Community//

“Plan your day so your calendar is working for you and not the other way around.” with Mike Hennessy and Beau Henderson

Retirees often forget to account for taxes when planning their retirement income needs. They will laser-focus in on the size of their portfolio and how much cash it can feasibly generate to fund their needed expenses. This number is often mistakenly assumed to be after-tax, but it’s likely the vast majority of a retiree’s investment […]

Retirees often forget to account for taxes when planning their retirement income needs. They will laser-focus in on the size of their portfolio and how much cash it can feasibly generate to fund their needed expenses. This number is often mistakenly assumed to be after-tax, but it’s likely the vast majority of a retiree’s investment portfolio is held in tax-advantaged accounts. Uncle Sam is now waiting, hand-open, for his portion of the income you deferred to fund your post-work life.

As a part of my series about the “5 Things Retirees Say They Wish They Were Told Before They Began Retirement” I had the pleasure of interviewing Mike Hennessy, CFA, CFP®. Mike Hennessy, CFP®, CFA®, is the founder and CEO of Harbor Crest Wealth Advisors in Fort Lauderdale, Florida. He helps families, retirees, business owners, and the boating community get the attentive, comprehensive care they need for the best financial outcomes that align with their values. He is a CERTIFIED FINANCIAL PLANNER™ professional and a holder of the right to use the Chartered Financial Analyst® designation.


Thank you so much for doing this with us, Mike! Our readers would love to “get to know you” a bit better. Can you share with us the backstory about what brought you to your specific career path?

I thought I was going to be a doctor — I majored in bioengineering and even had an internship with the Medical Genetics Department at the University of Pennsylvania School of Medicine. It took me far too long to realize that, with my eye injury (born almost blind in my left eye), my options in medicine would be severely limited.

After deciding I wouldn’t pursue medicine, I didn’t know what to do next. A bunch of my friends were finance and accounting majors, so I thought I’d give that a try. I interned at Goldman Sachs and was hooked on high finance. I parlayed that internship into a position with BlackRock in New York, moving from analyst to portfolio manager by my mid-twenties.

I then moved to sunny south Florida with my wife, working for a hedge fund and then a consulting firm. Despite all of the on-paper career success, something nagged at me. I didn’t feel fulfilled working with 1s and 0s on the screen. I wanted to sit with people, understand their problems, and use my skills to help them achieve their goals.

My aha moment came when I realized I could use my gift with numbers to guide families to their financial freedom. I started an independent, fee-only RIA — Harbor Crest Wealth Advisors — to serve the south Florida boating and business owner community. I’ve been an avid boater my whole life, and boaters are some of the best people to work with because we all are bound by that feeling of freedom the water brings. My firm’s mission is to make sure our clients feel that same sense of clarity and tranquility with their personal and professional finances as they do when they are cruising down the Intracoastal or winding their way through the Keys.

Can you share the most interesting story that happened to you since you started your career?

I began my career at BlackRock during the heydays of the financial crisis, working as a mortgage analyst just as that market was melting down. BlackRock was, and is, known for their strong risk management platform and the firm was called in to handle several critical assignments on behalf of various US government agencies and organizations. I was tasked with running these trillion-dollar portfolios through the firm’s analytical engine, distilling the results, and creating the reports that went right into the hands of the top brass at these large government and monetary organizations.

There were weeks of all-nighters, making sure every bond was modeled properly and that every number was pristine for presentation. It was exhilarating work, to be thrust into the epicenter of the mortgage meltdown and to work alongside some of the brightest minds in the industry to find solutions, fast, to alleviate the nationwide issue.

Can you share a story with us about the most humorous mistake you made when you were first starting? What lesson or take-away did you learn from that?

I have a funny story about how my old boss recruited me to his team.

So I was working my tail off as a mortgage analyst in the advisory group at BlackRock, and out of the blue I got a call from the head of ALL mortgage portfolio management. For the entire firm.

