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The Ultimate Retirement Plan | Wade Pfau | Ep 63

[Music] welcome to the market call show where we discuss what's happening in the markets and the impact on your Investments tune in every Thursday on Apple podcast Google play Spotify or wherever you listen to podcasts hi Wade how are you doing I'm doing great thanks for having me on the show you know I'm so happy to have you here if you're in the retirement income planning business or if you're a financial advisor or a money manager somehow managing money in the space for retirement income planning everybody has heard your name you've been around in this field for a long time and as I was looking through your uh resume from various sources it's like okay well what are we going to exclude you know there's because there's so many things that you have done but I thought I would just kind of just fill in for viewers that don't know you a little bit about you um you know you're an active researcher and educator about retirement income strategies you know you do a lot of speaking I know you're going to be speaking here in Denver uh pretty soon uh you are a professor are you still a professor of retirement income at the American College of financial services I am currently yes and the director of Retirement Research for McLean asset management and in-stream uh you did your PhD in economics from Princeton and you did interestingly you did a dissertation on Social Security reform which we hopefully we'll talk a little bit about later uh you're also a fellow CFA Charter holder like myself um and you've got lots of AD you know accolades and some great books in particular one that I really like that you've done is a retirement planning guidebook uh 2021 uh and then you have that safety first retirement planning how much can I spend in retirement etc etc you've done some stuff on reverse mortgages The Unwanted stepchild that actually is a useful tool for many people yet not quite known by many so uh with that said I I was just curious tell me a little bit about your background where did you grow up so uh well I was born outside of Detroit I lived there until I was 15 moved to Iowa after that my my mother is originally from Southwest Iowa so I graduated high school in Des Moines Iowa and then went to the University of Iowa after that so pretty much midwesterner lived a number of different places afterwards including New Jersey Pennsylvania Tokyo Japan for 10 years and then now I live in Texas you live in Texas now yeah actually these pictures behind me and all are all the places I've lived over the years so it's so so you so you grew up in Detroit mostly it sounds like but moved all traveled a lot um how did you go from you know studying what did you study Finance initially when you were in college in undergrad economics and finance economics okay so how did you go from economics and finance to just being so focused it seems like you're focused on retirement income planning well yeah I mean uh financial planning as an academic field is still pretty new and even I entered the PHD program uh in 1999 and actually Texas Tech University started the First Financial Planning PhD program in the year 2000 so it wasn't even an option at that time but academic economics is very mathematical and theoretical and I was always looking for ways to apply to more real world type activities and that's ultimately how I made my way into financial planning indirectly you mentioned the my dissertation on Social Security reform that was testing how in the early 2000s there was a proposal to create personal retirement accounts to carve out part of the Social Security tax and put that into like a 401k style account and I was simulating how that might perform and ultimately that's the same sort of thing I've made my career on at this point which is just writing computer programs to test how different retirement strategies perform in looking for ways to get more efficiency out of one's asset base for retirement now that was during the bush 2 Administration if I remember correctly wasn't it and so and uh what were your findings in that what was your general thesis or not thesis but your general conclusion well at the time what I determined was that it could be made to work but it wasn't obviously a better approach and now in hindsight I realize more and more that there's so little in the way of protected lifetime income that carving out more of Social Security which is that inflation-adjusted protected lifetime income and exposing that to the market as well uh probably would lead to worse outcomes for many people than we do need some risk-fooled income and so now that traditional pensions are going away Social Security is one of the last holdouts and so it probably wouldn't be the best idea to private or not privatize but uh create personal the defined contribution 401K style accounts out of those Social Security contributions very interesting and we'll we'll touch a little bit more I have a lot a few questions on Social Security uh in general um you know from a macro perspective and also a micro perspective personally for uh people so um one of the things that I really like about what you've done is that you kind of take more of a approach that I'm kind of used to like more of an asset liability management approach when you think about funding ratios rather than the traditional way that you hear financial planners talk about it I really like your overall framework and one of the things that I I think is very helpful is your retirement income style protocol your resubm Matrix can you explain a little bit uh to the viewers about your ideas there and and what how that helps an individual determine their overall approach to how they should tackle their retirement income plan yeah absolutely and that's really one of the the confusing aspects of retirement income is