The One Number Budget: Simplifying Financial Planning for Retirement with John Crane

[00:00:00] Eric Brotman: Welcome to Don’t Retire, graduate, the podcast that asks you what you want to be when you grow up so you can graduate into retirement with purpose and passion. I’m your host and valedictorian Eric Rottman, and I am excited to share with you that our audience is now over a hundred thousand downloads and growing rapidly, and I can’t thank you enough for making Don’t Retire Graduate, a part of your personal financial journey.
Our guest today is John Crane. John’s an author, a financial advisor, and a retirement income planner who spent more than a decade providing personalized financial guidance to business professionals, corporate executives, and medical specialists. He’s a member of the National Association of Insurance and Financial Advisors and the Million Dollar Round Table, a lifelong learner himself.
John shares his expertise with students at hospitals and high schools throughout the Washington DC area. His new book is called The One Number Budget, in which he reveals a simple approach to budgeting. That will forever impact how you look at retirement [00:01:00] and your financial goals. He describes the current state of financial services, discusses the psychological aspect of spending, and explains why and how one number is all you need to help ensure that you are meeting your goals.
John, welcome to Don’t Retire, graduate.
[00:01:17] John Crane: Oh, thanks for having me. I’m excited to be here. Well,
[00:01:20] Eric Brotman: I, I’m, I’m excited to find out what my number is. I don’t know if we’re gonna do that on air or not. I don’t know how comfortable I am sharing all of my financial details. But, you know, on this show, for the last five years we’ve been calling, uh, budget that we just call that the B word.
Um, and the show is clean. So the only B word we use is budget. And I, for one, despise the art of budgeting and the idea of budgeting. It’s fine for companies, but I hate it for personal, uh, use. And yet you’ve managed to make this uniquely easy and different, and I definitely want to dive into that. But first I’d like to know a little bit more about you, how you got into the financial advisory business, and then what possessed you, like the rest of us [00:02:00] to write a book.
[00:02:03] John Crane: So I got into the financial services business as a second career, uh, right outta college. Uh, of course, you know, as any young man, you know, you wanna be a lot like your dad. So my dad was a 35 year veteran in the IBM corporation. So as soon as I got outta college, I joined another Fortune 500 company called Sprint and.
Started in the telecommunications industry and worked my way up the corporate ladder chasing paychecks and promotions. And by the time I was 29 years old, I had my master’s in business administration. I was married, I owned a house. I, uh, was a senior national account manager, signed to Sprint’s, largest account.
And everybody around me was just like, wow, you’re really doing great. And you know, this is, you’ve got it made. And I, I, I just didn’t want to do that. Like I, I. Sprint was a great company. They treated me really well, but I, I just couldn’t see myself spending, you know, another 30 years doing that. So I took about two years [00:03:00] while in that job researching different careers and, uh, I, part of my process was I would, once I found a, a career that I thought might be a good fit, I would meet with people that knew me well and I would say, Hey, could you see me doing this?
And when I got to Financial Advisor, I started hearing. Not only could I see you doing it, but if you choose to do that, call me. I want you to be my guy. And that’s when I knew Wow. That I had, I had figured it out. And uh, so in 2002, I pivoted and joined, uh, the firm that I’m with, uh, financial growth partners affiliated with, um, guardian Life Insurance Company of America.
And, uh, crane Financial is a, is a partner of that. And um, yeah, it’s been almost 21 years now. Good
[00:03:43] Eric Brotman: for you. A actually, um, I’ve got you by a little bit. I started at this 29 years ago, which is hard to believe. Um, but you know, something about our business does attract, um, it, it attracts a certain kind of person.
It, it attracts people who not only are, um, [00:04:00] are savvy in terms of financials and numbers and all of that, but more importantly, people who really understand people and are empathetic and can listen and learn and, uh, and really want to help people. I mean, we really. Despite all of what Hollywood has done to demonize the financial professional m, most of the financial professionals I know are actually really trying to, to make a difference in people’s lives.
So let’s talk about the book. I have it, I’ve read it. I’m gonna dissect it and play with it a little bit today, and I’ve got some, some talking points that I, I wanted to throw out at you. But first, why a book and why budgeting?
