Ross Levin
Ross Levin
FINANCIAL LIFE PLANNING
When we set safe spending levels for clients in retirement , we base those levels on four things : the number of years they are expected to live , the amount they spend , their market returns and what kind of legacy they wish to leave . We can then tweak some of these factors according to how important they are . If the client doesn ’ t care about their legacy , we can tweak everything else so that they die with zero dollars . But longevity is a factor even then . Dying with zero dollars only works if you know the exact day you are going to die .
One of my long-term clients has fought a 10-year battle with cancer , and she ’ s now in hospice . She and her husband called and thanked us for helping her do what ’ s possible while she ’ s still alive . They traveled and brought their adult children and grandchildren on trips that they could not imagine on their own . But she will be dead by age 82 , not 95 . They could have done even more , yet I had created guardrails that informed their decisions . I am grateful for what she expressed , but I am also sad when I think that they could have created other memories that I artificially stymied because of my worship at the altar of safe withdrawal rates . What I did for her was generally right , but not absolutely so .
Humility means setting up our primary residence in the town of uncertainty . While we may talk about probabilities , most of us still don ’ t live in the state of uncertainty , we merely vacation there . Humility means we are always acknowledging alternatives and how they could turn out better than what we are suggesting . It also means that we help clients see most decisions as experiments , rather than as something right or wrong .
One of our clients had a debilitating stroke , and his home no longer accommodated his needs . He and his spouse
Humility means we are always acknowledging alternatives and how they could turn out better than what we are suggesting .
moved into a graduated living facility where they could get care . When his condition improved , they went to Mexico where they could live less expensively and , in their opinion , receive equivalent care . Last year they spent 15 % of their beginning asset value , though the markets left them with slightly more money at year ’ s end .
They had been talking about selling their home in Minnesota and buying a smaller place there — as well as a home in Mexico . Since they are in their mid-70s , we talked about how likely it would be that they run out of money if they live another 15 or 20 years . We settled on them renting a year-round place in Mexico and visiting Minnesota for just a couple of months in the summer . No one could have foreseen their current situation , and we don ’ t know how long it will last . Running out of money was their biggest worry , but they chose to ignore it as they dealt with the husband ’ s recovery . Now they feel ready to face it .
So to recap , we ’ re advising them to do something they don ’ t want to do so we can keep them from running out of money — we ’ re experimenting with the rental idea to give them more options . If the husband dies tomorrow , we might wish we had done something different . There is zero chance we will get this decision perfectly right . And I also have to ask myself : Did I inadvertently tether them to a fear their money will run out ?
As we work on the sustainability plan at our own firm , Accredited Investors Wealth Management , I am confronted constantly by my own need for humility . Our next generation of leaders are exceptional , and very different from my co-founding partner , Wil Heupel , and me . Some of what they are doing is different from what I would do . How do I handle that ? Where do I step in , step up or step out ? How do I wrestle with the reality that our newer employees are concerned more with the impressions they make with the current managing partners than with me , and how will I deal with it if my ego gets bruised ? How do I respond when I perceive the managing partners ’ egos sometimes becoming an issue ? How do I have more grace , a byproduct of humility ?
When I struggle with my own ego , I try to remember that humility stems from an acceptance that outside influences were important in my life . I certainly had something to do with the good outcomes in my life , but the final results have probably been shaped by thousands of people and things like luck , faith and happenstance . It was never all about me . Compassion and moderation are critical to a life well-lived , but I think humility makes the other two possible .
ROSS LEVIN is co-founder of Accredited Investors Wealth Management in Edina , Minn .
24 | FINANCIAL ADVISOR MAGAZINE | MAY 2024 WWW . FA-MAG . COM