Over the last 10+ years as a financial advisor, I’ve heard a lot of horror stories. I’ve also heard a lot of crazy things come out of my client’s mouths. So in this episode of Retirement Made Easy, I’m going to share the top 5 financial life lessons I’ve learned from my clients. After all, the best way to learn is from someone else’s mistakes. Hopefully, these lessons can help you make better decisions for your retirement.

You will want to hear this episode if you are interested in…

  • [2:03] My Top 5 Financial Life Lessons
  • [3:21] Lesson #1: Be careful loaning money
  • [7:02] Lesson #2: Plan for the unthinkable
  • [11:11] Lesson #3: Look at the big picture
  • [15:40] Lesson #4: Be careful how you title assets
  • [20:07] Lesson #5: Teach your kids how to save

Lesson #1: Be careful loaning money

A gentleman in his 70s loaned his best friend’s son some money for a real estate purchase—north of $200,000. His son’s friend was supposed to make interest payments on it. But the son moved to Colorado and stopped answering his phone. My client never received one interest payment. He lost a HUGE chunk of his retirement because he trusted the wrong person. Unfortunately, he still trusts that he’ll get that money back.

If and when you loan money to people, you have to expect that you may never get it back. highly recommend you get an attorney or CPA to draft up a loan document that is notarized and signed—with the repayment terms spelled out in the document. Be cautious with your money and loan out an amount that won’t devastate you financially.

Lesson #2: Plan for the unthinkable

I’ve been a financial advisor for 10+ years. I have, unfortunately, had clients pass away. A divorced gentleman left each of his kids over $500,000. When he passed away, his two kids were in their early twenties. Because they inherited a 401k, they had to pay taxes on every dollar that they withdrew. The son withdrew money to buy a $65,000 sports car. Then he bought a boat. Then he blew more gambling. In 18 months, the money was gone—and he didn’t save enough to pay the taxes. The life savings my client worked so hard for was squandered by his son. The lesson? Make sure your inheritance goes to someone financially responsible—or put a trust in place.

Lesson #3: Look at the big picture

Someone I spoke with had a simple IRA through work. She told me she stopped contributing to it because the annual fee was $50 (she thought it was too high). But her employer was matching 3% of her salary dollar-for-dollar. 3% of her salary was $1,500 a year.

She was looking at the cost when the end benefit was far higher. A simple IRA is 100% vested from day one. That’s a 100% rate of return on her money, for only $50 a year. She would’ve only paid $50 to make $1,450—but she thought it was too high. Be careful when you’re trying to save money. There are no bargains in toilet paper, life preservers, heart surgery, or parachutes.

Lesson #4: Be careful how you title assets

My grandfather’s best friend—a fellow Korean war vet—had one son. He decided that when he died, he wanted his son to inherit the 500+ acres of land that he owned in Illinois. So he added him as a joint owner. Unfortunately, his son got divorced. All 500 acres got auctioned off and a large portion went to his son’s ex-wife. Perry was left with 120 acres of the original 500-acre farm. It cost him hundreds of thousands of dollars. He was in tears over it until the day he died. When you put someone’s name on any asset, be very careful. If something happens to the person named as the joint owner, you may lose those assets. You open yourself up to a lot of risk.

Lesson #5: Teach your kids + grandkids how to save

I’ve never heard anyone say “Man, I wish I wouldn’t have saved so much money for retirement.” I’ve met many people solely living on social security because they had no other resources. Imagine the hurt and pain of someone only living on social security after they’ve diluted their entire retirement savings. That’s why you NEED to teach your kids how to be good with money from an early age. Show them the value of saving and investing for their future so they don’t end up penniless in their retirement years.

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