[00:04:37] John Crane: Uh, budgeting is something that all my clients, uh, don’t really like to talk about. I, when I first got into the industry, I created a spreadsheet to drive the budgeting conversation, and on one side I had all of your fixed expenses, and on the other side I had all variable expenses. There were about 30 to 40 categories.
Then up at the top, I had [00:05:00] a simple. Uh, income calculation, backing out retirement, uh, contributions and a simple tax calculation. And in this very center of the spreadsheet, I had basically backed into what I estimated their monthly surplus was based on the information they provided. And. Sadly, like it took me about 15 years to realize that clients really hated that spreadsheet.
Um, and they hated it for a number of reasons. Uh, one is it’s time intensive. Nobody really wants to go through their, their stuff. And, but it, it also, it’s. The, the nature of the budgeting conversation with anybody, whether it’s a financial advisor or a spouse or anybody, there’s, there’s always kind of a, you know, a worry that you’re gonna be judged.
And we see a lot of that with the talking heads on TV and radio. You know, they start diving into a caller’s budget and then you start hearing, well, oh my gosh, how did you not know that you [00:06:00] couldn’t afford that car? Like I, the budget shaming, I, you can tell, like, I, I really have a problem with it cuz it’s just not helpful.
Mm-hmm. Um, so I wanted to create a tool that, um, People would find helpful and would get results. One of my drivers is, and you likely know this too, is the demographic of 55 to 64. In America, their median net worth is about $215,000, and some of that’s home equity, so you can’t spend all of that two 15 and to me, I think traditional budgeting bears some of the responsibility for that result.
And part of me writing the book was I want to try and put a dent in that problem. I wanna show people a different way, a way that simplifies the budgeting process. It takes a lifetime approach to budgeting and helps people get results. And about three, four years ago, I. I was talking with a colleague and he just walked me through [00:07:00] a whiteboard conversation, which is basically the similar math problem to what’s the, the book’s about on a whiteboard and guides the client through that discussion.
And I was like, I, I think I could adopt that. And then, uh, after watching, uh, Moneyball, the movie for you, I don’t know the. 18th time. Uh, there’s a scene in the movie where, uh, the, the smart guy in the film says to Billy Bean, the general manager of the Oakland A’s, it’s all about getting things down to one number.
And I was like, I wonder if I could get budgeting down to one number. So if the, if I knew what that one number was, if I’m a client and I knew what that one number was, like, how much I could spend every month, as long as I keep my, my spending below that number, then I’m okay. And that’s, that’s where the concept was born.
[00:07:46] Eric Brotman: Okay. Um, and, and I’m, I’m fascinated by how people have adopted this. I’m sure, uh, the fact that you’ve, that you’ve not only created a book, but that you’re, you’re working clients through this exercise. I’m sure it’s been well received, and [00:08:00] I’m sure you’re feeling more rewarded by it, as opposed to putting people through a budgeting process that’s a little bit like a, like a root canal.
Um, you, you talk in the book about your number and historically advertising. Lots of different companies have said, do you know your number? What’s your number? And the number is always, how much money do you need to be financially independent? The number winds up having lots of commas, and it’s a huge, daunting number.
And it scares the heck outta people, especially young people, because it relies on inflation assumptions. And so you tell somebody 29 or 39 years old that you’re gonna need x millions of dollars to, to live the way you live today. And it almost feels insurmountable. So when we think about your number, lots of us have been trained.
Um, we’re conditioned to think about that huge. Unwieldy number that we need to get to. Like, if you only had right X million dollars, you could be fine. So you’re talking about a totally different number. How do you do it? Let’s, [00:09:00] let’s, let’s walk through the exercise, uh, for, for, for all of us, including myself.
[00:09:06] John Crane: Sure. So just for folks listening, if they want to kind of look at the spreadsheet and follow along, if you go to the book website, one number budget.com/worksheet, you can get a copy of it and, and look at it. So the way that the calculation is done, it’s pretty simple. There’s only really eight or nine boxes that you really need to be concerned with.
