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Federal Employee Financial Planning: Start Small, Start Now (EP56)

Small steps, big leaps. In this episode, Michael, John and Ben explain the power of initiating modest changes in your financial plan, drawing parallels to the similarly slow approach required in physical fitness. Tune in to discover why waiting for the future to pursue your dreams can be a costly delay.

You will learn simple steps to live a more fulfilling, financially free life and the art of understanding your financial landscape. The guys also share advice on implementing substantial changes, the game-changing impact of seeking professional financial advice and how to redefine your financial trajectory.

Listen to the full episode here:

What you will learn:

  • The importance of starting small with financial well-being. (2:00)
  • Why you should start planning for your future today. (5:30)
  • Why you shouldn’t wait until you’re older to do the things you want to do. (9:00)
  • How to ensure you’re living your life today. (11:45)
  • The benefit of understanding your financial situation. (15:00)
  • Steps you can take to start making substantial changes. (17:00)
  • The value in outsourcing your financial planning. (20:00)
  • How hiring a professional financial advisor can change your life. (25:00)

Ideas worth sharing:

  • “It’s never too early to start making memories with your family.” - Mason & Associates
  • “Start small, and start now. It’s amazing how taking baby steps can lead to leaps and bounds.” - Mason & Associates
  • “Don’t wait until you’re older to do the things you want to do.” - Mason & Associates

Resources from this episode:


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Read the Transcript Below:

Congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast, hosted by Mason & Associates, financial advisors with over three decades of experience serving you.

John Mason: Welcome to the Federal Employee Financial Planning Podcast. I'm John Mason, certified financial planner. And with me today, we have three of the four. We have Ben Raikes and we have Michael Mason, your usual host.

We're missing Tommy Blackburn who's out on paternity leave. We're very excited for him and his family, but, folks, this episode we're calling Start Small, Start Now. And this is definitely a play and a takeaway from an RV channel that I enjoy watching called “Keep Your Daydream”. So, I want to give them a shout-out as we get started in this episode, Start Small, Start Now.

But folks, couple reminders. Please do all the things for us to help continue making our educational content grow throughout the country. Like, subscribe, hit the bell notification, email us with content and questions: Like, share, subscribe, do all those things for us and we appreciate you.

Our platforms are growing and one of the things that we continue to say, and we want to remind you early on in this episode, is that things are what they seem at Mason & Associates. And although we're financial planners first and we're doing this second, things are what they seem. We're here to support, empower, educate, and motivate you whether you're a client and we're doing that through individualized financial planning, or you're a listener and you're engaging with us on one of our platforms to make a change and update and continue to tweak your financial plan so that you're achieving all those goals. So guys today, start small, start now. I'm excited for this one.

Michael Mason: You know, anytime there's change, we ask you to do something every year to improve your financial plan, and that doesn't necessarily mean saving more, right? It could mean saving more, so if you're not at maximum in your TSP, maybe start small, you put one percent in. If you don't have the ready savings, the emergency savings, do something, start small, it will build. If you never start at all and if it's physical fitness, if you don't do anything and you walk around your block and you walk a quarter of a mile, well that's better than doing nothing. So start small and build upon it.

John Mason: I think, Mike, you hit on it perfectly with those analogies and where this YouTube channel has gotten me and Sarah really excited about our RV travel and adventures is that it's never too early to start making memories with your family.

And I'm going to call back a lot of things right now. I think we had Allison on a previous episode and we talked about adjusting expectations for like your first house or your next house, adjusting expectations and get a house that works for you, whether that's a two-bedroom, a four-bedroom, an eight-bedroom, but like maybe just getting a house is better than not having a house.

So, start small, start now. Get a house that's reasonable, that's safe, that can house you and your family. Use it as a tool. If you're camping and you can't afford a camper and you can go tent camping, you're gonna make phenomenal memories with your kids. Tent camping with your family. Start small, start now. You don't have to wait for the Class A $400,000 motorhome that may or may never happen. If you want to look like Ben Rakes and you want to be super jacked, and you want to be very physically fit, you don't just get to go into the gym tomorrow, Ben, and walk out being able to bench 350 pounds, do we?

