Episode 26 — The Four Elements of a Well-Rounded Financial Workout

We take care of our physical health by stretching and building stamina, strength, and stability. But did you know that there are tremendous benefits to applying these actions to our dollars?

Today, Danielle Howard builds off of the four S’s of physical health and looks at how we can exercise the same principles in our financial lives to boost our potential for success as we build our version of true prosperity.

In this episode, you’ll learn:

  • How we can strengthen our dollars with intention and mindfulness
  • About different tools that can help you stretch your dollars
  • Why longer life expectancy makes it more important than ever to have financial stamina
  • The importance of re-assessing your risk tolerance in your fall season
  • And more!

Tune in now to learn how you can exercise your dollars for a strong financial fall season!

 

 

[00:00:02] Welcome to the Wealth Done Differently Retirement Podcast. Danielle Howard a certified financial planner shares insight into the financial tools techniques and temperaments needed to make the most of your retirement dollars and relationships. Danielle bridges the gap between Wall Street and Main Street bringing complex financial topics down to earth. Danielle will educate and inspire you as you define and refine your version of prosperity.

[00:00:35] Hello and welcome to Wealth Done Differently Retirement with Danielle Howard a Certified Financial Planner. I’m so excited Danielle sent me some notes ahead of this podcast and the main thing on this notes is we’re covering the four elements of a well rounded financial workout. I’m excited to get started. Danielle how are you today?

[00:00:52] I’m doing well thank you Aric.

[00:00:55] This ties in beautifully with our last podcast I know that you had Amanda on as a guest and she really talked a lot about health and well-being and some physical exercises and stretching and things and so kind of really works right into today’s topic of a financial workout.

[00:01:11] Exactly that was that was the point we wanted to look at the physical aspects with strengthening your muscle building with how do you build endurance.

[00:01:22] How do you create flexibility. How do you build stamina and stability.

[00:01:28] And if we can look at that in our physical life and draw some corollaries. Have you notice that things are changing as we age a little bit?

[00:01:41] It’s it’s funny you bring that up earlier in 2019.

[00:01:45] I know you know this we had some serious flooding in my area of the country and in Nebraska specifically and I chose a day to take off of work and go work with a wonderful group called eight days of hope that comes in and helps families clean up their properties. And we worked a full day and I’ll tell you what Danielle I was I haven’t been that sort a long time. It was hard physical work and I’m looking at these guys that do this on a consistent basis and in my 20s I did hard physical work because that was the job I had and it was wasn’t a problem. But it took me a good two days to recover. I’m glad I did it on a Friday so I had the weekend to recover. My goodness yes some things have changed.

[00:02:24] Definitely. Yeah whether it’s our physical life or our financial life things things change.

[00:02:31] I’ve been in this business for over 25 years and what I see is it is growingly increasingly complex. And as people transition into this idea of retirement and not creating distributions dreams are creating income from different areas. They get frustrated with whether it’s the terminology whether it what’s going on in Wall Street or how the markets work. And I think they get also just consumed with day to day life. And we can tend to just acquiesce to status quo at that traditional idea of retirement and just as Amanda talked about the need to be intentional and mindful even more so as we age to our physical needs to the way we want to stay strong and build muscle and keep up our stamina that we need to do it with our financial life also. I agree. Yet it has served me really well over the years and to to create financial analogies or comparisons with saying you said people do kind of relate to and that’s what I really appreciate about having a Amanda and having the conversation around what does it take to be intentional mindful around our physical life. So today what we’re going to talk about is some of those corollaries in our financial life with our physical life and how we might want to exercise our financial tools to optimize the potential for success in building your version of true prosperity.

[00:04:21] Fantastic. Have you ever thought about your physical life as a metaphor for your financial life.

[00:04:28] It’s funny you ask that because I actually have thought I don’t know if it’s what you would call a metaphor but I always thought of it this way. The reason like I had a very labor intensive job when I was 20 21 25 is because I didn’t have the money that we needed. And that’s the job that I could get at that time I didn’t have the experience or education that I do now. So it’s kind of interesting as my finances have increased my level of activity has decreased. So that’s probably a bad thing. And I did take notes from that last podcast with Amanda. Just making sure that you know we’re moving more in the proper stretching and things like that. Man this is probably some pretty good stuff. And yeah I should stop buying new office chairs and just get rid of my chairs altogether and start streaming for everything. I think that’s probably a good idea.

[00:05:17] Well we have one of those standup desks and they say you’re not supposed to stand up all the time but it’s that combination of standing and sitting in one of those kneeling chairs.