And up at the top, we start with gross household income. And once we have that gross household income entered, the very first thing I’m telling clients to do, and this is if I’m meeting them for the very first time, is mm-hmm. I’m backing out 20% for wealth building and I write specifically for retirement.
Uh, okay. And then once I back out the retirement 20%, then I put an estimate in for a blended tax rate between federal, state, and local. Uh, cuz [00:10:00] as you know, the IRS is gonna take it anyway and then, We get down to, uh, the calculation there, uh, re reveals what’s available for lifestyle expense. And that’s an annual number.
I divide that by 12 to get it to a monthly number. And then to further simplify, I back out the client’s two largest monthly expenses, which usually are housing or childcare housing or the know student loan, something like that. And once I back out those two monthly expenses down at the bottom, then I get to my one number.
And when I’m walking a client through for the very first time, I’ll get down to that one number and I’ll say, can you get through four weeks on discretionary expenses? Can you get through four weeks on this dollar amount? And I’ll wait for an answer. And if they say yes, then I’ll point back to the 20% savings number and say, okay, well if you can get through four weeks on this number, then that means this 20% savings rate’s [00:11:00] possible.
And then we’ll go through a little crib sheet exercise of, well, let’s see what you’re saving right now. Most people that I get introduced to are usually saving somewhere between eight and 12%, somewhere around there. Mm-hmm. Uh, they’re maxing out their 401k plans. They’re saving a little bit in an investment account.
Um, But it right around 10 to 12%. And that gives me the baseline to then have that conversation. Now you had referenced earlier we were talking about the, uh, traditional budgeting method. When I would, when I’d reveal the estimated monthly surplus to my clients, let’s say it’s 3000 a month. Mm-hmm. And I would suggest, okay, well outta that 3000 a month, we need to, uh, increase your savings rate.
So why don’t we shift 1500, just half of it. Over into long-term wealth building, and it’s usually at that moment the client starts to sing. And I’m sure you’ve heard your clients sing too. They go, well, I don’t know. I, let’s, let’s do 300, you know, and it, and it was [00:12:00] always, it, it was always met with some level of scarcity that they were afraid to commit any of that money to long term wealth building.
The reason I share that is when I do it this way with the one number budget, and clients see that they’re saving 12. They see that it’s potentially possible that they could be saving 20%. Now it’s like competition kicks in and they’re like, oh yeah, we, we can, we can move it up to, yeah, we can get to 20, no problem.
Yeah, let’s, let’s figure this out. Um, and sometimes, you know, I, I have to kind of talk ’em down a little bit because, you know, if you make a $2,000 shift in your cashflow in one month, like you’re, you’re gonna notice.
[00:12:39] Eric Brotman: Yeah, no, no question about that. So, so essentially what you’ve done is reframed the conversation around.
Uh, around calculating a savings or investment rate, um, that’s healthy and you use 20%. And, and that’s sort of a rule of thumb, I presume. Um, I, I presume you also then do some kind of calculation that says, Hey, you’re already [00:13:00] 46 years old, so 20% won’t cut it. You need to be at 23 or 28, or whatever it is.
Um, or you’re young enough that you can get away with, uh, with, with 15% if you also take advantage of these, these other options. Um, but I love that there’s a barometer. Um, you know, we’ve historically used 15% as a barometer and said, if, if you’re saving 15% for long term, forget things like education savings and things you’re gonna spend.
But for the long term, if you’re saving 15% and you, and you have no adverse debt, Then you’re already, you already have the foundation to, to create wealth. I mean that really, right. Um, ultimately that’s partly what this is about. Um, and I love the idea that this is a, a simple monthly budget exercise. Now, how do you handle folks who, uh, who maybe do this, but either don’t maintain the right emergency fund or the right, um, the right risk management or insurance tools or other things that might be, um, Icebergs in that journey for them.
How do you, how do you put that into this equation and make sure that [00:14:00] they also have a protection component to their planning?
[00:14:04] John Crane: One of the things that I always felt was really missing from traditional planning is that it’s a snapshot in time and it kind of drives the behavior of, as long as I have more money than month, then I’m okay.