Ben Rakes: No, unfortunately, you have to go at least 5 or 6 times a week. You've got to get yourself on a good pre-workout. You've got to get some good protein powder. You've got to eat right. But you know what you can do instead of checking off that big list? You can just start walking on the treadmill. Start small. Get yourself in there. Just walk into a gym. Ask them about their membership. It's amazing how taking baby steps can really eventually lead to leaps and bounds.

John Mason: And I think, maybe, hopefully, we haven't lost anybody. And that's already, but start small, start now, we're not just talking, Mike, about working with 22-year-olds because we really don't have many 22-year-olds as clients, but sure. Like if you're 22, you should pay yourself first. You should invest for the future. We should start contributing to a Roth. We're not really talking about starting small and starting now when you're 22. We're really talking about like going about and making substantial or even minor changes in your life at 50, 55, 60, or at any point in your life. You don't have to be 22 for this to be applicable.

Michael Mason: Yeah. The old saying, “Tomorrow never comes,” it doesn't, we're recording this the end of September. It'll probably be released in December. Think of how fast March of 2020 turned into December of 2023, not just how fast January turned into December of 2023, but March of 2020.

And you know why I'm using March of 2020, how fast that happens. And as great financial planners at Mason & Associates, we have to help those folks that are on a glide path or as Ben said, they're getting up and getting on life's treadmill, not the treadmill, but life's treadmill. Every day they jump in the car, they drive to work. My dad did it. Woodbridge, Virginia to National Institutes of Health, every day for 30-some years or at least every work day, the scenery pretty much doesn't change, right?

It's just like Drew's going to see on his way home, traffic all the time, right? But what did Dad do every year, once a quarter, to change his future? What did he do? He had goals. Did he do anything or did he just wait until that day he retired and said, okay, I'm in a new world, I'm off the treadmill, what am I going to do?

John Mason: Well, we've talked many times internally and with clients that when you're 30, 40, 50 years old you're in like the rat race and now we're on this episode, we're saying you're on the treadmill and it's like you can't get off of it, right? Every day, so busy, you have so many obligations, you have so many things going on, you've got people depending on you and it doesn't matter whether the treadmill’s at three or ten miles per hour you are running and you will be on that treadmill until somebody tells you that it's okay to turn it off and through financial planning, hopefully, we're the ones that get to tell you we can turn that down, or we can turn it off and we can move on to the next phase in life.

And I think what happens to your point, Mike, and I don't know how good grandpa did this, is when you're on that treadmill and you're just sprinting and you can't see the outside world and the scenery may or may not be changing, maybe he didn't make any substantial changes for 30 years in his financial plan. Maybe doing one thing, maybe starting small and starting now was even too overwhelming for him because he was running too hard, too fast.

Michael Mason: Yeah, unfortunately, and many people may fall into this, we're very lucky to be doing something that doesn't feel like work to us. So dad’s treadmill, he had a finish line, his treadmill looked more like a track, and his finish line was age 55, okay, he was CSRS. And he was a great dad, passed away in 2019, but can you just imagine 35 years, how fast 35 years must have gone with his single focus? You know, the end is age 55, almost wanting to get to age 55 and all that stuff in between that he may have missed. He didn't miss us growing up. He's great, football games, baseball games. There's golf. He didn't start playing any substantial golf until he retired at 55. It would have been nice to see him do some of those other things.

Ben Rakes: Something you said there really stuck out to me is he almost wanted to be age 55. How many people in their 20s, 30s, and 40s go, I can't wait ‘til I'm 65, I can't wait ‘till I'm much older than I am now so I can retire. And it's crazy to think that mindset even exists and what we need to do is help people realize, don't wait to be older to retire. Don't wait to be older to do the things that you want to do. Do it now so that you don't just have a focus on an age or an accomplishment or a certain value in your TSP or years of service. Don't set those goals. At the end of the day, they're not as meaningful as how many times did I get to see my kids go to a baseball game or go play golf or whatever it might have been that you enjoy.

