown time that we have to achieve. And all we know is that if we get up every morning, and train, and if we have a good diet and we go through our routine, and we push really hard and we train effectively, like we’re going to optimize our chance to having the best time. But we aren’t given this race completion time. It’s not handed to us in financial planning. And I think that we have to just continue to focus on our routines, focus on our preparation, focus on our training, focus on the things that matter right now, and make sure our financial advisors are also focused on that. They’re not just like painting a rosy picture about the future, but they’re helping us up our game for today.

Ryan Isaac:
Awesome, cool. Invitation to everyone listening. And thanks for listening. Thanks for being with us today would be, if you, if this discussion leaves you feeling like, “Oh, there’s probably things I could improve. I wish I was a little bit more organized, I wish somebody was looking at all these moving pieces so that I am maximizing all my effort today, so my future self is going to be okay”, then let’s have a chat. Give us a call, go to dentisadvisers.com, click the book, free consultation button, and schedule a time to chat with one of our advisors. If you have a question you want to just shout out to us, go to dentistadvisors.com/group. That’s the Facebook group, very civil, nice group of human beings in there with lots of good answers and post a question there. We’ll get in there, and answer it, and maybe even use it for a future episode. So again, thanks for the support. Thanks for listening. We really appreciate it. Thanks for being here, and Reese, gracias for all the wisdom and we’ll catch you next time.

Reese Harper:
Carry on.

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