It’s really only focused on a 30 day cycle, and when I was going through the process of writing the book, I. I, I wanted to include that lifetime perspective, and I highlighted a 90 year hypothetical lifetime, so 90 year hypothetical lifetime, and broke it into thirds. The first 30, the middle 30, and the final 30.
So the first 30, your parents basically pay for that one. So I, I don’t really spend a lot of time talking about that. The middle 30, that’s really the engine. That’s, that’s where you’re, you’re in your prime earning years and you’re making money and that’s when you need to be putting money away. And then the final 30 is when you’re retired.
So what became really clear to me is, I was working on that piece of the book [00:15:00] was you basically have 60 years of living that gets funded out of 30 years of earning. Hmm. Okay. And that’s tremendous pressure on those 30 years because in addition to needing to save for retirement and live for today, you also have, you know, kids soccer camp and you know, you want to take your family on vacation and you, you need cars.
And there’s just all this stuff, there’s lots of pressure on those 30 years. So if I’m gonna, if I’m challenged with leading somebody to. Save the right amount and to protect their income, you know, cuz you know, if you had a disability in early in your, uh, career, I mean, that’s gonna wipe you out. Or, you know, if you passed away.
I mean, the only person that’s really making money after they died is Michael Jackson. You know, it’s like, you’re, you’re not, you know, no disrespect to Michael Jackson. Can’t
[00:15:52] Eric Brotman: spend, no, he can’t spend it though. But no.
[00:15:55] John Crane: Um, so like, Protecting the money you’re [00:16:00] gonna make during those 30 years is hugely important to those that, um, either, you know, if you’re disabled, that’ll be taken care of you, or if you’re gone, that the people that are left behind
[00:16:10] Eric Brotman: you in the book go, uh, into some depth on human life value, which I think is a concept that is, it’s unique, I think, to the Ebner School of Life Insurance Planning.
Um, that’s sort of where that. Idea came from the idea that your human life value changes as you get older because, um, it’s almost like having potential energy versus kinetic energy in, in physics where you begin with these, this earning potential that you have as a 25 year old. You have 30 or 40 or plus years of earning potential that that calculates into your human life value.
And then when you’re 70, Your human life value is much more closely aligned with your actual physical value because Right. You don’t have all that, necessarily that earning capacity. Michael Jackson notwithstanding, um, right. [00:17:00] How did you decide to incorporate human life value into the conversation on, on the budgeting side?
Because I, I like the way you, you shared that, and I was hoping you’d share it with our audience. Yeah,
[00:17:11] John Crane: I, I reason I tie, like, human life value is so important in explaining the protection elements for lawsuit protection, disability, and life insurance, um, and human life value. For those listening, it’s basically the amount of money, the lump sum that would be needed in order to recreate your income stream.
Uh, backing out inflation in taxes. The reason I included in the budgeting exercise is one, I want people to, to know about the human life value concept for their, mm-hmm. For their protection design. The second reason, and more relevant to the budgeting exercise, I wanted human life value in their, so that they had some gauge as to what’s possible.
Um, is I, I’d have clients, sometimes they’ll come to meet with me for the very first time. They have a household income of 150,000 and they tell me they want to have 20 million by the time [00:18:00] they’re 45. And, you know, that’s a, that’s a pretty, that’s a pretty big distance to travel, uh, between that income and, uh, oh yeah, that dollar amount.
So, Uh, that’s, I I wanted to include human life value so they can kind of get a gauge like, okay, well if, if I make $150,000 a year and I use a, a 20 times multiple, or even a 30 times multiple, I’m looking at about $4 million. Okay. So that’s, that’s kind of, you know, to reference back to what you were talking about with the one number, um, mm-hmm.
Commercials from years ago. Uh, I wanted to give him something that was kinda like, based in economics.
[00:18:36] Eric Brotman: Y y uh, one of the things you, you talk about in the book that I really liked, you talked about the things to beware and it, there’s nothing, there’s nothing quite like. The idea of, of losing or missing out or FOMO or, um, or, or sort of having a, people hate to lose money much more than they love to make money.