He (I’m sure he would agree with this classification) is a larger-than-life figure within the organization. A tornado of activity. He was curt with his words on the phone but asked me a series of questions and told me to answer yes or no.

“Do you like what you do?” “Yes.”

“Do you want to be there forever?” “No.”

“I’ve heard good things. Would you want to join our team?” “YES.” I perhaps said that last one a little too loudly.

“OK, meet me at X in fifteen minutes for lunch to talk about it. Don’t tell ANYONE.”

Now, I’m suddenly confronted with two problems:

1) I’ve done zero prep for this interview, and

2) I didn’t catch where X actually was.

The call happened so fast, and was so unexpected, I completely blanked on noting that quick but quite important detail.

I rushed out of the office. I knew the opportunity of a lifetime was literally a block away, I just had no idea which block it was on!

I made a plan to start circling the blocks around the building, focusing on a few key lunch areas. Let’s add another wrinkle — while he is larger-than-life in personality, he isn’t the tallest guy and is maybe 140lbs soaking wet. And I’m no giant, myself.

I was 20 minutes into my search with nothing to show for it except a soaking undershirt and rising anxiety. I was now running around mid-town Manhattan, trying to find a career needle amidst the lunch traffic haystack.

On what was either sheer dumb luck or the career gods smiling down on me, I finally saw him waiting by the stairs to a bank of restaurants near the subway. He looked annoyed he was waiting — never mind my dripping forehead and lack of breath — but after shaking hands he stormed down the stairs to a fast-casual restaurant and started peppering me with questions about my background and, thankfully, not my ignorance at his directions. And the rest, they say, is history.

My main takeaways from that episode were to always be prepared for new possibilities and to be sure to write down important details as you get them!

None of us are able to achieve success without some help along the way. Is there a particular person who you are grateful towards who helped get you to where you are? Can you share a story about that?

Two people come to mind, though there are countless others who helped guide me along the way.

The first is the aforementioned boss from my lunch near-debacle story. He had an immeasurable impact on my career. I thought I was driven until I met him and learned how to be a world-class professional. I’ve never been pushed so hard in my life. He had a knack for motivation, too. Everyone on the team bought into the mission and would run through a wall to make the impossible happen.

The second is my wife. She’s been my biggest supporter through all of life’s highs and lows, she’s my best adviser when I need a fresh voice outside of the one in my head, and she is also my best butt-kicker when I need to change my perspective and don’t quite realize it. I wouldn’t be even 1% of where I am today without everything she does for our family.

What advice would you suggest to your colleagues in your industry to thrive and avoid burnout?

Plan your day so your calendar is working for you and not the other way around. If you spend 10 minutes each morning (ideally the night before, but one step at a time) planning what you will accomplish that day, then map out when and how you will do it, it’s amazing how productive you can be.

This lends itself to a related point — when you are at work, work. When you are at home, be at home. I’ve gotten into the habit of physically hiding my phone when I walk in the door so I’m not mindlessly scrolling through social media or hitting refresh on my email when I can be spending those few precious moments with my son before he goes to bed. It’s a tough habit to break, but trust me, it’s well worth it.

What advice would you give to other leaders about how to create a fantastic work culture?

When you are the boss, you no longer serve clients of the firm. Your clients are now your employees. When you were an operator in the business, you brought massive value to your clients and did everything in your power to create a raving client fan base. Try doing the same with your employees and see how they, and then your business, flourish.

Ok thank you for all that. Now let’s move to the main focus of our interview. Retirement is a dramatic ‘life course transition’ that can impact nearly every aspect of one’s life. Obviously everyone’s experience is different. But In your experience, what are the 5 most common things that people wish someone told them before they retired?

Five common issues that retirees wish they knew about ahead of time are divorce, taxes, healthcare costs, housing, and retirement income.

