The Truth About Heading Into Retirement

The average retirement is 17 years. Are you managing your nest egg wisely?

Out of 100 people who starts working at the age of 25, by the age 65, 1% will be considered wealthy. (src: Statistic Brain)

With alarming statistics like this, it's no wonder why the thought of retirement brings on a sense of uneasiness. Nobody wants to downsize their living standards upon retirement, yet this reality is very frightening for many.

What level of savings do you require to generate a certain level of monthly income? The table below lays out the truth.

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Following The Rules Is Not Enough

Many of those that do follow the rules and prepare for retirement run out of money well before they run out of life. This very thing happened to my grandparents. They worked blue-collar jobs, saved 20% of their earnings, bought life insurance policies, paid off their home, and lived frugally all through their golden years, and still died penniless. They outlived the plan, yet did exactly as were told by professionals who didn't necessarily know better themselves.

When you dig deeper and get educated on what's required to not only make your money outlive you, but to benefit generations far beyond your own (along with any missions you feel driven to support), your mind will swim in a seemingly endless barrage of legalese and best accounting practices. It's overwhelming and easy to pass on for another day.

As my father once said,

Just last week I was 17, then on Sunday I was 45, and today I'm 74. Where did the time go?

Succession Planning Strategies

Here are 7 issues to consider should you have significant wealth and are considering succession planning.

Use Trusts
Provisions should be crafted with the descendant in mind.

Use Customized Clauses
No boilerplate is allowed here, and they must determine distribution events.

Create a Family Office
Consider your wealth transfer based on a business model.

Create Governance Documents
Operating agreements become a framework for the family business.

Rear the Next Generation Early
Don't wait to bring youth into the business. Educate them early. Play monopoly with your kids when they are of the age.

Focus on Philanthropy
Make charitable giving a large component of the family plan.

Establish a Cohesive Team
Vetting your financial team and bringing in the best counsel will affect a plan that otherwise could not be.

I've found the last point the most important.

Over the years, I've discovered that collecting a world-class team of professionals is a challenging proposition. Finding a team that would champion our desired family plan had proven virtually impossible, but it can be done and MUST be done. I ended up spending 7 years searching for our own perfect team of business professionals that had both the experience and business acumen I expected and deserved.

You shouldn't settle for anything or anyone less, even if it takes you 7 years as well... and this is why you must start now.

Blessings always.

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