there are different strategies that people can use and unfortunately just there's a lot of disagreement and arguments about one strategy is better than all the others and and by what I mean by that is you have What I Call Total return which is just a you build an Investment Portfolio and you take distributions from it throughout retirement you have different bucketing or time segmentation strategies and then you also have strategies that will focus more on having protected lifetime income through annuities or other tools to cover your Basics before you start investing on top of that and they're all viable strategies at the end of the day and that's an important point that Advocates of Investments only don't appreciate how powerful the risk pooling that annuities can do to offer more income how that is competitive with anything that the stock market might do and so people really have options about what they're most comfortable with and that's what the retirement income style awareness is about developing a questionnaire to help guide people in the direction as a starting point which of these different retirement strategies resonates best with your personal Outlook and preferences you may not ultimately choose the the strategy coming out of that but at least it gives you a starting point to say okay it seems like I might look here first as a way to build my retirement strategy and ultimately if that helps me connect to a strategy that resonates and that I can stick with through thick and thin in retirement that can help give a better outcome because they're all viable strategies but where a strategy doesn't work is if you're not comfortable with it and you don't stick with it and you you bail on it during a market downturn or something like that that that's what the retirement income style awareness is really designed to do is just provide that initial talking point on which kind of approach might work best for me to to think about as a starting point yeah I like that because what it's doing is it's basically more holistically looking at how you would can solve the problem and typically you'll find advisory firms that will will overweight if you will one over the other they're like I'm a Time segment guy or I I hate annuities it's all Total return annuities are a scam or uh you know I will never buy an annuity or uh you know Etc et cetera and risk pooling is is something that's really important but it's also very complicated and I think that's why a lot of people have shunned annuities and annuities have changed a lot over the years um and you know coming from my background you know which is more of a total return approach that's great if you have a lot of money but in in other cases you know I think that you can you can you can look at the problem from a optimal way of doing it or you can look at the problem from a way that's actually going to get implemented and work and what I like about Risa is it's practical pretty much all the stuff that you're doing is practical it's not completely theoretical one problem though with that is that you can have somebody who has a safety first for example mindset but their situation is such that if they have a Safety First with 100 of their Capital that they're very unlikely to be successful can you can you expound a little bit upon how you would think about that in terms of giving advice to people in that scenario yeah so that scenario is probably more they do have a safety first mindset but they've been pigeonholed into a total return strategy but they're ultimately not comfortable with the stock market and therefore maybe most of their Holdings are in cash or in bonds which doesn't support a whole lot of spending power and that's you kind of there's three basic ways you could fund a retirement spending goal the first is just with bonds or with cash not really offering much yield on top of that and then to try to spend more than that the um the probability base perspective is invest in the stock market and the stock should outperform bonds and that should allow you to spend more throughout retirement the safety first approach is more now let's build a floor of protected lifetime income that then brings in with an annuity the the risk pooling the the support to the long-lived helps provide more spending power than bonds alone as well and people have that option and it's when the safety first person gets pushed into a total returns probability based strategy and just doesn't invest in the stock market they're ultimately left with bonds which which is the least efficient way to fund a retirement spending goal over an unknown lifetime very true and you know I guess a lot of people did take that approach probably when I first got in this business 20 over 20 years ago there was a lot of people that were doing that who were retired back where the municipal bonds were paying it was it was conducive the market was conducive for that we had high interest rates that were in the long-term secular decline so you had capital appreciation from those bonds he also had reasonably good uh tax-free interest yields that were working for people and inflation was falling um and so now we potentially could be in the opposite inflation Rising who knows how yields are going to work themselves out but um it when you're looking at this um you you bring up this concept of some of the retirement risks and and you have like these uh longevity sequence of returns spending shocks Etc of of the risks that you're seeing out there which one would you say has had the largest impact negative impact on people that they really need to solve for you know longevity sequence of returns spending shocks and surprises well longevity in a way it's the overarching risk of retirement and it's misnamed because it's a good thing it's if you live a long time it's just as an economist will point out that the longer you live the more