’Til Death, or Retirement, Do Us Part

Grey divorces, or divorces for those over age 50, are on the rise. Navigating the financial, emotional, and even physical consequences of grey divorce is akin to trying to put together a 1,000 piece puzzle that spilled all over the living room when you weren’t looking. Some pieces are up, some are down, some are hidden under the couch. How do you know where to start?

There are many questions that eventually need to be answered, and you can’t strictly rely on the numbers to win the day. The emotional aspects of questions like “Who will keep and maintain the house?” or “How will we coordinate visiting the kids and grandkids for Thanksgiving and graduations?” are quite difficult and affect more lives than just the two of you. Also, who gets the dog?

Uncle Sam Moves In, and Eats Last Night’s Leftovers

Retirees often forget to account for taxes when planning their retirement income needs. They will laser-focus in on the size of their portfolio and how much cash it can feasibly generate to fund their needed expenses. This number is often mistakenly assumed to be after-tax, but it’s likely the vast majority of a retiree’s investment portfolio is held in tax-advantaged accounts. Uncle Sam is now waiting, hand-open, for his portion of the income you deferred to fund your post-work life.

Additionally, retirees often fail to plan for potential taxes on their Social Security, both at the federal and state level.

Healthcare is Expensive! And No Dental?

Healthcare costs in retirement are complicated to plan for and require exceptional attention to understand the programs available as well as your anticipated health profile. Many seniors erroneously assume they won’t have to pay for large outlays, like long-term care or assisted living, because Medicare will pay for that. It doesn’t.

Another tripping point is that dental care is also not covered by Medicare. Two out of three Medicare enrollees do not have dental coverage (according to Kaiser Family Foundation) and 20% of Medicare beneficiaries spend more than $1,000 on dental services (Kaiser, 2016 data). That bites.

Lots of Home, Nothing To Do With It

Discussions on what to do with the family home can be emotionally charged. Retirees often don’t seem willing to part with the physical manifestation of literal decades of memories. They occasionally assume, without asking, that their kids will one day love to inherit the home. But this can create all sorts of future costs and headaches, from ongoing tax and maintenance outlays to outfitting the home with modifications to support aging parents. What is often overlooked is how the home is an important asset, often a very large one, that can help supplement an investment portfolio in retirement income planning.

Should Have Made More (Passive) Income!

The transition from an employer paycheck being directly deposited to your bank account to having to sell investment assets to fund your daily expenses leaves a lot of retirees wishing they had planted the seed for other income streams earlier in their careers. The sole reliance on savings and market performance to pay your bills (potentially) into your 90s can be a tough pill to swallow. This doesn’t call for a full stop run on rental properties in your neighborhood, but you can start prudent planning for other avenues of income while you are still working.

Lets zoom in on this a bit. If you had to advise your loved ones about the 3 most important financial issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

There are many risks to plan for in retirement, but three biggies are:

Longevity

There are many stats or charts that can show longevity risk, but the one that sticks out the most to me is:

A 65-year old couple has a 50/50 chance of at least one of them living to 94 years.

(Source: Society of Actuaries RP-2014 Morality Table projected with Mortality Improvement Scale MP-2014 as of 2015.)

Flip a coin — will your retirement income last for almost 30 years? Can it last longer than that?

It’s important to build a plan ahead of retirement so that your assets and other income sources work together to support not only your lifestyle but the rest of your life. These plans must be individualized — don’t accept a cookie-cutter report dense with charts but light on you. What will you do with your house? With your cars? With that overseas trip you always wanted to take? With the support you still send the kids? With proper planning, you can take steps to make sure your retirement kite keeps flying high in the wind.

Taxes

It’s easy to forget you sold the government an IOU during those years you were diligently saving for your future. However, in retirement, the music stops and the tab is due. You may be able to kick the can a little further down the road depending on when you retire, but at some point, you will have to start withdrawing from your accounts and paying taxes on that (until-now) deferred income.