Michael Mason: And this wisdom that we're trying to impart, understand it does not come natural. I just got back from Yellowstone with my bride. Earlier this year we went to Curaçao, and we'll take two or three nice trips. I'm 62 years old. We'll take two or three nice trips every year. Well, how did I get to this mindset? My son sitting right beside me, saw me on the treadmill. He watched me and his uncle from as soon as he was alive back in 1987 until he said, “Dad, you can't do this at this pace forever. It's time to enjoy some of this,” and what better way to enjoy it.

I'm giving you my experience. You create your own. What better way to enjoy it from 62 until 71 doing what I love here, but not as much and making the most income, which most of you will be the same way those last four, five, six years. Why are you going to wait until you can't navigate Yellowstone Park because you're 70 years old and you weren't supposed to go there until you retired, right? Why wait? Let's do it now.

John Mason: I think the inherent problem with this is, and we have a podcast episode, not surprising, called “Know The Score” and if you're on a treadmill and you're blindfolded and you can't see that it's benefiting you and you can't see that you've lost 20 pounds and we don't know whether or not we should get off or can get off or if we've hit our goals, it makes it really hard to just jump off the treadmill.

And I think as we think start small, start now, like the action item immediately for clients and for potential clients listening to this podcast is to reach out and connect with a financial planner who can help you know the score. Let's take off the blindfold. Let's pull back the curtain. Let's all of these analogies and figure out, can I get off this treadmill? What is my score?

And then we have things like our YouTube video, “Don't Max Your TSP!”. That got a lot of questions and comments, and for us, quite a bit of engagement because it's a foreign concept. But you have to know the score. You have to be able to get off that treadmill for a second to understand why maybe at 57 years old, using your income for trips is okay rather than directing all of your income into a TSP.

Ben Rakes: And I think more appropriately, now that we're kind of talking through this, it's not, “Can I just get off of the treadmill?” It's “Can I take the setting from ten down to five?” And maybe, “Can I actually take a rest from the treadmill and go do something else? Can I go home instead of just riding on this treadmill or running on this treadmill all day long?”

The perfect example you just said was the video that we posted on YouTube, “Don't Max Your TSP!”. It seems like completely counterintuitive advice. And for those of you that are maxing your TSP, we've had conversations this is why you should or shouldn't do it. But if you're sacrificing current trips, current vacations, time with kids, and your plans’ already set. That's a conversation you need to have. That's a really good example of taking a pause from the treadmill or running on ten versus running on five.

John Mason: And I think, Ben, all wonderful points. And where did this treadmill concept come from? Well, a couple of industry experts who we believe add a lot of value talked about the growth treadmill in a business and the growth treadmill in the business is like, okay, you hire your first team member, more people, more problems. You make a little more revenue, more money, more problems because then you hire more team members and it just continues to evolve. You never really get off the treadmill. We think that's where you are listening to this podcast is you got on this work treadmill 30 or 40 years ago and in the business world you think I'm going to hire one more person and my life's going to get better, or I'm going to do this one other thing to help me really scale and things are going to get easier.

And the fact of the matter is the goalposts keep moving, the goals keep changing and you never really get there, right? It's just this constant treadmill. And it's the same thing with people who get up and go to work every day, guys, they get on the treadmill and they think, well, maybe tomorrow that boss that really stresses me out won't be there and then I'll really be able to do this or this will happen and I'll really be able to retire early But the fact of the matter is like those things, you're stuck on this go to work everyday treadmill until you have permission from somebody to get off and that's either gonna be forced, health reason, a best guess if you're not a qualified financial planner or hopefully a really, really educated assessment of the situation.

Michael Mason: So again, you used a really good term, you know, know the score, right? And there's an episode, “Know The Score”, but this is Mike Mason's experience, and I'm going to take it back to Yellowstone. If you don't really know the score, but you go ahead and set that trip wherever it is, ours was Yellowstone.

