Latest / TaylorMade Retirement with Taylor Demars, CFP® / Why Your Financial Plan Shouldn't Feel Like IKEA Instructions

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Why Your Financial Plan Shouldn't Feel Like IKEA Instructions · TaylorMade Retirement with Taylor Demars, CFP®

• 0:00
  SPEAKER_01: Almost everyone has an experience with IKEA, whether it's getting lost in their massive showroom or just leaving with way more than you planned.
• 0:07
  SPEAKER_01: It turns out that the entire experience from the parking lot to getting back to your living room actually has a lot to do with financial planning.
• 0:12
  SPEAKER_01: We're gonna unpack for you today.
• 0:41
  SPEAKER_02: Some assembly required.
• 0:44
  SPEAKER_02: Taylor and I were talking, we're like, what are we gonna talk about?
• 0:46
  SPEAKER_02: And he's like, I had to take a bunch of kids' furniture apart this past weekend.
• 0:49
  SPEAKER_02: I want to talk about that.
• 0:50
  SPEAKER_02: And I was like, all right, let's do that.
• 0:52
  SPEAKER_02: It's true.
• 0:52
  SPEAKER_01: It's true.
• 0:53
  SPEAKER_01: I was uh my my fingers are were fiddling with those tiny Allen wrenches for quite a while yesterday, and uh as our kids are getting older and taking down cribs, putting up beds, and one Allen wrench for it all.
• 1:05
  SPEAKER_01: I know.
• 1:06
  SPEAKER_01: I was like, man, I know there's someone's has a product out there that like makes this like a drill, and I just have been too lazy to find it.
• 1:12
  SPEAKER_02: But yeah, now how many folks, how many of you out there listening, you open your junk drawer and you have 42 of the same size little silver Allen wrenches.
• 1:22
  SPEAKER_02: Um, you know, now there's got the handy guys, and I'm one of those myself, I guess.
• 1:26
  SPEAKER_02: Well, you know, I was like, ah, throw those away because I've got the 47, you know, piece Allen wrench thing that you flip out the right one you need.
• 1:34
  SPEAKER_02: There you go.
• 1:35
  SPEAKER_02: They do send it to you all that stuff, and then you wind up to this collection because in you in your mind you think, I better not throw that away.
• 1:40
  SPEAKER_02: What if I know?
• 1:42
  SPEAKER_01: I know.
• 1:42
  SPEAKER_01: And at this point it's it's it's gotta be made into some form of art or something.
• 1:46
  SPEAKER_01: I know.
• 1:46
  SPEAKER_02: Yeah, that's oh, that's an interesting idea.
• 1:47
  SPEAKER_02: Somebody might do that.
• 1:48
  SPEAKER_02: Well, let's talk about some financial lessons.
• 1:50
  SPEAKER_02: You know, the you know, why our financial plan shouldn't feel like IKEA instructions, because that you know the meatballs, pretty good.
• 1:57
  SPEAKER_02: The other part, not it's kind of annoying.
• 1:59
  SPEAKER_02: So let's start, I guess we'll just start there, like at the store, right?
• 2:02
  SPEAKER_02: The the one-way path, right?
• 2:04
  SPEAKER_02: It's it's built.
• 2:05
  SPEAKER_02: Anybody who's been to one, it's built so you kind of follow that single route through the store, right?
• 2:09
  SPEAKER_02: They're kind of get you to you know the flow of it, right?
• 2:11
  SPEAKER_02: They want you to see all the stuff to your point so you walk out with more than you uh intended to.
• 2:16
  SPEAKER_02: That could be an interesting metaphor, Taylor, for for finance, too, right?
• 2:20
  SPEAKER_02: It shouldn't there's a natural order, but it there's probably not just one path, though.
• 2:24
  SPEAKER_01: It's true.
• 2:24
  SPEAKER_01: Yeah, and we gotta be careful to I I I love analogies, but I'm also guilty of leaning too far into them.
• 2:29
  SPEAKER_01: But yeah, IKEA is designed intentionally as a one-way path.
• 2:33
  SPEAKER_01: People, you know, they thought through the psychology of how to get people through the whole store most successfully, and I would apply that to what we do with clients, right?
• 2:41
  SPEAKER_01: And that's why our planning process, you know, the retirement readiness roadmap is is is a very specific sequence.
• 2:47
  SPEAKER_01: You know, we start with our discovery session, what's your ideal lifestyle and what are we actually planning around?
