Do You Have SECURiMENT Equity?
I was asked recently what SECURiMENT means. As you know I am the world's leading expert on this fictional word I created!
So here's why I did it. I felt there needed to be a simple word to describe what I know, intuitively, most people are shooting for. When I began my work as a retirement strategist, I noticed that people were all over the place with their thoughts. Some only cared about maximizing social security. Some just wanted to avoid market losses. Others considered only their taxes.
They weren’t taking in the whole picture. So, a new retiree might consider how to minimize investment risk but
have no plan to pay for a devastating health care crisis in the future. Or they would collect social security too soon when there are better ways to generate income. Overall, the actions were too granular. Something was missing.
I also reflected back on the terrible advice I received when I sold my business - at a time when I had the most money I ever had and likely ever will. (It's a wonderful story. Takes place in 2007. Need I say more...)
Anyway, the whole thing was troubling. More than all that, I encountered a whole bunch of people who had assets, in some cases, significant assets but didn’t have the corresponding happiness.
I wanted to understand!
So, I think about it this way and I use a house as an example. As you know, your equity (in your home) is the price of your house less the balance on the mortgage. The same way that paying off the mortgage provides increased financial equity, reducing risk, needless worry and stress increases “happiness” in your retirement.
SECURIMENT is the abundance of “happiness” equity… While Risk is the antithesis of SECURiMENT!
It’s the actions we don’t take that prevent SECURiMENT. For example, if you are subject to an inordinate amount of tax rate risk and you don't do anything about it - SECURiMENT equity is reduced. Too much market risk and you're not placing a floor under some of your assets...that’s also a liability that reduces SECURiMENT.
Do you want SECURiMENT as I’ve described it?
Eliminate the risks that might prevent SECURiMENT, and that will lead to more “happiness” equity.
This next part is very important. Assets are only meaningful if we ELIMINATE the worry that diminishes the happiness we derive from the assets in the first place.
It's not only about how much money you have. I've known both types. People with fortunes, but no SECURiEMENT and those with small nest eggs but tons of happiness.
That's just how it works!