Financial fitness after 50 is about building a robust financial plan that supports your dream Next Act. In this episode Rachael Van Pelt covers four keys to building financial fitness and how to shift your investment strategy as you approach retirement. Now is the time to lean into a great team of financial advisors and to find a balanced approach to investing that emphasizes income generation and capital preservation. Creating multiple income streams can further improve your financial fitness while also fulfilling your passions. The goal is to create a financial plan that has strength, stamina and flexibility, but also aligns with your lifestyle and has longevity.
Chapters
00:00 Introduction to Financial Fitness After 50
01:40 The Four Keys to Building Financial Fitness
04:11 Diversifying is Like Building Strength and Stamina
04:52 Investment Strategy Changes with Age
08:26 Regularly Review and Adjust your Strategy
09:20 Build a Trusted Team of Financial Advisors
10:50 Creating Multiple Active Income Streams
13:06 Finding the Balance
14:33 Taking Bold Action
Welcome to Next Act Ninjas, the number one podcast for mastering your lifestyle longevity. I'm your host, Rachael Van Pelt, a retired health span scientist turned Realtor and coach. Today I'm diving into the fun topic of financial fitness after 50. And no, I'm not going to ask you to drop and give me 50 pushups. This is about fueling your dreams and supercharging your future. Financial fitness is not just about building your nest egg, it's about living a life that's bursting with energy and possibilities.
But before we get started, let me ask you a question. What does financial fitness mean to you? Is it having a robust retirement fund that you won't outlive? Is it being debt-free? Or maybe it's the ability to support the lifestyle you love without financial stress. I'd love for you to share your thoughts in the comments below. I'm eager to hear what you have to say about this. Because I think of financial fitness as the heartbeat of your dream lifestyle. A robust financial plan is like a strong, healthy heart. That heart is pumping life into every dream, every ambition, every golden moment that you wish to cherish.
Taking this metaphor even further, building up your financial fitness is very similar to building your cardiovascular fitness, your musculoskeletal fitness. And there are four keys to building fitness, financial or otherwise. The first key is unwavering commitment. Why do you even care about your financial fitness? What's going to keep you showing up day after day, even when you're not feeling it? Who are you doing it for? You know, you're not going to have the motivation to put your workout clothes on, let alone get out the door for a walk day after day if you don't have a good reason to improve your fitness. So whatever you do, don't skip this step. Get connected to your why, anchor it into your system. Otherwise,any strategy that you implement is irrelevant.
The second key to fitness is consistency. Think of your financial journey as a marathon, not a sprint. It's about taking steady steps towards your goals, much like a runner pacing their way to the finish line. And that consistency doesn't just start on race day, does it? It starts months before, when you commit to training, when you show up day after day and put in the work. This journey is for life. It's about building wealthspan that lasts your lifetime. hopefully even leaves a legacy.
The third key is tracking. Monitoring your finances is like keeping an eye on your heart rate during a workout. It's about knowing when to push and when to relax, ensuring that you're always on the right track. Now there's no need to obsess about tracking. You just need to take an honest look at your finances on a regular basis and not have your head in the sand. And what gets measured gets managed, doesn't it? So make sure you're tracking the right metrics. There are three important metrics. Investment rate or how much you're putting away every month, return on that investment, and your time horizon. Pay attention to those three things and you're going to have a good feel for whether you're on track or not.
The fourth key to building fitness is having good coaching. Even champions, they need coaches, don't they? The best athletes may already know how to train, but they still need outside perspective. They need someone on the outside looking in who can be objective about their performance and guide their training. It's the same with managing your portfolio. You may already know how to invest, but you'll still want financial advisors to coach you along the way. Once you have these four basic things in place, you're committed, you're being consistent, you're regularly tracking outcomes, you have good coaching...Then you're ready to think about leveling up your overall performance. Upleveling means improving your strength and stamina.
That means diversifying your portfolio and creating multiple income streams. Diversification is your cross-training. Every investment you make builds different muscle groups. By diversification, I mean having a mix of stocks and bonds precious metals, cryptocurrencies, real estate, you name it. You want a portfolio that has strength, endurance, and flexibility. It should adapt not just to the changing market, but to your changing needs as you age, keeping tempo with your changing lifestyle. Our overall investment strategy, it changes as we get older, doesn't it? And that's primarily due to a shift in our risk tolerance and our time horizon.
Obviously, when we were younger, say in our 30s and 40s, we had a long time horizon, so we could take more risks. We had plenty of time to recover from losses if we made mistakes. So we could focus on relatively riskier investments. Our portfolio could be made up mostly of stocks and mutual funds because the idea was to capitalize on potentially higher returns while accepting higher risk. This was also a great time to explore alternative investment strategies like venture capital, cryptocurrencies, startup funding that can have higher return, but it also comes with a lot of risk, doesn't it?
In short, when we were younger, time was on our side. Our portfolio could take on risk for potentially higher long-term returns. We had plenty of time to recover from market downturns along the way. But now as we get older, and our time horizon shrinks, we must shift to relatively more conservative and balanced portfolios. As retirement approaches, our focus moves towards preserving what money we have and generating income or cash flow. Now, that doesn't mean completely avoiding risk, but rather managing it a little more prudently. We want to continue to grow our nest egg, but we also need liquidity. We need cash to spend, right? to support our lifestyle. This is a good time to have more fixed income investments like bonds, which can provide regular income. They're also generally less volatile than stocks. Dividend-paying stocks also, they're attractive because they're income-generating and relatively more stable.