[00:05:27] Like you said with your wife at the yoga ball just that continuous. How can we move a little bit more. His we’re spending way too much time behind the computer or looking at our cell phones or watching TV and you know we acquiesce to the status quo. We move towards what is easy. Whether it’s with our physical life or with our financial life. And as we you know want to look at these corollaries with our physical life and how they change as we move into you know the traditional whether you are currently retired or whether you’re thinking about what this season of life is going to look like for you. I just think we have to be you know more intentional and more deliberate about what we want it to mean to us. Instead of just now sitting back on the couch or you know deciding that I’m going to garden or you know what brings meaning and purpose into your life and how do you use your financial tools to be the wind in the sails to take you where you want to go. As we look at the four elements of the physical life where we talked about with Amanda how do you want to strengthen you know build muscle keep your that muscle tone in place as much as possible. We have to combat it. It just goes away if you don’t proactively stay engaged and do things that are going to build that muscle tone. Same thing with with stretching creating that flexibility. She talked about you know that just bending you know that flexibility should just be able to bend without breaking and the idea of doing just staying movement. And then after exercise really holding the stretches to lengthen muscles. How do we look at that stamina. You know that endurance for the long haul and stability maintaining balance when we get thrown off guard. All of these areas are replicated in our financial life whether it is in our mindsets around money whether it’s in the tools the financial tools that we’re using or how to access these tools. And I thought it’d be fun to appeal it apart and look at you know these four different areas and how they apply to our financial life.

[00:08:03] Let’s do it. All right. So strength training.

[00:08:06] So as we look at strength training as a part of your physical workout that that’s going to help you maintain the optimal net weight helps you build that muscle mass increases your energy level and improves your mood.

[00:08:21] I think it’s time to strengthen our dollar decisions especially in this season of life when you might be turning off that income stream from the traditional work world and looking at how it’s going to come in in other ways.

[00:08:38] And we need to look at how to strengthen the other areas of our financial decision making processes.

[00:08:47] And this may be around telling your money where to go instead of asking where it went. It is more important. I hear this a lot from clients as they come in and they’re looking at this transition. We’ve never really had a spending plan. We never really had a budget that changes that may just just I encourage people to do it. Whether you have all the money in the world becoming intentional about how you want to spend your money use your money as a reflection of what’s truly important to you. I think as you look at the retirement years you may have a little bit more time to make these decisions. You may be able to have deeper richer conversations with the, whether it’s a spouse or a family member or those who are impacted by your financial decisions. I just encourage my listeners to take a look at what it would look like to create a spending plan so they can be more intentional about how they’re using their money and strengthen their financial decisions in the retirement years. If you’re asking yourself the question is this soul need or an ego desire. You know many times as we’re in the accumulation phase and there might be more money in our lives. You just make decisions. It’s a push of a button or a click of a click of your phone or you know we get distracted with why we’re making these decisions and now we have a season of life where it’s more important that we ask ourselves the questions just because we can. Should we. Does this financial decision really align with what’s truly important to me. These are the areas that I think we can strengthen whether it’s our conversations or strengthen the durability of our financial portfolios. A lot of it is about making cash flow decisions.

[00:10:51] And I know you’ve really stressed communication as a huge piece of this and that’s great but how do you encourage people to begin the communication.

[00:11:03] I think you know along the same line as our physical strength training it requires discipline.

[00:11:09] So is it putting a date on the calendar that you guys you know you and your significant other going to sit down and maybe talk about your financial decisions. The estates where everything is at.

[00:11:22] How is it looking.

[00:11:23] You know what changes do we need to make maybe pushing past your comfort zone a little bit in that maybe talking about money hasn’t really been a big thing and you know the work years it’s just been you know fast paced and let’s rock n roll let’s build up as much as we can. And oh my gosh. Now we have to look at each other and have conversations. I think it is a consistency you know set that periodic time my husband and I do it quarterly you know where we kind of sit down and go how is the cash flow going or are there any big decisions we need to make sure or as needed.

[00:12:05] We had a you know a situation last night with one of our children that came up and were having to have a conversation about you know possible assistance that is being requested and you know just making it an intentional and mindful and that it’s okay to talk about this stuff. It’s okay to enter into it at a good time of the week. It’s not something you do on the fly when you’re out of your busy and maybe not in the best of moods.

[00:12:38] Absolutely. Good communication is, It’s a muscle but you’ve got to exercise it you’ve got to start slowly lose that doesn’t mean absolutely you start slowly stretch it out a little bit and as you get more comfortable you’re going to do it more often and it’s going to be easier and easier and easier.

