Episode Summary:
Andrew shares the tragic story that changed his career: a couple delayed retirement until reaching a financial milestone, only for the wife to pass away before they could enjoy it. This moment reshaped his mission from managing money to helping people retire with confidence. He breaks down the three pillars of financial planning, explains how small spending habits reflect deeper priorities, and offers strategies that help clients shift from fear to freedom. He also challenges conventional advice on Social Security and urges listeners to take action, not just make plans.
About the Guest:
Andrew LaFontain began as a CPA at a Big Five firm before transitioning to financial planning over 20 years ago. Based in Wisconsin, he works with clients nationwide and authored the Amazon bestseller "Beyond Enough."
Key Concepts Explained:
The Three Pillars of Financial Planning:
- Resource Allocation – Managing money, time, and energy
- Retirement Income – Replacing your paycheck post-career
- Risk Management – Protecting against disruptions
True planning must address all three; focusing on one weakens the whole strategy.
Beyond Enough Philosophy:
Most people want to leave a legacy, but hesitate until they feel secure. Confidence enables generosity, purpose, and freedom to live meaningfully.
Henry & Ava’s Story:
Despite having enough, Henry delayed retirement for a $2M goal. When they reached it, Ava passed away. They never fulfilled their dreams—not from lack of money, but lack of confidence.
Practical Strategies:
The $1,000 Rule:
Cutting $1,000/month reduces retirement needs by ~$300,000 (4% rule). If invested over 15 years at 8%, it grows to over $129,000—boosting both savings and flexibility.
The Pizza Story:
Andrew’s family spent $6,000/year on pizza—a surprise revealed during a spending review. It’s a light-hearted example of how small, unconscious habits add up.
Three-Bucket Retirement System:
- Bucket 1: 1–3 years of cash for near-term needs
- Bucket 2: Mid-term investments to refill Bucket 1
- Bucket 3: Long-term growth for legacy or care
This system cushions clients from market swings and supports steady income.
Qualified Charitable Distributions (QCDs):
After age 70½, people can donate directly from IRAs to charities, tax-free. It’s a simple, underused way to increase impact without increasing out-of-pocket costs.
Challenging Conventional Wisdom:
Social Security Timing:
Waiting until 70 isn’t always best. Andrew shares a case where retiring at full retirement age gave a couple three extra years together—time they couldn’t reclaim by waiting.
Why Financial Plans Collect Dust:
Most plans fail not because they’re wrong—but because no one follows through. Andrew stresses the role of accountability: advisors, spouses, mentors who help ensure action.
Taking Action:
Confidence comes from clarity—and clarity requires action. Andrew urges listeners to reflect on their values, realign spending with purpose, and take the first step toward impact.
Connect with Andrew:
• Book: Beyond Enough (on Amazon)
• LinkedIn: Andrew LaFontain (Brookfield, Wisconsin)
“The goal isn’t just retirement—it’s confidence. When you have it, you stop delaying and start making the impact you were meant for.”
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
What if I told you that right now, somewhere in
America, there's a successfulcouple staring at their
seven-figure portfolio, knowingthey could retire tomorrow, but
convinced they need to work justthree more years?
And what if I told you thatdecision, that seemingly prudent
, responsible decision, might bethe biggest mistake of their
(00:20):
life?
Our guest today carries theweight of watching this exact
scenario play out, withdevastating consequences, and it
transformed everything abouthow he approaches financial
planning.
Andrew LaFontaine traded apromising career as a CPA with a
big five firm for something farmore meaningful helping
individuals and families findnot just financial security but
(00:43):
the confidence to actually enjoyit.
After 20 years in the trenchesof financial planning, he's
distilled his hard-won wisdominto Beyond Enough, a guide to
financial confidence andmeaningful impact.
Andrew LaFontaine, how are youdoing?
(01:07):
I'm doing well.
Paul, how about you?
I'm doing great.
Congratulations on the Amazonbestseller.
Speaker 2 (01:13):
Thank you.
Thank you, that was quite ajourney.
Yeah, it was humbling, it wasgreat.
We were very proud of the bookwe put out and it was gratifying
to some of the comments and theresults.
Speaker 1 (01:22):
So I appreciate that Definitely.
In today's interview we'regoing to dive into your new book
, which I'm holding here in myhands Beyond Enough A Guide to
Financial Confidence andMeaningful Impact and I love the
cover of it, so if someonelistening can't see it, but it's
a great book.
It's on Amazon now number onebestseller and I just want to
(01:42):
dive into just a little bitabout your background and then
just start talking about some ofthe concepts that you talked
about in the book, so people canget to know both you as well as
, essentially, the message ofthe book.
Tell me a little bit about yourbackground and, as I understand
it, you started out as anaccountant and today you're a
financial planner.
What was that transition like?
What led you from one to theother?
Speaker 2 (02:03):
Yeah, so, like you said, I started in accounting.
I actually started with a bigfive public accounting firm and
when I went to school I reallyI've always enjoyed numbers,
because with numbers I feel likethere's always an answer.
And one of my professors atschool he said if you understand
the numbers, you understandaccounting, then you understand
the language of business, andthat really appealed to me.
Okay, I want to do that andgotten on my career.
I'm on the audit side with apublic accounting firm and so
(02:25):
we're helping very largecompanies be a little more
efficient and make a little moremoney, which, believe it or not
, is not as gratifying as itsounds.
When I did some self-reflectionon what do I really want to do
for a career Like where do Iwant to have my impact, and I
thought if I can help peoplemake good decisions, good
financial decisions, that wouldbe a satisfying career path.
At the time I was looking atsomething to do at the time
(02:45):
mortgages or I could go thefinancial planning route.
I felt going the financialplanning route would allow us to
help people in more areas andwe haven't looked back.
It's been a little over 20years.
I'm extremely grateful that Iwas able to make that transition
into financial planning.
Speaker 1 (02:58):
Very cool.
You've been a financial plannerfor around 20 years now, and so
what inspired you at this?
Speaker 2 (03:08):
point in time to write your book beyond enough.
Yeah, really, I'd say it's twothings.
One, I got to give all creditto my wife for inspiring the
book, okay.
And so we do a lot of.
We do a lot of work in thecommunity to trade shows.
We talked to a lot of peopleand over the years she's heard
me talk about the differentstories of clients we've worked
with or helped or folks we'vetalked to that maybe we didn't
help or couldn't help.
(03:28):
And over the course of the last20 years, we noticed some
consistent themes around peoplemaking mistakes not only people,
but also advisors of peoplethat had advisors.
And so, as we really looked atit, we came to the general
premise that I really, trulybelieve that everybody wants to
have some kind of impact greaterthan themselves, right, whether
that's on the church, theircommunity, their family,
(03:53):
whatever it is.
That's individual for everybody, right.
But before they can actuallyhave that impact, they need to
feel comfortable or confidentthat they are doing or have
enough to meet or satisfy theirfinancial goals.
And if they don't feel that way, they don't have the confidence
necessary to move forward tohave that impact.
And so the book was inspired bymy wife saying, hey, you tell
these stories, you should gowrite a book.
And as we reflect and I go, ifI'm going to write a book, what
is the message we want to getacross?
And the message is one ofhaving impact, to be able to do
(04:15):
things bigger, better andgreater than yourself.
And I got to be honest thewriting a book.
The reason I never did it is Idon't like writing.
So I appreciate my wife pushedme in that direction.
I give her all the credit forreally inspiring and making that
happen, so I'm very grateful.
Speaker 1 (04:29):
Yeah, definitely.
And just so I understand that,and just so both I and our
audience understands it clearly,what I understand you to mean
is that retirement and havingenough is one of those things
that we never know ourexpiration date, and so we can
have a million in the bank orinvestments, or we could have 2
million, but because the futureis inherently unpredictable in
(04:52):
terms of when we're going topass, it's challenging to know.
Do I have enough?
And the number one fear, as Iunderstand it, for people is
running out of money.
Is that the core issue thatyou're describing, or is there
something else to it?
I think that's part of it.
Okay, I think that's part of it.
Speaker 2 (05:04):
Is that the core issue that you're describing or
is there something else to it?
I think that's part of it.
I think that's part of it.
I think what it comes down tois having the financial
confidence now, because there isno crystal ball, you don't have
an expiration date.
I don't have an expiration dateand realize I can't take it
with me, I can't impact that.
What I can impact is what I amdoing now and what are the
impact on my actions and mydecisions now.
And so if I'm comfortable thatI'm doing the right things
saving enough, have enough ifI'm retired, have a good plan on
(05:27):
income then I can actually havea greater impact Again, meaning
we're only here temporarily,right, I have to be a good
steward of the gifts I've beengiven, and so I want to be able
to say, okay, I feel comfortableand confident in what I'm doing
right now.
And if I'm confident in that,then I can more freely give
myself whether it's time, energy, effort, money to wherever
where I want my impact to be.
So my impact needs might bedifferent than yours, right,
(05:48):
like I want to give to thechurch charities I support,
which would be different fromwhat you or somebody else may
support, but the consistenttheme there is you will not do
the extra if you haven't donethe basics, if you don't have
enough.
Speaker 1 (05:58):
It's almost like the airline analogy of when the
oxygen masks come down, you wantto put it on yourself before
you put it on someone else, justso that you're confident and
you can help people better.
Oh, that's a great one.
Yes, exactly, in the book youtell a story and the characters
in the book and I'm sure thatthe names have been changed to
protect people and all that goodstuff is about Henry and Ava.
(06:20):
Tell us about that story.
Speaker 2 (06:22):
Let me set that up a little bit, so that one was
about having financialcompetence at the time.
So Henry and Ava, they werelate sixties and they wanted to
retire her more than him,actually.
And so at the time I wasworking more of a consulting
role.
So I would work with advisorsto help them do their retirement
plans.
So they'd bring this stuff tous and we would look at so
here's what they can do, here'swhat they should do.
And so every year this advisorteam comes to us.
(06:43):
We look at Henry and Ava'sretirement plan.
And they could retire, they hadenough, and they had all these
dreams or all these things theywere going to do in retirement.
They wanted to travel, theywanted to spend time with their
grandkids, they wanted to bemore involved in their church.
All this they did.
All these beautiful plans,beautiful plans, he said when I
have $2 million, then I feellike I'm good, then I can retire
.
Reality is he could retire onsignificantly less than that,
(07:06):
but that was the number hewanted.
Every year we tell theseadvisors hey, this guy can
retire, they should retire, go,spend time with the grandkids,
go do the trick, go All thesedreams, right, yeah.
And so you fast forward fouryears later and the attorney
ever coming.
This is the year, here we go.
This guy's going to retire andhe doesn't show up for his
meeting and he doesn't calleither.
And so typically, when somebodydoes like a no show, no call,
(07:28):
like you did something wrong orsomething happened right, and so
I told these guys, I don't know, you might be getting fired, I
don't know, what'd you do,what'd you do?
Passed away suddenlyunexpectedly.
And so for me I'll tell you,paul, that was a perspective
shift for me from a career pointof view.
(07:49):
When I looked at that I thought, man, if they'd been my clients
.
I feel like I could have giventhem the confidence necessary to
actually retire and thetrajectory of their life would
have been much, much different.
So all the dreams they had, allthe things they want to do
together, now they couldn't doit because they didn't have
enough.
It's because they didn't havethe confidence necessary to make
the decision to retire.
And so at that point, againfrom a career perspective,
(08:10):
that's when I shifted my focusto actually working with clients
again and I'll be honest, likeHenry, he didn't make it too
much farther past that.