Um, and right, so you get into some of the behavioral finance concepts, the [00:19:00] psychological torture that people go through, and the timing, torture and some of that. But one thing you relate to is a financial vampire. And you know, I, I, I, I love that idea because you’re just thinking about the image of something literally being sort of suck dry.
That’s a very powerful image. How did you come up with the financial vampire concept and how does that apply to this exercise?
[00:19:24] John Crane: Well, think about it. I mean, everybody’s trying to get your money, everybody’s trying to get your money, and, uh, Madison Avenue, uh, is, is really talented at making you want stuff or believe that you need stuff.
The store that really, mm-hmm. I find amazing is target. And they, they’re the absolute experts at this. And I, I think I talk about it in the book, the, the mini deep fryer. You know, it’s usually on an aisle cap. It’s 1995, and each time I go to Target, uh, I walk through the aisles and I’ll, I’ll find somebody that [00:20:00] has that in their.
Their cart. And no one will ever convince me that when they woke up that morning that they’re like, okay, you know, I’m gonna go, I gotta cut the grass, I gotta go to Target and buy the mini deep fryer. Like nobody plans on buying that. Um, and the, the french fries on the cover look delicious. But you know, you, you, after using it once and you, then you gotta clean the thing and it ends up in the, uh, in the next yard sale.
Um, so. The other one at Target, which I like to make fun of is like the Karate Kid, uh, like the Karate Kid movie series. You know, I’m, I was, I’m a child of the eighties, you know, it’s like you see that and you’re like, oh my God, I gotta get that. That’d be so much fun to watch tonight. Like, um, it just, they’re, they’re just target’s just so great at the, uh, the impulse purchase.
Um, And then the, the other one that I, I, I talk about in the book also is like, uh, buying a car. I mean, every, everybody likes a new car. Um, and the way that that one typically works is, you know, buying a new car. It’s always [00:21:00] the. It, it’s always on the monthly financing that they’re able to make the car seem like not that big of a deal, the car purchase.
So if you, if you have a monthly payment of say, $450 and the new car is gonna be a monthly payment of $600, well then it’s, it’s, it’s really, it’s not costing you $600. It’s really only costing you an extra hundred 50. Right. Mm-hmm. Like, that’s the rationalization that goes through the mind and like, you know, someone really smart came up with that and that’s why they have that discussion with you.
Um, so being aware of your financial vampires is hugely important to keep yourself on track.
[00:21:36] Eric Brotman: So, so the financial vampire concept is this idea that everyone’s sort of out to get you and, and we’re barrage with advertising of things we need and keeping up with the Joneses. And by the way, social media did not help us in that regard.
No. In fact, if anything, it made it worse cuz everyone’s life is perfect on social media. And while look at their house, their shrubs, their driveway, their vacations, and. Man, why? Why aren’t we doing all of those things simultaneously? [00:22:00] Um, but you also talk about something that I think is really powerful that I think might get missed, and that’s about spending for love.
Now. Yeah, historically, historically, I’ve used the airplane safety lecture with folks. Yeah. Which is when you’re, when you’re flying commercial, it says in, in the event of loss of cabin pressure, mask will drop down. Please secure your own mask before securing the mask of others, your kids, and so forth. And as a father of a teenager, if I were in that situation, my immediate instinct would be to save my daughter.
Right. That’s just the human par parental instinct. However, in theory, and probably in practice, if I try to do that and I pass out, I’m of no help to her at all. Right. But financially that’s akin to making sure that your kids have undergrad and grad school cart blanche, and then you have to decide which one you’re gonna live with, because now you no longer have your own wherewithal.
So spending for love can be education, it can be other things. How do you, how do you describe that, um, and how do you [00:23:00] warn people who, of course, are trying to be benevolent but can be hurting themselves?
[00:23:05] John Crane: Sure. The. College discussion’s always a challenge. The, uh, because we, we want the best for our kids. I have a daughter also.
She’ll be going off to school in the, in the fall. And the way that I approach it is I, I try to approach it as early as possible and lay the groundwork with the parents because the, the thing that I, I want to help them avoid is if they don’t have the money discussion about college early enough. Their kids get to be 14, 15, 16.
