Running, Sitting and Biking... a way to think about your big and small financial decisions
Running vs Sitting or Running vs Biking?
When clients ask me questions about the best way to reach their financial and life goals, I try to differentiate between the Running vs Sitting questions and the Running vs Biking questions.
Let me explain.
Financial questions can be intimidating and confusing, but people instinctively understand fitness analogies.
If you wanted to live to be 100, your doctor would encourage you to run and not sit. If you made them choose between running and biking, the answer would be a bit more of a tossup. Maybe one is slightly better for you for some nuanced reasons, but both are great if you want to live to be 100. The stakes are high when choosing between running and sitting….less so with running vs biking.
So, when clients have questions about their finances, I use this analogy to give them a sense of the stakes involved in their chosen action. It helps to take the pressure off.
Should you consistently save 15% or 2% of your income? That is definitely a Running vs. Sitting question.
Should you make an incremental investment in Roth IRA or a Traditional 401k? That is more of a Running vs Biking question, as both answers can lead you to a great outcome.
Hearing this differentiation takes the pressure off the client and gives them a sense of the stakes involved.
This doesn’t mean that you don’t have time for the more nuanced questions that can improve outcomes, especially at critical points on your journey. These include:
Can I retire this year vs. next?
Should I save for college in a 529 or a regular investment account?
Should I claim Social Security now or later?
Can I optimize my retirement withdrawals to minimize my taxes?
When you are at key decision points during your complicated years, I can help you get on the right path.
But if you are on the right path and moving (not sitting), I will let you know that as well.
~
Dave Pedersen is an Advice Only Financial Planner. Based in Hermosa Beach California, he shepherds clients (typically age 40+) through “The Complicated Years”, where they have overlapping goals and need insight from a trained professional. Compensated only for his time and work (and not commissions or management fees), Dave provides true independent insight. Interested? Reach out to discuss further.
Mr. Pedersen is an investment advisor representative of and offers investment advisory services through Hermosa Advisors LLC, a registered investment adviser offering advisory services in the State of California and other jurisdictions where registered or exempted. This communication is for informational purposes. Nothing in this document is intended as legal, accounting, or tax advice, and is for informational purposes only.