Meet Mr. Assets.

I’d like to introduce you to Mr. Assets. He’s a proud individual. Works hard for himself and his family. He’s industrious, has an entrepreneurial spirit, and has several business opportunities in motion at any one time. It’s very exciting to watch him go, and many folks are eager to receive regular updates about his progress.

He seems to be working on deals endlessly, striving to build wealth long-term. Many of his deals turn out to be quite successful given time to develop, and a few are more lucrative than others but take years if not decades to become prosperous. A handful of them happen much more quickly, and the rewards can be extraordinary though it is less common.

On the other hand, not all of his deals work out. In fact, in his line of work there’s plenty of danger and risk. That’s why he is often so handsomely compensated for what he does. Nevertheless, he is prone to periods of reduced economic potential. He may experience temporary pay cuts, even devaluation of his enterprises, or even run the risk of being completely wiped out altogether. His past is checkered with times of uncertainty and doubt. However, given time, even decades to succeed, he seems to always land on his feet and come out ahead in the end. 

Meet Mrs. Income

It’s fair to say that much of Mr. Assets success would not be made possible without his better half, Mrs. Income. She is steady and she is strong. Month in, and month out she seems to be consistent and reliable. It’s her income that puts food on the table, a roof over their head, hot water in the shower, electricity to light their home, clothes on their back and wheels in the driveway.

Because of her unique position she is most often immune to the periods of economic uncertainty that often plague Mr. Assets. When he finds himself temporarily out of work, or his pay is reduced due to a market downturn, she picks up the slack and makes sure they don’t get booted out of their home. Her station in the relationship may not be nearly as exciting as the wild ride Mr. Assets always seems to be on, but without her it’s likely their home life would be just as turbulent as his career.

In fact, during periods of economic hardship, it’s her ability to provide for the household with a steady paycheck that gets them through the toughest, meanest times. Without her support, Mr. Asset would not be able to take the long-term risks that result in extraordinary rewards. He may have to quit his risk-taking ways and settle for a mediocre less rewarding position just to get by. Without her, his success would likely at best be limited, and at worst he might be an absolute failure living on the streets.

Better When They’re Together

Together, they are Mr. and Mrs. Financial Resources. Mr. Asset and Mrs. Income work well together to create a comfortable and sustainable home for their dependents. For how long? As long as they have to! No one knows how long their dependents will be around. They have to keep it up for an indeterminate period of time. Folks in their care may stay a few years, but more likely than not it could be decades before they leave home and move one.  Therefore, Mr. and Mrs. both have to work together.

Mr. Assets to take long term risk, in an attempt to ward of the rising costs of goods and services (inflation), and Mrs. Income to assure a minimum desired standard of living no matter which way the economic winds happen to blow. Together in balance, they live in harmony. However, any sustained imbalance of either could be disastrous in due time.

Honey, I Have Some Bad News 

One day, Mr. Assets walked through the door with his head hung low. “Honey, I’m home, but I have some bad news”. “Things are not going so well in the market. Most of my business ventures are down in value, and a couple of them have all but vanished in a short period of time. It’s really not looking good in the short term, and I’m not sure how we’re going to make it through this one. I’m sure things will recover in time. They always seem to.” He says as he tries to stay positive. “However, I have no idea how long it will take.”

Seeing the distress on his face, Mrs. Income rushes to comfort him. “It’ll be alright dear. My sustainable consistent income will cover all of the regular expenses. We’ll be able to maintain our lifestyle with a few minor seemingly insignificant modifications. We may have to postpone our European cruise next month, and maybe dine out one night less each month until things get better,” she says in a calm and steady voice.

“This too shall pass,” she continues, “and we have prepared for this. Over any 30-year time span your career has been an absolute success, and it would be hard for anyone to deny you of that. However, we’ve come to learn through experience that over any 10-year period you could be up or down, and relying solely on the fruits of your activities could mean feast of famine for our household. Because we’ve planned for the volatility and temporary setbacks that are likely in your line of work we’ve built a sustainable lifestyle for our household on my ability to provide steady income. You’ll get back on your feet soon, and flying high again. Until then, I’ve got this!”

Balance Your Income & Assets

During your working years, Mrs. Income provides for your household. She does this when you earn a paycheck from employment. You trade your time and expertise for income. The whims of the financial markets have little to no impact on your day to day lifestyle. Her steady income gives Mr. Assets the luxury of taking big chances with your retirement savings.

