I have seen an awesome shift over the past 20 years.
The old paradigm was:
- Head down
- Save in a 401(k)
- Retire at 65
- Start withdrawing 4% from your portfolio
- Age 75+ failing health and senior care
Anecdotally: What I saw in practice = People died with too much; enjoyed WAY too little!
- They didn’t take enough vacations
- They didn’t do enough fun stuff while their body could do fun stuff
- They lived exactly as they set out to do, head down in accumulation mode
The new paradigm is:
- Find balance between saving for the future and living today
- Have a plan to access (USE) your wealth today, e.g.: HELOC, Securities Based Line of Credit, Brokerage Account
- Saving outside your 401(k), e.g.: Roth IRA, Brokerage Account, HSA
- More flexibility and optionality, e.g.: Walk away (from work) when you want too
- Enjoying life throughout
I fully support this wonderful trend.
A quick real-life example:
A W-2 employee started a side business years ago. What began as an exciting hobby turned into a full money-making machine. Obviously, he wanted a plan his transition from his high-paying W2 job into his new full-time business owner role.
Over the past several years he reduced savings to his 401(k) and increased cash allocations in his HYSA and brokerage accounts.
The transition to full-time business owner would have been a much larger leap of faith had he been saving ONLY in his corporate 401(k) plan.
Life changes quickly and I believe it is a great feeling to error on the side of flexibility and optionality.
I share all of this to also say; you need a plan. I do not encourage you to take on large financial risks without thoroughly preparing and having all of your ducks in a row first. Yes, we preach optionality, flexibility, walking away from your “job” on your terms, but that’s for those that have planned and prepared.
If you’re a high-achieving professional and ready to take control of your finances and create a plan that reflects your values, let’s talk. Together, we can make sure your story is one of security, generosity, and purpose.
–Nic
This is a hypothetical story and not indicative of any specific situation or client. It is presented only as an example and not intended as investment advice. Investing involved risk and there is no assurance that any investment strategy will be successful.
Any opinions are those of Know My Plan and not necessarily those of Raymond James. Expressions of opinion are as of this date and are subject to change without notice. There is no guarantee that these statements, opinions, or forecasts provided herein will prove to be correct. Investing involves risk and you may incur a profit or loss regardless of strategy selected, including diversification, and asset allocation. Past performance does not guarantee future results. Future investment performance cannot be guaranteed, investment yields will fluctuate with market conditions.