I know it was sad, but it's anexample of sometimes it's more
than just the numbers.
It's about having theconfidence necessary to make the
decision.
Speaker 1 (08:24):
And I think that story perfectly captures the
idea.
It's beyond enough, because oryou tell me, how common is that
for people to for a scenariolike that to happen, where just
people don't have thatconfidence?
Speaker 2 (08:35):
That's exactly it, and I would say that it happens
more often than you want to hearabout.
People will delay for somearbitrary reason.
It's not because the reason isnot maybe valid in their own
mind.
It certainly is.
People have their own reasonsfor what they do.
However, a lot of that delay,procrastination, comes down to
lack of confidence in the plansthey have in place, knowing that
(08:55):
they are going to be okay Ifyou knew for certainty that you
could retire today.
Spend time with your grandkids,spend time with your spouse.
Do all the things you want todo.
Spend time with your grandkids,spend time with your spouse.
Do all the things you want todo If you know for certain that
you could do that, most peoplewould.
But you'll see people stay in ajob that they hate, that
stresses them out, that'sdifficult on them physically
because they are not confidentthat they can actually pull the
trigger on retirement.
(09:15):
So the objective there is togive them the confidence
necessary to be able to makethose decisions and then go on
to do more than just retire,have an impact again, whether
it's on family, church,community, whatever.
Everybody wants more than, orthey should want more than, just
themselves.
Speaker 1 (09:29):
Awesome, great story.
Next question In the book youtalk about three key parts of
financial planning.
I guess this is the quoteunquote secret sauce.
To help people have thatconfidence, tell us about the
three key parts of financialplanning.
Speaker 2 (09:43):
Yeah.
So when we talk about the threekey parts, three pillars of
financial planning, I'll namethem for you.
First, I'll tell you whythey're important.
First one is resourceallocation.
Resource allocation deals withwhat you have now, and that's
not only your financial what youhave, what you're saving, what
you're spending, what you'reinvesting, what's your time,
your energy, your effort theseare all your resources.
Resource allocation how do youspend that time, energy, effort,
(10:04):
money, retirement income Look,when you stop working, you don't
have a paycheck, and so you gotto have a plan on how are you
going to replace that income.
And the third piece is riskmanagement.
Risk management deals with allthe things that could derail a
retirement, and so you have tohave all three.
A lot of times what you'll seeis people will focus on one to
(10:24):
the exclusion of another.
I'll give you an example.
Let's say you walk in, you gotalk to somebody that's solely
focused on risk management.
They may only talk aboutinsurance and not focus on what
are you doing for your otherinvestments or assets, resources
, right?
You go talk to somebody that'ssolely focused on just
investments and managing money.
That's what they're going to befocused on, and so they ignore
other pieces.
(10:44):
So true financial planningreally takes into account all
three.
We had a client that comes in,and so we're not a kind of time
client now and we come in andwe're taking a look at all the
things they have set up.
They're already retired, as Isaid, they're already retired
and they come in and say, okay,now that you're retired, how are
you generating your income?
Because the answer is when Ineed money, I sell some stuff
and I take some money out Fromhis stocks.
Speaker 1 (11:03):
From his investments.
Speaker 2 (11:08):
From his portfolio.
I said okay, so what is yourplan around that?
He said we have a 60-40portfolio.
Is there an actual plan arounddistribution management
resources?
And the answer was no.
He just had a portfolio that hewas selling when he needed to
take money out.
How do we address that?
In that case they were justfocused on one piece the
investments.
Their plan was a 60-40allocation.
That's not a plan.
When we looked at it, the riskyou run I only just want to
cover the risks and so whengenerating a retirement income
plan, the risk he was running ifyou are selling money, if
(11:31):
you're selling investments togenerate your income, the market
goes up and down.
If you're selling into a downmarket, all you do is compound
the declines in your portfolio.
That's a mathematical issue.
So you run the risk of runningout of money because you don't
have a proper retirement incomeplan, because your resources
were not properly allocated.
As we're talking our way throughthis, the guy knew he had a
problem, right what it was.
He knew it didn't feel rightwhat he was doing, but he didn't
(11:53):
know what the issue was or howto fix it.
So the answer in his case and Iknow we'll talk about this a
little bit later on is we lookedat what he needed to spend and
then we allocated some of hisresources, some of his
investments, to very short-termconservative that we could draw
against, so that we didn't haveto worry about market declines.
To get him his money, we set upsystematic payments so we knew
exactly what we were dealingwith and so that eliminated the
(12:14):
risk of selling into a downmarket.
He had a retirement income planand his resources were properly
allocated.
Now there's more to what we didfor him.
But that's an example of makingsure we hit all three of those
pillars.
And but that's an example ofmaking sure we hit all three of
those pillars.
And so the net result is nowthe guy's not worried anymore
about market decline.
He didn't care.
He's out fishing on the lake.
He's not looking at the market.
He's not worried about oh, isthe market down?
Should I sell, should I notsell?
(12:34):
Where do I get my money from?
He's got a plan.
Speaker 1 (12:40):
So now, when he talked's interesting, like just
in the recent volatility we'vehad, I understand these concepts
.
My time horizon for retirementweighs off, so I'm like I want
to buy more.
Speaker 2 (12:51):
And the problem is too, if you focus on one to the
exclusion of others, right, Imean talking about like pillars,
like three pillars that thewhole thing, the whole house,
crumbles.
So you have to take, or youshould take, a holistic view
that encompasses all three.
What are we doing with ourcurrent resources?
How are we generatingretirement income?
And, finally, what risks couldderail us and how do we handle
those risks?
(13:11):
Again, no idea.
Like you said earlier, no one'sgot a crystal ball, I don't got
an expiration date, but I canbe fundamentally sound in terms
of how we view the differentareas.
Speaker 1 (13:18):
And, as part of that, just the confidence you always
hear about the stock market, theroller coaster and just of
course, the news media is gearedtowards trying to scare you
about that.
But my understanding, based onhow you explained it in just the
book, is that really you don'tneed to worry about that.
If you have it properlyallocated, as you described both
now and in the book, you canturn off the news, you can go
(13:39):
fishing, you can do those thingsbecause you have that proper
plan that allows, that, foreseesthese things, can predict these
things and can handle thesethings.
Speaker 2 (13:48):
Well, it allows you to focus on the things that are
important.
Okay, the market going up anddown is not important.
It's impactful.
The important things are howyou spend time with your family.
How are you impacting thecommunity?
What are you doing for yourhealth?
Yeah, sure, worrying about themarket going up and down.
It's stressful andcounterproductive.
And that's why you do need tohave a plan and that's the
importance of proper planning.
Speaker 1 (14:06):
Yeah, definitely Andrew.
I understand from reading yourbook that you and your family
enjoy pizza.
Speaker 2 (14:12):
Yeah, we do Tell us the pizza story, okay.
So let me say this.
So we're talking about resourceallocation, right?
So one of the things that weadvocate for is, at year end,
doing a good review of yourspending, right, like, where did
you actually spend your money?
And so, because we do eat ourown cooking here, like the stuff
we tell people they should do,we do ourselves right.
At the end of every year, I getmy credit card, my annual
credit card summary, and Idownload that to Excel and I
(14:35):
sort it out.
It's okay, where am I spendingmy money on?
And a couple years back, so wego through that exercise and and
one of my key spending partners, I guess, was Papa Murphy's.
Are you familiar with PapaMurphy's?
Do you know?
Speaker 1 (14:46):
what that is.
I've heard the name.
I don't think I've been therebefore, but I've heard the name.
Speaker 2 (14:49):
Okay, if you get to Wisconsin they're awesome.
It's a take-and-bake pizzaplace.
That was the go-to for ourfamily.
So it was like, oh, kids areMurphys.
So now I got three kids and awife at home.
Everybody wants somethingdifferent, paul, and everybody
wants a different dessert, sure.
So, when all's said and done,you spend a fair amount on pizza
(15:11):
.
And so we looked at our annualreview.
We dropped about $6,000 onpizza and going out, it wasn't
all Pop Murph, like yeah, wespent how much.
I called my wife and I said doyou have any idea how much we
spent on pizza last year?
No, so anyway, I had to explainthat to her, and so we decided
we needed to cut back a littlebit on the pizza.
It was no longer a Friday,saturday, sunday and Wednesday.
(15:33):
It was probably betterhealth-wise as well, and I know
the kids didn't like it so much,but now I think we appreciate
it more when we get it.
Speaker 1 (15:40):
So working with clients that was your own
personal example of discoveringunusual spending behavior.
When you work with clients.
What's a or any stories aboutjust some of the things that
you've helped clients discoverabout their own spending
behaviors?
Speaker 2 (15:53):
Here's what happens when you do the spending review.
If you ask somebody how muchyou spend on a monthly basis,
they'll quote you probably themortgage utilities, and people
always underestimate what theyspend and so when you go back
and look at the spending review,it's always these little things
that add up on you.
A good example we had a clientcome in.
He was in his 50s.
He was a little bit behind onhis retirement savings.
(16:14):
He needed to amp that up alittle bit.
He was a single guy.
We took a look at where hespent his money.
There was a local pub that hewould stop by about three times
a week.
He wasn't spending a ton by thetime.
You get your burger and yourbeer, maybe another beer dice
shaking, and you buy a round foryour buddies Sure.
And you buy around for yourbuddies Sure.
All of a sudden you're 50, 60bucks deep three times a week.
180 bucks Yep, you're north of60.
(16:35):
He's actually close to about700 bucks a month.
On average.
You spend it at the local pub.
Man, that adds up.
Speaker 1 (16:41):
Almost 10,000 a year.
Speaker 2 (16:42):
Yeah, you can more than fund your Roth.
When we're looking at some ofthe easier opposed to three or
maybe you go on the wing specialnight or something right.
Or you buy the Pop Murphy'swhen it's on a Tuesday deals you
can cut back, and that bycutting back you don't want to
(17:03):
deny, right, we didn't look atit and say we're never eating
pizza and you can never go tothat bar again.
That'd be ridiculous.
People aren't going to do that.
But you can make the decision,the intentional decision, to cut
back and reallocate thoseresources elsewhere, and so I
think that's why it's importantto do that spending or that
expense review at your end.
Where did your resources go?
Speaker 1 (17:20):
You said it, but it's amazing how these seemingly
little things that we spendmoney on we don't really think
about add up, and so it's justbringing that additional layer
of awareness to it.
You can find some interestingspending habits.
Speaker 2 (17:31):
And it's interesting too, because you can tell where
people's priorities lie based onwhere they put their dollar.
If you have somebody that comesin and says, hey, I'm really
prioritizing my retirementsavings, I really want to retire
.
And then you look at theresources and they're
contributing the minimum totheir 401k and spend all the
money at the bar.
Is retirement really a priority?
Or if somebody says, well, Iprioritize my impact, I want to
prioritize giving money to thechurch, and then you look at
(17:51):
their spending patterns andthey're giving a hundred bucks a
month to the church andspending $6,000 a piece of
something, then where does yourpriority?
So I think doing the reviewdoes allow you to prioritize
what you're doing.
Make sure your resources aremoving you towards your ultimate
goal.
Speaker 1 (18:05):
I think you use the word which is intentionality.
It's making a consciousdecision.
You can do both, you can doeither, you can do what you want
, but it's just making sureyou're being intentional.
Yes, that leads into my nextquestion, which is in the book.