We set the trip, and we find out at midnight we're leaving at six the next morning out in Norfolk, and we find out at midnight that the flight out of Norfolk to Chicago was going to be three hours delayed and dominoes started falling as how that was going to screw up our trip and somewhere between midnight and two o'clock, Bobby finds a flight out of Richmond on Southwest. It was gonna take off five hours from when she said it and she didn't care that it was 900 more dollars, right?

She didn't think, “Can I get my refund from United?” She knew the score. And she knows this is what we set the money aside for. And then when you're in the park and you're doing things, if you don't know the score and you take a trip of a lifetime, but then you penny-pinch it because you don't know the score, it's just not a good place to be. You need somebody to help you know that may be the only trip you and your bride take ‘cause you never know what's around the next corner health-wise. So you want to be there and you don't want any stress and that's how we felt. Whatever we wanted to do, we could do. I've never been in that place before.

John Mason: So you didn't start small, start now. You went go big or go home is what I'm hearing.

Michael Mason: Well, when we started small at 25 years old, when six months into my equitable career, I could save into my 401k and I could build a business and it started small but yes. If it's worth doing, it's worth doing right.

John Mason: So what are some ways that our audience can at 50, 55, 60 years old, or any age, what are some things they can do now, starting small, starting now? Because let's face it, many of these folks have been on this treadmill for two, three, four decades, and they haven't looked at anything since they signed those initial beneficiary forms when they joined the government two, three decades ago. So what can we do now as a federal employee early, mid, late career to just start making substantial changes?

Ben Rakes: I think starting small is all about just number one, collecting the data, right? Do we even know how many years of service we have? Do we know what our pension looks like when we can retire at minimum retirement age or later? Do we even know how much money is in our TSP or how it's allocated? I mean, these are very simple questions that we should all know off the top of our head that, otherwise, are we just guessing at what we have? Have this information in hand so you can at least begin to have a conversation with not only an advisor but yourself. Sometimes there's this, “I'm not going to look at my statement this month because it's going to look bad and I don't want to know. And ignorance is bliss.”.

Michael Mason: Yeah, I would think you're right on track. Many people, if they hear the subject of this, they'll be like, “I should put an extra dollar in my TSP or I should do this.” Well, the first thing is figure out what you don't know and then know it. So the first step we talked about, knowing the score, listen to that. But if you're trying to replace a $100,000 of income with a $100,000 in retirement, you don't know the score because you're not making a $100,000. So know what you're really making, know what that replacement value is. If you have no idea how your pension and social security is going to be taxed, learn what the pension is going to be. That's small. And then your next step is, oh, let me figure out what that's going to look like on a tax return when I'm retired.

John Mason: It really snowballs quite quickly when you start doing little things to start making changes so that you hit your goals. I think you mentioned, or maybe we all mentioned this already, just acknowledging maybe that we don't know everything we think we know. Just by looking in the mirror and saying, okay, am I really a tax expert? Am I really a financial planning expert? Am I really an estate planning expert?

So acknowledging that there are probably some things out there that we don't know I think is a good first step for a lot of these folks and a good second step would be interviewing financial planners doesn't mean you have to hire them. But maybe if we can acknowledge the fact that we don't know what we don't know, or that we're not experts in everything, then maybe we can go find a financial planner. And then maybe in this discovery phase through collecting the data, acknowledgement, et cetera, maybe we find a financial planner that actually makes a difference in your world. Think about it this way, folks. And I know you guys know this already too, my co-hosts, is that it costs money to hire Mason & Associates. It costs money to hire other financial planners.

And all else being equal, if you can do everything that we do by yourself, you are better off not paying a fee. But we would like to introduce you to the concept of outsourcing and outsourcing means if it would cost you $2 to do it versus costing us $1, then it was worth you hiring us. We'll also suggest that if it cost $2 for you to pay us and you could have done $2 and done it yourself, it was still worth hiring us because you didn't have to do it.

