Classic car aficionado David Rosell, CEO of Rosell Wealth Management and author of “Failure is NOT an Option,” (www.DavidRosell.com), says pre-retirees can learn a lot from their beloved old cars about financial planning for a secure retirement.
This story alone holds valuable lessons:
“I love adventure travel and, years ago, I went to New Zealand, where I bought a charming old Morris Minor from a German traveler who was heading home,” Rosell says.
“I paid $200 for the car, thinking if it got me to the Bay of Islands 150 miles to the north and back again, it would have been worth the money.”
As it turned out “Kiwi” carried Rosell all over the North Island. He took a chance and made a second investment of $200 to have the car ferried to the South Island to roam the mountains and rainforests.
The car not only hung in, he sold it for $600 to another newly arrived traveler when it came time to leave.
Years later, fondly remembering the Morrie, he found a convertible version for sale in the United States. “Peaches” had been lovingly maintained, so the asking price was much higher, but she was a far more reliable bet than old Kiwi. Rosell bought it and continues to carefully maintain it. At 57 years old, it’s humming along smoothly.
So, what can a pre-retiree learn about financial planning from Rosell’s Morris Minors?
Plenty, he says.
• There’s a time for taking risks, and a time for avoiding them.
Rosell was a young man on that trip to New Zealand, and he planned to stay a few weeks. He could afford the risk of driving around in a charming old clunker because, if it broke down, he had time and other resources available.
“When you’re young and building your wealth, you can and should take more risks. Small- , mid- and large-cap stock funds, and international stock funds are the most volatile – riskier – so they generally have the greatest potential for growth,” Rosell says.
Once you retire, your focus should be on a lack of risk and volatility, although you still want some growth to overcome the damaging effects of inflation.
• If you look after your money the way you would a beloved old car, you can live the life you imagine.
Many people contribute to company plans such as 401(k)s or pump their money into other savings and investment plans and then ignore them. That’s like investing in a car like Peaches and never checking the oil, Rosell says.
“Whether you’re managing the funds yourself or you hire a financial advisor, you need to be monitoring your progress toward your goals and making adjustments during your accumulation years,” he says.
“As you get closer to retirement, you need to begin planning for how much you’ll be able to withdraw each year without stressing your portfolio; how that affects the date when you can retire; and when you should start collecting Social Security benefits.”
• Gather all your important paperwork – and an index to it – and keep it where your family can find it.
When Rosell bought Peaches, its owner had a stack of paperwork documenting everything he’d done to maintain and restore the car. That has helped Rosell be proactive and focused in his maintenance efforts.
“If something should happen to you, you can make it much easier on your family by compiling the information they need,” he says.
Make sure all important financial information and other important documents are organized and stored in a fireproof box, and provide a list with information such as:
Location of wills and other important papers; bank accounts; investments; retirement assets such as 401(k)s; insurance policies; business interests; real estate; personal property; debts and money owed
Rosell says Peaches taught him many life lessons as well, including this one: “Like Peaches, one does not need to be flamboyant or showy to get positive attention!”
David Rosell, author of “Failure is NOT an Option,” (www.DavidRosell.com), is a sought-after speaker who has addressed international audiences including the Million Dollar Round Table. He is a recipient of the Retirement Distribution Certificate from the University of Pennsylvania’s Wharton School of Business, and has been featured on NPR and FOX Business News. His company, Rosell Wealth Management, was a select finalist in 2008 for the management of the $500,000,000 Oregon 529 College Fund. He is the past chairman of the Bend, Ore., Chamber of Commerce, the City Club of Central Oregon and his Toastmasters chapter. With a current tally of more than 65 countries on four different continents, Rosell has a love of extreme travel and adventure.