Be Like Jimmy!

One of the benefits of my line of work is that I see, with my own very eyes, what works and what doesn’t when it comes to retirement planning.  I’ve been doing this since 1998 and I’ve worked with THOUSANDS of people over the course of my career. 

It becomes so blindingly obvious what works and it is so doggone simple that to try to develop a better mouse trap is a pure waste of time and money.  Don’t do that!  Do what works and you’re going to be good to go.

So what works? Well, I’m going to share with you an email I received from Jimmy last night. I posted it as a blog on my website which you can find here.  Such basic stuff that no PhD in finance needed. In fact, I guarantee no education at all needed, other than good, ole-fashioned common sense. 

Two fundamentals ring true, always. 
1. no debt
2. pension

If you have no debt and a pension, of any size, I can almost assure you you’ll be ready to retire. 
“But Josh, I don’t have a pension!” I hear you screaming right now.  Social Security? That’s not a pension, with a Survivor Benefit and a Cost-of-living-adjustment?

If Social Security isn’t a pension, well I don’t know what is.  

Now some folks also have a private pension through their employer.  More power to ’em.  They’re going to be just fine if #1 above is met.   But what if you don’t have a private pension? And this is where the words of Jimmy ring very true to what I always say, once you won the game STOP FLIPPIN’ PLAYING!…
“With my personality being so paranoid about not having enough money in retirement, it really was best for me to just do SPIAs so I wouldn’t have the stress I would put on myself. I grew up so incredibly poor and don’t ever want to go back to living that way. The pension and SPIAs give me the security blanket that I mentally needed. “

Could Jimmy “do better” by not taking the annuity with his retirement money? Maybe.  But then, does it matter? I mean, if he’s kicking butts and taking names WITHOUT the risk, why take the risk, especially in this insane times? 

Notice what else he says, and THIS is THE MOST IMPORTANT THING.
“Since my house is now paid off and I don’t have many bills. My life is good! “
and
“I guess it was a good idea after all to drive my old car for 15 years during which I had no car payment so I could put that extra money towards paying off my home loan alot faster which in turn allowed me to increase my retirement savings.”

Now, I give Dave Ramsey a lot of crap for his thoughts on Whole Life Insurance, Reverse Mortgages and his projections for investment returns. BUT where Dave is always superior to almost every other financial guru out there is his harping on paying off debt.  The importance of being debt free can not be stressed enough. 

No home loan. No car loan  means no income needed to pay for those things.  No income needed to pay for those things means no taxes to pay on that income needed to pay for those things.  Thus, the beauty of IMPUTED INCOME! 

Jimmy is living rent free and driving car loan free too. 

Which leads me back to myself.  I am doubling up my mortgage payments each and every month.  That means $5,000 a month goes from my checking account to PenFed, which owns my mortgage, and really my house. 

My goal is to have this puppy paid off in 5 years.  At that time, I’ll be 56 and will have an immediate “salary” increase of $5,000.  What will I do with that extra savings?  Start socking it away like a crazy man. By the time I’m 60 I’ll have $300k in the bank. TONS of equity in my home. And whatever my investment portfolio has grown to. 

We’ll downsize. Live off the remaining equity from the sale of this house, plus my cash. And, oh by the way, all my investable assets will be in Roth.  So you know what I won’t have to pay ever again? Yup, taxes.  I’ll be POOR ON PAPER. Meaning I will quality for HUGE Obamacare subsidies until I’m 65 when Medicare kicks in.  Obamacare subsidies allow me to continue to be POOR ON PAPER as I won’t need the income in which to pay massive health insurance costs, (Remember, IMPUTED INCOME???)

Will I live like Donald Trump? Nope.  Do I want to? Nope. 

Give me my dogs, a garden, a vacation or two a year, some local raised grass-fed beef and I’m good to go. Nothing fancy. Just like ole Jimmy here and guess what? IT WORKS!!!

Be Like Jimmy!