And we would even go as far as saying if it costs $3 to hire us, and one or $2 for you to do it on your own, it was still worth hiring us because one, you had that second opinion. Two, you had the professional advice. Three, you had somebody that's going to be there with you as the rules and life changes because let's face it, when you're in Yellowstone or you're on a cruise or you're welcoming a grandbaby to the world, do you really want to be thinking I need to learn this new tax law or do you want to outsource it?

And what we found, and you guys can support me in this I think, is that our best clients and the people we enjoy working with the most are the ones who enjoy the outsourcing aspect of having us in their world.

Ben Rakes: I think that's absolutely true. And I even wanted to add to that point is maybe you are someone who is married and you are the person that says, I want to do it myself and you do a pretty good job of it. Maybe you say, hey, I've already had all that information collected. I've talked to an advisor, but he didn't really make sense. Are both you and your wife or you and your husband, do both of you know all of that information? Are both of you set?

When you mentioned outsourcing, John, I think the reason that a lot of people come to us it's, hey, I have a pretty good grasp on things, but I don't know what I would do if my spouse were to pass away. She doesn't know any of the passwords or he doesn't know any of the passwords. I need to outsource to have trust in someone that they are going to be taken care of when I'm no longer here.

John Mason: Or the succession plan.

Ben Rakes:Exactly.

Michael Mason: That's a great way of putting it. I mean, we've done appointments, me for 37 years, when a couple comes into the office or now comes to Zoom and they come to a Zoom meeting, they don't come solo. You weren't allowed to come on a scouting mission, one partner, because I'm the one that makes all the financial planning decisions. That's exactly why the other one needs to be there. The other one needs to have confidence in me if you're hired or confidence in Mason & Associates.

John Mason: So starting small, starting now, guys, financial planning can be so overwhelming and we use software. We use a program called RightCapital and there are so many screens and there are so many things that you can show a potential client when they walk in. But I think what really sets us apart is that not only can we demonstrate and show all of these like really cool things, at the end of the day, we can give a digestible report, three to five action items on what a client needs to do this year to actually make substantial changes in their financial planning world. And I think that's the measure.

So, like, one, let's just assume that prospects and potential clients have gone out and they've started interviewing a financial planner. I think one good way to figure out, is this person going to be helpful, is if they can somehow take all of this info, like, we don't need them to be Google. And maybe this is self-serving, but are things what they seem there? Can you get support, educate, empower, and motivation to make changes like we do at Mason & Associates?

Three action items a year is probably all you need in a financial plan to have a really good financial planning success year. But if we can't distill the information down to those action points, then you have a gigantic money guide pro plan that means nothing to anybody.

Michael Mason: Yeah, what's interesting, Ben, you and I have an appointment later this week, and this lady has been listening to the podcast. So the podcast are working, John.

And during the introductory meeting, telephone call, 30 minutes, I find out her assets, she recently terminated a relationship with, I'm doing air quotes, “financial advisor”. And I asked her why and she said, “Well, he just didn't seem to be bringing any value.” And then we find out there's $60,000 of non-deductible contributions in her IRA.

There's no reason to have $60,000 of non-deductible contributions in your IRA. In that 30-minute phone call, we provided the value of effectively $18,000 in free money because we can show her the pathway to move that $60,000 of basis into a Roth IRA and in a combined 30 percent bracket, that's $18,000 of value. Imagine what else we're going to find now that she sent all the rest of her documents in.

Ben Rakes: And kudos to her for having the, I guess, foresight in saying, hey, I'm on this treadmill now, but let me actually take a look around and see what else is out there, right? She listened to the podcast. She took some initiative. She said, I'm on this treadmill right now, but I think there's things that I'm missing. Maybe Mike and Ben will tell me that I can slow down my speed or cut off of this thing pretty soon.

Michael Mason:Great point.


John Mason: So we're getting close to wrapping up this episode, and I think it's also good for our audience to ponder or be curious about what life looks like on the other side of retirement. And we have episodes to talk about the year before and the year after retirement, but retirement is as much emotional as it is financial. And as we continue and hopefully haven't overused this treadmill analogy for today's episode, so one, your treadmill just went from whatever speed to zero, right?