[00:12:53] So that makes perfect sense. It’s great.

[00:12:57] I think it’s also important to you know build your muscle and your savings whether it’s your basic traditional savings account or your 401k or IRA your home equity. You know and you want to do that by you know minimizing the debt that you have out there you have if you have consumer debt.

[00:13:16] What do you want to do to consistently knock that out and get rid of it and not get back into it in the future. If you’ve got home equity. Yeah how are you building and how are you going to use that equity down the road for you know your future cash flow needs or do you want to. All of the tools that you have out there you’re gonna optimize your financial health and your fiscal outlook. If you look at how can I strengthen the financial tools I have minimized the liabilities that are out there and create that awareness of how to utilize each one of these financial tools properly.

[00:14:00] Absolutely. You know you’re going to create income streams from different pockets. I know based on liquidity or legacy needs.

[00:14:12] And you know as we look at doing that strength training understanding what the current tax environment is and making sure that you’re properly positioned to take advantage of utilizing your financial tools given the current tax brackets. So for example if you want to leave money to family you know it’s not ideal to leave your IRAs or qualified plans because it gets taxed as ordinary income to them. Because we’re in low tax brackets right now. You may want to look at a Roth conversion or you may want to be pulling more than your required minimum distribution out for your current cash flow. This would strengthen what you’re going to be able to leave if you have a legacy goal for your family members.

[00:15:03] Gotcha. Now Danielle I have heard of a stretch Ira. Is that something you can explain to us.

[00:15:10] OK so yeah as we look at at stretching it if creating flexibility with your financial resources a stretch IRA can be either a Roth IRA or a traditional IRA.

[00:15:23] It is a way to leave money if you by chance have to leave your IRAs to family members. It is a way for them to take an income stream off of that IRA for their lifetime. So you’re maintaining the tax efficiency the tax sheltering of that tool for as long as they live and what they would be required to pull out of that account would be based on their age. You know again there’s a lot of moving parts with this. Many times as somebody inherits an IRA. They just cash it out well if you cash out a large IRA traditional IRA it could push you into a really high tax bracket you could end up paying a lot of that out in taxes. You know so for everybody to look at you know if you do inherit a traditional IRA to look at how you want to have that provide an income stream for you over your lifetime and this is a non spousal IRA. With wealth Roth IRAs those come to you tax deferred anyway but to set up a stretch just means that you would be getting income you know a little bit of an income stream for your entire life which can be a nice little kind of like an annuitization got it.

[00:16:51] Ok that makes a lot of sense. It’s it sounds like a pretty valuable tool.

[00:16:56] You know and I don’t think a lot of people understand you know the idea of how you get tax or getting an inherited IRA and what your options are. So make sure you are seeking wise counsel before you start and decide to take a distribution what your personal situation is what’s going to serve you best based on your desire to stretch or to be flexible. When we’re talking about stretching and flexibility. I think there’s also that idea with our financial tools you want to know when to create an awareness of what you have where it’s at. To understand what’s the best tool to use for that liquidity needs or to create that longevity.

[00:17:44] You know what are the best tools to get you through your entire life without running out of money.

[00:17:50] So individualized like you said somebody needs to seek out a professional. But for every situation there’s a combination of tools that can be used to really fit the specific need and to stretch the dollar and to strengthen the dollar and all the things that we’re talking about today make their financial future more stable.

[00:18:09] Right now if we look at stamina you know that to create that stamina to push you through for the long haul.

[00:18:19] This is where I look at you know that we keep hearing well 70 is the new 60 or 80 is the new 70 and that means that we’re staying physically more active we’re living longer but we don’t hear a lot about how are you going to make your finances last longer. And that’s really really important. Knowing that there’s going to be the go go years when you might want to be traveling and visiting family and then there’s the Slow go years and then you’re going to move into the nogo years which actually can get more expensive because of the healthcare and longterm care. And I think it’s vitally important that people understand that they need to create lasting power with their financial tools no matter what you have. You may have a lot or you may have a little. And by getting really creative and understanding how to best use these tools given taxi efficiencies give and you know current market environments. Given your personal needs that you can really push the opportunity for your portfolios to last longer and accomplish what you’re trying to get out of life.

[00:19:41] Yeah absolutely. And you’ve joked before in the past on past podcasts about somebody wanting to write that last check as a slide into home and let it bounce. You know we’re OK just running out of money. But again nobody knows when that day is. And again if you’ve got a little bit and you need it to last a long time there’s a very specific strategy in you. You may be living frugally for the rest of your life which is there’s nothing wrong with but that’s your situation. There may be somebody else who has a bit more saved up but still it has to last the entire time and they may want to do more travel or they may want to have a different lifestyle than living frugal the entire time.

