The Problem with Financial Planning

Let me start with a story that highlights the problem with financial planning today. A colleague of mine works diligently as a financial advisor, and he schedules days to meet with employees about their 401(k)s. He’s prepared to offer invaluable advice, set up one-on-one meetings, and answer pressing questions. Yet, out of 50 employees, only four show up. https://www.youtube.com/live/i4NH3UgbDlU Why? The truth is, many people don’t take ownership of their financial future. We’re bombarded with information from YouTube videos, TikTok influencers, or even well-meaning friends, but when it comes time to sit down and make decisions, we hesitate. Too many of us leave our future to chance or to others without truly understanding the options available to us. The result? Missed opportunities and financial stress. Shifting Your Financial ParadigmUnderstanding The Problem with Financial PlanningThe Risks of Deferring TaxesThe Myth of "Set It and Forget It" InvestmentsThe Power of Financial EducationExploring Alternative Financial StrategiesWhy Rethinking Financial Planning MattersTake Control Today Shifting Your Financial Paradigm Today I want to talk about a concept that might be unfamiliar to you—rethinking how you approach financial planning. Most people stick to the typical paths because it’s comfortable. We invest in 401(k)s, we defer taxes, and we hope everything works out when retirement rolls around. But here’s the hard truth: the problem with financial planning lies in its limited scope. It often relies on outdated assumptions, overlooks the impact of taxes and inflation, and can leave you vulnerable to market fluctuations. What we’re offering in this blog is a new lens to view your financial journey, one that empowers you to make more informed, strategic decisions that truly align with your goals. If you want to take your financial life to the next level, you’re in the right place. Understanding The Problem with Financial Planning What most people call financial planning is often limited to a narrow set of strategies: employer-sponsored retirement accounts, stock market investments, and savings. These options seem like safe bets—after all, they’ve been recommended for decades. But the problem with financial planning in this typical model is that it ignores key risks, like market downturns, future tax hikes, and the hidden costs of inflation. Typical financial planning often revolves around making predictions about things you can’t control. You’re asked to guess your future income, how long you’ll live, and what kind of returns you’ll see in the market. While this may work for some, the reality is that building a financial plan on assumptions can create a shaky foundation. Consider this: many financial advisors lean heavily on historical data, like the belief that the stock market averages a 7% return. But those averages span over a century. Your investing timeline might only be 30 years, and within that period, the market could behave very differently. You might face prolonged periods of low or even negative returns that derail your entire plan. The problem with financial planning here is that it assumes a one-size-fits-all approach. The Risks of Deferring Taxes One of the biggest misconceptions in typical financial planning is the idea that deferring taxes through 401(k)s and IRAs is the best way to minimize your tax burden. The thinking goes like this: defer taxes now when you’re in a higher bracket and pay them later when you’re in a lower one. However, this strategy ignores a critical factor—the potential for future tax increases. As we often discuss, the U.S. debt is skyrocketing, and at some point, those taxes will have to go up to pay for it. So, while you may think you’re saving by deferring taxes today, you could be setting yourself up for a larger tax bill down the road when you need the money the most. This is yet another angle of the problem with financial planning th...