• 2:52
  SPEAKER_01: Then we open up the software and the spreadsheets, right?
• 2:55
  SPEAKER_01: And we get a ways through the plan before we even tackle what most people are are hungry for, which is the investments and then the taxes.
• 3:01
  SPEAKER_01: Uh, skipping those tends to really mess up with the process because you let the wrong things dictate how your plan lands, and people end up with a lifestyle or retirement plan that isn't what they were trying to optimize for all along.
• 3:13
  SPEAKER_01: So, yeah, I think the the intentional uh sequence of of topics is is crucial for a successful plan.
• 3:20
  SPEAKER_02: Yeah.
• 3:20
  SPEAKER_02: And then of course you got the big yellow bag.
• 3:22
  SPEAKER_02: Uh, and we're not talking about the fashion runaway show with Balance Balenciaga, however you say their name, and their literal trash bag that they have convinced people they should.
• 3:30
  SPEAKER_02: If you haven't seen that, what I'm talking about is crazy.
• 3:32
  SPEAKER_02: It's like a thousand dollars for a basically a trash bag.
• 3:35
  SPEAKER_02: It's crazy.
• 3:35
  SPEAKER_02: Uh, but you came in for a lamp, right?
• 3:37
  SPEAKER_02: You left with candles, a plant, picture frames, all that stuff like you were talking about a minute ago.
• 3:41
  SPEAKER_02: And so that kind of to me makes me think, especially right now, Taylor, this past you know, couple of years, really, really since really since COVID, where everything, it's just like it's more costly, and it seems like everything is nickel and diamond you even more than it used to.
• 3:55
  SPEAKER_01: It's true.
• 3:56
  SPEAKER_01: Yeah, it's not just the the purchases because I can empathize with that, especially I went to Costco over the weekend, and uh it's the same that with the what's the the big yellow bagger at Ikea, or it's that that red cart at Costco.
• 4:07
  SPEAKER_01: It's like the milk run is always more expensive than you think.
• 4:10
  SPEAKER_01: And and and I think where the analogy ties to retirement planning for me is is this stacking, you know, this this this unintentional compounding.
• 4:18
  SPEAKER_01: And I see that with with tax planning because many people, you know, throughout their careers have a pretty cut and dry income.
• 4:23
  SPEAKER_01: It's like, hey, I've got my W-2 income and maybe some dividends or whatnot here or there, but the it's it's it's pretty simple straightforward in retirement.
• 4:31
  SPEAKER_01: For better or worse, we have more ability to control that.
• 4:33
  SPEAKER_01: And and so we've got layers, right?
• 4:35
  SPEAKER_01: Uh everyone knows social security is gonna kick in at some point, right?
• 4:38
  SPEAKER_01: You're gonna take income from up to three different buckets of your portfolio, depending on how it's taxed, from an IRA, a Roth IRA, or a brokerage account.
• 4:45
  SPEAKER_01: Maybe you've got a pension, right?
• 4:47
  SPEAKER_01: And and and that's just the beginning of of some people's situations.
• 4:50
  SPEAKER_01: And then the compounding effect, right, is how that lands in your tax return, right?
• 4:54
  SPEAKER_01: Maybe bumping you to higher tax brackets, make you ineligible for ACA healthcare subsidies.
• 4:59
  SPEAKER_01: Eventually we're gonna talk about Irma healthcare surcharges.
• 5:02
  SPEAKER_01: So that's where I think people get caught off guard, if you will, when it comes to this compounding effect, is how structure their income, you know, may feel like the same dollars that land in your bank account, but how you structure it could be wildly different on how you pay taxes.
• 5:15
  SPEAKER_02: Very, very true.
• 5:16
  SPEAKER_02: And then of course, again, I kind of sort of mentioned them earlier, there's the meatballs.
• 5:22
  SPEAKER_02: You know, the food is cheap for a reason, right?
• 5:23
  SPEAKER_02: Because it keeps you in the store longer, basically.
• 5:26
  SPEAKER_02: And the financial world does have that, right?
• 5:28
  SPEAKER_02: I mean, and not not knocking anyone, any advisor who does this, but you know, there's always the the the seminars and the things like that with the free whatever, um, you know, to kind of get you to come in and check it out.
• 5:39
  SPEAKER_02: And it may be the right fit for you, but again, it's it's a just it's a lure to help see, you know, to help get you in a store, basically.
