As we acquire more assets, we need to be more intentional with our actions. The two goals of obtaining assets are to free us from being wage slaves and prevent our children from the same bondage.
Yes, using the word slave is harsh, but it’s appropriate. Travel back in time with me. When you left the house at age 18, how many assets did you have? How did you treat your time and money?
Now, what if you left the house at age 18 and moved into one of your parents’ fully-paid off homes. You went to junior college while maintaining two roommates who paid all your school and housing expenses.
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Your parents also gifted you a dividend portfolio that produced $1,000/mo in dividend income. How would your life be different? Would you have been in the same rush to get a job and pay off debt? What career would you have chosen if money wasn’t the top priority?
Retirement Planning vs. Estate Planning. Retirement planning is your plan to remove yourself from the workforce and live the rest of your life as a free person.
Estate planning is your plan to ensure your children have the same freedom, but hopefully much earlier in life than you.
Most people don’t plan for retirement, so they have no assets. Therefore, they don’t do any estate planning because they don’t have an estate. This article doesn’t pertain to those that choose to live without freedom.
The Blue Chip Mindset. I geared this article towards the 5% of people obtaining assets and trying to become independently wealthy. The Blue Chips’ top priority is getting their children to think and move like Blue Chips.
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Books. One of my favorite books to recommend about retirement is “Rich Dad’s Cashflow Quadrant.” Inside, Robert Kiyosaki tells us to shift our mindset from the Employee quadrant to the Business and Investor quadrants.
When I read this book in September 2020, I didn’t have a business mindset—I had a 100% employee mindset. In January 2021, I released my first book and started my life as an entrepreneur.
I have also become an investor. I invest in my own business and dividends, crypto, and real estate. Along with my military pension and Roth IRA, these things will ensure I have a Happy Cash Flow Retirement.
I recently finished “Get Your Ducks in a Row,” which goes super in-depth into estate planning. This book was 450+ pages and could be a challenging read for some. I found it interesting because I knew nothing about estate planning.
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Estate planning covers wills, power of attorneys, trusts, and long-term care plans. I really want to dig into these topics, but I don’t know how big the audience will be for this information. Let me know (via my Facebook Group) if you want me to dive into estate planning more in-depth.
Examples of retirement planning and estate planning. One good example of the difference could be in your investment accounts. If you add the recipient as a beneficiary, brokerage accounts don’t need to go through probate (holding).
Depending on the status of my children, I may not want to leave the investment accounts directly to them. I may want to leave it in an irrevocable trust so they can’t touch the principal, only the dividends.
Or, I may leave each of my kids an income portfolio that pays a hefty current income and put the dividend growth and index fund portfolios into irrevocable trusts for the grandkids and great-grandkids.
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This way, my kids get the current income they can use to fund college or tutoring, and I am still leaving a significant legacy fund for the future. This Blue Chip mindset will set your future generations up for long-term success.
Real Estate. I can go through the same process with real estate. I can leave one rental home directly to my kids but then put the rest of the homes into a trust. After the manager pays taxes, insurance, and maintenance, the trust can deliver the family the dividends, almost like having a personal real estate investment trust.
I can appoint my children to be the manager of the real estate trust. Or I can leave the real estate in a Limited Liability Corporation (business entity), with the children succeeding as the president.
Business. Hopefully, my book and website business will take off over the next twenty years. I can leave the company to my children as an LLC. Or I can have someone manage my business and ensure my children get the royalties and residual business income.
Make Your Family Rich. The book “Make Your Family Rich” discusses positioning and integrating your children into your overall businesses. This includes everything from real estate, investments, and business.
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Your kids need to know everything you have going on and even meet business partners. If you want to keep your legacy and ensure you pass on your wealth successfully, children need to sit at the table as early as possible.
Getting started. To build a Blue Chip mindset, you need to free yourself from your own bondage. If you can’t survive without a paycheck, you have many things to learn before starting retirement and estate planning.
The hardest part of the process is converting from an employee mindset to an entrepreneur. Retirement planning is the business of providing for you and your spouse. Estate planning is the business of providing for your offspring and their offspring.
To run a business, you need an entrepreneurial mindset. Work on building that, and then the rest will fall into place.
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Entrepreneur test? Can you build a monthly income stream on $100/mo without exchanging time for money? So this means no driving Uber, delivering pizza, or working extra hours.
If you cannot think of a way to do this, you have to do some reading. I recommend the How to Create Passive Income (101, 102, 103, 104) series. Also, the books “The Passive Income Myth” and “Passive Income, Aggressive Retirement” also dig into some great ideas for passive income.
Conclusion. I want to dig deeper into the difference between retirement planning and estate planning. If you start estate planning early, it can affect your retirement planning—in a positive way.
For example, instead of buying a new rental property for yourself, you may just put it under your children’s name from the start. That way, they can start reaping the benefits much sooner, and it’s one less headache towards the end of your life.
There is so much to discuss, but I will do it sporadically. The average person doesn’t even plan for retirement, let only start estate planning, so the market is small for this content. However, that doesn’t diminish how important these topics are towards everyone’s success.
I am looking forward to ensuring my children are set up with significant assets and the mindset to leverage these assets for themselves and their children (my grandkids). What an extraordinary life!
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Disclosure: I am not a financial advisor or money manager, and any knowledge is given as guidance and not direct actionable investment advice. I am an Amazon Affiliate. Please research any investment vehicles that are being considered. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article. All Right Reserved Military Family Investing
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