How Is Your Retirement Plan Working?

I

 have calls with many professionals (dentists, orthodontists, doctors, and other professionals) who are looking for an alternative way to maintain, preserve, and build wealth before looking at their retirement options. They’re not satisfied with their current retirement plan.

The big conundrum today is: Where can you put your money with certainty of sustainability for both the nest egg itself, and the cash flow that nest egg should produce?

If you follow me then you know I am not a fan of the accumulation model, the nest egg model. This is the retirement plan Wall Street conventionally teaches – put money in tax deferred vehicles like 401(k)s, save it up, get as much in there as you can and then hope for the best, fingers crossed. 

That is not a retirement plan.

There will be very few, if any, in this generation that can actually retire off of some kind of 401(k) alone. They will need other aspects of wealth production or face downsizing their lifestyle, or working much longer in their careers. Having that scarcity mindset (that mentality of running out) is not what anybody works so hard to get to.

I have calls with doctors and dentists all the time who are looking for that alternative path. I’ve discussed ways that I did it and how I've helped hundreds of other professionals with their freedom game plan.

Back in June I had a call with a 66 year old doctor. He and his wife had sold his practice about a year ago. He's completely done practicing and he's been watching his investment accounts (mainly on Wall Street) – his stock market mutual funds and maybe some bonds mixed in there.

Dr. David Phelps speaking at a Freedom Founders Free For Life Retreat
Dr. David Phelps speaks at the Free For Life Retreat at Freedom Founders

In January of this year, he had around $2 million in capital accounts. In June it was down to about $1.5 million. He had lost 20 to 23% in his capital accounts in the first half of 2022.

That's very common for most people who invest in Wall Street, because you pretty much buy the market. 

And when you buy the market you're going to be suspect to its volatility.

When you have a great bull run market like we've had in the last 10 years, since the great financial recession of 2008-2010, it's wonderful. Everything looks rosy and your investment capital's up high. You retire out, sell your business, sell your practice, and then bingo… the market turns.

I've seen this happen time and time again, over multiple recessions and corrections, over many years. Just when they thought the road was clear, all of a sudden there's disruption, there's volatility

I often hear from people, “I've always wanted to invest in alternatives like real estate.” Or, “I tried it a couple of times on my own – that didn't work out.” Or, “I haven't tried it but I don't want to make another mistake in anything.” Of course not. We don't want to make mistakes.

So what's the answer to that? The answer is: You have to find a tried and true planand not the plan the majority is following, which is traditional Wall Street.

I promise you, that retirement plan is not going to work for almost anyone. It's a scarcity game because you have to live with scarcity.

This couple I spoke with was talking about that very fact. “You know, we’d like to live a little bit. We’d like not having to count our pennies or only going out to eat once a week.”

I mean, goodness sakes. What a way to finish out your life after you've put in all those years and the risk and liability of being a business owner. I asked him, ”What's your plan going to be?” Maybe it’s talking to your financial advisor? “Well, yes, but we really don't like that plan.” They’ve been with the same financial advisor for 30 years and I'm not denigrating that financial advisor. 

I'm just saying that traditional retirement plans are very problematic. 

I can't find any financial advisor who's told their clients exactly how much money they need to have – and exactly how much cash flow on a repeatable, sustainable basis their nest egg can conservatively produce. They can't do that.

I can't zero it into a T, but I can (with conservative numbers) talk about cash flow. And that's what we do in Freedom Founders. We back into the numbers.

I’ll end this story here – that wasn't the key aspect of what they were looking for. Certainly they want to look for more sustainability and protection of their wealth – Rule number one, don't lose principal. They've already lost 23%, not a good thing. 

They don't want to lose more.

They look at the “cost” (or what they call costs) of being part of a group like Freedom Founders. I say, “Well, is it a cost? Is that really an expense? Or is that an investment?” Because if it's a cost to you, then we can always reduce costs in life. But if you want the best? If you want speed? If you want a curated group that actually provides real implementation to assets that have been underwritten at a high level?

David Phelps DDS at a recent Free for Life Retreat
Dr. David Phelps speaks about Freedom at a Free For Life Retreat

Then you have to invest to have that. If you don't want to invest in that then you can keep doing the plan that you currently have. It's just as simple as that.

Those are the kinds of questions they were asking, but here's what really helped. They have adult children who they would like to give the mindset of how they can protect and build their wealth outside of their own respective careers, wherever they might be.

My story: I started in real estate when I was 22 alongside my professional career. I did both in tandem. 

But real estate is what set me free.

Now, are there other ways to do it? Of course there are, but I know how to do real estate. I know how to do real estate really well. I've been there. I've been through the corrections, the market volatility, and I have curated the best of the best. 

We're not perfect, but we certainly can zero in on a level of stability that the financial markets cannot. 

No question about it.

Last point that this couple brought up was – what will happen if something happens to the spouse taking care of the finances? This should be a common theme, right? 

You're in your sixties and someday somebody's going to be gone. And if it's the person who's had the financial reins all those years, where are you left?

One of my dear classmates from dental school actually passed away this last year and getting to help his widow, good friends of mine, and their young sons is something I'm proud of that our group can do. 

We’re helping her weave through the finances and the assets that were left behind by their hard work together. Now she has a roadmap on how to protect it and preserve it so that she can go on with her life and not live in that scarcity.

When I told that story to this couple I was having a discussion with, that sinked it right there. When you're talking about ROI (Return on Investment) – that’s important, but what's the real ROI? 

What's that really mean, to be a part of a community that really looks out for its own at a very high level?

Building your retirement plan is more than just the financials (which are important), it's also about the people who will have your back in these crucial moments.

If you don't have that in your world, if you don't have people that are really looking out for you, you don't have much.

To your freedom!

– David

P.S. Whenever you’re ready, here are some other ways I can help fast track you to your Freedom goal (you’re closer than you think) :

1. Schedule a Call with My Team:

If you’d like to replace your active practice income with passive investment income within 2-3 years, and you have at least $1M in available capital (can include residential/practice equity or practice sale), then schedule a call with my team. If it looks like there is a mutual fit, you’ll have the opportunity to attend one of our upcoming member events as a guest. www.freedomfounders.com/schedule

2. Become a Full-Cycle Investor:

There are many self-proclaimed genius investors today who think everything they touch turns to gold. But they’re about to learn the hard way what others have gained through “expensive” experience. I’m offering a free report on how to become a full-cycle investor, who knows how to preserve and grow capital in Up and Down markets. Will you be prepared when the inevitable recession hits? Get your free report here.

3. Get Your Free Retirement Scorecard:

Benchmark your retirement and wealth-building against hundreds of other practice professionals, and get personalized feedback on your biggest opportunities and leverage points. Click here to take the 3 minute assessment and get your scorecard.

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