You talk about how, if you cut$1,000 in monthly expenses, that
(18:28):
could mean that you need about$300,000 less for retirement.
That's huge.
On one level it's like pizza Isthat a big deal?
The bar is a big deal, but whenyou quantify it like that,
that's huge.
Speaker 2 (18:36):
Yeah, agreed, and so the reason we put that in the
book was to offer perspective Ifyou go.
So let's say right now, likesome of the common searches are
how much do I need to retire?
You go to Google, right.
Or how much can I spend inretirement?
A general rule of thumb thatyou will see is you'll see what
they call the 4% withdrawal ruleand basically what that says is
, if you want your money to lastthroughout a 30 plus year
retirement, you can safelywithdraw 4% of your portfolio on
(18:59):
annual basis.
Now, I'm not advocating forthat, I'm not a rule of thumb
guy because everybody'sdifferent but I put that in
there to share perspective.
That's about a perspectiveshift, because people do look at
this stuff and that is what youwill see.
You'll hit the Google machineright what the 4% rule says if
you want to sustain your income,you can take out 4% of your
portfolio.
For example, you have a milliondollars.
The 4% rule says you can takeout $40,000 a year.
(19:20):
That's the rule when we talkabout.
If you can reduce your savingsby $1,000 a month, what is the
impact of that?
I give you the math.
I don't want to have asustained $12,000 a year, based
on the 4% rule of thumb.
You divide 12,000 by 4%, thatgives you $300,000.
So if you can cut back orreduce your spending, your
(19:41):
unnecessary spending, by $1,000a month, no-transcript, 10 years
(20:02):
, 15 years, before retirement,it matters what you do with
those savings.
I'll give you an example.
Let's say you cut the $1,000 amonth and you take that $1,000 a
month and you then invest that.
You allow that money to grow.
You will have significantlymore towards retirement.
But, that said, not everybodycan sell an overall super and
you're all just going to save$1,000 a month.
That's not realistic.
But let's take a different tack.
So going back to the pizza, soon, here again I'm going to
(20:24):
throw some numbers at you.
Let's say we're able to reduceour pizza habit by $375 a month.
So rather than buying pizzawith that, you invest it and you
get, let's say again, 8% rateof return.
You invest it.
Over the next 15 years that$375 a month grows to over
$129,000 under those assumptions.
So not only are you spendingless and needing less in
retirement, but you actuallyhave more.
Speaker 1 (20:45):
So you're both spending less and have more,
which I would imagine allows youto have more confidence and
have additional cash flow todetermine what's actually most
important.
Speaker 2 (20:54):
Correct, because it doesn't do you any good to say
you know what?
I'm going to cut back on mypizza habit and I'm going to
spend more on bourbon Sure,that's counterproductive, that's
just shifting expenses.
So when we talk aboutpre-retirement, if you can cut
back on those expenses andactually save or invest that
money, not only will you needless in retirement, but you will
have more.
Speaker 1 (21:10):
What do you find is how do you guide clients to
manage their spending, and whatI mean by that.
I think you said it is okay,I'm going to be intentional
about eating less pizza, I'mgoing to be intentional about
going to the bar less, but thenyour spending shows up somewhere
else because we're just humanbeings, right?
Do you encourage people to doannual look back or do you
(21:32):
encourage them to do anything interms of budgeting?
How do you help guide people sothat they can actually be
intentional and lock in theirspending habits?
Speaker 2 (21:41):
Yeah, so it's both.
So one is having anunderstanding of what and where
your money is going how are youspending that money and then
being intentional about whereyou send that money.
Now, people won't do thatunless they can see what the
impact of that is.
I'm a big fan of setting upsystematic programs.
So if I tell Joe that, hey,we're going to cut back 100
bucks a month to the bar Now,rather than just letting that
sit in his checking account, hewould set that up systematically
(22:02):
to go to some sort ofinvestment vehicle that takes it
off the plate.
So it's about being intentionalnot only understanding where are
you spending, how do you haveto cut that back, but then, when
you do that, where do youreallocate those resources?
Now, it might be reallocatingthat towards paying down debt.
It might be reallocating ittowards an investment account.
It might be bumping up your401k.
Everybody's different.
But the consistent thing isunderstanding where you're
(22:22):
spending your money, thenunderstanding where you want
your money to go and what youwant it to do for you, and if
you can get a handle on that,what do you have, what are you
spending, what are you doingwith it and how is that going to
impact you in the future.
You put together a pretty goodfinancial plan.
Speaker 1 (22:35):
Part of what I heard or took away from that is that
you don't want to just have thatdifference in money sitting
there in your checking account.
It's almost I'll use themetaphor or the analogy of
dieting.
It's like my wife makes me agood to help yourself the second
you can.
I'm going to likely help myself, whereas if I just know that
this is my meal and that's it,I'm going to enjoy the meal.
Speaker 2 (22:56):
That's another good analogy.
I like that, Paul.
Well done.
That's exactly right.
You don't want to have theportion control meal sitting
next to a plate of cookies.
Speaker 1 (23:02):
Exactly so.
Social security is a big topicfor people.
For many people they're onlyguaranteed source of income.
And you know, I've readdifferent books and I've heard
from different people onpodcasts and whatnot, different
strategies.
In your book you challenge theidea that waiting until 70 is
always the best move.
What are your thoughts onSocial Security?
Speaker 2 (23:24):
Yeah, so you're right , social Security it's a huge
decision, huge impact, bigdollars when you take the
totality of what people get overtime.
So you're right, that is adecision people want to get
right and there should bethoughtful analysis because
everybody is different.
But I will tell you, if you goout and ask 10 advisors, when
should somebody take SocialSecurity, nine of them are going
to say at 70.
Why is that?
Because they get more, okay,super.
How does that actually impactthem?
(23:46):
And where I challenge yousometimes we had a prospective
client that was coming in.
They wanted to retire.
We ran the numbers they couldretire and they had an advisor.
They said my advisor is tellingme to wait until 70 to retire
at 67.
They're saying that my advisoris telling me to wait until 70
to retire.
So why is that?
I said, well, because I getmore Social Security, so I'll be
a little better off.
So now, when you ran thenumbers, yeah, they'd be better
(24:06):
off 30 years from now.
But him him telling them theyhad to wait until 70 didn't give
them the confidence necessaryto be able to retire now when
they could, they could retire at67.
They, in their case, they didneed to take Social Security to
have the confidence they wantedthat guarantee because, you're
right, it's only guaranteedincome, not pensions.
And so they opted to take theSocial Security at full
retirement age rather thanwaiting until 70, because it
gave them the confidence to beable to walk away from the job
(24:28):
and spend the time with familyand themselves and enjoy their
lives.
It goes back to what you saidbefore we don't know our
expiration date.
Now, if they'd have waiteduntil 70 and they'd have more
income and 20 years from nowthey'd have more money super.
But they would not have gottenback those three years, those
three years of creating memoriesof themselves, their family,
the experiences they had.
If they waited until 70, justbecause somebody told them they
(24:49):
probably should, because theymight have a little more money,
they would have missed it andthey cannot get that time back.
They can't get that time back.
So when you make the SocialSecurity decision, I believe
there has to be thoughtfulanalysis around when and how.
Why?
Because in some cases, yes, ifyou run the numbers, you would
have a little more money whenyou're 85 years old if you
waited.
Speaker 1 (25:06):
If you make it that long.
Speaker 2 (25:07):
If you make it that long, because that's again we
don't know.
So, when you look at the socialsecurity decision, because that
is one of those things, havingthat guaranteed income does
impact confidence.
I can imagine, and so that'swhere, when you get into the
financial planning is a bit ofan art and a science.
These people don't have theconfidence to retire but they
could or should, because yougave them a false sense that
(25:27):
they have to wait.
I think that's doing them adisservice and so decision that
will allow you to haveconfidence in your retirement
and stay retired.
I've seen some of thesefinancial plans who run the
Monte Carlo analysis giving youa percentage likelihood of
success.
If you wait till 70, yourconfidence percentage is 96.
Speaker 1 (25:43):
That's awesome.
Speaker 2 (25:44):
What is it if I retire right now and take it 93?
It sounds pretty good to me.
Okay, I'll take it.
So making that decisionrequires more thoughtful
analysis than what I think a lotof people would go through.
Speaker 1 (25:55):
What I'm hearing is that there's the math, and then
there's the math applied to theperson and ultimately it's
what's driving the person, whatare their values, what are their
goals, what's important to them, and it ties back into the
beginning story with Ava.
We have enough, and that'swhere the recommendations I
imagine, imagine need to bebased on math, but also tied to
the person, their goals, theirvalues, et cetera.
Absolutely right.
(26:16):
The premise of the book, andreally the subtitle of the book,
is it's a guide to financialconfidence and meaningful impact
.
So let's switch gears a littlebit and tell us about the
qualified charitabledistribution strategy.
What is that and how is thatand why is that important to
people who are looking to makethat broader impact with their
(26:37):
resources?
Speaker 2 (26:38):
Let me first set up what that is, why it's important
.
So the qualified charitabledistribution is a rule that says
that you can send money afterage 70 and a half directly from
your IRA to a qualified charity.
When you do that, you don't paytaxes.
That's not income to you, it'scenter.
You don't take possession.
You send it directly to thecharity.
This is one of the tools Ithink is underutilized in
(26:58):
financial planning.
We're involved in a lot ofcommunity events, right, and a
consistent conversation I have.
I talk to people that are intheir 70s.
You talk to them.
Are you retired?
Yep, I'm retired, super.
Are you drawing money out ofyour IRA only because I have to,
so you don't need to?
No, I don't need to take thatmoney, but I got to take it out,
okay, fine.
Are you giving to a churchcharity Of?
course I am Okay, super.
(27:19):
Wouldn't it be nice if youcould take your money, rather
than taking your money out ofyour IRA and paying taxes on it
and then sending it to thechurch or charity, wouldn't it
be nice if you could not pay thetaxes at all to them?
And all these people are likehold on, you can do that.
You can do that.
Yeah, you can do that.
There are two consistent themesaround these people that we
talk to.
One is they're impact-mindedright, they want, they're giving
people, they're charitablepeople.
The second consistent theme isthey all have advisors.
(27:41):
They all have advisors.
How can you increase yourimpact with that?
Let's say I want to give $8,000to the church, but I pay 20%
taxes In order to give $8,000 tothe church, I would take
$10,000 out of my IRA, then$2,000 to the IRS and $8,000 to
the church.
My alternative would be ratherthan do it that way, how about I
just send $10,000 to the churchto cut the IRS out?
(28:03):
Unless you feel like you'reimpacted, you want to give more
to the IRS.
Speaker 1 (28:06):
Let's be honest.
Have you person that's beenlike I want to give more to the
IRS?
Speaker 2 (28:11):
No, don't, and I tell you, I'll ask you so.
Are you the person that checksthe box to give extra?
I don't know anybody doing that, but I do know that you can
increase your impact.
Speaker 1 (28:23):
It's like this to me is a new.
I don't think I've heard thisexplained the way that you just
said it, so I don't think thatthis has been on my radar.
And do people realize this,because it seems like a huge
difference if your intent is tomake impact, and instead of
paying the tax and then make animpact at a lower level, you can
just make more impact that way.
It seems huge.
Speaker 2 (28:38):
I think it is and I think what I think that's big is
like for some of theseorganizations that do have
people giving.
They should be talking to folksabout this.
You look at your giving roles.
