Ep 49: How to Build a Strong Financial House

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The Concept:

How can you build a strong financial house? Mike gives you step-by-step instructions to create a solid foundation for your finances.

The Reality of the Matter:

Putting together a financial plan is like building a house. You need a strong foundation to create the walls, roof and finishing touches. On this episode of the Retirement Reality Podcast, Mike Kojonen gives you step-by-step instructions to create a solid foundation and financial plan.

Foundation = Income Plan

Before you start building a house you need to make sure you have a solid income plan in place.

“A lot of people have that misconception – ‘I don’t need that much income in retirement,’” said Mike.

When you walk away from a paycheck, you have to have a plan for how you’ll create income on a monthly basis to cover your basic lifestyle.

Walls = Investment Plan

Part of the planning process involves decisions about how your money will be invested. The walls of your financial house are the liquid investments that help you grow your assets so that you can give yourself a raise in future years to offset inflation

“We want to make sure your investments are still making money,” said Mike. “You want an appropriate amount of risk.”

Roof = Insurance protections

The roof of your financial house should protect you from risks that could devastate you financially, such as the premature loss of a spouse or long-term care expenses.

Life insurance is an option, but it’s not always necessary for everyone. It depends on several factors, including whether you still have a mortgage on your house.

Finishing touches = Estate Plan

When creating an estate plan, make sure you have the right beneficiaries listed, a will in place, a healthcare power of attorney and everything registered correctly.

“You’ve worked your whole life for everything,” said Mike. “The one thing people really forget or don’t put a lot of attention into the details is the estate plan.”

We have much more advice in the episode, as well as viewer mailbag questions about early retirement and the rule of 100.

3:56 – Foundation = Income Plan

6:23 – Walls = Investment Plan

8:11 – Roof = Insurance protections

11:20 – Finishing Touches = Estate Plan

16:54 – Mailbag: Forced into early retirement

19:12 – Mailbag: Can you explain the rule of 100?

Thanks for checking out the Retirement Reality Podcast. We’ll talk to you again next week.

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