{"id":8204,"date":"2022-06-13T18:20:30","date_gmt":"2022-06-13T23:20:30","guid":{"rendered":"http:\/\/blog.jlbn.net\/?p=8204"},"modified":"2022-06-19T14:47:09","modified_gmt":"2022-06-19T19:47:09","slug":"i-want-to-retire-a-millionaire-so-i-showed-my-portfolio-to-a-financial-planner-and-he-said-4-mistakes-are-holding-me-back","status":"publish","type":"post","link":"http:\/\/blog.jlbn.net\/?p=8204","title":{"rendered":"I want to retire a millionaire, so I showed my portfolio to a financial planner and he said 4 mistakes are holding me back"},"content":{"rendered":"\n<ul><li>I want to retire a millionaire, so I asked a financial planner to look at my strategy so far.<\/li><li>He said I need more tax diversification and income streams, and a plan for retirement income.<\/li><li>He told me I need to contribute to my retirement account more often, not randomly throughout the year.<\/li><\/ul>\n\n\n\n<p>For the past two years, I&#8217;ve been working hard to reach&nbsp;<a href=\"https:\/\/www.businessinsider.com\/personal-finance\/retire-early-millionaire-manage-risk-financial-planner-advice-2022-5\" target=\"_blank\" rel=\"noreferrer noopener\">my goal of retiring as a millionaire<\/a>. I knew this would be a challenge, since I only started saving for retirement in my early 30s, but I still decided it was something I wanted to achieve so I could spend my later years living comfortably.<\/p>\n\n\n\n<p>While I took some steps to start putting this plan into motion, like opening a SEP IRA and adjusting my spending habits, I knew I had a lot more work to do. That&#8217;s why I asked financial planner\u00a0<a href=\"https:\/\/www.greenbeatfinancial.com\/about\">Adam Scherer\u00a0<\/a>to review my retirement portfolio and tell me if I&#8217;m on track to retire as a millionaire. He said\u00a0<a rel=\"noreferrer noopener\" href=\"https:\/\/www.businessinsider.com\/personal-finance\/mistakes-stop-making-retire-millionaire-2022-5\" target=\"_blank\">I&#8217;m making four mistakes<\/a>\u00a0that are holding me back from reaching my future goal.\u00a0<\/p>\n\n\n\n<h2><strong>1. I only contribute to my SEP IRA a few times a year&nbsp;<\/strong><\/h2>\n\n\n\n<p>Ever since opening up my first retirement account at the age of 30, I vowed to make frequent contributions to my&nbsp;<a href=\"https:\/\/www.businessinsider.com\/personal-finance\/sep-ira\" target=\"_blank\" rel=\"noreferrer noopener\">SEP IRA<\/a>. At first, I was good about depositing money monthly. But as time went on, I found myself forgetting to do this or just tempted to use that cash on purchases instead.<\/p>\n\n\n\n<p>Scherer says one main downside to not contributing monthly is that I&#8217;m missing out on opportunities to buy into investments when they are potentially priced lower due to normal market or economic fluctuations.&nbsp;<\/p>\n\n\n\n<p>One way to fix this mistake is to automate my contributions. Scherer says that setting up a monthly automatic transfer to my SEP IRA will put less pressure on my overall cash flow and help me develop a positive retirement savings habit that could pay off in the long run.&nbsp;<\/p>\n\n\n\n<h2><strong>2. I don&#8217;t have any tax diversification&nbsp;<\/strong><\/h2>\n\n\n\n<p>When I opened up my SEP IRA a few years ago, I thought that was the only account I needed to help me plan for retirement. It turns out I was wrong.<\/p>\n\n\n\n<p>Scherer says that tax diversification, which is the strategy of having assets in accounts that have varying tax treatments (e.g. tax-deferred, taxable, tax-free) allows for a smoother retirement income strategy and generates tax savings.&nbsp;<\/p>\n\n\n\n<p>&#8220;If your invested assets are located in a single account type, the options available to meet your retirement income needs in a tax-efficient manner become more limited and could result in additional taxation,&#8221; says Scherer.<\/p>\n\n\n\n<p>To help my retirement savings grow, Scherer recommends establishing accounts with varying tax treatments. For example, as a self-employed individual, I can have my SEP IRA as the tax-deferred account, a&nbsp;<a href=\"https:\/\/www.businessinsider.com\/personal-finance\/best-online-brokerage\" target=\"_blank\" rel=\"noreferrer noopener\">brokerage account<\/a>, which is taxable, and a Roth IRA, which offers tax-free withdrawals.<\/p>\n\n\n\n<p>&#8220;Over time, adjust the location of your contributions so the result is a balanced, tax-diversified allocation as you head into retirement: 33% in taxable accounts, 33% in tax-free accounts, 34% in tax-deferred accounts,&#8221; says Scherer.&nbsp;<\/p>\n\n\n\n<h2><strong>3. I don&#8217;t have a retirement income strategy<\/strong><\/h2>\n\n\n\n<p>Even though I have a goal that I want to retire as a millionaire, I don&#8217;t have a viable plan in place to help make that happen.&nbsp;<\/p>\n\n\n\n<p>Scherer points out that if I want to reach this goal, I need to account for variables that include: the amount of my earnings, the length of time until retirement, the length of time I&#8217;ll be in retirement, the effect of inflation on the value of my savings, an estimate of my living expenses throughout retirement, additional savings for contingencies (traveling, health-related issues, gifting), and a required rate of return on my invested assets to get me to my goal in the timeframe I desire.&nbsp;<\/p>\n\n\n\n<p>To begin figuring out this strategy, Scherer recommends using a&nbsp;<a href=\"https:\/\/www.businessinsider.com\/personal-finance\/retirement-calculator\" target=\"_blank\" rel=\"noreferrer noopener\">retirement calculator<\/a>&nbsp;or working closely with a financial planner.<\/p>\n\n\n\n<h2><strong>4. I don&#8217;t have enough income streams&nbsp;<\/strong><\/h2>\n\n\n\n<p>Aside from my businesses and side hustles, I don&#8217;t have many other fluid streams of income.&nbsp;<\/p>\n\n\n\n<p>&#8220;Your current earnings provide you with the opportunity to spend on things that you value today and save for your future self,&#8221; says Scherer. &#8220;By having more sources of income, whether active (earnings), passive, or portfolio, a balance of saving and spending that truly aligns with your values and dreams becomes easier.&#8221;<\/p>\n\n\n\n<p>Scherer says one way to develop a passive income stream is by allocating investments to income-generating vehicles, such as dividend-paying stocks or coupon-bearing bonds. He also recommends looking into rental real estate or investing as a silent partner in other businesses as another passive-income generator.<\/p>\n\n\n\n<p>&#8220;Ultimately, any of these alternatives need to be reviewed and selected only if they align with your overall retirement strategy and personal values,&#8221; says Scherer.<\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>I want to retire a millionaire, so I asked a financial planner to look at my strategy so far. He<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[254,3421],"tags":[888],"_links":{"self":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8204"}],"collection":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=8204"}],"version-history":[{"count":1,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8204\/revisions"}],"predecessor-version":[{"id":8205,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=\/wp\/v2\/posts\/8204\/revisions\/8205"}],"wp:attachment":[{"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=8204"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=8204"},{"taxonomy":"post_tag","embeddable":true,"href":"http:\/\/blog.jlbn.net\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=8204"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}