You know that the 73-year-oldis giving you $5,000 or whatever
.
The number is right.
If they're just cutting you acheck, it's not coming right
from their IRA.
There's probably an opportunityto enhance the impact there.
Again, if we can enhance what'sgoing to these charitable
organizations, that's a goodthing.
(28:58):
And it's a simple technique.
Simple, but it's not widelytalked about, it's not widely
known.
Be it the folks you talk to.
And again, consistently, theyall had advisors.
But I think up with advisorsfocus on one thing exclusive.
Others, that's the ones thathave an advisor, but their
financial plan is a 60 40allocation, not looking at the
total picture and how can theymaximize what they're doing?
So I love the qcd concept.
(29:19):
I've personally seen peopleenhance their impact after you
talk to them.
Yeah, they like it, theyappreciate it, organizations
appreciate it.
I'm not a huge fan of thatparticular I I feel like good in
two ways.
Speaker 1 (29:30):
It's like I I feel good about not giving it to the
government and then better, andthen great about giving it to
the cause that I actually careabout.
That's awesome.
In your book you emphasizetaking action, not just planning
.
So question is why do so manygood financial plans collect
dust?
Speaker 2 (29:50):
That's a good question.
I think it comes down to twothings.
I think it comes down toaccountability and
procrastination.
Here's what happens sometimes.
You get this nice financialplan done.
It says hey, paul, you'resaving enough.
You're doing all these goodthings, you need to adjust this
and that, and you'll be fine.
You get that plan and say, oh,that's great.
Hey, I'm in good shape, I gotto make some changes, I'm going
to take that home.
It's going to hit the shelf,hit the cylindrical file.
Speaker 1 (30:11):
It's not getting looked at and what you do is you
dust it, because what I heardfrom you is that I'm pretty much
in good shape.
I don't need to worry aboutthese things, at least not for
now.
I'm solid.
Speaker 2 (30:17):
I don't need to do anything at all, and then they
maybe go back and meet withtheir planner a year later and
they get an update or somethinglike that.
So nothing actually happenswith the whether that's your
spouse, a mentor, your advisor,whoever I think accountability
is a key piece to actuallyimplementing a plan.
So there should be nobody's inperfect shape financially Not me
(30:38):
, not you, not anybody.
There's always stuff we need toand should be doing, and so
having an accountability partnersays okay, paul, you need to
get this done by end of March31st or whatever the number is,
whatever the day is, and thenbeing able to circle back to
that partner and them saying hey, paul, you were supposed to do
this, you do that.
And when you reschedule thatmeeting because you didn't do it
, funny how that works.
Yeah, funny how that works.
(30:59):
It's crazy.
And then the second piece isprocrastination.
Right, the status quo is alwayseasier.
It's always easier to donothing.
The most common one you think iskicked down the road is the
estate planning.
So where that could hurtsomeone, I had a friend of I
wasn't the family advisor hecalled me and said hey, can you
just take a quick look?
My dad's sick and I want tojust make sure that everything's
okay.
I said, yeah, let me you find,send it to me, I'll take a look.
And we did a review and in thiscase I looked at one of his
(31:19):
account.
Boy, I said you didn't have abeneficiary on that account.
You need to add a beneficiaryto that account.
I said okay, because they didcall the broker.
But the broker and thegentleman kicked the can down
the road and they didn't do it.
So you fast forward.
It was probably nine months orso, and then the gentleman
passes away.
So now my friend calls me andsays, hey, can you help me with
this stuff?
I said, yeah, I'll take a look.
Right, and you know what wasn'tdone.
(31:40):
Beneficiary change.
You know what they had to doand they're not doing anything.
What was the point?
I can actually do somethingwith the information.
Speaker 1 (31:58):
In your book you talk about the three-bucket system
for retirement income.
Speaker 2 (32:22):
Tell me about that, and so that's a very
conservative.
I'm going to spend that moneythis year.
Six months, two months,whatever.
I know I'm going to spend thatmoney.
So when I allocate the resourcetowards that bucket, that's my
near-term spending and with thatmoney I want to be like no risk
, because I know I'm going tospend that money.
And there's different you cando different amounts but I like
to have anywhere from one tothree years and very
(32:43):
conservative, I know I'm goingto spend it.
So that's bucket number one.
Bucket number two is more ofwhat I call a medium-term kind
of portfolio.
And I'm going to use thatportfolio to replenish my
near-term bucket that will beinvested for some kind of growth
.
And so what happens there?
As you spend down bucket numberone, ideally if you get market
gains you can replenish frombucket number two.
Now let's say I don't.
(33:03):
Let's say we go through aperiod of time where the market
is down.
I'm not going to bereplenishing Market's down, I'm
not pulling out a bucket two togo to bucket one.
But if you think about itpsychologically for the client,
market to client is notcomfortable for anybody.
Nobody likes it.
But if me as a client knowsthat I have one to three years
sitting in a secure bucket, Ican weather that storm a little
better.
And again in good years you'regoing to replenish Again.
Psychologically that conceptsays I'm okay, you're okay, we
(33:25):
can weather these storms.
The third bucket is ourlong-term bucket.
That's the money we ideallywe're setting aside for
long-term care, we're settingaside for the kids.
I hope to never touch it.
You can maybe be a little moreaggressive with that money
because I have no intention oftouching it anytime in the near
term, right?
So you're talking about thethree buckets and the advantage
of the clients is that they knowall their different areas are
covered.
They don't have to worry aboutwhat they saw on the news, what
(33:47):
they saw on CBC oh my goodness,the market's down or it's up, it
doesn't matter.
It doesn't matter because theyhave a plan in place.
That bucket system has a planin place.
How are they going to actuallyfunctionally manage their
retirement income?
Speaker 1 (33:57):
I was just going to say that, and this essentially
is.
It deals with the sequence ofreturns risk.
Speaker 2 (34:02):
Correct and that goes back to sequence of return risk
.
That goes back to if I'm takingout money in a down market, I
have to make more to get it back.
It's a mathematical problem.
Speaker 1 (34:10):
And the years in the three buckets that's based off
of, I'm guessing, justhistorical data in terms of what
?
Speaker 2 (34:16):
Yeah, that's all individualized.
If you have somebody that's gota great amount of fixed income,
Social Security pension, maybeyou need less, and that goes
back to the art and science.
So there's the hard and fast.
Hard and fast.
You need to have 1.72 years ofit all depends.
That's where you get to the endof the individualization.
Speaker 1 (34:29):
I'm glad that you said that.
It's good to know, because Ilook at some of these things
sometimes online, like you said,the 4% rule and it's like,
really I've enjoyed ourconversation so far.
And just in starting to wrap upa little bit, I have a few more
questions for you.
If someone only remembers onething from your book, or even
this conversation, what wouldyou like that one thing to be?
(34:51):
What would you like theirtakeaway to be?
Speaker 2 (34:53):
Our premise is that most people want to have an
impact greater than themselves,whether it's on their church,
charity, community, family,whatever but they can't do it
unless they know that they haveenough.
That's our starting premise,but I'll follow that up with.
A lot of people don't go on tohave the impact that they want
and the reason they don't isbecause they don't take action.
A lot of people will read books, they'll listen to podcasts,
(35:13):
they'll go watch a video,they'll go down the YouTube
rabbit hole and then they don'tdo anything.
So the one thing I would likethem to take away from that,
from this book or thisconversation, is you have to
take action or nothing willhappen.
If there are concepts thatresonate with you, take action,
go do something.
Have the conversation, meetwith your spouse, assess what
you want to have your impact tobe, assess where you are, but
actually take the action steps.
(35:34):
So if I had one key thing, onekey thing take action, make some
kind of decision and dosomething.
Speaker 1 (35:40):
I totally agree about action.
I think for me personally, myone nugget of new information
that I haven't heard elsewhereis that I forget the exact name
of it, but the ability to godirectly from ira tax free
distribution qualifiedcharitable distribution, because
that's something that I haven'treally at least paid attention
to.
So I think that's huge.
Speaker 2 (36:00):
That's an awareness thing.
A lot of times you go you seelike capital campaigns and
charities and all that.
They're talking about all thestuff they can do with the money
and they ask for it.
I think that the joke I heardthat I liked was the good news
is we have the money.
The bad news is it's in yourbank account.
Speaker 1 (36:11):
I haven't heard that before.
Speaker 2 (36:12):
I like that one, I like that one, and so being able
to show people better ways toenhance their giving without
enhancing their outflow.
So if I can give you more, butI you rather do, mr Charitable
Giver.
Speaker 1 (36:28):
Why isn't every single church leader or anyone
that receives donations, havingthis conversation?
Speaker 2 (36:33):
I don't know.
That's a good question.
I did talk to a local churchleader that had the conversation
.
He said oh, it's great, I loveit, we're going to hand start
giving.
I'm like that's great, I saidthey did it.
But here's the kicker though Isaid 70 and a half, he goes no
when they start taking theirrequired minimum distributions.
Because they changed rules onrequired minimum distributions
to bump your age back.
It was no longer 70 and a half.
They did not change the rulesfor the qualified charitable
(36:55):
distribution, so it doesn't haveto be a required minimum
distribution.
But he was one that had donesome research and was
communicating that to his parishand had enhanced his giving.
But even he didn't know you canget an extra couple of years of
giving out of them.
He didn't know that.
And so even the ones that doand are talking about it and he
did say that was at least forhis parish they were able to
significantly enhance what wasgiven and yet it's shifting
dollars.
Where do you want it to go?
Church or the IRS Chair, or theIRS, your call?
Speaker 1 (37:17):
That's a motivator right there for me, For someone
who's either listening to thisconversation or has finished
reading Beyond Enough and feelsinspired.
What's the first step that theyshould take or what's the next
thing that they should do?
Talking about accountabilityand action, what's the next
thing that you would advise themto do?
Speaker 2 (37:33):
The next thing I would advise them to do is I
would do some self-reflection onwhat is actually important to
them.
Where do they want to havetheir impact, what goals are
important to them?
And again, it's different foreverybody.
But if I don't know what'simportant, then I can't take the
steps necessary, I can'tallocate my decisions, I can't
adjust my decisions to what'simportant if I don't understand
it.
So the first thing I would do isI would sit down and I'd do
(37:54):
some self-reflection what am Iactually, where do I want my
impact to be and what am Iactually looking to accomplish?
Once I've done that, then Iwould sit down with important to
me.
Now, what do I need to do?
What action steps do I need totake in order to actually
accomplish that goal?
This is important to you andagain, your impact, your
(38:15):
importance, is different thanmine, different than Joe and
Sally, right, but you have to dothe self-reflection and decide
what is actually important.
And then you have to decideit's important enough to
actually do something?
It doesn't do you any good totalk about it, think about it,
do nothing.
Speaker 1 (38:26):
Do you find that people that come to you do they
typically have an advisor, butmaybe they've outgrown the
relationship.
Or do you find that they don'thave an advisor?
Or do you find that they havemore of that narrow, not
comprehensive planner where theyjust do one narrow thing?
Speaker 2 (38:40):
It's a combination.
I think the vast majority haveprobably outgrown or are looking
for more than what they'regetting currently, or,
alternatively, they've done alltheir savings in a 401k or
something like that and neverreally sat with a planner.
And so many people come andthey have a good financial
planner, it's covered all thebases, and they just want some
assurance that they're doingthings right.