While tax evasion is illegal (don’t do that), tax avoidance isn’t. There are strategies that you can employ to pay the government what it’s owed and not a penny more. A popular tactic is to partially convert your pre-tax accounts into Roth IRAs in between retirement and the time you have to take your required minimum distributions (RMDs) from those tax-advantaged accounts. You should work with your tax advisor or accountant to make sure these strategies fit your situation.

Inflation

Benjamin Graham, mentor to Warren Buffett, wrote the seminal book on investing, The Intelligent Investor. What was one of the very first topics he covered in the book? Inflation.

Consider the (admittedly extreme) example of a retiree who is so afraid of risk they put all of their money under their mattress. We will save the debate for bank vault versus mattress safety for another discussion.

This risk-averse individual may think they are protecting the value of their life savings by being able to watch it every second of every day. And yet, if that money just sits there, it will lose half its value in about 25 years if inflation is between 2–3%.

To make matters worse, the type of inflation that retirees experience is different, and often times is unfortunately higher, than the general inflation rate. A big reason for this is medical care spending.

If you had to advise your loved ones about the 3 most important health issues to keep in mind before they retire, what would you say? Can you give an example or share a story?

Identity & Purpose

When you are stuck in the office working 50-plus hours a week, limitless free time for golf and travel sounds like heaven on earth. Who wouldn’t want to spend every day by the beach, out on the town, or off on vacation?

Turns out, a lot of people. Just like New Coke, leisure in retirement is best consumed in little sips. Rely on it too much, though, and the taste turns cloying and nearly unbearable. The thrill of driving down the fairway gives way to the shrill reality your short game won’t get any better.

We often see what amounts to a crisis of identity after the newness of retirement fades. This can, on occasion, lead to depression in retirees. Gone are the days of being head honcho in the office. Get ready to stand in line with the masses at Home Depot. This can be a humbling experience for people who, up to this point in their lives, were driving towards a goal with singular purpose. Now that they are there, what can they do next?

The best answer is to find another vocation for your life, one that exists outside of vacation. Something to give you meaning and purpose. Some of the options that resonate best are mentoring or volunteering opportunities. Of course, if the symptoms of depression extend past the transition from work to retirement, please seek medical attention. Self-diagnosis is all but impossible and proper evaluation by a medical profession can help you understand the best course of action for your situation.

Dementia

Dementia comes in many forms (Alzheimer’s, Parkinson’s, Lewy body disease, among others) but the effect on someone’s mental, physical and financial health is pernicious and debilitating. According to a study of Medicare data, a dementia diagnosis can cost a retiree an additional 22% in medical costs relative to someone without dementia. This says nothing of the emotional, physical, and familial issues that reverberate through diagnosis and treatment.

Long-term care

This is a retirement wildcard, and it’s a tough one to plan for. Many people (incorrectly) assume that Medicare will cover the cost of long-term care, but it won’t. There are insurance options to help mitigate the tail risk of a long-term health issue, but the market has had a tough time properly pricing this risk, and most insurance today is sold as a rider on a permanent life insurance policy. One can try to self-insure and carve out part of their retirement savings to use exclusively for a health event, but the uncertain nature of any issue makes this difficult to thread the needle between living well in retirement and protecting your downside.

If you had to advise your loved ones about the 3 most important things to consider before choosing a place to live after they retire, what would you say? Can you give an example or share a story?

Stay Local, My Friends

If you have a strong support group of family and/or friends, a well-established network of service providers (including doctors), and enough social and outdoor activity by your doorstep, why move? You can have a cross-country (or continent) adventure without completely uprooting your life. Our recommendation is to always try before you buy, just to make sure it’s indeed exactly what you hoped it would be.

Family First

Grandkids are one of life’s great joys, except when you get stuck babysitting on a Tuesday afternoon when you were supposed to meet up for lunch with friends. But it’s still possible to live near family without living with family. While you may feel like a permanently underpaid babysitter now, don’t underestimate the physical (and potentially monetary) support you may need in your advanced years. Family, in most cases, will be there to make sure you are treated well and with dignity. That’s tough to do over a Facetime call across the country.