• 5:45
  SPEAKER_01: It's true.
• 5:46
  SPEAKER_01: Yeah.
• 5:47
  SPEAKER_01: Nothing in life is is truly free.
• 5:48
  SPEAKER_01: I I think I heard the saying once that said if something is free, then then you are the product, right?
• 5:53
  SPEAKER_02: That is very true.
• 5:54
  SPEAKER_01: And and and that's when, you know, you either these free dinner seminars or like, you know, these incentives to to buy a certain product or work with a certain company.
• 6:02
  SPEAKER_01: You just gotta ask, what's the what's that?
• 6:04
  SPEAKER_01: I'm not saying they're necessarily bad.
• 6:06
  SPEAKER_01: It's just you got to think about what the financial incentive is under the surface, right?
• 6:09
  SPEAKER_01: You want to understand obviously how they charge their fees, and that's gonna tell you what they're incentivized to do, and hopefully that aligns with what you want to do.
• 6:16
  SPEAKER_01: But at the end of the day, yeah, the Swedish meatballs, they smell great, they're nice and cheap, and you just want to make sure you're what's the catch, if anything.
• 6:23
  SPEAKER_01: And once you find that out, then you gotta make sure you're accepting with that of that and and then moving moving forward with chowing down the meatballs.
• 6:28
  SPEAKER_02: And don't eat too many because you spoil your dinner.
• 6:30
  SPEAKER_02: So uh so all right, so then part two, right, which is what the frustration you were feeling the other day, uh, after you get home, it's the IKEA effect, right?
• 6:39
  SPEAKER_02: Right.
• 6:39
  SPEAKER_02: Uh this one is a real term actually from behavioral research.
• 6:42
  SPEAKER_02: People place more value on things they build themselves, even if it's wobbly, versus something they buy.
• 6:48
  SPEAKER_02: I mean, it's really kind of genius, you know, uh from a company standpoint what they've done, right?
• 6:52
  SPEAKER_02: It's like, oh, well, you buy this thing and it's, you know, we've you've got it built, but you assemble it, you put it together, it's yours, you've built it, and you feel a bit of ownership there.
• 7:01
  SPEAKER_02: And I think that's the same kind of thing sometimes with our finance, you especially if you've done the DIY approach, Taylor.
• 7:07
  SPEAKER_02: It's like, hey, this is mine.
• 7:08
  SPEAKER_02: I I've done this.
• 7:09
  SPEAKER_01: Right.
• 7:10
  SPEAKER_01: Yep.
• 7:10
  SPEAKER_01: I see the same thing when we take our kids to build a bear, right?
• 7:13
  SPEAKER_01: It's the same fluffy bear, but they they felt like they did it themselves.
• 7:16
  SPEAKER_01: So that they're that much more attached.
• 7:18
  SPEAKER_01: Yeah.
• 7:19
  SPEAKER_01: Yeah.
• 7:19
  SPEAKER_01: And I see people will do that.
• 7:20
  SPEAKER_01: I'm not, and and I'm not saying they're inherently bad or wrong when people come to me with their uh their spreadsheets or you know, their their bold in retirement plan that they built with their software, right?
• 7:30
  SPEAKER_01: There are definitely things that we want to take away as as key learnings and lessons because if they built it, they also obviously had a say in what the assumptions were and whatnot.
• 7:38
  SPEAKER_01: And that's what we want to extract is their preferences and what their intentions were, right?
• 7:43
  SPEAKER_01: But not always are the tools that they're using maybe the best tools, or even going back to our Allen Wrench analogy, right?
• 7:49
  SPEAKER_01: Maybe they're not the not even doing the things that they thought they were supposed to do, right?
• 7:52
  SPEAKER_01: That's where you know we want to come in and be able to say, okay, not trying to crush your dreams on something that you put together yourself, but let's try and find, you know, not your way or my way, but the best way for your situation, if that makes sense.
• 8:04
  SPEAKER_02: That makes a lot of sense.
• 8:05
  SPEAKER_02: And so that, you know, and again, it's a real hook, right?
• 8:08
  SPEAKER_02: So then you start thinking about, you know, you've got this thing, you've built it together, you're talking about now a couple, right?
• 8:14
  SPEAKER_02: You kind of assemble this thing, you put the furniture together, you and the the spouse, right?
• 8:18
  SPEAKER_02: And you've done the same thing with your life, you've put all these things together.