I would say having a goodfinancial planner and there are
lots of good ones out there it'simportant, but the ones that
come to us typically, like yousay, have outgrown and are
(39:03):
looking for more as theytransition towards retirement,
transition towards being able tohave more impact.
Speaker 1 (39:09):
And you're located in Wisconsin.
Do you work with people only inWisconsin or do you work with
people in other states as well?
Speaker 2 (39:14):
No, we work with people in other states as well.
Yeah, we're in Wisconsin, yep.
Speaker 1 (39:17):
Do you find today that more meetings are virtual
or in person, or I still?
Speaker 2 (39:22):
prefer Paul.
I still prefer in person.
I like to be able to looksomebody in the eye, shake their
hands, really get to know them.
I greatly prefer in person,although we do have clients that
move throughout the country.
As much as I'd like to tell mywife I'm flying down to Florida
in wintertime for clientmeetings.
We certainly do the virtualmeetings, but I greatly prefer
face-to-face.
I'd rather be able to looksomeone in the eye, shake their
hands and really get to knowthem.
Speaker 1 (39:43):
Final question For and or to connect with you.
What should they do?
Speaker 2 (39:47):
Yeah, so a book's available on Amazon it's Beyond
Enough by Andrew LaFontaine.
If they want to connect with mepersonally, the best way is
probably through LinkedIn.
It's Andrew LaFontaine, no E onthe end.
A lot of people do that Over inBrookfield, Wisconsin.
I think that'd be the best wayto connect.
I'm happy to chat.
Speaker 1 (40:01):
Perfect, all right, andrew.
What if I told you that right now, somewhere in
America, there's a successfulcouple staring at their
seven-figure portfolio, knowingthey could retire tomorrow, but
convinced they need to work justthree more years?
And what if I told you thatdecision, that seemingly prudent
, responsible decision, might bethe biggest mistake of their
(00:20):
life?
Our guest today carries theweight of watching this exact
scenario play out, withdevastating consequences, and it
transformed everything abouthow he approaches financial
planning.
Andrew LaFontaine traded apromising career as a CPA with a
big five firm for something farmore meaningful helping
individuals and families findnot just financial security but
(00:43):
the confidence to actually enjoyit.
After 20 years in the trenchesof financial planning, he's
distilled his hard-won wisdominto Beyond Enough, a guide to
financial confidence andmeaningful impact.
Andrew LaFontaine, how are youdoing?
(01:07):
I'm doing well.
Paul, how about you?
I'm doing great.
Congratulations on the Amazonbestseller.
Speaker 2 (01:13):
Thank you.
Thank you, that was quite ajourney.
Yeah, it was humbling, it wasgreat.
We were very proud of the bookwe put out and it was gratifying
to some of the comments and theresults.
Speaker 1 (01:22):
So I appreciate that Definitely.
In today's interview we'regoing to dive into your new book
, which I'm holding here in myhands Beyond Enough A Guide to
Financial Confidence andMeaningful Impact and I love the
cover of it, so if someonelistening can't see it, but it's
a great book.
It's on Amazon now number onebestseller and I just want to
(01:42):
dive into just a little bitabout your background and then
just start talking about some ofthe concepts that you talked
about in the book, so people canget to know both you as well as
, essentially, the message ofthe book.
Tell me a little bit about yourbackground and, as I understand
it, you started out as anaccountant and today you're a
financial planner.
What was that transition like?
What led you from one to theother?
Speaker 2 (02:03):
Yeah, so, like you said, I started in accounting.
I actually started with a bigfive public accounting firm and
when I went to school I reallyI've always enjoyed numbers,
because with numbers I feel likethere's always an answer.
And one of my professors atschool he said if you understand
the numbers, you understandaccounting, then you understand
the language of business, andthat really appealed to me.
Okay, I want to do that andgotten on my career.
I'm on the audit side with apublic accounting firm and so
(02:25):
we're helping very largecompanies be a little more
efficient and make a little moremoney, which, believe it or not
, is not as gratifying as itsounds.
When I did some self-reflectionon what do I really want to do
for a career Like where do Iwant to have my impact, and I
thought if I can help peoplemake good decisions, good
financial decisions, that wouldbe a satisfying career path.
At the time I was looking atsomething to do at the time
(02:45):
mortgages or I could go thefinancial planning route.
I felt going the financialplanning route would allow us to
help people in more areas andwe haven't looked back.
It's been a little over 20years.
I'm extremely grateful that Iwas able to make that transition
into financial planning.
Speaker 1 (02:58):
Very cool.
You've been a financial plannerfor around 20 years now, and so
what inspired you at this?
Speaker 2 (03:08):
point in time to write your book beyond enough.
Yeah, really, I'd say it's twothings.
One, I got to give all creditto my wife for inspiring the
book, okay.
And so we do a lot of.
We do a lot of work in thecommunity to trade shows.
We talked to a lot of peopleand over the years she's heard
me talk about the differentstories of clients we've worked
with or helped or folks we'vetalked to that maybe we didn't
help or couldn't help.
(03:28):
And over the course of the last20 years, we noticed some
consistent themes around peoplemaking mistakes not only people,
but also advisors of peoplethat had advisors.
And so, as we really looked atit, we came to the general
premise that I really, trulybelieve that everybody wants to
have some kind of impact greaterthan themselves, right, whether
that's on the church, theircommunity, their family,
(03:53):
whatever it is.
That's individual for everybody, right.
But before they can actuallyhave that impact, they need to
feel comfortable or confidentthat they are doing or have
enough to meet or satisfy theirfinancial goals.
And if they don't feel that way, they don't have the confidence
necessary to move forward tohave that impact.
And so the book was inspired bymy wife saying, hey, you tell
these stories, you should gowrite a book.
And as we reflect and I go, ifI'm going to write a book, what
is the message we want to getacross?
And the message is one ofhaving impact, to be able to do
(04:15):
things bigger, better andgreater than yourself.
And I got to be honest thewriting a book.
The reason I never did it is Idon't like writing.
So I appreciate my wife pushedme in that direction.
I give her all the credit forreally inspiring and making that
happen, so I'm very grateful.
Speaker 1 (04:29):
Yeah, definitely.
And just so I understand that,and just so both I and our
audience understands it clearly,what I understand you to mean
is that retirement and havingenough is one of those things
that we never know ourexpiration date, and so we can
have a million in the bank orinvestments, or we could have 2
million, but because the futureis inherently unpredictable in
(04:52):
terms of when we're going topass, it's challenging to know.
Do I have enough?
And the number one fear, as Iunderstand it, for people is
running out of money.
Is that the core issue thatyou're describing, or is there
something else to it?
I think that's part of it.
Okay, I think that's part of it.
Speaker 2 (05:04):
Is that the core issue that you're describing or
is there something else to it?
I think that's part of it.
I think that's part of it.
I think what it comes down tois having the financial
confidence now, because there isno crystal ball, you don't have
an expiration date.
I don't have an expiration dateand realize I can't take it
with me, I can't impact that.
What I can impact is what I amdoing now and what are the
impact on my actions and mydecisions now.
And so if I'm comfortable thatI'm doing the right things
saving enough, have enough ifI'm retired, have a good plan on
(05:27):
income then I can actually havea greater impact Again, meaning
we're only here temporarily,right, I have to be a good
steward of the gifts I've beengiven, and so I want to be able
to say, okay, I feel comfortableand confident in what I'm doing
right now.
And if I'm confident in that,then I can more freely give
myself whether it's time, energy, effort, money to wherever
where I want my impact to be.
So my impact needs might bedifferent than yours, right,
(05:48):
like I want to give to thechurch charities I support,
which would be different fromwhat you or somebody else may
support, but the consistenttheme there is you will not do
the extra if you haven't donethe basics, if you don't have
enough.
Speaker 1 (05:58):
It's almost like the airline analogy of when the
oxygen masks come down, you wantto put it on yourself before
you put it on someone else, justso that you're confident and
you can help people better.
Oh, that's a great one.
Yes, exactly, in the book youtell a story and the characters
in the book and I'm sure thatthe names have been changed to
protect people and all that goodstuff is about Henry and Ava.
(06:20):
Tell us about that story.
Speaker 2 (06:22):
Let me set that up a little bit, so that one was
about having financialcompetence at the time.
So Henry and Ava, they werelate sixties and they wanted to
retire her more than him,actually.
And so at the time I wasworking more of a consulting
role.
So I would work with advisorsto help them do their retirement
plans.
So they'd bring this stuff tous and we would look at so
here's what they can do, here'swhat they should do.
And so every year this advisorteam comes to us.
(06:43):
We look at Henry and Ava'sretirement plan.
And they could retire, they hadenough, and they had all these
dreams or all these things theywere going to do in retirement.
They wanted to travel, theywanted to spend time with their
grandkids, they wanted to bemore involved in their church.
All this they did.
All these beautiful plans,beautiful plans, he said when I
have $2 million, then I feellike I'm good, then I can retire
.
Reality is he could retire onsignificantly less than that,
(07:06):
but that was the number hewanted.
Every year we tell theseadvisors hey, this guy can
retire, they should retire, go,spend time with the grandkids,
go do the trick, go All thesedreams, right, yeah.
And so you fast forward fouryears later and the attorney
ever coming.
This is the year, here we go.
This guy's going to retire andhe doesn't show up for his
meeting and he doesn't calleither.
And so typically, when somebodydoes like a no show, no call,
(07:28):
like you did something wrong orsomething happened right, and so
I told these guys, I don't know, you might be getting fired, I
don't know, what'd you do,what'd you do?
Passed away suddenlyunexpectedly.
And so for me I'll tell you,paul, that was a perspective
shift for me from a career pointof view.
(07:49):
When I looked at that I thought, man, if they'd been my clients
.
I feel like I could have giventhem the confidence necessary to
actually retire and thetrajectory of their life would
have been much, much different.
So all the dreams they had, allthe things they want to do
together, now they couldn't doit because they didn't have
enough.
It's because they didn't havethe confidence necessary to make
the decision to retire.
And so at that point, againfrom a career perspective,
(08:10):
that's when I shifted my focusto actually working with clients
again and I'll be honest, likeHenry, he didn't make it too
much farther past that.
I know it was sad, but it's anexample of sometimes it's more
than just the numbers.
It's about having theconfidence necessary to make the
decision.
Speaker 1 (08:24):
And I think that story perfectly captures the
idea.
It's beyond enough, because oryou tell me, how common is that
for people to for a scenariolike that to happen, where just
people don't have thatconfidence?
Speaker 2 (08:35):
That's exactly it, and I would say that it happens
more often than you want to hearabout.
People will delay for somearbitrary reason.
It's not because the reason isnot maybe valid in their own
mind.
It certainly is.
People have their own reasonsfor what they do.
However, a lot of that delay,procrastination, comes down to
lack of confidence in the plansthey have in place, knowing that
(08:55):
they are going to be okay Ifyou knew for certainty that you
could retire today.
Spend time with your grandkids,spend time with your spouse.
Do all the things you want todo.
Spend time with your grandkids,spend time with your spouse.
Do all the things you want todo If you know for certain that
you could do that, most peoplewould.
But you'll see people stay in ajob that they hate, that
stresses them out, that'sdifficult on them physically
because they are not confidentthat they can actually pull the
trigger on retirement.
(09:15):
So the objective there is togive them the confidence
necessary to be able to makethose decisions and then go on
to do more than just retire,have an impact again, whether
it's on family, church,community, whatever.
Everybody wants more than, orthey should want more than, just
themselves.