Real estate becomes a huge player in our long-term strategy. As we get older and we've lived in our homes for a while, we've probably built up equity. We can tap into that home equity either by refinancing our mortgage and pulling cash out or by taking out home equity lines of credit. Or after we reach the age of 62, a home equity conversion mortgage. And of course, rental properties and vacation homes, they're great. They're an outstanding way for us to continue to grow our wealth while maintaining cashflow. I've talked about this in previous episodes and I highly recommend you go back and listen to those episodes if you're thinking at all about leveraging real estate to strengthen your overall portfolio and create cashflow in retirement.
Remember, the strategy in your 50s and 60s is about balance. You want to protect the wealth you've already accumulated while at the same time you want to keep growing your wealthspan to support a potentially longer lifespan.
This is also the time to think through how your investments fit into your overall estate plan. Don't forget to consider tax efficiency and transfer wealth to heirs if you plan to leave anything to your loved ones. I'm going to cover estate planning in future episodes, but I mention it here because I think of it as an important piece of your overall financial fitness.
Now I realize that finding this balance is no small task, but paying attention to your fitness is non-negotiable at this stage of life. This is not the time to take a head-in-the-sand approach to your financial fitness. Regardless of your time horizon, make sure you are taking the time to regularly review and make adjustments to your investment portfolio as needed. My husband and I, we used to do this only about once, maybe twice per year. But now that we're nearing retirement, we take time to review this quarterly. Even if we don't make any adjustments, we at least have our eye on the ball. We're consistently tracking our outcomes. We're discussing our dreams. The goal at this stage is to make sure that your investments align not just with market conditions, but with your evolving lifestyle needs.
To meet these goals, make sure you consult with financial advisors along the way. They can provide personalized advice based on your individual circumstances, your risk tolerance, your changing goals. Just know that not all advisors are created equal. Few can advise you on every type of investment. They tend to be specialized and to stay in their lane. In fact, I find that many so-called financial planners primarily sell products like insurance policies, retirement mutual funds. While that's fine when you want these products, they don't really look at your financial situation holistically. Ideally, if you want to do that, you're going to need a team of people you trust, a team that can cover a variety of financial advice and services.
A great team might include a CPA to do your taxes and advise on tax strategy, a savvy investment broker to manage and grow your stock portfolio, an experienced mortgage lender to help you tap into your home equity and/or get the best rates for new loans, and of course, a knowledgeable Realtor to advise you on real estate market conditions and to negotiate the best deals for you. Now, you may not need all of these people all of the time, but you want a team of people that you trust to help you all along the way, just like you would rely on doctors and health coaches to help you on your health journey.
Lastly, let's not forget about adding other active income streams to the mix. Think of these income streams as the nutrition to support your performance, to fuel your endurance. This is about monetizing your passions, pursuing dreams, embracing new adventures. It's never too late to start a new chapter to nourish your soul. Maybe you don't stop working altogether when you retire and instead you start a business or side hustle. Maybe you have hobbies, skills, passions, things that you can monetize in a fulfilling way. My own father, who was an inventor, designer, master woodworker, he made and sold custom wine racks on Etsy in his last few years of life. He loved it. It kept him creating and innovating right up until the very end.
Or maybe your expertise lends itself to consulting work, referral fees, royalties, revenue sharing. For example, as a Realtor, I assist clients in buying and selling properties, not just here in Colorado, but nationwide through referrals. And my brokerage, EXP Realty, has a revenue sharing program. This not only diversifies my income, but it also keeps me engaged and connected with clients and other Realtors all over the country. That's why I became a coach and a Realtor after retiring from academia. That's why I started this podcast for that matter. I have no intention of retiring in any conventional way. I fully intend to keep contributing to society and creating a fulfilling life for myself as long as possible.
Isn't that what you want? A life that fulfills you? I'm sure. I think it's what most of us ultimately want, isn't it? In fact, if you survey older adults in their 80s and 90s and you ask them what's the recipe for successful aging, they're going to tell you that the trick is to not become a burden and to keep contributing to society in a meaningful way. The vast majority put those as top of their list. In other words, generating other active income streams, that's as much about staying relevant as it is about your financial fitness. The bottom line, as we age, our investment strategies should transition from higher risk to more balanced approach. A balanced approach that emphasizes income generation and capital preservation. The more diversified your portfolio, the more income streams you have, the better, especially in this economic climate.
So think about how you can apply the principles of building your cardiovascular fitness to your financial planning. How will you make your financial health robust, resilient, ready for the long run? What will you do to diversify your investments, to generate more income streams? Start by decisively committing, being consistent, tracking your outcomes, and getting good coaching. Remember, financial fitness after 50, it's not a one-size-fits-all approach. It's about crafting a strategy that aligns with your lifestyle goals and your aspirations. Whether you dream of traveling the world, spending more time with your family, pursuing new business ventures, your financial plan, it needs to support your dreams. Ask yourself, how can I make my financial future not just comfortable and secure, but exhilarating, fulfilling.
And then take one bold step in that direction today. Maybe that means exploring a new investment. Maybe that means chatting with a financial advisor. Maybe it simply means discussing your dreams with your partner on a regular basis. Because... While the best time to plant a tree was 20 years ago, the second best time is right now. I'm Rachael Van Pelt. Thank you for joining me today on Next Act Ninjas. Don't forget to subscribe to this podcast and share with someone you know who's also on the journey of mastering their lifestyle longevity. Until next time, live well, love more, age less, my friends.