• 8:21
  SPEAKER_02: But whatever what happened I don't know about you, Taylor, but every time my wife and I try to build something, it doesn't usually end with pleasantries.
• 8:29
  SPEAKER_02: Somewhere along there, there's like a, you know what, you just do it.
• 8:32
  SPEAKER_02: Yeah.
• 8:33
  SPEAKER_02: You know, kind of thing.
• 8:34
  SPEAKER_01: That's true.
• 8:34
  SPEAKER_01: Feels like every every uh Billy bookcase you put together requires a uh a therapy session.
• 8:39
  SPEAKER_01: And and in a way, you know, you you kind of wish that you had uh some sort of mediator or even someone you could offload and delegate.
• 8:46
  SPEAKER_01: And that's that's that that's our role, right?
• 8:48
  SPEAKER_01: In retirement planning is is I sometimes joke that that but that that isn't like the sub subtitle of my business card is is the mediator because people you know they're still talking about the same subjects, but they can't get aligned.
• 8:59
  SPEAKER_01: And we've seen enough of these scenarios that we know how to zoom out and bring people on the same page or at least get them talking about finding a mutual common ground on making decisions such as okay, what what are we gonna fund, right?
• 9:09
  SPEAKER_01: What decisions are we doing about legacy?
• 9:11
  SPEAKER_01: For are we leaving something for the kids or are we actually giving giving them money while we're around?
• 9:16
  SPEAKER_01: The list goes on.
• 9:17
  SPEAKER_01: And so it's true that building an IKEA furniture is is it's like a relationship stress test, and and you don't want to have worked and saved for 30 years just for you know, at this point for it to create friction in your marriage.
• 9:28
  SPEAKER_01: So that's where we try and play a role is helping uh pull that apart and making things smooth.
• 9:33
  SPEAKER_02: The wordless instructions, right?
• 9:35
  SPEAKER_02: Some people love figuring stuff out through pictures.
• 9:37
  SPEAKER_02: Uh many of us have looked at step 14 and thought, what?
• 9:41
  SPEAKER_02: Like and my dad, you know, my dad cracked me up, rest his soul.
• 9:45
  SPEAKER_02: When when I was a kid, uh teenager, we were working and building my first car together, not building it, but you know, we're you know, doing the remod on it, right?
• 9:52
  SPEAKER_02: And uh I come home from school one day and he's been in I when I got up to go to school, I'm like 15.
• 9:58
  SPEAKER_02: I got up to go to school and he's in the garage working on the carburetor.
• 10:00
  SPEAKER_02: And I come home from school that afternoon, right?
• 10:03
  SPEAKER_02: Three hours, three, three in the afternoon.
• 10:05
  SPEAKER_02: So what seven, eight hours later, he's still working on the carburetor.
• 10:09
  SPEAKER_02: And I'm like, uh you got it there, bud?
• 10:12
  SPEAKER_02: And he's like, Yeah, yeah, just got it finished.
• 10:13
  SPEAKER_02: And I'm like, well, what are all these extra parts in the box?
• 10:16
  SPEAKER_02: And he's like, Oh, they give you extras.
• 10:17
  SPEAKER_02: I'm like, what do you mean they give you extras?
• 10:20
  SPEAKER_02: Especially back in the 80s, they did not give you extra carburetor parts, right?
• 10:24
  SPEAKER_02: That's true.
• 10:24
  SPEAKER_02: Uh but nowadays they certainly, you know, this certainly feels like it.
• 10:27
  SPEAKER_02: And so I I don't know.
• 10:28
  SPEAKER_02: You know, every piece seems to make sense until you try to put it all together.
• 10:31
  SPEAKER_02: And I think that's what a lot of people struggle with with their finances or with a retirement strategy, Taylor, especially if they've been doing the DIY approach for years, they get to a point where they're like, I need help, I can't do this anymore.
• 10:41
  SPEAKER_01: Yeah, and and and there's certainly people that can do retirement planning on their own, right?
• 10:46
  SPEAKER_01: Sure.
• 10:46
  SPEAKER_01: But in order for people to be successful at it, I find that they need a a strong sense of three things.
• 10:51
  SPEAKER_01: They need to have the the time, right?
• 10:53
  SPEAKER_01: Obviously got to take time to do this right.
• 10:55
  SPEAKER_01: They need to have the the temperament, right, to be able to make good decisions when emotions or neighbors or people are telling them to do otherwise.
• 11:02
  SPEAKER_01: And they need to have the talent, right?