Speaker 1 (09:29):
Awesome, great story.
Next question In the book youtalk about three key parts of
financial planning.
I guess this is the quoteunquote secret sauce.
To help people have thatconfidence, tell us about the
three key parts of financialplanning.
Speaker 2 (09:43):
Yeah.
So when we talk about the threekey parts, three pillars of
financial planning, I'll namethem for you.
First, I'll tell you whythey're important.
First one is resourceallocation.
Resource allocation deals withwhat you have now, and that's
not only your financial what youhave, what you're saving, what
you're spending, what you'reinvesting, what's your time,
your energy, your effort theseare all your resources.
Resource allocation how do youspend that time, energy, effort,
(10:04):
money, retirement income Look,when you stop working, you don't
have a paycheck, and so you gotto have a plan on how are you
going to replace that income.
And the third piece is riskmanagement.
Risk management deals with allthe things that could derail a
retirement, and so you have tohave all three.
A lot of times what you'll seeis people will focus on one to
(10:24):
the exclusion of another.
I'll give you an example.
Let's say you walk in, you gotalk to somebody that's solely
focused on risk management.
They may only talk aboutinsurance and not focus on what
are you doing for your otherinvestments or assets, resources
, right?
You go talk to somebody that'ssolely focused on just
investments and managing money.
That's what they're going to befocused on, and so they ignore
other pieces.
(10:44):
So true financial planningreally takes into account all
three.
We had a client that comes in,and so we're not a kind of time
client now and we come in andwe're taking a look at all the
things they have set up.
They're already retired, as Isaid, they're already retired
and they come in and say, okay,now that you're retired, how are
you generating your income?
Because the answer is when Ineed money, I sell some stuff
and I take some money out Fromhis stocks.
Speaker 1 (11:03):
From his investments.
Speaker 2 (11:08):
From his portfolio.
I said okay, so what is yourplan around that?
He said we have a 60-40portfolio.
Is there an actual plan arounddistribution management
resources?
And the answer was no.
He just had a portfolio that hewas selling when he needed to
take money out.
How do we address that?
In that case they were justfocused on one piece the
investments.
Their plan was a 60-40allocation.
That's not a plan.
When we looked at it, the riskyou run I only just want to
cover the risks and so whengenerating a retirement income
plan, the risk he was running ifyou are selling money, if
(11:31):
you're selling investments togenerate your income, the market
goes up and down.
If you're selling into a downmarket, all you do is compound
the declines in your portfolio.
That's a mathematical issue.
So you run the risk of runningout of money because you don't
have a proper retirement incomeplan, because your resources
were not properly allocated.
As we're talking our way throughthis, the guy knew he had a
problem, right what it was.
He knew it didn't feel rightwhat he was doing, but he didn't
(11:53):
know what the issue was or howto fix it.
So the answer in his case and Iknow we'll talk about this a
little bit later on is we lookedat what he needed to spend and
then we allocated some of hisresources, some of his
investments, to very short-termconservative that we could draw
against, so that we didn't haveto worry about market declines.
To get him his money, we set upsystematic payments so we knew
exactly what we were dealingwith and so that eliminated the
(12:14):
risk of selling into a downmarket.
He had a retirement income planand his resources were properly
allocated.
Now there's more to what we didfor him.
But that's an example of makingsure we hit all three of those
pillars.
And but that's an example ofmaking sure we hit all three of
those pillars.
And so the net result is nowthe guy's not worried anymore
about market decline.
He didn't care.
He's out fishing on the lake.
He's not looking at the market.
He's not worried about oh, isthe market down?
Should I sell, should I notsell?
(12:34):
Where do I get my money from?
He's got a plan.
Speaker 1 (12:40):
So now, when he talked's interesting, like just
in the recent volatility we'vehad, I understand these concepts
.
My time horizon for retirementweighs off, so I'm like I want
to buy more.
Speaker 2 (12:51):
And the problem is too, if you focus on one to the
exclusion of others, right, Imean talking about like pillars,
like three pillars that thewhole thing, the whole house,
crumbles.
So you have to take, or youshould take, a holistic view
that encompasses all three.
What are we doing with ourcurrent resources?
How are we generatingretirement income?
And, finally, what risks couldderail us and how do we handle
those risks?
(13:11):
Again, no idea.
Like you said earlier, no one'sgot a crystal ball, I don't got
an expiration date, but I canbe fundamentally sound in terms
of how we view the differentareas.
Speaker 1 (13:18):
And, as part of that, just the confidence you always
hear about the stock market, theroller coaster and just of
course, the news media is gearedtowards trying to scare you
about that.
But my understanding, based onhow you explained it in just the
book, is that really you don'tneed to worry about that.
If you have it properlyallocated, as you described both
now and in the book, you canturn off the news, you can go
(13:39):
fishing, you can do those thingsbecause you have that proper
plan that allows, that, foreseesthese things, can predict these
things and can handle thesethings.
Speaker 2 (13:48):
Well, it allows you to focus on the things that are
important.
Okay, the market going up anddown is not important.
It's impactful.
The important things are howyou spend time with your family.
How are you impacting thecommunity?
What are you doing for yourhealth?
Yeah, sure, worrying about themarket going up and down.
It's stressful andcounterproductive.
And that's why you do need tohave a plan and that's the
importance of proper planning.
Speaker 1 (14:06):
Yeah, definitely Andrew.
I understand from reading yourbook that you and your family
enjoy pizza.
Speaker 2 (14:12):
Yeah, we do Tell us the pizza story, okay.
So let me say this.
So we're talking about resourceallocation, right?
So one of the things that weadvocate for is, at year end,
doing a good review of yourspending, right, like, where did
you actually spend your money?
And so, because we do eat ourown cooking here, like the stuff
we tell people they should do,we do ourselves right.
At the end of every year, I getmy credit card, my annual
credit card summary, and Idownload that to Excel and I
(14:35):
sort it out.
It's okay, where am I spendingmy money on?
And a couple years back, so wego through that exercise and and
one of my key spending partners, I guess, was Papa Murphy's.
Are you familiar with PapaMurphy's?
Do you know?
Speaker 1 (14:46):
what that is.
I've heard the name.
I don't think I've been therebefore, but I've heard the name.
Speaker 2 (14:49):
Okay, if you get to Wisconsin they're awesome.
It's a take-and-bake pizzaplace.
That was the go-to for ourfamily.
So it was like, oh, kids areMurphys.
So now I got three kids and awife at home.
Everybody wants somethingdifferent, paul, and everybody
wants a different dessert, sure.
So, when all's said and done,you spend a fair amount on pizza
(15:11):
.
And so we looked at our annualreview.
We dropped about $6,000 onpizza and going out, it wasn't
all Pop Murph, like yeah, wespent how much.
I called my wife and I said doyou have any idea how much we
spent on pizza last year?
No, so anyway, I had to explainthat to her, and so we decided
we needed to cut back a littlebit on the pizza.
It was no longer a Friday,saturday, sunday and Wednesday.
(15:33):
It was probably betterhealth-wise as well, and I know
the kids didn't like it so much,but now I think we appreciate
it more when we get it.
Speaker 1 (15:40):
So working with clients that was your own
personal example of discoveringunusual spending behavior.
When you work with clients.
What's a or any stories aboutjust some of the things that
you've helped clients discoverabout their own spending
behaviors?
Speaker 2 (15:53):
Here's what happens when you do the spending review.
If you ask somebody how muchyou spend on a monthly basis,
they'll quote you probably themortgage utilities, and people
always underestimate what theyspend and so when you go back
and look at the spending review,it's always these little things
that add up on you.
A good example we had a clientcome in.
He was in his 50s.
He was a little bit behind onhis retirement savings.
(16:14):
He needed to amp that up alittle bit.
He was a single guy.
We took a look at where hespent his money.
There was a local pub that hewould stop by about three times
a week.
He wasn't spending a ton by thetime.
You get your burger and yourbeer, maybe another beer dice
shaking, and you buy a round foryour buddies Sure.
And you buy around for yourbuddies Sure.
All of a sudden you're 50, 60bucks deep three times a week.
180 bucks Yep, you're north of60.
(16:35):
He's actually close to about700 bucks a month.
On average.
You spend it at the local pub.
Man, that adds up.
Speaker 1 (16:41):
Almost 10,000 a year.
Speaker 2 (16:42):
Yeah, you can more than fund your Roth.
When we're looking at some ofthe easier opposed to three or
maybe you go on the wing specialnight or something right.
Or you buy the Pop Murphy'swhen it's on a Tuesday deals you
can cut back, and that bycutting back you don't want to
(17:03):
deny, right, we didn't look atit and say we're never eating
pizza and you can never go tothat bar again.
That'd be ridiculous.
People aren't going to do that.
But you can make the decision,the intentional decision, to cut
back and reallocate thoseresources elsewhere, and so I
think that's why it's importantto do that spending or that
expense review at your end.
Where did your resources go?
Speaker 1 (17:20):
You said it, but it's amazing how these seemingly
little things that we spendmoney on we don't really think
about add up, and so it's justbringing that additional layer
of awareness to it.
You can find some interestingspending habits.
Speaker 2 (17:31):
And it's interesting too, because you can tell where
people's priorities lie based onwhere they put their dollar.
If you have somebody that comesin and says, hey, I'm really
prioritizing my retirementsavings, I really want to retire
.
And then you look at theresources and they're
contributing the minimum totheir 401k and spend all the
money at the bar.
Is retirement really a priority?
Or if somebody says, well, Iprioritize my impact, I want to
prioritize giving money to thechurch, and then you look at
(17:51):
their spending patterns andthey're giving a hundred bucks a
month to the church andspending $6,000 a piece of
something, then where does yourpriority?
So I think doing the reviewdoes allow you to prioritize
what you're doing.
Make sure your resources aremoving you towards your ultimate
goal.
Speaker 1 (18:05):
I think you use the word which is intentionality.
It's making a consciousdecision.
You can do both, you can doeither, you can do what you want
, but it's just making sureyou're being intentional.
Yes, that leads into my nextquestion, which is in the book.
You talk about how, if you cut$1,000 in monthly expenses, that
(18:28):
could mean that you need about$300,000 less for retirement.
That's huge.
On one level it's like pizza Isthat a big deal?
The bar is a big deal, but whenyou quantify it like that,
that's huge.
Speaker 2 (18:36):
Yeah, agreed, and so the reason we put that in the
book was to offer perspective Ifyou go.
So let's say right now, likesome of the common searches are
how much do I need to retire?
You go to Google, right.
Or how much can I spend inretirement?
A general rule of thumb thatyou will see is you'll see what
they call the 4% withdrawal ruleand basically what that says is
, if you want your money to lastthroughout a 30 plus year
retirement, you can safelywithdraw 4% of your portfolio on
(18:59):
annual basis.
Now, I'm not advocating forthat, I'm not a rule of thumb
guy because everybody'sdifferent but I put that in
there to share perspective.
That's about a perspectiveshift, because people do look at
this stuff and that is what youwill see.
You'll hit the Google machineright what the 4% rule says if
you want to sustain your income,you can take out 4% of your
portfolio.
For example, you have a milliondollars.
The 4% rule says you can takeout $40,000 a year.
(19:20):
That's the rule when we talkabout.
If you can reduce your savingsby $1,000 a month, what is the
impact of that?
I give you the math.
I don't want to have asustained $12,000 a year, based
on the 4% rule of thumb.
You divide 12,000 by 4%, thatgives you $300,000.