[00:20:20] How do you help somebody find out kind of what box they fit into or what path they should be on? You know it’s taking every individual situation and pulling it apart. It’s the onion.

[00:20:34] I sit here on the Roaring Fork River and as I look at the clients I serve most of them maybe have more financial resources to be wise about. And we’re in spring and the water. The runoff is happening and just because there’s a lot of water doesn’t mean you just let it flow just because you have water coming through your faucets at home doesn’t mean you just leave the faucets open and let it run. We talk about being a wise with our with our water we want to do the same thing with our finances. And I think it is harder as you have more financial resources to do it wisely. So to look at you know how to best utilize your you know take from Social Security or use the you know if you have annuities or you have real estate income coming in or pensions. Yeah understandings are what we want to do is we want to create an awareness of where all the tools you have and we want to understand what is important to you about creating that you know strengthening you know creating that stamina and that stability and understanding who you are around your financial life and what’s truly important to you. Before we set to the task of utilizing all of those different financial tools. Amanda talked about it last week and kind of talked about doing assessments. You know you want to get to know your physical. Have you had injuries. Are there areas that you want to specifically focus on strengthening. Who are you. What is your physical life look like. We do the same thing with the financial context. Is look at who you are with your money. And then we help you to understand the financial tools that you have and utilize maybe some techniques and look at your temperaments around or around money to maximize your life potential and that the last piece of what we were talking about today was stability.

[00:22:49] That’s the last piece she brought up and. And when you were speaking with Amanda and she was talking a lot about this she brought up balance and that’s kind of what I think of is balance when I think of stability. And it fits right in with the financial side too. So I’ve heard about rebalancing your portfolio.

[00:23:03] What are your thoughts about that? Many times when you’re in the accumulation phase and you were given a risk assessment and you’d say a boy and I have a longtime till I’m going to retire so I can afford to be you know go for it and be risky I have time to recover.

[00:23:20] What I see happening is people get closer to the retirement years they haven’t looked at their capacity to take risks or their comfort level with taking risks. And that changes.  So you want to look at what needs to be rebalanced in not only your investment portfolio but it may be you know other financial assets that you have out there. When do you want to utilize a you know a savings account. If we come into a market correction or a drawdown the season in the markets where you know instead of taking money out of your investment portfolio you might want to take it out of a savings account. So how do you balance out all of the different financial tools you have to make sure that they are you know serving you and giving you that stability for the for the long term.

[00:24:20] When I look at you know the income that’s coming in we want to minimize it’s called sequence risk and that is when you take money out of a portfolio an investment portfolio whether it’s your IRA or you know non-qualified investment and the market has pulled back and you may not have rebalanced to have your proper allocation of bonds in alternatives and equities. And if you have to be pulling money out for your cashflow and living expenses and the market pulls back 50 percent you need to make 100 percent just to get back to break even if you’re pulling money out when the market is down. It makes it even harder to get that kind of recovery. So in order to minimise your sequence risk we’re going to look at where could we pull income from and not tap into your investments. And this is again it’s back to that stability but we’re also focused on on balancing out where you have different buckets to take income from. And what is the proper spigot to be turned on.

[00:25:39] Given our market environment or your cash flow needs. Got it.  Aric when we talk to him and as she talked about having a coach and I know you are a coach and have probably been coached how have you benefited from that relationship.

[00:25:58] Oh tremendously. The basics for me when I look for somebody as a coach or a mentor is I need accountability. That’s number one I need accountability to stay on track with what I’m doing, of what I want to get accomplished. And the other piece that I think is so powerful is that a coach helps me remove the emotion from it from whatever it is whether it’s a decision for a business decision for business decision in my finances if I’m going to invest in something or I’m going to start another piece of the company. I’ve utilized a lot of my a lot of people but a lot coach many many times and I have a couple that I use once more to mentor than one was more of a coach. But yeah it helps to have a sounding board to be able to remove the emotion to be able to say okay what what are the true factors here in this decision let’s look at it let’s do it and then once we make a decision or once I’ve made my final decision then the accountability piece really kicks in with. All right let me help keep you on track with that.

[00:27:01] Yep yep. And you know as Amanda talked about you now helping people create that awareness of themselves and educating them and maybe inspiring them or empowering them to understand not only their mindsets but in the financial realm educate them to the tools they have and how to best utilize them. So yeah the same thing about going to the gym I look at some of the equipment they have and I have absolutely no doubt that if I started yanking on some of that in certain ways that I would totally hurt myself.

