Money

Is running out of money your greatest financial fear?

You Don’t Want to Run Out of Income Before You Run Out of Life

Some people don’t know how to turn their money into a lifetime income stream. That’s the view of Russell G. Meinen, founder of Fort Worth-based Meinen Financial Services, with a core motivation the same as when he started – helping people. His firm offers a money management platform designed for retirement, with clients ranging in age from 50 to 75 with $250,000 to $2 million in assets. Although he’s now reached an “official” retirement age, at 66, Meinen has no plans to stop working. “I’ve got a great message to offer, and feel called to do this so people will potentially avoid a disastrous financial retirement,” he says.

A Three-Step Process

Meinen’s approach involves a three-step process. First, clients arrive for a sit-down session, where he finds out who they are and what they have in mind. The second step focuses on examining their retirement situation, including their family, assets, insurance, annuities, 401(k)s and income sources. “We go into depth when people bring in their investments. We do an analysis of the top holdings they have in their portfolio, walking through what they own, the type of fund, fees, the manager and how long they’ve been in there, risks on that fund, and really break down what they have and show them the downside risks,” he says, adding that showing potential losses is where people really pay attention. Most people know their investments have risk, but don’t know what they are. “In my experience, the majority take more risk than they think they are taking and what they are suited to,” he says. Meinen has everyone complete an online questionnaire about risk, so he can determine their risk number. “Their risk tolerance may be normal for people their age, but at times I’ve found their investment risk is much higher. Sometimes twice as much risk as what they are suited for,” he says.

russminen300x450His firm uses private money managers not usually available to the general public. “We offer strategies that have the potential to limit drawdown losses, which is what we’re trying to avoid,” he says. These strategies are based on age, years until retirement, income needs, risk tolerance, and the family’s situation.

The third step concerns planning for income to support their lifestyle in retirement along with a money management plan that fits their risk tolerance level. His philosophy centers around the fact that retirement may last as long as their careers. “Having a big pile of money in their 401(k) is nice, but to me it’s just not enough,” he says. Meinen’s analogy is needing oxygen to survive Mt. Everest, and in retirement, oxygen is income. “You don’t want to run out of income before you run out of life,” he notes. It’s important to help people understand what they already own in investments. “We don’t automatically try to change everything, if what someone has is already of good value,” he says.

Not Thinking in the Long-Term

Meinen says most people don’t think enough for the long-term. “One of the challenges I have is getting people to wait to get Social Security,” he says, noting too many people want to take it at 62. He tries to encourage them to wait until 66 or, better yet, 70. As for long-term care, by the time he meets with people in their mid-60s, they’ve already made the decision whether or not to buy long-term care insurance. Most don’t, usually because of the cost. However, in the Dallas-Fort Worth area, nursing home care ranges between $4,500-$6,000 per month. “A lot of people see long-term care insurance as a waste. It’s not really their fault, it’s just human nature,” he says.

Lifetime Income Through Fixed Annuities

When asked about fundamental changes needed in the investment industry, Meinen says there’s a need for secure income in retirement. “Pensions are gone, except for government workers and a few large corporations. Social Security needs changing to be financially viable for the next generation and beyond. Annuities need to be understood, not demonized,” he says. The modern income annuity, when understood, creates a paradigm shift in the way people look at retirement income, according to Meinen. While not a fan of variable annuities, he likes fixed annuities as principal is protected. “It’s a way to generate lifetime income while the account value is still sitting there,” he explains. “When you start taking withdrawals out of it, you may deplete the account, but never run out of income. When your money is gone, the income is now coming out of insurance company’s pocket.”

russminen600Choosing a Financial Advisor

When asked about choosing a financial advisor, Meinen says clients must find out how an advisor feels about investment, risk, retirement, guaranteed income through fixed insurance options and how that meshes with the client’s core beliefs. Clients should ask if the advisor has a specialty, and if dealing with a broker, find out what brokers are not allowed to offer them. Among the most important questions: What is the plan to help protect investments if another 2008 occurs? “What is the investment exit strategy – most don’t have any,” he says. “How do you determine my risk tolerance? What is your experience? Do you have a fiduciary obligation – if not, why not? Are you easy to reach via phone, email or text? How often do you meet with clients?” Meinen says that once you get the answers and they are satisfactory, go with your gut about how you feel about working with someone.

Successes and Failures

To Meinen, his goal is to help a client go through the three-step process, and at the end, have them thank him for helping them. “The challenge is understanding to what degree people want to be educated. I try to give people all they need and find out where they are on the scale of how much they want to know,” he says. Failure occurs when he’s presenting something he knows they need – and they know they need – but they don’t make the change. “They’re complacent where they are, and don’t see the dangers out there,” he says.

For more information on Meinen Financial Services, visit: meinenfinancial.com

Investment advisory services offered through Horter Investment Management, LLC, a SEC-Registered Investment Advisor. Horter Investment Management does not provide legal or tax advice. Investment Advisor Representatives of Horter Investment Management may only conduct business with residents of the states and jurisdictions in which they are properly registered or exempt from registration requirements. Insurance and annuity products are sold separately through Russell Meinen. Securities transactions for Horter Investment Management clients are placed through TCA by E*TRADE, TD Ameritrade and Nationwide Advisory Solutions. Insurance and annuity products are not sold through Horter Investment Management, LLC (“Horter”). Horter does not endorse any annuity or insurance products nor does it guarantee their performance. Owners of these products are subject to the terms and conditions of the policies and contracts of the issuing companies. All product guarantees depend on the insurance company’s financial strength and claims-paying ability.

 

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