expensive your retirement becomes just because every year you live you have to fund your expenses for that year so the cost of retirement grows with the length of retirement and then it's when you live a long time not only is there that issue that you're having to fund your budget but then there's just more time for all those other types of risks to become a problem as well with the macroeconomic environment with changing public policy with inflation even a lower inflation rate still is slowly eating away at the purchasing power of assets and then the spending shocks are things like big Health Care bills helping adult family members having to support a long-term care need to to pay for care due to declining cognitive or physical abilities and so forth and so so it's really that longevity is if you don't have longevity there's not really time for the other risk to disrupt your retirement too much and that's why longevity usually gets listed as the primary risk of retirement interesting I hadn't thought about that so a lot of the other risks are kind of correlated to the longevity element um so so really tackling that that that could be one of the biggest parts of all the surrounding risks around that you you talk a little bit in your book a retirement planning guidebook you talk about quantifying goals and assessing preparedness and I I had mentioned before that I like that you're taking your approach more like a Alm or asset liability management type of of an approach which basically that's what it is um and uh and I don't think the average person thinks about it that way they tend to think about it as like I have so much money and I'll be able to with draw so much from it sometimes there's unrealistic expectations about it but one of the common things that I've seen is that most people are not spending the time they need to do on budgeting really to actually even come up with a number or help come up with a number of what your present value of assets need to be to be prepared do you have any kind of practical tips for people and their advisors on how they can actually think about and execute a good budget not only just you know come up with one but actually implement it well now that technology can really help with that and so if people are comfortable with some of the the different websites or software that Aggregates all of your different expenses different credit cards and so forth into one Excel spreadsheet that's a very easy way to to start budgeting now for people who mostly pay in cash that can be a lot more complicated these days I don't use a lot of cash so I just simply when in the rare case that I have an ATM withdrawal I'll just kind of call that a household expense for that time period and not worry about breaking that down much more but uh when you start having those credit cards or debit card type expenses now the the software may not categorize them in the way you desire and so I usually try to not more frequently than once a month but maybe once a month once a quarter download the expenses while I can still remember well enough if I have to change some of these categories and so forth to then be able to keep track of all my expenses and know exactly then pretty much to the scent almost what I spent that year and then to start thinking about well were there any anomalies of course there's always going to be anomalies and to make sure you budget in that sort of thing but that really once you have a few years of expenses down and once you think about bigger Big Ticket items like car purchases and things that can really give you a foundation to start projecting ahead at what your expenses may be in the future as well and then then you have a way to start thinking about well how much do I need to fund those expenses and that's the whole idea of that asset liability matching do I have the resources necessary to fund your expenses are just your liabilities and do you have the resources to be able to fund that with a level of confidence that you feel comfortable with hmm interesting so I I had a meeting with a client actually who was forced into early retirement and a former engineer and keeps meticulous records has for years and uh he gave us the actual numbers for the last three years and I I figured out what the compounded rate was and it was a lot higher than the inflation rate reported by the bl by the government so um I I think there's some disconnect there between you know how we model and reality um you know uh when you look at financial planning software and you look at the assumptions that are the number of assumptions that are involved in the financial software and you know even if you're not taking Point estimates if you're doing Monte Carlo or whatever stochastic process it's very difficult to come up with a robust plan so I'd like I'd like for you to give me some and I know this is kind of a big general question do you have any general tips to people who are doing this modeling on how and for and for clients actually for for individuals and how they can make their retirement more robust to be able to deal with all the changes that can happen in the world like you said public policy changes Market changes Etc yeah you will have to revisit things over time and and as you get new information about your spending make revisions to the budgeting but uh it's still just a matter of when you're like round up your expenses or be conservative with some of your projections there's some categories that are challenging as well like healthcare and when someone switches to MediCare at age 65 that could lead to an entirely different set of health care expenses and with all your expenses on Health Care in the past you might have to completely upend that and and and do a reset there so it is challenging but if you're trying to build in conservative projections the default is usually whatever you believe your expenses will