Q&A Edition: Where to Start with Retirement Planning, Ep #36

What can Warren Buffett teach us about the volatility of the stock market? Where do you get started with retirement planning? Should you bring in a professional to help you? In this episode of Retirement Made Easy, I answer some listener questions and share a story that drives home the point of long-term investing. Don’t miss it!

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

• [1:32] What we can learn from Warren Buffett
• [8:52] Answering Julie’s Question: Professional financial help
• [14:18] Make sure you’re in-tune with your family’s finances
• [15:59] Answering Ed’s question: Where do you start?

What we can learn from Warren Buffett

When asked about volatility and fluctuation in the stock market, Warren Buffett said that whenever you price stocks so frequently (and it is liquid) they may be way overpriced or way underpriced at any given moment.

He said to imagine you and your spouse picked out the perfect 80-acre farm. It has a beautiful house, income from crops, a beautiful view, etc. You paid $3,000 an acre for your farm. Your next-door neighbor owns an identical 80 acres. Every day, your neighbor comes over and offers to buy your farm. Some days he offers $2,600 an acre. Other days he offers $2,700 or $3,300 an acre.

It’s the same thing with the stock market. The price you see is the price that someone is willing to pay that particular day at that particular moment. But it doesn’t matter what is being offered if your stock isn’t for sale. Warren Buffett is one of the richest people in the US and is well-known as a long-term investor. When you’re holding something long-term, it doesn’t always matter what the price fluctuation is from one day to the next.

Answering Julie’s Question: Should you hire a professional?

Julie said she and her spouse are planning their retirement and are overwhelmed with the transition. She feels stuck and lacks confidence. She feels she needs professional help. My recommendation? Find a financial planner that specializes in retirement planning. I work with people 50 and older because their needs are different from a younger couple. There are so many things someone with a different specialty might not know versus someone who has helped dozens of people retire.

There’s a ton of information available online but it’s just that—information. You can’t read a book about how to become a better golfer and go out and beat Tiger Woods. There is both skill and wisdom that you’re lacking.

There’s no shame in hiring professional help, whether it’s a tax advisor or financial advisor. A financial advisor, tax planner, or estate planner is someone who will work with you to get you where you want to go.

Do you have to hire professional help? No. Do I have to hire someone to put up my own gutters? No. Do I want to learn how to do it? Not at all. I wouldn’t enjoy it, it would be stressful, and I’m not confident that the outcome would be better. It’ll cost more to hire someone to do the work, but it’s well worth it.

Where do you start with retirement planning?

Ed, one of my listeners, is 62 and wondering where to start with retirement planning. Thomas Watson—the man who created IBM—was asked how he built IBM. He replied, “I just thought about what I wanted and I worked backward.” If people did that with their retirement planning, they’d have a lot better outcome.

I met with a couple a few years out from retirement. They were looking for help in putting the pieces of the puzzle together. I asked them about the outcome they were looking for and helped them determine what success looks like for them. Together, we worked backward and uncovered the 5 key elements that were important to them.

You have to start with the end in mind. Figure out what your goals are, then plan from there. What pieces of the puzzle can make your dreams come true? You have to know what’s important to you before you can start planning. Figure out what you want and work backward.

Resources & People Mentioned

• US Census Bureau