The Importance of a Second Opinion

The importance of a second option. Now this is something that often gets overlooked, especially in retirement planning. And it seems strange to me because you know, I think we can all agree that if you came down with some serious illness and you had some terrible diagnosis. And you needed some you know, experimental procedure or something like that with your health and you heard that from your Doctor. I would for sure say you’d probably go get a second opinion, right? Why? Well because it deals with your health, right? You want to make sure that hey, what that one Doctor is saying, actually is the truth. And that’s something you actually need. And you get that confirmed with another Doctor. Well the same principal can apply to a retirement plan. I mean retirement, that is a huge fundamental change in your life. One of the biggest decisions that you’re going to make. You want to make sure that you do it right, okay? So why not get a second opinion? I’ve had just recently, I had a perspective client come into the office, actually it was a couple in the Gaylord office. And what brought them in was back in late March, early April of this year. They saw their portfolio drop nearly 20%. And they were going to retire here at the end of this summer in 2025. And that freaked them out. They could not believe that they lost that much money in such a short period of time, right before they were planning to retire. And so they came into the office. They got that second opinion. Now thankfully for them, the market came roaring right back. So by the time that they met with me, their funds had pretty much regained everything that they had lost at that point. But they still kept that second opinion, that second opinion appointment. And so what I did, is I sat down with them. I went through their current portfolio. And here at Centennial Wealth Advisory, we have a great software program where we can plug in all of those different investments that they were holding and kind of estimate you know, how much risk they’re actually taking. And it provides a great visual showing that risk. Come to find out after going through this process and it didn’t take too long. We determined that they had nearly 82% of their portfolio in stocks. They were absolutely shocked to see how much risk they were taking with their funds. Needless to say, we made some changes, okay? But I didn’t stop there, okay? The second opinion didn’t just apply to the investment planning. It also applied to income planning and tax planning as well. So in the process of this second opinion meeting, you know we tackled income planning. And I asked the couple, hey what’s your plan for income once you retire here at the end of summer? And their plan was to pull all the money that they have from their Roth accounts first to show lower taxes. And that was kind of their tax plan, as well. And once the Roth accounts were depleted, which they figured would be two or three years down the road. Then they would start pulling from their pre-tax or IRA, 401K accounts at that point in time. Which in my mind, that’s kind of a little backwards from what I typically do for my clients. And my question for that couple was, where do they think tax rates are going to be in the future? And I could see as soon as I asked that question, a little light bulb went off in the gentleman’s mind. He’s like well, I think they’ll probably be higher, right? You know, we’re $37T in debt as a nation. While I can’t guarantee tax rates are going up, they probably are going to go up, right? And so I kind of flipped the script on this couple and said, you know what? In my mind, the Roth money is the last money that you probably want to touch. Because you get all of that tax-free growth and potentially taxes are going to go up in the future. So if you don’t touch those Roth funds for 10, 20 years down the road, tax rates are higher. But if you’re using income from the Roth, you won’t have to worry about that. So there’s just two examples. Okay, this couple they thought they were on the right track. They had their investment plan, but they saw a huge drop in the market and they realized they were taking on way too much risk. And then the income plan. They didn’t realize that hey, maybe it’s not the best strategy to take from the Roth right away in retirement. Now everybody’s situation is a little bit different. But for them, it didn’t make the most sense. Don’t wait for a market crash to come along. If you’re approaching retirement or in retirement and you haven’t had a second opinion on your portfolio, you need to do that. Okay, we do it for our health all of the time, why not for your wealth as well?