be you just adjust that for inflation every year and most people don't really do that they tend their expenses don't tend to necessarily keep up with inflation over time now that can get complicated but the way I describe it in the retirement planning guidebook is you'll have one particular budget through ajd and then you'll have another lower expense budget after ajd but also building in what if there's a long-term care event and so forth how much additional Reserve assets would I like to have set aside for out-of-pocket expenses that sort of thing and then it's not going to be perfect and it's going to need revised over time but I think you can start to get fairly confident like I've sort of done these exercises I'm still far away from the retirement date and of course I may be wrong but I I think at this point I have a sense of what my expenditures will be or what they can be at least uh over the longer term Horizon of course subject to new technologies new inventions everything else that can happen uh that would change your expenses but at least roughly speaking I think you can start to figure these things out yeah um I guess I'm coming from a practitioner who's been doing it for you know 25 years and seeing the the the conventional wisdom by the best experts at each point in time and looking at how people have actually fared without advice and what I've found consistently is that changes in in particular with government policy has led to uh sub-optimal choices for people who are trying to optimize to the typical cfp advice so and let me let me uh back that up a little bit with with uh some some examples um education planning what was optimal has changed in my career probably four or five times um let me just put it this way I I have put more emphasis in tax diversification and diversification and stuff in how you do things now because what if you if you over optimize in these scenarios it's sub-optimal does that make sense right if like if you designed everything to handle one particular public policy and then it changes on you like right now Roth IRAs or Roth accounts are incredibly attractive to have Assets in but something could change it could just be not that they might necessarily ever tax a Roth distribution but they could add a required minimum distributions or they could count it in the modified adjusted gross income measures used to calculate taxes on Social Security benefits or to calculate higher medicare premiums and so forth and so if something like that happened and you'd been doing all these Roth conversions to get everything into the Roth account yeah that would be overdoing it and subjecting you to that particular risk so I do think tax diversification is is quite important so that you still have flexibility and options because the the uncertainty is the rules will change and we see that every couple of years we just in late December 2022 secure act 2.2.0 came out and that has changed a number of different public policy matters related to retirement income it's gonna and that will continue to happen over time so so be flexible and part of that is just not overdoing things making sure you stay Diversified with with how you're approaching planning yeah in today's environment what we see a lot is is people that have taken the advice of Max 401K uh you'll get a lot of tax deferred and and what's happening is is they're coming to retirement with a large very large 401K plans and things like that and then they just get nailed in taxes and in fact I'm finding a lot of people pay more taxes when they're retired than they did in some cases than when they were not retired um and uh and and it becomes an issue it becomes a real issue then they have estate planning issues and things like that so um uh I just I'm glad that you said that about the the tax diversification I think more than ever especially given our our current you know country's economic condition there's a lot there's we're going to have lots of changes and they could be very large changes uh in particular if you considered quote unquote rich um so I'm sorry I put my little uh two cents in there but getting back to your book uh you have this concept of the retirement income optimization map um again going back to the assets and liabilities and all of that and when you're you when you're you talk about optimizing that's that's why I brought up the the concept of optimizing I I think there's optimizing within ranges one of the concepts that I've kind of looked at and you talked about you talk about different people's retirement styles um one of the issues that you can look at is like matching the duration of your expected liabilities up for a certain period of time so let's say you have a certain percentage of your portfolios in a total return portfolio and then and then another percent that you're you're cash matching or your duration matching matching for one to five years or whatever uh I think some people call that time segmentation you can call it many different things if forget about psychology and how somebody feels if you are just a rational investor a rational person what would you say the optimal length of time is on average for somebody retiring 65 say to cash match or to duration match uh you know their near-term expenses at one year is it five years is it 10 years I know that's a a loaded question but if you forget about forget about psychology and just go pure rational mm-hmm well pure rational the the total return investing approach which has less emphasis on trying to duration match uh can work and also if you then use a an income protection or wrist wrap type strategy you you have that income floor in place that is lifetime so it's already kind of duration matched to your liability so time segmentation is certainly a viable strategy in terms of my personal preferences it's my least favorite strategy so the whole behavioral point about