Combatting Popular Excuses For Poor Financial Decision-Making

Very often, we see people who know that the financial decisions that they’re making aren’t the best decisions, but they try to create excuses or explanations for why they’re doing what they’re doing. Let’s talk about why these excuses usually don’t hold water.

 

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Transcript: 

 

Marc Killian:

Very often we see people who know that the financial decisions that they're making aren't the best decisions, but they try to create excuses to explain why they do what they do. So, let's talk about that this week here on Plan With The Tax Man. Hey, everybody. Welcome into the podcast. Tony, myself, here to talk investing, finance, and retirement. Tony and myself. I don't know why I can't talk this week. To have a conversation about popular excuses for poor financial decision-making. And really, Tony, I've just got five basic questions here. Look, we're all really good at saying, "Well, I did this because of that." and sometimes we know it's a bunch of BS, that we're just throwing some junk out there, because we didn't think it through or we rushed to a decision. And certainly, that's part of life. It's part of being human. But, when it comes to the financial stuff, especially as we're getting closer to retirement, we really don't want to be making excuses for bad decisions, because we don't really have the time to fix these bad decisions. So, let's maybe try to get it right the first time.

Tony Mauro:

Okay. Yeah. I agree with it.

Marc Killian:

That makes sense? It makes your job easier, too, when we can get it right the first time, because it makes it easier for you to build that plan for us. So, let's talk about a few places where we might get this wrong and make an excuse. And obviously, we're going to start with social security, clearly. The whole turning it on at 62 thing, the excuse being, "I want to get it back before it's gone," Or whatever thing you want to grab onto, other than just saying, "I truly need the money, and that's why I'm turning it on." Okay, that's a valid reason. But just saying, "They owe me. It's mine. Whatever. I'm turning it on." Well, fine, but you could be costing yourself a ton of money, if you do that.

Tony Mauro:

A ton of money. The other excuse that goes along with that is they're going broke. They won't get it. Blah. Blah. Blah. And I just had an email this morning from a tax client, asking this very question. And his email went, "My wife is 67. We're thinking about waiting until 70. I've asked different people. They all give me different answers." Of course they do. And they want to know about when they should take it. Now, most people at the younger ages, they may want the money. That's a valid reason, and there's all kinds of things that go into it.

But what I can say from a financial planning standpoint is ... And we have this and we utilize this for our clients, and your advisor should have this, is there is some sophisticated software that we can run and punch numbers in to show you basically, "Here's what you're going to get over your lifetime if you take it at 62. Full retirement, age 70, whatever you want." And show you how long it takes to break even, because that's most of the time what you're asking, is, "How long do I have to live to break even and actually come out ahead?" And there's a lot of factors, and there's no wrong answer. But, don't just rush to take it at 62, because you think that you're going to get the government. You're going to show them.

Marc Killian:

"I'm going to stick it to the man."

Tony Mauro:

And start taking the money.

Marc Killian:

Yeah, "I'm going to stick it to them." Yeah. No. And you're sticking it to yourself if you do this wrong. Right?

Tony Mauro:

You're sti