And then you got off of it. You retired. And Ben, you said this perfectly. You were like, well, just because the treadmill stopped, didn't mean you get to stop moving. Now, instead of somebody telling you have to get on the treadmill every day, we have to create our own motivation. We have to walk around the block, go see friends. We have to make additional, it's harder now when you're retired than when you're working.

So once you're off the treadmill, doesn't mean we can stop moving, I think is very important. And one other concept, if you don't have support, and we're going to do some action items too around the table, but if you don't have support and I want you to imagine you're 65 years old and you're on the treadmill of life, maybe you're retired, maybe you're not retired, but you're there, you're blindfolded and then you're walking at three miles an hour and you think everything's great.

And then somebody besides you decides they want to crank the speed up to 12 miles per hour, and you have no idea. You're going to get flung off the back of the treadmill, you're going to get hurt, and bad things are going to happen. It was a completely unexpected event. So, the story here goes, one, we can't be blindfolded. Ignorance is not bliss. We have to collect the data, we have to know the score. But number two is if we don't have a plan, there will be something that pops up in your life that throws you off that treadmill.

It could be a death, it could be a divorce, it could be a terminal illness, it could be something with your family, it could be a number of things that just causes your entire financial plan either to blow up or change. And we don't want you to get flung off the back of the treadmill unprepared. We want to be there with you as a resource to support you through those times. So just think about that. One, we got to keep moving. Two, we don't want to get flung off the back. We need to have a plan because things will happen in your life, you will be thrown a curve ball and we need to be ready for those.

So guys, start small, start now, treadmill of life. Let's go around the table with some action items for folks.

Michael Mason: Yeah. So I think I created another saying earlier, find out what you don't know and then know it. So maybe at the end of this, if you've listened to the end, you list four or five things that you're pretty confident you're not a hundred percent confident in, okay. It could be exactly what's happening with your tax return now and what it'll look like in the future. It could be knowing exactly how assets will transfer to your loved ones at your death, so estate planning, it could be your actual benefits with the federal government.

So find out what you don't know and then systematically begin to know it one at a time. Don't overwhelm yourself. First step would be to list the things that you're not a hundred percent confident that you know.

Ben Rakes: I'd say interview a financial advisor, interview a financial planner, start taking those initial steps to see what that relationship looks like. Maybe you'll call a few people and it won't be a good fit personality wise, or maybe they'll have minimums that you don't hit, but you don't have to call an advisor and work with them immediately. Maybe just find out who might be a good fit for you now or in the future. And when you do decide to work with a financial advisor, you can say, you know what I've actually been through this process before. This isn't as scary this time.

John Mason: I like that one. And I think we also should give our audience, the people who are watching us on YouTube, the people who are listening to this podcast, we even say congratulations for taking ownership of your financial plan by tuning into the Federal Employee Financial Planning Podcast. So congratulations. Like you really listening to this and being a part of our journey and our content creation, you did start small. You have started now.

Here's the action item and it's self serving. You started small, you the audience, you've done it, but let's continue to spread the word. Let's continue to get this content out to the people whose lives you can change by sharing what we're doing at Mason & Associates. So that is an action item. And then just think about the value of outsourcing. And having a partner with you for the next three or four decades as you exit one treadmill and start moving into what retirement looks like, folks, we'd like to be there with you.

And if you're a fit, we'd love you to be a client of Mason & Associates. And if not of us, of another financial planning firm who operates like we do. This has been another episode of the Mason & Associates Federal Employee Financial Planning Podcast. We thank you again for being on this journey with us. We wouldn't be here without you. Things at Mason and Associates are what they seem. Remember, start small, start now. And if you can't do this on your own, find somebody who can support, empower, educate, and motivate you to make these changes in your financial plan. And until next time, we wish you the best. We thank you for being here and we'll see you next time on the Federal Employee Financial Planning Podcast.

The topics discussed on this podcast represent our best understanding of federal benefits and are for informational and educational purposes only, and should not be construed as investment, financial planning, or other professional advice.

We encourage you to consult with the office of personnel management and one or more professional advisors before taking any action based on the information presented.