time segmentation is if I have five years of expenses in in cash or other fixed income assets I don't have to worry about a market downturn because I feel confident that the market will recover within five years and I'll be fine and that that story that's a behavioral story and it just doesn't resonate with me personally I I can understand it resonates with others but it doesn't resonate with me personally and therefore I don't necessarily think about what sort of like front end buffer you need in place too to somehow be rational or optimal also that's where something like a reverse mortgage can fit in in a really interesting manner because if you set up the growing line of credit on a reverse mortgage that can be the the type of contingency fund that you can draw from so that you don't necessarily need to have as much cash or other assets sitting on the sidelines to fulfill that role so I would look more at some other of course you need some some cash but I tend to say less rather than more and maybe look at some other options as well about how to have that liquid contingency fund that's great so so basically the in in the guaranteed income sources plus plus reverse mortgage could uh provide a buffer provide a floor so that you could have uh less cash and and you're generally getting a higher expected rate of return on the annuity than fixed income securities and your at at least at the present time a reverse mortgage line of credit grows at a faster rate than the cash which can be used tax-free when you need the money uh so you can see that Evolution that Carol davinsky is one of the famous planners and researchers in this area and in the 1980s he talked about the five-year Mantra which was have five years of expenses in cash now cash you create drag on you're not able to get as high of potential returns with the money you have in cash so he gradually lowered that down to two years in cash and then when he came across reverse mortgages and in subsequent research and and descriptions he talked about having six months of cash alongside a reverse mortgage growing line of credit so I think that's an example of I I think something like that sounds pretty reasonable that's that's that's that's really helpful so and I want to Circle back to reverse mortgages here but before we do if you don't mind I'd like to talk a little bit more about social security uh so we're kind of getting into the realm of the the guaranteed side of things not the total return side of things um or or I more more knowable income sources um I was just looking at the kind of the statistics right now total debt in the United States is really huge um we're running very large deficits project to be like 2 trillion we have a Pago system right now in Social Security and even if we taxed it's been argued by many people even if we taxed every billionaire 100 that would barely make a dent in our current situation so we have huge unfunded liabilities off balance sheet uh type unfunded liabilities how can we really expect Social Security to keep up with inflation and will it be there for quote unquote you know what I'm saying well it will need reforms it's very unlikely to Simply disappear for my own personal planning I I assume I'll get 75 percent of my presently legislated benefits but for people who are younger as well further away from their their 60s uh the social security statement they receive assumes the zero percent average wage growth as well as zero percent inflation and the reality is there's probably going to be a positive real wage growth over time so you're presently legislative benefit could be a lot higher than what your social security statement is implying and therefore when you offset a benefit cut with the uh the wage growth that can be expected over time you may not have that much less in terms of what you're going to plug into your financial plan but yeah I certainly we don't know how the reforms will shake out but if nothing is done sometime in the 2030s Congress would have to legislate a benefit cut and to keep the system so that enough payroll contributions are coming in to cover exist current benefits that cut would have to be somewhere in the ballpark of 20 to 25 percent so I just simply assume I'll get 75 percent of my presently legislated benefit as part of my financial plan is is it fee Is it feasible feasible to actually get Social Security in a funded situation or is it gonna is it most likely going to stay Pago in your if you had a crystal ball oh it yeah it's always been pay-as-you-go and right so the buildup of the trust fund was an effort to just build up some reserves in anticipation of the changing demographics where there's more and more retirees relative to the workers paying contributions uh they try to keep Social Security funded over the 75-year time Horizon and so it's never permanently funded but yeah with a 25 20 to 25 percent benefit cut that would be sufficient to get the system to be expected funding funded fully over the subsequent 75-year time Horizon that's that's really helpful um thinking about it that way in terms of just potentially a 25 less is a reasonable way to look at it I think um the that part of it's not so hard what's harder to understand or to get a grasp on is whether or not that's going to be what that means in real terms for for a retiree um if we continue on a certain path and inflation is is in a different scenario in the future how how do you think about scenario when or inflation when you're when you would set up a plan or a retirement plan what how would you what kind of what kind of uh of Monte Carlos if you will would you put on on your inflation expectation so I do well I tend to just try to think of everything in today's dollars so that the inflation's factored out of it but I the way I think about long-term inflation is the markets tell us what they expect inflation to be if you just