And then the college salespeople were in the school and their friends are getting, uh, enamored with different schools. And once, once your child blocks onto an expensive school and they come to you and they’re like, yeah, I got in. I applied, I got in. Now you’re on your heels. And the only thing that you can say is either no, uh, you know, we really don’t have the money for that.
Or, [00:24:00] um, which the statement that I really don’t like to hear is the advisor is, is, well, it’s, it’ll be okay. We’ll just figure it out. And if the client doesn’t have a funded retirement, like the, there’s nothing really to figure out. Like it’s, and the path that I’ll walk folks down is I’ll just say, look, I’m the, I’m the financial advisor, so I’ll say the ugly thing that no one wants to say, which is I.
Your children don’t need to go to college. We want them to go to college, but they don’t need to. You on the other hand, you have to retire. It’s, it’s going to happen. Mm-hmm. At some date in the future, you will receive your last paycheck, and when you do, there will be, there will not be another one. And if you’re not financially self-sufficient, then where are you going to be living or who will you be living with?
And they usually figure it out pretty quick. And then once we have that discussion, I’ll say, okay, well, you know, From my view and view as a financial advisor, one of the greatest gifts that we can give our [00:25:00] children is to be financially independent in retirement and to not end up as a line item on their budget.
Mm-hmm. And so sometimes when you know money’s tight, you know, it’s a difficult conversation and, um, You know, it, it’s just, it, it is what it is. I don’t I it, but that I, I, I’ve had some success stories along the way and, and helped some families along those lines, but it is a tough conversation.
[00:25:24] Eric Brotman: Well, and it, it’s a two-way street too because all of us, uh, I don’t know if your parents are living, but as my parents are in their eighties, uh, uh, or approaching there, you know, you start to worry about whether you’re gonna wind up writing checks for your daughter and your parents simultaneously while trying to handle your own stuff.
And this, this sandwich generation piece requires an unbelievable abundance. Um, You know, I told each of my parents a couple of things and you can tell me whether this was good advice or not, and you can beat on me if you want to. But the first thing I said is, you don’t ever have to leave me a nickel, but please, please manage to [00:26:00] pay your own bills.
Don’t have me paying your bills. That would be difficult. You don’t have to leave me anything, but please take care of yourselves. And the other was right, please have long-term care insurance because if you don’t buy long-term care insurance, I’m buying it for you and I’m bringing it up every Thanksgiving.
So, right, that was the way the conversation went. You will have long-term care insurance whether I pay for it or you do, and that’s the end of the discussion because that’s something that sinks ships multi-generationally if somebody gets sick, particularly cognitive impairment. And they haven’t covered that base in some way, then we’re stuck in a position where we either have to decide, yes, it’s okay for mom to be in a Medicaid facility where we wouldn’t necessarily want to choose any of our loved ones to spend time, or we have to subtract from our own retirement or our own children’s, um, uh, opportunities to take care of those things.
Did I give good advice? Was this, uh, helpful or am I just a, a terrible curmudgeon of a son?
[00:26:59] John Crane: [00:27:00] No, I, it, it goes back to what I said before. The, uh, that, that middle 30 is tremendous pressure on it. And if, if you’re adding, uh, other people’s cash flows to your cash flow, uh, and I mean, when I say adding cash flow, as I’m saying, negative cash flows to your, your monthly budget, um, it just makes it that much harder for you to be financially independent too.
Um, and it’s not just, uh, you, you, you’ve talked about parents, but it’s also adult children. Um, yeah. You know, if you’re subsidizing adult children, uh, same thing. So it’s, uh, yeah, it behooves you to have those conversations as early as possible.
[00:27:38] Eric Brotman: So I saw somewhere a statistic, and I I, I’m not gonna quote it because I’m not a hundred percent sure where I saw it, but something like 70 or 75% of adult people.
Are paying something for their children in their twenties or grown, no beyond college, but their grown kids twenties plus. That’s alarming. I Is life really that expensive that you can’t launch? [00:28:00] Or are these kids trying to live on the uh, the lifestyles that their parents 30 years of work created rather than the ones that they’re just getting started with?