[00:27:43] Yup me too.

[00:27:44] And it’s the same with some of these financial tools and equipment that’s out there. They’re complex and you want to make sure you understand how they can be working for you and how they fit into your particular life situation. This is where I think you know it’s great when you’ve got you know there’s a whole bunch of folks that you can listen to out on the you know audio visual whatever hey listen to a bunch of people out there talk about you know finances but applying it to your personal life. I think when you get to a point of moving towards the income stream that income flow that requirement refire met reassignment season of life that the accountability the support the education is all the more important to make sure that you’re strengthening that you’re building stamina that you’re in it for the long haul that you are creating that stability in your financial life. All of these things that we’re looking at is really really important. I just want to encourage my listeners you know there’s a lot of really good financial life advisors out there. I’d like to include myself in that realm. But find somebody who is going to get to know you your life situation and put all of the financial tools you have out on the table not just the investment piece. But get creative with you and talk to you about income streams from different areas or how to best use the tools that you got to help you you know create the wind beneath your sails.

[00:29:34] It’s so important that you have somebody the relationship right in that that’s one of the key pieces. I had a coach back when I was in high school. He helped me to attain my highest squat. That was I was going after you know squatting and really want to do a lot of legwork. And I got to my maximum of 460 pounds. Wow that’s great yeah. I was very active back then with a lot of different sports. Today

[00:29:57] I don’t need a squat four hundred sixty pounds nor do I want to. You know I want to be strong but I need a coach that knows me now. I need a coach that understands what I want now and what I want in 3, 5, 10, 20 years. What my goals are and they can walk beside me and help me to build the plan that is best for me because if I have a coach come in and tell me all right we’re going to get you to 460 lb squatting. No I. I’d really like to be able to run more than you know three blocks without being winded. How about we start there right.

[00:30:30] You know me so dealing with life transition. Now whether yes. Amanda talked about when you’re injured or when something happens you can have goals you can have physical goals you know financial goals and then life happens. So who is going to walk alongside you in those transitory periods when life doesn’t go the way we thought it was gonna go and help you make decisions hold you accountable give you that support now find that person out there for you and if you want to give me a call 9 7 0 9 2 7 3 9 0 9 you can talk to Molly. You can check us out on WWW.wealthbydesgin4U.com. I also have an e course a retirement e course that is available at WWW.DanielleHoward4u.com. Lots of educational opportunities and empowerment and just that encouragement to do your dollars differently. You’re in a new season. We have a lot of years ahead of us and we want to make the most of it.

[00:31:44] Amen to that. Absolutely. Thank you Danielle so much for the time today.

[00:31:49] You bet.

[00:31:50] Thank you Aric. And thank you all for listening to the Wealth Done Differently retirement podcast with Danielle Howard. Listen here’s the thing. Danielle is an amazing and I’ll just say it. She’s a coach. She she is definitely a coach. She can definitely be fit that mentor role. More More importantly she is someone that is easy to have a relationship with and that’s the point of of anybody that’s going to come alongside you with this next season of your life this transition or just looking at the future. They need to know who you are. And she takes the time to do that. So please reach out to her. She gave the number she gave the email address. The website. Go for it. Check it out and also subscribe to this podcast. The buttons right down there below at the bottom. Press it subscribe. Listen to more that she has to say when she comes out with a new podcast little shop directly on your listening device. And this makes it easy to share with your friends and family have a couple of you. It’s just like like working out together get your financial houses in order together so you can spend the next 10 20 30 years together. And having a great relationship being able to have the things that you need when you need them at all times. And Danielle can help both of you or all of you whoever you share this podcast with and we would appreciate it again. Thanks for today for everyone at Wealth Done Differently retirement. This is Aric Johnson reminding you to live your best day, every day. And we’ll see you next time.

[00:33:10] Thank you for listening to the Wealth Done Differently Retirement Podcast click the subscribe button below to be notified when new episodes become available. The information covered and posted represents the views and opinions of the guest and does not necessarily represent the views or opinions of Wealth by Design LLC. The content has been made available for informational and educational purposes only. The content is not intended to be a substitute for professional investing advice.  Always seek the advice of your financial adviser or other qualified service provider with any questions you may have regarding your investment planning. Danielle Howard, Certified Financial Planner

is an investment adviser representative of Cambridge Investment Research Advisors a registered investment adviser. Securities offered through Cambridge investment research Inc.

A broker dealer member FINRA SIPC Cambridge and wealth by design LLC are not affiliated.

 

 

 

 

 

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