look at the difference between a treasury bond and then a tips treasury inflation protected security with the same maturity uh the difference between those two is what the markets expect inflation to be in if they thought it would be different they would invest in one or the other to get that aligned inflation is coming down now and even over the next five years at this point markets are only factoring in an average inflation rate of about 2.1 to 2.3 percent so it seems like markets really expect inflation to come over to come under control even over 30 years right now the markets are building in about a 2.3 percent average inflation rate which is below historical numbers and in terms of if I'm building a Monte Carlo simulation right now I'd to be a little more conservative there I'd base it around a two and a half percent inflation rate with historical volatility and inflation is around four percent so so you're basically an average of 2.4 or 2.5 and then uh standard deviation is like four basically okay so uh that that sounds reasonable um I I guess what is interesting about that is I guess if you assume that we have typical real rates of return for different asset classes that that all works itself out if you put it in present value terms um but if that's not the case and and it should stay that way ultimately it should stay that way but you could have major moves in markets in people's uh time Horizon when they retire which leads us to sequence of returns conversation uh when people retire you can have these you can have these big shifts in markets things things are rough right when somebody retires uh we uh remember I told you about that engineer we had a conversation with forced into early retirement right when the market topped uh the good news is is he had two types of annuities that worked out perfectly for him in the sequence return can you explain sequence return risk for listeners and and what it means and how to you know strategies to mitigate that a little bit more and just one quick last comment on the inflation too like if you thought when I said these low inflation numbers that that's ridiculous inflation would be much higher well then you'd benefit from investing in tips because they'll provide you a real yield plus whatever inflation ends up being and so they'll perform better if inflation is higher and they've already discounted that that was one of the best performing uh fixed income markets uh in the last couple years so but anyhow but but yeah a sequence of returns risks so that's it whenever you have cash flows going in or out of a portfolio the order of returns matters and it's when you start spending in retirement that it matters a lot more so it's like the market could do fine on average over the next 30 Years but if the market goes down at the start of my retirement I'm not having to sell more and more shares to meet my spending needs and sell a bigger percentage of what's left to meet my spending needs such that when the market subsequently recovers my portfolio doesn't get to enjoy that recovery and so it can dig a hole for the portfolio and the the average return could be pretty high but if you get a bad sequence of market returns right at the start of retirement it can really disrupt that retirement and lead to an implied much lower average rate of return than what the overall markets were doing over your retirement Horizon yeah so and in terms of actually uh let's say you're coming up on retirement so this is a common scenario you're retiring in 10 years or five years what should an investor be thinking about doing to transition from that accumulation to distribution phase to kind of mitigate that sequence of return risk so when people start thinking about retirement I think that's where the first step take that retirement income style awareness to get a sense of what sort of retirement strategy might work for you because that's where you then have um different options if you're more of a total return investor that's the whole logic of the target date fund and so forth is just start lowering your stock allocation but still investing in a diversified portfolio as part of that transition into retirement if your time segmentation the easiest way to think about the transition is instead of holding those Bond mutual funds you start exchanging those in for holding individual bonds to maturity like if I'm 10 years before retirement every year for the next 10 years I could start buying a 10-year bond and then when I get to my retirement date I have the next 10 years of expenses covered through these maturing bonds if you have more of an income protection or risk draft strategy the the options would then to be thinking about well if I have an income gap I'm trying to fill where after I account for Social Security or any pensions I'd really like to have more reliable income to meet some basic expenses well you could start looking at purchasing annuities that would turn on income around your projected retirement date as a way to have that transition into retirement and so they're all viable options and it's just a matter of taking the the route that you feel most comfortable with very good that's really really helpful um now I I guess at least is a little bit into the what I would call the traditionally unloved unwanted stepchildren annuities and reverse mortgages uh you know they've gotten a bad a bad rap for so long but they're so useful in in as tools I would say probably the reverse mortgage is the least understood and uh and and one very helpful um tool I think maybe because of just the history of them and how they used to be structured versus how they're structured now um can you give me a sense about how to think about reverse mortgages for people is it only for people who are you know can barely get their their plan together with their assets or or does this also work for people who have a