[00:28:10] John Crane: Yeah, I can’t speak to that statistic. Um, but I, I have, when working with young people, uh, sometimes, you know, had to gently point out that, you know, the, your, your, your dad and your mom, they drive BMWs because they work for 30, 35 years and they’re now, well, uh, You know, they, they’re, they have a career, like they’re an attorney or, or they’re a physician and they make a lot of money and you make $50,000 a year.
So driving a BMW doesn’t really make sense for you. And it, it’s usually not a long involved discussion, but it makes sense though because they’re in that fishbowl of, oh, well you know, my parents, this is, they, they went out to get a car and that’s the car they drive. So that’s probably what I should do too.
Makes total sense. [00:29:00] Um, but sometimes, you know, we, I, I have to share with them like, you’re, that’s not you yet. It will be you, but it’s not you yet. Well, it could be and if you, it could be anyway. Yeah. Yeah. And if you try to live that lifestyle too early, then it’s gonna really impede you from being able to have some things, uh, later on.
So, uh, so anyway, but yeah, that’s, uh, I, I’ve seen that problem.
[00:29:24] Eric Brotman: So folks go through this process and you have some worksheets and and some other things, and they go through the budget process and they’re saving their 20% and they’re avoiding adverse debt and they’re doing all the things they need to do, and now they’re getting to that third, third, whether it’s 60 or 65 or 74, whatever it is, they’re getting to that next phase of life where instead of accumulating wealth, which I think all of us.
Sort of intrinsically know how to do, you know how to add to something every month and watch the mountain chart. And we’ve all been trained to do it over our whole adult lives, right? But then you have to figure out how do you use it? How is, how do taxes play a [00:30:00] role? How do you use it? How do you create income for yourself?
How do you make sure that you run out of, uh, oxygen before you run out of money? Like all those kinds of things. How do you guide people or how do you suggest that people frame. What the financial purpose of retirement is or, or what that process is gonna look like. And then my follow up question, and I know I’m never supposed to ask two at once, but, but I’m going to, and that is how do you handle the non-financial aspects of retirement with these folks of trying to figure out what, what they’re gonna do with what could be a third of their lives and a half of their adult lives?
[00:30:34] John Crane: Right. The, uh, first question, um, over the last, I don’t know, five years or so, I have started the retirement income planning discussion with folks in their, uh, mid forties, uh, using the tools on the financial planning software that I use. Mm-hmm. I’ll start showing them, based upon what we’ve got right now, this is what your retirement income’s gonna look like.
[00:31:00] Um, you know, give or take. Mm-hmm. And that. Helps the client in multiple ways. One is it kind of gives ’em a sense as to where they’re at. And then two, if they’re not really on pace, then it’s a motivation to save more. Uh mm-hmm. And the savings rate is actually holding two, uh, important roles. One, the obvious one, which is it’s helping you accumulate money, but the second role that it plays is it, It creates a, a hole in your, in your cashflow.
So mm-hmm. If you’re saving 20% or 30% as you’re getting close to retirement, then that’s 20 to 30%. You’re not gonna be saving for retirement in retirement. So you’re artificially keeping your standard of living lower than, than it could be. Right. Uh, so you have less that you have to replace in retirement.
So that’s how I, how I do that. As it relates to, uh, the, uh, non-emotional, uh, stuff, um, like what are they gonna do when they ultimately retire? I’m in the Strategic Coach program with Dan Sullivan and mm-hmm the, one of the greatest conversations he ever taught me was this [00:32:00] conversation called the DOS Conversation, where, um, you know, if, you know, looking out five years, Going back to today, um, what would have to happen for me to feel happy with my progress, both personally and professionally?
And I, I have that conversation about every fi on a rolling five-year basis with all of my clients during reviews, and it helps them think through that or forces them to think through that. And, um, that’s been, that’s been enormously helpful.
[00:32:26] Eric Brotman: I, I have long believed that retirement in the traditional sense is dreadful for you and no one should do it.
And people look at me funny when I say, you know what Dan Sullivan
[00:32:35] John Crane: says, tell me, do you know what Dan Sullivan says? Yeah, this
[00:32:39] Eric Brotman: don’t is great. I know who he is, but I don’t know what he says.
