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Let’s walk through some of the factors of what it means to be “financially stable.” Pete and Damian have worked hard on this new formula. You’ve gotta hear this.
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No time to listen? BUMMER. Here’s some of what happened:
Show Notes:
Mailbag Question 1:
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- “I’m 33 and my wife Is 40. We’ve got about $250,000 saved for retirement and I’m planning to do so at 62. One retirement calculator says we’ll need $3 million saved and be just fine, another says $7 million; wild variations. Are there fair and objective calculators out there? And how to know if they’re in real or nominal values?“
- The unseen issue with these calculators is the variables that form the calculations themselves. In order to compare, make sure the details match really closely. (Examples: rate of inflation, what the return is, age, if it includes taxation, etc.) They all must be theorizing the same way to get consistent outputs.
- There’s a little bit of self-interest that companies (banks, investment companies) incorporate into these tools to pay allegiance to their business model.
- Damian: Vertex42.com may have a more reasonable calculator, as a neutral party.
- “I’m 33 and my wife Is 40. We’ve got about $250,000 saved for retirement and I’m planning to do so at 62. One retirement calculator says we’ll need $3 million saved and be just fine, another says $7 million; wild variations. Are there fair and objective calculators out there? And how to know if they’re in real or nominal values?“
Special Feature:
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- What if we could measure financial “stability?” What if we could coach people toward different types of stability so that when these stressful times happen again, they’re better off (and if they don’t happen again, they have a better base to build their financial life on?)
- People experience so many different factors throughout life. Which could be the same for everyone? We have to take things like these into account.
- Financially Stable = if something bad happens, you can withstand it. (power)
- Financially Healthy = you have good ongoing behavior. (habits)
- Realize this: You can be stable, but not healthy; you can be heathy, but not stable; you can be neither; or you can be both.
- What if we could measure financial “stability?” What if we could coach people toward different types of stability so that when these stressful times happen again, they’re better off (and if they don’t happen again, they have a better base to build their financial life on?)
Sounds complex, right? They break it all down in the show. Listen, listen, listen!
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Peter Dunn a.k.a. Pete the Planner® is an award-winning financial mind and a former comedian. He’s a USA TODAY columnist, author of ten books, and is the host of the popular radio show and podcast, The Pete the Planner Show. Pete is considered one of the foremost experts on financial wellness in the world, but he’s just as likely to talk your ear off about bass fishing.