On this week’s show, Val goes in-depth on avoiding financial landmines when planning for your retirement as a FERS employee. He explains how lack of planning, procrastinating with your approach and following the masses could lead you to financial trouble when planning for your future.
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4.21.23: Audio automatically transcribed by Sonix
4.21.23: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.
Val Majewski:
Well, welcome back to the Federal Retirement show. I'm your host, Val Majewski, with American Benefits Exchange. And in today's episode, this is going to be a short one, but I wanted to revisit a topic that we did in the past, and we talked about financial landmines and how to avoid them and what is it that you can do to avoid some of these shortfalls, some of these pitfalls, some of these things that can blow up in your face when it comes to preparing for retirement? I have a couple new ones that I want to share with you. So today's episode is called Additional Financial Landmines, basically a continuation of our previous episode. I will ask you to stop here if you have not seen the previous one. Go back, search up our episode on financial landmines. Familiarize yourself with the first four because I am going to be briefly reviewing them here, but you can get a deeper dive in that previous episode. So let's go into the information today and talk about some additional financial AL landmines. First of all, what are financial landmines and how do we avoid them? Well, the first thing, if we if we look back at what we previously talked about, they are things that will throw a monkey wrench in our situation. They will detour us from what we desire to do. They will halt our progress if we're not careful enough to avoid these things.
Val Majewski:
And if you saw our previous episode, hopefully when I asked you to pause, you did. You watched it, now you're coming back. But the first four that we talked about were or seem like common sense. So the first one, lack of planning, right? The old adage of failing to plan is planning to fail. You certainly want to make sure that you've got a plan in place. You don't want to leave it to chance. You don't want to hope your way to retirement. You want to actually plan, set up a strategy that is going to get you to where you want to go. Seems easy enough, but with our regular everyday lives, I know you're extremely busy. Most veteran employees that I talk to are super busy. If they're not at work, they're spending time with their family and sleeping. That's basically it. So you want to plan ahead and make sure that you understand the direction that you're going to be going, in the direction that you desire, what you want to do in retirement, all of these things. You want to make sure you have a plan for. Now, if you realize you need to plan, one of the biggest things that we mess up with is actually doing it. Why? Because we tend to procrastinate. So landmine number two is procrastination. It's easy. It's easy to say it. It's just tough to do it and follow through.
Val Majewski:
Why? Well, and I'm not saying you are lazy, but in general, we get lazy. You know, we decide that we want to do something, but we have enough time. We're going to put it off for another day. We're going to do it later. We'll get around to it when it's more convenient for us. But we push it off, push it off, push it off, and next thing you know, it's forgotten about and does not get done. Preparing for retirement. Preparing for your future is not like cramming for a test. I was guilty of this when I was in school. I waited, waited, waited for projects and tests and I crammed and did them at the last minute. Got them done before the due date I prepared, but it was not a healthy way of doing it. You cannot do this with retirement. It is not like cramming for a test. You can't prepare everything for the last minute. Why? Because first of all, time and time value of money, if you're going to be saving for retirement, you need to let your money work for you over time. And the earlier that you can prepare, the better. So do not procrastinate. Avoid landmine. Number two along with that is the inertia factor. Now, if you're familiar with the laws of inertia, first one, an object in motion tends to stay at motion.
Val Majewski:
An object at rest tends to stay at rest. So if we decided not to procrastinate and we're going to get up and do something well, we need to build up some momentum. Make a plan. Decide we're going to do it. Not procrastinate and get going. Set this whole thing in motion and stay committed to it so that way it stays in motion. The ball keeps rolling and building. There's a snowballing effect, but if you stop it. You stop it, it's going to be tough to get it going again because that object at rest you is going to tend to want to stay at rest. So once you get the ball rolling, stick to it. Plan. Do not procrastinate. Get it moving. And then the last one was acting like the future is never going to arrive. Like it's never going to come here. Like we have plenty of time. Like it's not going to be over in an instant. It's not going to seem like a blink. I've mentioned this before, but it's a very good comparison because people told it to me about my kids when they were born. Hey, cherish every moment you're going to blink and they're going to be driving away to college. It's going to happen in an instant. And you want to make sure that you're taking advantage of every second that you can, every year that you can, every moment that you can to prepare properly for retirement.
Val Majewski:
Because if you act like the future is never going to be here, next thing you know, you're on the doorstep of retirement and you're wondering where all the time went. You didn't prepare properly and you're not going to like yourself very much if that was the case or if that turns out to be the case. So utilize the time you have. Make a plan. Do not procrastinate. Let's get moving. Once we get moving, keep the ball rolling and let's not put it off because the future will be here faster than you think. Those were our original financial landmines. We discussed them. How to avoid them. I want to add two more to our list today. Number one is following the masses. Number two is going to be a lack of generosity. Now, these, I said, are financial landmines, things that can trip us up, things that can put us in a stall, things that can put us on a detour, not in the direction that we want to go in, get us off track when it comes to our retirement. Now, not that every plan is going to go as smooth as possible, not that there aren't going to be bumps in the road, but we want to have the end game in mind and we're going to have to tackle this one step at a time.
Val Majewski:
Saving one penny, $1 per pay period, next pay period. Stay diligent and dedicated to whatever plan you put in place. And chances are if you do that and you continue to reevaluate along the way, you'll get to where you're going. But there are a couple of these things. No matter how good of a plan that you decide you're going to take. That can still trip us up. So what is following the masses mean? Well, you've seen a lot of different fads, a lot of different trends out there, things that people were doing, whether it's exercises or dieting or clothing choices, hairstyles. You look back and go, Oh, you know, that that wasn't too bright of an idea. I can't believe that I wore that. I can't believe that my hair looked like that. I can't believe I made that decision. Why? Because we look a lot to our peers. We look a lot towards the people that we spend our time with, and we tend to work in packs or herds. We tend to do things in groups. And if if it seems like everybody's doing it, well, that's the case. It must be must be good. It must be the right decision. If everybody has decided to do it, it must be the right move. And unfortunately, that's not always the case when it comes to financial decisions or planning for retirement. Right. The masses, I would say, can tend to be wrong at times.