[00:32:42] John Crane: Dan Sullivan says is nobody should retire. Everybody that has retired has died.
[00:32:48] Eric Brotman: Well, true, true, fair. You know, Bobby Bowden, Bobby Bowden, the coach from Florida State, used to say that, I’m not gonna, I don’t wanna retire because then I only have one milestone left and I’m not ready for [00:33:00] that one.
Um, so similar, similar idea. I. I think that retirement, if it involves daytime, TV and golf will get very boring, very fast despite how much you love golf or daytime tv. And so I, I really do think we have to coach people through a process and ask them the question that I’m going to ask you now, because I would love to know what you want to be when you grow up.
[00:33:29] John Crane: Sure. Well, uh, you know, the, the default answer, which would probably be disappointing, is, uh, you know, this is my second career, so I kind of, I’ve kind of been through a similar process already. Um, like I mm-hmm. I really do enjoy what I do, but there will come a day where I will retire from this. Um, so the leading candidate right now, if, if I had to give you an answer is, uh, I, I would love to be on a lake somewhere and to be, be the guy doing fishing charters for like, Striped bass on lakes.
[00:34:00] I would really like to do that. Nice.
[00:34:02] Eric Brotman: Okay. And where’s the lake?
[00:34:05] John Crane: Uh, in Virginia we’ve got two, uh, there’s one Smith Mountain Lake down, uh, south of Lynchburg. And then, uh, lake Anna, which is, uh, just west of, um, of Fredericksburg.
[00:34:17] Eric Brotman: All right. So John Crane bass fishing charter is born. Is that that coming or?
Maybe,
[00:34:25] John Crane: I don’t know. I mean, yeah, maybe. I mean, I, I, I would, I would love to do that. And it’s also the kind of thing where I can kind of decide when and how often I’m gonna go out. Uh, and I, I love that own schedule, so.
[00:34:37] Eric Brotman: Love it. All right. Well I’m, I’m gonna ask you for an extra credit assignment, and I know there’s a ton of homework in your book and we’re definitely gonna let you share with folks how to get in touch with you and how to get your book.
So, but first, an extra credit assignment. What can folks walk away with and do today potentially as a result of spending half hour with us?
[00:34:56] John Crane: Sure, go to the book website, one number [00:35:00] budget.com, and download the introduction in first chapter. Uh, the chapter, the, the first chapter of the book. It starts off with a poem and, uh, I, I feel that I’m not gonna ruin the poem, but just the, the poem is inci I, I feel is insightful.
I’m trying to change the paradigm and how people think about their lives in retirement, and I would really encourage people to start there. Um, and that’s something you can download and have in less than five minutes. And then also love, love it. And you wrote
[00:35:26] Eric Brotman: this poem downloading the worksheet. You wrote this poem?
I did. You wrote this poem, correct? Yeah. Okay. All right. No, that’s good. Yeah, it’s, it’s one thing to quote someone else, it’s another thing to put yourself out there and actually start with a poem. So I, I applaud you for that. Um, where can folks get, you had mentioned the, the book in the first chapter.
Where else can folks find out more about you?
[00:35:46] John Crane: Uh, my, the f website for my business is crane financial.com and I’m also pretty active on LinkedIn. Uh, so you can find me there as well.
[00:35:57] Eric Brotman: This has been fun. Thank you for sharing your, your [00:36:00] wisdom, your book, uh, your humor, and, uh, and your time with us. I, I really thoroughly enjoyed our conversation and thanks for being here.
[00:36:07] John Crane: Oh, oh, you’re very welcome. I enjoyed it too.
[00:36:11] Eric Brotman: For all of you, thank you for watching and listening today. We’d love to hear from you, so please send us a message or leave comments at don’t retire graduate.com or on social media. If you enjoy our show, don’t keep it a secret. Share it with your friends and family so they can join you on your path to financial freedom.
And please leave us ratings and reviews on your favorite podcast platforms. Those are priceless to us. We’ll be back next week with another installment of Office Hours and in two weeks with another engaging guest. For now, this is your host, Eric Bratman, reminding you don’t retire, graduate.
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