The Number One Mistake Financial Planners Make

Updated insider information by Chellie Campbell, author of “The Wealthy Spirit: Daily Affirmations for Financial Stress Reduction”

141-May 21

“Everyone must row with the oars that he has.”—English Proverb

Years ago, when I was first starting to earn good money, I thought I would go to see a financial planner to get started saving and investing for my retirement. We talked about my goals, and what amount of money I would like to live on when I was retired.

Then she made The Mistake. She calculated how much money I would have to have saved by age 65 in order to have enough to retire, adjusted by inflation. I remember the amount, because it seemed enormous and totally unreachable: $1.2 million. She told me that I would have to start saving $800 every month in order to reach my goal. Well, I was only making $2,000 per month at the time! There was no way that I could save $800 a month. It was a totally unreachable number to me. I thanked her very much for her time and left the office, thinking that I was never going to be able to retire, so I might as well not bother saving anything. And so, for years, I didn’t save a dime.

The Los Angeles Times has run articles called “Money Makeovers” where a financial planner helps people with their retirement objectives. They are usually quite good, but every now and then one of them makes The Mistake. I’ll never forget the one who was advising a young professional woman in her early thirties who had a six-figure income and over $1 million saved, that she wasn’t saving enough. What kind of message does that send to people who don’t have anywhere near that kind of money? If she’s not going to be okay, you must be headed for a homeless shelter with a shopping cart!

Did this ever happen to you? Did you ever get the impression that the goal was so out of reach that it was out of sight? Don’t get discouraged before you get started. Get into the savings habit. Start small and build. Learn about asset building and planned prioritized spending. Get excited as your assets grow. Strengthen your muscles climbing the hill in the back yard before you attempt Mount Everest.

If you don’t have a financial planner, get one. Find one who will be your savings coach, and help you build your wealth, and celebrate your wins with you. My financial planner, Dianne Bishop, calls me every time I send her a more substantial check and says, “Good job, Chellie! I’m proud of you!” I find myself trying to make more money so I can send her even bigger checks and really impress her. Get one like that. Or be one like that.

Today’s Affirmation: “My assets grow easily and effortlessly every day!”

Here’s how to calculate the amount of money you’ll need at retirement: 1) Whatever you have now; plus 2) Ten million dollars.

That sounds like enough to make you feel safe, right? Financial advisors estimate that the percentage of Americans who can actually save enough money to afford a reasonable lifestyle for 25 years without working is about 3%.

Social Security helps—and it isn’t going bankrupt, either. Michael Hiltziks’ column in the Los Angeles Times in March of 2014, outlined the relevant facts: Life expectancy has risen since Social Security was instituted in 1935. But the difference is mostly because of improvements in infant mortality. In 1935, if you made it to age 65, an average 65-year-old man could expect to live to about 77, and a woman to 78. In 2009, the figures were 83 for men and 85 for women. That’s an extension of 6-7 years, not the decades often reported. And the payroll tax has increased from 2% at its inception to 12.4% today.

It will be a thin retirement if that’s all you’ve got, but it certainly helps. If you continue to work part time, have your own business or start one, you can continue to earn money.

I spoke with a 50-something man one day. He was burned out at his job and wanted to retire. But he was afraid. “I have enough money to last twenty years,” he said. “But if I live longer than that, it’s a problem.”

Living too long is a problem? No—the problem is working too hard and burning out. The problem is too much work and not enough vacation. The problem is not having work you love.

When was the last time you heard a movie star say, ‘I can’t wait until I have my pension funded so I can retire and stop making all these movies’? You never hear that. Because actors love their work. At ninety years old, they’re trying to convince insurance companies how healthy they are so that they can make a movie. They die onstage. They want to die working because they love their job.

The game of richest man in the world has been won already. Bill Gates is still working. The number two richest guy, Warren Buffet, gave the number one guy all his money. He’s still going to work every day. The number twelve guy, Sheldon Adelson, is still working, too – he has a plan in place to become the number one guy. He’s 84 years old! Why bother? you might ask.

Just for fun is the answer.

Find work that you love doing and you won’t want to retire from it. Retire to do what? Lie on the beach? For how many days would that be interesting? You only think you want to lie on the beach because you haven’t had a good vacation. So go to Hawaii or Cabo or the Caribbean or someone’s backyard in Malibu now.

And enjoy a latte on the beach while you’re at it.