Val Majewski:
And it seems like a lot. You know, we just we saw collapses with banks. We saw the craziness of, you know, a virtual form of money. Right. That that ftxs collapse that happened in the the Bitcoin or virtual currency cryptocurrency realm where that that company lost billions of dollars. Seemed like overnight money was just lost. People lost, you know, whatever they had invested in that company, it seemed like a lot of very popular people were investing with that. Now, that's just one extreme example. But just understand that just because the most popular people are doing it, celebrities, just because the most popular financial gurus are telling you about these things, it's up to you to make your own decision, do your own research, make sure that you are. Making what's best for you just because it's good for the person who works next to you, your neighbor, a person that you have been friends with for years. A family member. Just because it's good for them does not mean it's necessarily great for you and your situation. Ask questions, make sure that you understand exactly what's going on, and don't fall into the blind trust trap of just saying, Hey, he does it. I trust him. That's it. This is your money. This is your future, this is your retirement. I said, This is when it comes to financial decisions, obviously I mentioned earlier in joking around outfits and haircuts and, you know, other purchases that you make.
Val Majewski:
Okay. That's not going to necessarily derail your retirement, but certain investment choices can. Hey, I invested all of my money in X, Y, Z company or X, Y, Z business because it seemed like a great idea. So and so told me about it. And they were investing all their money and this was going to be a guarantee, a can't miss or whatever until it misses. Until something happens and then you find out that the person who gave you all the advice on it really didn't know what the heck they were talking about. You were trusting the fact that they did their homework when you should have been doing yours. I'm not yelling at you. I'm just saying do your homework, do your diligence. Today's tax advantages could soon turn into tomorrow's burdens. It's been a great idea, right? Common knowledge. People say defer money. Put it into the traditional side of your investments. Iras, 401. Ks, what have you. Defer your taxes. You get a tax break today, then you'll pay the taxes down the road. Well, which way are taxes going? We've talked about taxes before on the show. It's not a unanimous, but it's a very high. Majority of you are saying that taxes will go up in the future. I hope they don't, but it looks like they will.
Val Majewski:
Well, that tax break you're getting today, is it going to cause a tax burden in the future? Who knows? Maybe there's some lesser known things that the masses are not following that could be more beneficial for you. Educate yourself, learn about these things, see what's out there so you can make the best decision. Did you listen to a buddy? And I say, Buddy, that could be friend, colleague, family member, or did you listen to a licensed professional? Now, look, even licensed professionals, you have to do your homework, make sure they're credible. They have experience. They know what they're talking about. Ask questions to them. Do not just nod your head and say, okay, yeah, yeah, yeah. Feel free to ask questions. Feel free to to try to. I don't say pick it apart, but just to ask the tough questions. And if they have answers for it, great. If they can defend their position. Awesome. Tell you the why behind a recommendation or why something would be good for you, your family, your situation. So who did you listen to? Did you listen to a buddy or a qualified licensed professional to give you advice as far as your retirement is concerned? So landmine number five following the masses. Understand who you're listening to, understand your situation. What's best for the group may not be best for you. And number six. This is something that I've found To be true.
Val Majewski:
You can disagree, but just in my experience, people that are seeing financial success, seeing financial prosperity, seeing happiness in retirement, seeing things come to fruition that they've they've planned for and that they've looked forward to. And again, you can test me on this, but people who are generous with their time and with their money and they enjoy giving to others, Right. They're not just generous with their time because they want to seek something they generously want to give to others and see others helped by what they have to give. Find that they're not lacking themselves. People that find joy in being able to give. Will usually be joyful in their financial future. So if you're in a position where you are preparing for retirement, if you're in a position where you are trying to save as much as you can. Experience that joy of being able to give to others. That to being able to serve others with your time, with your money, it doesn't just have to be financial. It could be with your time. It gives you a different perspective, right? If you help out those that that are less fortunate as you or not as good a position as you. You give some of your time and effort and money, you know, to those that need it more. You'll find that that you won't be lacking. That that extra spending that you have, it may change your your perspective on what's really important. And that way some of those things that that we may have thought were critical in our lives may not be as important or may not hold as much value.
Val Majewski:
It can curb our spending. It can change our perspective. So if you enjoy and find the joy in giving with your time and your money and you really enjoy helping others and helping people be in a better place, those folks really do find that they are not lacking themselves when it comes to their financial security and their happiness and their joy. So just just some food for thought there. I know we're planning on financial landmines, things that can really trip people up, but having a lack of generosity. And having an internal thought pattern of greed and and wanting to hold on to everything yourself could prevent you from really and properly preparing for retirement the way you want and really enjoying the retirement that you're planning for. So again, I hope you you find these landmines, these these financial discussions that we have beneficial. If you enjoyed the first list, I hope these last two, number five and six of financial landmines you hit home and we're have added value to you. If you have additional questions, if you have comments, if you need help with anything and all things federal employee benefits and retirement information, please reach out to us at federal retirement. Show.com fill out the form. We'll be sure to get in touch with you, walk you through your situation, answer your questions, just get you that information that we know you're looking for. Again, my name is val majewski with American benefits Exchange. Thank you for joining me today and look forward to seeing you on another one of our future episodes.
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