So if you can cut back orreduce your spending, your
(19:41):
unnecessary spending, by $1,000a month, no-transcript, 10 years
(20:02):
, 15 years, before retirement,it matters what you do with
those savings.
I'll give you an example.
Let's say you cut the $1,000 amonth and you take that $1,000 a
month and you then invest that.
You allow that money to grow.
You will have significantlymore towards retirement.
But, that said, not everybodycan sell an overall super and
you're all just going to save$1,000 a month.
That's not realistic.
But let's take a different tack.
So going back to the pizza, soon, here again I'm going to
(20:24):
throw some numbers at you.
Let's say we're able to reduceour pizza habit by $375 a month.
So rather than buying pizzawith that, you invest it and you
get, let's say again, 8% rateof return.
You invest it.
Over the next 15 years that$375 a month grows to over
$129,000 under those assumptions.
So not only are you spendingless and needing less in
retirement, but you actuallyhave more.
Speaker 1 (20:45):
So you're both spending less and have more,
which I would imagine allows youto have more confidence and
have additional cash flow todetermine what's actually most
important.
Speaker 2 (20:54):
Correct, because it doesn't do you any good to say
you know what?
I'm going to cut back on mypizza habit and I'm going to
spend more on bourbon Sure,that's counterproductive, that's
just shifting expenses.
So when we talk aboutpre-retirement, if you can cut
back on those expenses andactually save or invest that
money, not only will you needless in retirement, but you will
have more.
Speaker 1 (21:10):
What do you find is how do you guide clients to
manage their spending, and whatI mean by that.
I think you said it is okay,I'm going to be intentional
about eating less pizza, I'mgoing to be intentional about
going to the bar less, but thenyour spending shows up somewhere
else because we're just humanbeings, right?
Do you encourage people to doannual look back or do you
(21:32):
encourage them to do anything interms of budgeting?
How do you help guide people sothat they can actually be
intentional and lock in theirspending habits?
Speaker 2 (21:41):
Yeah, so it's both.
So one is having anunderstanding of what and where
your money is going how are youspending that money and then
being intentional about whereyou send that money.
Now, people won't do thatunless they can see what the
impact of that is.
I'm a big fan of setting upsystematic programs.
So if I tell Joe that, hey,we're going to cut back 100
bucks a month to the bar Now,rather than just letting that
sit in his checking account, hewould set that up systematically
(22:02):
to go to some sort ofinvestment vehicle that takes it
off the plate.
So it's about being intentionalnot only understanding where are
you spending, how do you haveto cut that back, but then, when
you do that, where do youreallocate those resources?
Now, it might be reallocatingthat towards paying down debt.
It might be reallocating ittowards an investment account.
It might be bumping up your401k.
Everybody's different.
But the consistent thing isunderstanding where you're
(22:22):
spending your money, thenunderstanding where you want
your money to go and what youwant it to do for you, and if
you can get a handle on that,what do you have, what are you
spending, what are you doingwith it and how is that going to
impact you in the future.
You put together a pretty goodfinancial plan.
Speaker 1 (22:35):
Part of what I heard or took away from that is that
you don't want to just have thatdifference in money sitting
there in your checking account.
It's almost I'll use themetaphor or the analogy of
dieting.
It's like my wife makes me agood to help yourself the second
you can.
I'm going to likely help myself, whereas if I just know that
this is my meal and that's it,I'm going to enjoy the meal.
Speaker 2 (22:56):
That's another good analogy.
I like that, Paul.
Well done.
That's exactly right.
You don't want to have theportion control meal sitting
next to a plate of cookies.
Speaker 1 (23:02):
Exactly so.
Social security is a big topicfor people.
For many people they're onlyguaranteed source of income.
And you know, I've readdifferent books and I've heard
from different people onpodcasts and whatnot, different
strategies.
In your book you challenge theidea that waiting until 70 is
always the best move.
What are your thoughts onSocial Security?
Speaker 2 (23:24):
Yeah, so you're right , social Security it's a huge
decision, huge impact, bigdollars when you take the
totality of what people get overtime.
So you're right, that is adecision people want to get
right and there should bethoughtful analysis because
everybody is different.
But I will tell you, if you goout and ask 10 advisors, when
should somebody take SocialSecurity, nine of them are going
to say at 70.
Why is that?
Because they get more, okay,super.
How does that actually impactthem?
(23:46):
And where I challenge yousometimes we had a prospective
client that was coming in.
They wanted to retire.
We ran the numbers they couldretire and they had an advisor.
They said my advisor is tellingme to wait until 70 to retire
at 67.
They're saying that my advisoris telling me to wait until 70
to retire.
So why is that?
I said, well, because I getmore Social Security, so I'll be
a little better off.
So now, when you ran thenumbers, yeah, they'd be better
(24:06):
off 30 years from now.
But him him telling them theyhad to wait until 70 didn't give
them the confidence necessaryto be able to retire now when
they could, they could retire at67.
They, in their case, they didneed to take Social Security to
have the confidence they wantedthat guarantee because, you're
right, it's only guaranteedincome, not pensions.
And so they opted to take theSocial Security at full
retirement age rather thanwaiting until 70, because it
gave them the confidence to beable to walk away from the job
(24:28):
and spend the time with familyand themselves and enjoy their
lives.
It goes back to what you saidbefore we don't know our
expiration date.
Now, if they'd have waiteduntil 70 and they'd have more
income and 20 years from nowthey'd have more money super.
But they would not have gottenback those three years, those
three years of creating memoriesof themselves, their family,
the experiences they had.
If they waited until 70, justbecause somebody told them they
(24:49):
probably should, because theymight have a little more money,
they would have missed it andthey cannot get that time back.
They can't get that time back.
So when you make the SocialSecurity decision, I believe
there has to be thoughtfulanalysis around when and how.
Why?
Because in some cases, yes, ifyou run the numbers, you would
have a little more money whenyou're 85 years old if you
waited.
Speaker 1 (25:06):
If you make it that long.
Speaker 2 (25:07):
If you make it that long, because that's again we
don't know.
So, when you look at the socialsecurity decision, because that
is one of those things, havingthat guaranteed income does
impact confidence.
I can imagine, and so that'swhere, when you get into the
financial planning is a bit ofan art and a science.
These people don't have theconfidence to retire but they
could or should, because yougave them a false sense that
(25:27):
they have to wait.
I think that's doing them adisservice and so decision that
will allow you to haveconfidence in your retirement
and stay retired.
I've seen some of thesefinancial plans who run the
Monte Carlo analysis giving youa percentage likelihood of
success.
If you wait till 70, yourconfidence percentage is 96.
Speaker 1 (25:43):
That's awesome.
Speaker 2 (25:44):
What is it if I retire right now and take it 93?
It sounds pretty good to me.
Okay, I'll take it.
So making that decisionrequires more thoughtful
analysis than what I think a lotof people would go through.
Speaker 1 (25:55):
What I'm hearing is that there's the math, and then
there's the math applied to theperson and ultimately it's
what's driving the person, whatare their values, what are their
goals, what's important to them, and it ties back into the
beginning story with Ava.
We have enough, and that'swhere the recommendations I
imagine, imagine need to bebased on math, but also tied to
the person, their goals, theirvalues, et cetera.
Absolutely right.
(26:16):
The premise of the book, andreally the subtitle of the book,
is it's a guide to financialconfidence and meaningful impact
.
So let's switch gears a littlebit and tell us about the
qualified charitabledistribution strategy.
What is that and how is thatand why is that important to
people who are looking to makethat broader impact with their
(26:37):
resources?
Speaker 2 (26:38):
Let me first set up what that is, why it's important
.
So the qualified charitabledistribution is a rule that says
that you can send money afterage 70 and a half directly from
your IRA to a qualified charity.
When you do that, you don't paytaxes.
That's not income to you, it'scenter.
You don't take possession.
You send it directly to thecharity.
This is one of the tools Ithink is underutilized in
(26:58):
financial planning.
We're involved in a lot ofcommunity events, right, and a
consistent conversation I have.
I talk to people that are intheir 70s.
You talk to them.
Are you retired?
Yep, I'm retired, super.
Are you drawing money out ofyour IRA only because I have to,
so you don't need to?
No, I don't need to take thatmoney, but I got to take it out,
okay, fine.
Are you giving to a churchcharity Of?
course I am Okay, super.
(27:19):
Wouldn't it be nice if youcould take your money, rather
than taking your money out ofyour IRA and paying taxes on it
and then sending it to thechurch or charity, wouldn't it
be nice if you could not pay thetaxes at all to them?
And all these people are likehold on, you can do that.
You can do that.
Yeah, you can do that.
There are two consistent themesaround these people that we
talk to.
One is they're impact-mindedright, they want, they're giving
people, they're charitablepeople.
The second consistent theme isthey all have advisors.
(27:41):
They all have advisors.
How can you increase yourimpact with that?
Let's say I want to give $8,000to the church, but I pay 20%
taxes In order to give $8,000 tothe church, I would take
$10,000 out of my IRA, then$2,000 to the IRS and $8,000 to
the church.
My alternative would be ratherthan do it that way, how about I
just send $10,000 to the churchto cut the IRS out?
(28:03):
Unless you feel like you'reimpacted, you want to give more
to the IRS.
Speaker 1 (28:06):
Let's be honest.
Have you person that's beenlike I want to give more to the
IRS?
Speaker 2 (28:11):
No, don't, and I tell you, I'll ask you so.
Are you the person that checksthe box to give extra?
I don't know anybody doing that, but I do know that you can
increase your impact.
Speaker 1 (28:23):
It's like this to me is a new.
I don't think I've heard thisexplained the way that you just
said it, so I don't think thatthis has been on my radar.
And do people realize this,because it seems like a huge
difference if your intent is tomake impact, and instead of
paying the tax and then make animpact at a lower level, you can
just make more impact that way.
It seems huge.
Speaker 2 (28:38):
I think it is and I think what I think that's big is
like for some of theseorganizations that do have
people giving.
They should be talking to folksabout this.
You look at your giving roles.
You know that the 73-year-oldis giving you $5,000 or whatever
.
The number is right.
If they're just cutting you acheck, it's not coming right
from their IRA.
There's probably an opportunityto enhance the impact there.
Again, if we can enhance what'sgoing to these charitable
organizations, that's a goodthing.
(28:58):
And it's a simple technique.
Simple, but it's not widelytalked about, it's not widely
known.
Be it the folks you talk to.
And again, consistently, theyall had advisors.
But I think up with advisorsfocus on one thing exclusive.
Others, that's the ones thathave an advisor, but their
financial plan is a 60 40allocation, not looking at the
total picture and how can theymaximize what they're doing?
So I love the qcd concept.
(29:19):
I've personally seen peopleenhance their impact after you
talk to them.
Yeah, they like it, theyappreciate it, organizations
appreciate it.
I'm not a huge fan of thatparticular I I feel like good in
two ways.
Speaker 1 (29:30):
It's like I I feel good about not giving it to the
government and then better, andthen great about giving it to
the cause that I actually careabout.
That's awesome.
In your book you emphasizetaking action, not just planning
.
So question is why do so manygood financial plans collect
dust?
Speaker 2 (29:50):
That's a good question.
I think it comes down to twothings.
I think it comes down toaccountability and
procrastination.
Here's what happens sometimes.
You get this nice financialplan done.
It says hey, paul, you'resaving enough.
You're doing all these goodthings, you need to adjust this
and that, and you'll be fine.