The fact is most folks don’t rely on Mr. Assets for any financial support during their income earning years. Mrs. Income takes care of it, both essential spending on the things they need and the discretionary spending on the things they want.

As a result, Mr. Assets enjoys time to ride out market volatility and play the long game. He may be able to take advantage long-term capital appreciation. Big market downturns may become an opportunity rather than a threat, presenting an ideal situation to invest more money into his enterprises at a lower cost to grow household wealth. It’s all made possible because Mrs. Income. She is taking care of 100% of the daily obligation at home, and providing Mr. Assets with capital to invest in his enterprises.

Mr. Assets Gets a Promotion

As you near your transition into your post working years, be cautious not to place too much near-term financial burden on Mr. Assets. He’s effective when he has a decade or more to take calculated risks. However, in any given 10-year period he could experience a significant set back requiring years to fully recover from.

If he were forced to support the majority household expenses during these downturns in economic activity it could be disastrous. His success has always depended on Mrs. Income to provide for the majority of the household spending. However, few folks will transition into retirement with an equally strong Mrs. Income.

For many folks, she’ll be reduced to a shadow of her former self. Perhaps she’s been reduced to social security alone covering only a small percentage of household expenses. For a few folks, Mrs. Income may include a pension to compliment social security. In which case she will be able to cover a larger percentage of household income, but likely not 100% of the bill. Only a small handful will be able to completely replace 100% of Mrs. Income’s pre-retirement strength with their post-working retirement income sources.

More likely than not, folks end up relying heavily on Mr. Assets to step up and take over the majority of Mrs. Income’s financial obligations. He effectively gets promoted to primary income producer. It’s a job he’s likely not qualified to accept. It seems to be a lot to ask from a professional risk taker. It would be difficult for tiger later in his career to change his stripes.

What might happen if he’s all of the sudden responsible for replacing 60%, 70%, or 80% of Mrs. Income’s near-term obligations to provide a consistent and comfortable lifestyle? Will he be forced to stop taking the very risks that have made him so successful, bringing the long-term financial prosperity to the household to a slow crawl?

…Or, will he continue taking high risks as usual placing your lifestyle and livelihood in an uncertain situation?  Will he potentially force you into uncomfortable measures during the next market downturn because he was still playing his long game lined with short-term risks? Will it add undue stress and worry for your family because no one thought to replace a sufficient percentage Mrs. Income’s steady paycheck once you transition into retirement?

Purpose and Timeline: Mr. and Mrs. Retirement

The Triplett-Westendorf Financial Group’s Purpose and Timeline (P&T) philosophy strives to strike a balance between income and assets. Based on the intended purpose of each dollar, and the timeline for which it will be needed our PT5 step process guides our asset allocation recommendations to align with your desired lifestyle.

We believe Mrs. Income needs to be equally as strong in your post working years as she has been during your earning years. She plays a foundational role on which your retirement lifestyle rests.

With strong income sources in retirement covering the majority of your necessary household spending, Mr. Assets is free to continue taking long-term calculated risk. Given time it is foreseeable that he can continue the role he so masterfully executed for decades during your working years.

Long term capital appreciation to ward off the corrosive effects of rising costs of goods and services is his primary objective. His second objective is to provide additional resources for the non-essential luxuries you might want to enjoy, as well as developing a legacy for those whom you want to leave something behind.

By clearly understanding their roles, strengths, and limitations you can keep Mr. and Mrs. Financial Resources in balance as you transition from your working years into your post working retirement years. It starts with ORGANIZATION, one of the Triplett-Westendorf 6 Core Values, and initially occurs during the 1st step of our PT5 Step Retirement Plan Screening process called Discovery. All income sources, retirement and non-retirement assets, and lifestyle spending habits are organized and analyzed to simulate how they all work together. Then you can begin to identify potential weak spots, and opportunities.

However, failure to balance Mr. Assets and Mrs. Income’s financial duties in retirement before making the transition will likely leave many folks wondering how they’ll adjust the next time we experience severe market and economic turmoil.

“Investment Adviser Representative of and advisory services offered through Royal Fund Management, LLC, a SEC registered investment adviser.”

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