Do the Dollars Make Sense?

Many southern states offer sunshine and state income tax rates of 0%. This is enticing, but don’t let the tax tail wag the lifestyle dog. If you have certain, non-negotiable expectations on how you live your life, make sure the community you are considering moving to is in alignment with those values and beliefs. Do you really want to try to make a whole new set of friends in a foreign political, religious, or social land? Just to save on a few tax dollars?

You are a person of great influence. If you could start a movement that would bring the most amount of good to the most amount of people, what would that be? You never know what your idea can trigger. 🙂

Let’s RAK it!

Try to give one Random Act of Kindness (RAK) a week to someone in your family or social circle. Do it with the expectation you will receive nothing in return. It doesn’t need to be a gift, though it can be, if the gift is personal and thoughtful. It can just be a genuine conversation that’s about the other person. Or it can be an offer to help with something important in their life.

You would be amazed at how unexpected charity and gratitude lift both your spirits. I promise, you will win for giving just as much as the person who receives your RAK.

Is there a particular book that made a significant impact on you? Can you share a story?

Bird by Bird: Some Instructions on Writing and Life by Anne Lamott.

There are so many wonderful insights in that book, not only for writing but also for, well, life.

The most poignant for me was Radio Station KFKD (just sound it out). This radio station blares two channels of inner self-talk, all day, every day.

The first station can’t speak gushingly enough at how great of a writer, professional, human being, etc., that you are. The world should bow to your greatness.

The second radio station incessantly tells you how bad you are at what you do, that you are a hack, and that no one will love you.

When I realized that all of this head trash really was external — by imagining it as a radio station — it helped me stop consuming these thoughts as truths and get back to the business of creating. While it’s easy to slip back into listening to Radio KFKD from time to time, if you can remind yourself it’s just mental airwaves, you can turn down the volume.

Can you please give us your favorite “Life Lesson Quote”? Do you have a story about how that was relevant in your life?

“If a man knows not which port he sails, no wind is favorable.” — Seneca

You have to plan where you want to go. If you don’t, how will you ever get there?

I built a business to help clients do exactly this. Too often, we see people wandering aimlessly, both literally and figuratively, through their own life. The white noise of day-to-day life drowns out the heartbeat of your purpose. We help calm the noise so you can start hearing clearly again.

What is the best way our readers can follow you on social media?

I’m active on Facebook, Twitter, and LinkedIn. We also publish blogs regularly on our website. The links to our social pages are listed below:

Facebook: facebook.com/harborcrestwealth/

Twitter: @harborcrestwa

LinkedIn: linkedin.com/company/harborcrestwealth

Firm Website: harborcrestwealth.com

Thank you for these fantastic insights. We wish you only continued success in your great work!

Thank you, too, for all you do!

The Thrive Global Community welcomes voices from many spheres. We publish pieces written by outside contributors with a wide range of opinions, which don’t necessarily reflect our own. Learn more or join us as a community member!
Share your comments below. Please read our commenting guidelines before posting. If you have a concern about a comment, report it here.

You might also like...

Community//

“Save appropriately and aggressively for retirement.” with Brian Fry and Beau Henderson

by Beau Henderson
Wisdom//

New Solutions to Fund Your Retirement: Part 2

by Ken Dychtwald, Ph.D.
Why You Maybe Should Retire Overseas
Community//

Why You Maybe Should Retire Overseas

by Anna Johansson

Sign up for the Thrive Global newsletter

Will be used in accordance with our privacy policy.

Thrive Global
People look for retreats for themselves, in the country, by the coast, or in the hills . . . There is nowhere that a person can find a more peaceful and trouble-free retreat than in his own mind. . . . So constantly give yourself this retreat, and renew yourself.

- MARCUS AURELIUS

We use cookies on our site to give you the best experience possible. By continuing to browse the site, you agree to this use. For more information on how we use cookies, see our Privacy Policy.