• 11:04
  SPEAKER_01: Which none of us are born with.
• 11:05
  SPEAKER_01: And they need to have the actual expertise to be able to pull it off.
• 11:08
  SPEAKER_01: And so that's where if people don't have at least all three of those things, that's where we come into play to be able to make sure they don't feel like they're they're banging their head against a wall, trying to figure out some IKEA instruction book on their own.
• 11:19
  SPEAKER_01: Because many times a lot of our clients come to us because they're well educated.
• 11:22
  SPEAKER_01: Many of our clients are uh have been in managerial positions and their work and or engineers.
• 11:27
  SPEAKER_01: Um, they've done a lot of research on on YouTube videos because that's how they find us or on podcasts.
• 11:32
  SPEAKER_01: And so when they come to us, they're realizing that there is no single video or or podcast host that is going to perfectly speak to their specific situation.
• 11:41
  SPEAKER_01: It just is near impossible, right?
• 11:44
  SPEAKER_01: Right.
• 11:44
  SPEAKER_01: And so that's their, they're looking for somebody to say, okay, help me truly tailor this plan to my situation because we all have, you know, not even if our numbers are identical to our neighbors, right?
• 11:53
  SPEAKER_01: Our preferences are how to use them is are simple certainly different.
• 11:56
  SPEAKER_01: So that's where we hope to be that guide is get them across the goal line with what they've worked and saved for up until now.
• 12:01
  SPEAKER_02: All right.
• 12:01
  SPEAKER_02: Well, the final bit here, we'll just wrap this up.
• 12:03
  SPEAKER_02: I mean, Ikea makes it possible to build, you know, a lot on your own, but not every project is meant to be that solo job.
• 12:09
  SPEAKER_02: And I think the same thing, Taylor, as we wrap this up, could be said for what you guys do, and you kind of already did anyway.
• 12:14
  SPEAKER_02: But you know, it's it's like sometimes you get to a point where you just feel like you just need help, and there's nothing wrong with that, especially when you can get a complimentary consultation underway to see, hey, is this the right fit for me?
• 12:24
  SPEAKER_01: 100%.
• 12:24
  SPEAKER_01: Yeah, we're not a fit for all people, not all people are fit for us.
• 12:27
  SPEAKER_01: We're we're very specialized in who we can help.
• 12:29
  SPEAKER_01: So if anyone's interested, that's what that link in the description is for to have a call with me.
• 12:33
  SPEAKER_01: I don't offload it to some other member on our team.
• 12:36
  SPEAKER_01: We try and keep things small and keep the quality high.
• 12:38
  SPEAKER_01: So that's uh happy to see if people are are fit for us.
• 12:41
  SPEAKER_02: Well, that's demarsfinancial.com.
• 12:43
  SPEAKER_02: That's where you can find the link.
• 12:44
  SPEAKER_02: Demarsfinancial.com.
• 12:46
  SPEAKER_02: Click on the could we be a fit.
• 12:47
  SPEAKER_02: We also, to Taylor's point, have it just in this in the descriptions as well of the podcast.
• 12:51
  SPEAKER_02: Uh so that makes it easy for you also.
• 12:53
  SPEAKER_02: And so don't forget, speaking of, to subscribe to the podcast.
• 12:56
  SPEAKER_02: Uh, we just got uh a little milestone the other day, so that was nice to see.
• 12:59
  SPEAKER_02: So we appreciate the listens and the downloads and all that good stuff.
• 13:02
  SPEAKER_02: Uh and that way, you know, when you subscribe, you catch new episodes when they come out.
• 13:06
  SPEAKER_02: And of course, you could also check out his YouTube channel as well.
• 13:08
  SPEAKER_02: A lot of good content there.
• 13:10
  SPEAKER_02: All of that found at the main website to make life easy.
• 13:13
  SPEAKER_02: Damarsfinancial.com.
• 13:15
  SPEAKER_02: That's demarsfinancial.com.
• 13:16
  SPEAKER_02: So the next time you get a hankering for some Swedish meatballs and you decide to go to IKEA, just don't forget the extra pieces that come with it.
• 13:24
  SPEAKER_02: And with that, we will see you next time here on Taylor Made Retirement with Taylor Demars.
• 13:29
  SPEAKER_02: Thanks, buddy.
• 13:29
  SPEAKER_01: My pleasure.
• 13:30
  SPEAKER_01: Thanks, Mark.