The Simple Process of Getting Rich

By Bob Moeller
WEAC Member Benefits

October 2001

Financial Planning Seminars
Achieving Financial Independence

I talk to a lot of members as part of the financial counseling service WEAC offers. I don’t sell anything. I’m blunt. I’ve got all the right initials after my name. If a product is a bad deal, I say so. If it is a good deal, I say so.

I truly believe that there are fewer than 10 principles you have to follow to retire “rich,” at least in terms of an educational employee. “Rich” means you can retire at age 55 or so, with absolutely no reduction in your standard of living for the rest of your life. You don’t have to sub after you retire; you don’t have to scrimp on your annual vacations; you don’t have to work for Wal-Mart or McDonalds (although many may enjoy this kind of people-contact activity.) You most likely will leave your kids some inheritance.

You may be thinking, “that’s not rich,” but I have talked individually to hundreds of about-to-retire members who consider that rich indeed.

What have these happy new retirees done over their lifetimes to make themselves rich enough that their main concerns are health and enjoyment of life? They generally adhere to the following principles. These principles aren’t hard once you really adopt them, and they are logical.

1. The best-situated members have a plan. They know exactly what they are attempting to do. They know just how they are doing at any time and why. They agree with their spouses and make a team effort of it. When they have to deal with a problem, such as college financing for their children, they find out what is possible as early as they can and deal with it. They talk to each other and support each other in financial areas.

If the two have widely differing ideas regarding how to handle the family money, they must first deal with this problem. Many plans work better if you can share them. So, if you are single, share with your parents or some trusted relative.

Frequently I hear members say, “I don’t know anything about finances.” You must start learning. It’s your money you will be wasting if you don’t learn the basics. They are fairly simple, as noted below.

2. Get the highest degree as soon as possible, especially if you have found your “career” school district. You benefit from higher wages and a much higher retirement pension.

It saddens me to see members who never went beyond a BA or the next lane. Frequently, they were married to a person with a higher paying job, or they were raising kids, or some other excuse. Now the kids are gone, the spouse is dead, or they are divorced … you get the picture. Get your higher degrees, starting now. I notice some advertisements for accredited masters degrees over the Internet. Make sure you know the district’s requirements and go for it!

3. Another step toward wealth accumulation is that members should have very limited or no exposure to investments through a life insurance company. They do not own universal life policies, whole life policies, endowment life policies, etc. With a minor exception here and there, they buy only term life, and they shop for the best price. They do not have single premium annuity products. There is one major exception to this principle unfortunately.

Back in the old days, the only available source for tax-sheltered annuities was through a life insurance company, and literally thousands of our members signed up for them, as they should have back then. Some of these products were really bad, and the members should have gotten out long ago but didn’t. Some companies improved their product to the point that they are acceptable, although not ideal. But, we are concerned with principles here, and I am blunt. Try to find alternatives to investing money with life insurance companies. If you have a bad or so-so product, switch. If you do not know exactly the terms of your TSA, formulate your questions and get them answered (I can send you a list of TSA questions to ask).

The one principal question is, ”am I paying any mortality and expense fees with this product?” If the answer is yes, move on. Do not allow the agent to switch you to a new “improved” product. Read the previous sentence again!

Space does not permit me to continue in this issue, but the other keys to getting rich will be in the next issue. Stay tuned!

Posted October 9, 2001