You get that plan and say, oh,that's great.
Hey, I'm in good shape, I gotto make some changes, I'm going
to take that home.
It's going to hit the shelf,hit the cylindrical file.
Speaker 1 (30:11):
It's not getting looked at and what you do is you
dust it, because what I heardfrom you is that I'm pretty much
in good shape.
I don't need to worry aboutthese things, at least not for
now.
I'm solid.
Speaker 2 (30:17):
I don't need to do anything at all, and then they
maybe go back and meet withtheir planner a year later and
they get an update or somethinglike that.
So nothing actually happenswith the whether that's your
spouse, a mentor, your advisor,whoever I think accountability
is a key piece to actuallyimplementing a plan.
So there should be nobody's inperfect shape financially Not me
(30:38):
, not you, not anybody.
There's always stuff we need toand should be doing, and so
having an accountability partnersays okay, paul, you need to
get this done by end of March31st or whatever the number is,
whatever the day is, and thenbeing able to circle back to
that partner and them saying hey, paul, you were supposed to do
this, you do that.
And when you reschedule thatmeeting because you didn't do it
, funny how that works.
Yeah, funny how that works.
(30:59):
It's crazy.
And then the second piece isprocrastination.
Right, the status quo is alwayseasier.
It's always easier to donothing.
The most common one you think iskicked down the road is the
estate planning.
So where that could hurtsomeone, I had a friend of I
wasn't the family advisor hecalled me and said hey, can you
just take a quick look?
My dad's sick and I want tojust make sure that everything's
okay.
I said, yeah, let me you find,send it to me, I'll take a look.
And we did a review and in thiscase I looked at one of his
(31:19):
account.
Boy, I said you didn't have abeneficiary on that account.
You need to add a beneficiaryto that account.
I said okay, because they didcall the broker.
But the broker and thegentleman kicked the can down
the road and they didn't do it.
So you fast forward.
It was probably nine months orso, and then the gentleman
passes away.
So now my friend calls me andsays, hey, can you help me with
this stuff?
I said, yeah, I'll take a look.
Right, and you know what wasn'tdone.
(31:40):
Beneficiary change.
You know what they had to doand they're not doing anything.
What was the point?
I can actually do somethingwith the information.
Speaker 1 (31:58):
In your book you talk about the three-bucket system
for retirement income.
Speaker 2 (32:22):
Tell me about that, and so that's a very
conservative.
I'm going to spend that moneythis year.
Six months, two months,whatever.
I know I'm going to spend thatmoney.
So when I allocate the resourcetowards that bucket, that's my
near-term spending and with thatmoney I want to be like no risk
, because I know I'm going tospend that money.
And there's different you cando different amounts but I like
to have anywhere from one tothree years and very
(32:43):
conservative, I know I'm goingto spend it.
So that's bucket number one.
Bucket number two is more ofwhat I call a medium-term kind
of portfolio.
And I'm going to use thatportfolio to replenish my
near-term bucket that will beinvested for some kind of growth
.
And so what happens there?
As you spend down bucket numberone, ideally if you get market
gains you can replenish frombucket number two.
Now let's say I don't.
(33:03):
Let's say we go through aperiod of time where the market
is down.
I'm not going to bereplenishing Market's down, I'm
not pulling out a bucket two togo to bucket one.
But if you think about itpsychologically for the client,
market to client is notcomfortable for anybody.
Nobody likes it.
But if me as a client knowsthat I have one to three years
sitting in a secure bucket, Ican weather that storm a little
better.
And again in good years you'regoing to replenish Again.
Psychologically that conceptsays I'm okay, you're okay, we
(33:25):
can weather these storms.
The third bucket is ourlong-term bucket.
That's the money we ideallywe're setting aside for
long-term care, we're settingaside for the kids.
I hope to never touch it.
You can maybe be a little moreaggressive with that money
because I have no intention oftouching it anytime in the near
term, right?
So you're talking about thethree buckets and the advantage
of the clients is that they knowall their different areas are
covered.
They don't have to worry aboutwhat they saw on the news, what
(33:47):
they saw on CBC oh my goodness,the market's down or it's up, it
doesn't matter.
It doesn't matter because theyhave a plan in place.
That bucket system has a planin place.
How are they going to actuallyfunctionally manage their
retirement income?
Speaker 1 (33:57):
I was just going to say that, and this essentially
is.
It deals with the sequence ofreturns risk.
Speaker 2 (34:02):
Correct and that goes back to sequence of return risk
.
That goes back to if I'm takingout money in a down market, I
have to make more to get it back.
It's a mathematical problem.
Speaker 1 (34:10):
And the years in the three buckets that's based off
of, I'm guessing, justhistorical data in terms of what
?
Speaker 2 (34:16):
Yeah, that's all individualized.
If you have somebody that's gota great amount of fixed income,
Social Security pension, maybeyou need less, and that goes
back to the art and science.
So there's the hard and fast.
Hard and fast.
You need to have 1.72 years ofit all depends.
That's where you get to the endof the individualization.
Speaker 1 (34:29):
I'm glad that you said that.
It's good to know, because Ilook at some of these things
sometimes online, like you said,the 4% rule and it's like,
really I've enjoyed ourconversation so far.
And just in starting to wrap upa little bit, I have a few more
questions for you.
If someone only remembers onething from your book, or even
this conversation, what wouldyou like that one thing to be?
(34:51):
What would you like theirtakeaway to be?
Speaker 2 (34:53):
Our premise is that most people want to have an
impact greater than themselves,whether it's on their church,
charity, community, family,whatever but they can't do it
unless they know that they haveenough.
That's our starting premise,but I'll follow that up with.
A lot of people don't go on tohave the impact that they want
and the reason they don't isbecause they don't take action.
A lot of people will read books, they'll listen to podcasts,
(35:13):
they'll go watch a video,they'll go down the YouTube
rabbit hole and then they don'tdo anything.
So the one thing I would likethem to take away from that,
from this book or thisconversation, is you have to
take action or nothing willhappen.
If there are concepts thatresonate with you, take action,
go do something.
Have the conversation, meetwith your spouse, assess what
you want to have your impact tobe, assess where you are, but
actually take the action steps.
(35:34):
So if I had one key thing, onekey thing take action, make some
kind of decision and dosomething.
Speaker 1 (35:40):
I totally agree about action.
I think for me personally, myone nugget of new information
that I haven't heard elsewhereis that I forget the exact name
of it, but the ability to godirectly from ira tax free
distribution qualifiedcharitable distribution, because
that's something that I haven'treally at least paid attention
to.
So I think that's huge.
Speaker 2 (36:00):
That's an awareness thing.
A lot of times you go you seelike capital campaigns and
charities and all that.
They're talking about all thestuff they can do with the money
and they ask for it.
I think that the joke I heardthat I liked was the good news
is we have the money.
The bad news is it's in yourbank account.
Speaker 1 (36:11):
I haven't heard that before.
Speaker 2 (36:12):
I like that one, I like that one, and so being able
to show people better ways toenhance their giving without
enhancing their outflow.
So if I can give you more, butI you rather do, mr Charitable
Giver.
Speaker 1 (36:28):
Why isn't every single church leader or anyone
that receives donations, havingthis conversation?
Speaker 2 (36:33):
I don't know.
That's a good question.
I did talk to a local churchleader that had the conversation
.
He said oh, it's great, I loveit, we're going to hand start
giving.
I'm like that's great, I saidthey did it.
But here's the kicker though Isaid 70 and a half, he goes no
when they start taking theirrequired minimum distributions.
Because they changed rules onrequired minimum distributions
to bump your age back.
It was no longer 70 and a half.
They did not change the rulesfor the qualified charitable
(36:55):
distribution, so it doesn't haveto be a required minimum
distribution.
But he was one that had donesome research and was
communicating that to his parishand had enhanced his giving.
But even he didn't know you canget an extra couple of years of
giving out of them.
He didn't know that.
And so even the ones that doand are talking about it and he
did say that was at least forhis parish they were able to
significantly enhance what wasgiven and yet it's shifting
dollars.
Where do you want it to go?
Church or the IRS Chair, or theIRS, your call?
Speaker 1 (37:17):
That's a motivator right there for me, For someone
who's either listening to thisconversation or has finished
reading Beyond Enough and feelsinspired.
What's the first step that theyshould take or what's the next
thing that they should do?
Talking about accountabilityand action, what's the next
thing that you would advise themto do?
Speaker 2 (37:33):
The next thing I would advise them to do is I
would do some self-reflection onwhat is actually important to
them.
Where do they want to havetheir impact, what goals are
important to them?
And again, it's different foreverybody.
But if I don't know what'simportant, then I can't take the
steps necessary, I can'tallocate my decisions, I can't
adjust my decisions to what'simportant if I don't understand
it.
So the first thing I would do isI would sit down and I'd do
(37:54):
some self-reflection what am Iactually, where do I want my
impact to be and what am Iactually looking to accomplish?
Once I've done that, then Iwould sit down with important to
me.
Now, what do I need to do?
What action steps do I need totake in order to actually
accomplish that goal?
This is important to you andagain, your impact, your
(38:15):
importance, is different thanmine, different than Joe and
Sally, right, but you have to dothe self-reflection and decide
what is actually important.
And then you have to decideit's important enough to
actually do something?
It doesn't do you any good totalk about it, think about it,
do nothing.
Speaker 1 (38:26):
Do you find that people that come to you do they
typically have an advisor, butmaybe they've outgrown the
relationship.
Or do you find that they don'thave an advisor?
Or do you find that they havemore of that narrow, not
comprehensive planner where theyjust do one narrow thing?
Speaker 2 (38:40):
It's a combination.
I think the vast majority haveprobably outgrown or are looking
for more than what they'regetting currently, or,
alternatively, they've done alltheir savings in a 401k or
something like that and neverreally sat with a planner.
And so many people come andthey have a good financial
planner, it's covered all thebases, and they just want some
assurance that they're doingthings right.
I would say having a goodfinancial planner and there are
lots of good ones out there it'simportant, but the ones that
come to us typically, like yousay, have outgrown and are
(39:03):
looking for more as theytransition towards retirement,
transition towards being able tohave more impact.
Speaker 1 (39:09):
And you're located in Wisconsin.
Do you work with people only inWisconsin or do you work with
people in other states as well?
Speaker 2 (39:14):
No, we work with people in other states as well.
Yeah, we're in Wisconsin, yep.
Speaker 1 (39:17):
Do you find today that more meetings are virtual
or in person, or I still?
Speaker 2 (39:22):
prefer Paul.
I still prefer in person.
I like to be able to looksomebody in the eye, shake their
hands, really get to know them.
I greatly prefer in person,although we do have clients that
move throughout the country.
As much as I'd like to tell mywife I'm flying down to Florida
in wintertime for clientmeetings.
We certainly do the virtualmeetings, but I greatly prefer
face-to-face.
I'd rather be able to looksomeone in the eye, shake their
hands and really get to knowthem.
Speaker 1 (39:43):
Final question For and or to connect with you.
What should they do?
Speaker 2 (39:47):
Yeah, so a book's available on Amazon it's Beyond
Enough by Andrew LaFontaine.
If they want to connect with mepersonally, the best way is
probably through LinkedIn.
It's Andrew LaFontaine, no E onthe end.
A lot of people do that Over inBrookfield, Wisconsin.
I think that'd be the best wayto connect.
I'm happy to chat.
Speaker 1 (40:01):
Perfect, all right, andrew.
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