I’ve been writing a long time, since I was a young boy, really. My mom taught me how. When I had a term paper due, we would clear the kitchen table, set up our portable typewriter (no computers in those days!), spread out all my research in front of us, and start typing. It would always be in my words, with a little help from her on how to organize my thoughts into a coherent paper, along with a heavy dose of grammar and punctuation, which has made me a standout in a world of the devolution of language into a mishmash of sloppy speech, incoherent writing, and lax punctuation. And that’s how I learned to write in finished drafts (still how I write today).

One thing my mom taught me was to start with a hook (like I did this column). In journalism, we call it the “lede.” For me, at least, those hooks often end up being something entirely different than I thought they would be when I sat down. For example, today I thought it would be a famous quote by John Lennon that is on my home office wall (I’ll reveal it when I can use it as a primary hook; it’s just too good to give away). Anyway, back to my mom. Her early gift to me has opened a lifetime of opportunities as very few other things have. It’s amazing the doors that can open for a person by being able to string a couple of coherent thoughts together.

“So, what’s this have to do with money, investing, and retirement planning?” I can almost hear you thinking. Not much…and quite a lot, as it happens. The secret to good writing is to adhere to the rules – or when you don’t, to (not) do so with purpose and awareness – to be organized in thought, and to have a clear objective and process. In this regard, it’s very much like financial planning. One other area of similarity, in my experience, at least, is that both take a coach who is steeped in the art and process. In so many ways I would not be where I am today without my mom; no doubt you can relate to that. She shaped and honed me and my communication skills in ways I could never have imagined, the very same way a good financial coach can often help change the lives of their clients.

At the time this was all going on, I had no idea of the lifelong impact it would have on me. It didn’t feel life-changing at the time; it felt like something I had to get done so I could go outside and play baseball, or build a fort, or explore the woodlands across the street from our house. Given the chance, I would have avoided it, but not because it was particularly painful; in truth, once begun I often enjoyed it. It was quality time I had with my mom that was unique to us. There was this sense of creating something excellent together, and the payoff was always an A and a nice comment from my teacher. As life went on, I was able to translate that excellence to other parts of my life, and often with similarly unexpected payoffs.

As I came to this world of financial planning, I experienced similarities. First, under the tutelage of brilliant coaches who had been achieving excellence for decades, I learned the basics. I learned that much of what I had thought I knew about personal financial planning, especially in view of having an advanced degree in corporate finance, turned out not to be true at all. In much the same way people who are ignorant of the fact they butcher the English language on a routine basis (“him and I went to the store”), because they speak it every day, people who handle money every day often have a false belief that they understand it.

For example, all things being equal, is it always the best financial move to pay off one’s mortgage? Absolutely not. If interest rates are below the rate of inflation as they currently are, you actually make money on every dollar you borrow. In such an environment, paying off a mortgage can cost you money and liquidity. The issue becomes a matter of cash flow; if you can afford the payments, it may be better to keep control of the money rather than giving it up to the bank. This is one reason reverse mortgages can be so useful under the right circumstances.

Here’s another. It is often thought deferring taxes through a 401(k) or other tax qualified plan is a good financial move. This is almost never the case unless you have a high enough income to push yourself into the highest tax brackets. What most people don’t get is we live in a graduated income tax world. Even if you make $150,000+, your total tax bill will probably still be under 15% per year. Deferring 10% annually would save under $2,000 per year. If you did that over a 30-year period, you might be able to save $60,000 over your lifetime. It’s entirely possible you could pay that much tax in the first 10 years of retirement alone. If you live 20-30 years in retirement, deferring taxes could end up costing you 10s of thousands over your retirement lifetime. In other words, another well-worn piece of conventional wisdom might not be so wise, after all.

What traps await you in your retirement? What habits or ingrained beliefs are you acting on now that end up hurting more than helping? I don’t know. But ever more importantly, chances are, you don’t either. Why not give us a call? We’ll pull out our computer (no typewriters these days!), compile all ofour research, and bang out a plan that will set you apart in a world of poorly designed plans.

Stephen Kelley is a recognized leader in retirement income planning. Located in Nashua, NH, he services Greater Boston and the New England areas. He is author of five books, including “Tell Me When You’re Going to Die and I’ll Tell You How Well You Can Live,” which deals with the problem that unknown lifespans create for retirement planning. It and his other books are available on Amazon.com. His radio program, The Free Money Guys, can be heard every Sunday at noon on WCAP. He also conducts planning workshops at his New England Adult Learning Center, located in Nashua. Initial consultations are always free. You can reach Steve at 603-881-8811 or at www.FreeToRetireRadio.com.

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