cushion but they should still do a reverse mortgage more yeah I mean the conventional wisdom a lot of times is that the reverse mortgage is a last resort consideration after everything else has failed and maybe then just a way to Kick the Can down the road a little bit but ultimately that retirement wasn't necessarily sustainable since about 2012 that really the focus of the kind of research retirement planning financial planning type research was looking at how reverse mortgages can be used as part of a responsible retirement plan and so it's not that a lot of advisors may just think the reverse mortgage is only for someone who's run out of options but but that's really not the idea it's we have different assets and it's back to that real map the retirement income optimization how do we position those assets to fund our goals and the reverse mortgage provides a lot of flexibility about how to incorporate our home equity asset to help fund our retirement plan and it can lead to a lot more efficient outcomes than just simply say leaving the home sitting on the sidelines and saying well I've got the home if I have long-term care needs I'll sell my home to fund the long-term care something like that otherwise I'll just leave the home as a legacy asset for my beneficiaries there's much more efficient ways to incorporate home equity into a retirement plan and that's what the whole discussion around reverse mortgages is how can I I use a reverse mortgage to help build a more efficient retirement plan and not as a last resort but as part of a responsible well-funded retirement plan it's just another Diversified tool to a source of source of of assets that you can use that's not just sitting there I just had a conversation with a client yesterday that is about to retire in a few years and uh that is exactly what he said that other property that I have in that other State uh I'm just gonna keep that as a that'll be my I'll sell it if I need to you know there was a conversation about health care contingency and um uh long-term care and things like that and that was his rationale um and and in discussions with clients there has been a a ton of resistance you've been really good at putting out information that shows why it makes sense to have it as a potential use so can you explain a little bit about the the line of credit portion of it and how that how use how that could be advantageous yeah and it really it goes back to this idea of sequence of returns risk and if you look at a reverse mortgage in isolation it may look expensive or whatever else but it's how does it fit into the plan and by reducing pressure on the Investments it can help lay the foundation for a better outcome and the the growing line of credit is one of the most misunderstood aspects of the reverse mortgage and I think it was partly unintentional and it may sound too good to be true in a way it probably is and we saw in in October 2017 the government put some limitations on the growing line of credits so it was incredibly powerful before then it still quite powerful not as powerful as before for new uh anyone who opened a reverse mortgage before October 2017 was protected to have those Provisions in place for the entire life alone but if you wait and then after October 2017 you still have the growing line of credit it's not as powerful but but the idea is I believe the government assumed people would open reverse mortgages because they want to tap into the funds but financial planners realized with the variable rate not with a fixed rate but with a variable rate home equity conversion mortgage you do have to keep a minimal loan balance of say 50 to 100 dollars but otherwise the rest can be left as a line of credit and that line of credit grows at the same way the loan balance would grow and so you can understand why if you borrow money the what the loan balance will grow over time well it just happens to be the case that the kind of neat planning trick is if you open the reverse mortgage and 99 of it is in the line of credit the line of credit is growing over time at the same rate that the loan balance would have been growing and ultimately this improves the odds dramatically of having a lot more access to funds over time if you open it sooner and let the line of credit grow versus just waiting to open it at the time you might actually want to start spending from it yeah how has it been limited uh limited versus the way it used to be what what are the limitations well they increased the initial mortgage insurance premium which is not directly to the line of credit but then every every so often used to be more frequently we're now getting overdue at this point with it's been over five years but they revised the tables that determine the principal limit factors of what percentage of the home value can you borrow and so as part of that 2017 change they uh lowered the the borrowing percentages and also they lowered I mean this this part's a good thing but they lowered the ongoing mortgage insurance premium that would cause the loan balance to grow at a slower rate but it also in turn caused the line of credit to grow at a slower rate so it before that change I was running simulations where if you opened a reverse mortgage at age 62 there was like a 50 chance that within 20 years the line of credit could be worth more than the home and that's no longer the case it's still there's still a probability that the line of credit could grow to be worth more than the home but it's not nearly as dramatic as what I was Finding before the rule change that's very interesting because the line of credit growth rate is tied to interest rates and home prices have somewhat of an inverse relationship to interest rates to some degree but it's basically positively skewed so it's not it's hard to know but uh uh but yeah that's that is a great planning tip and it's interesting because we have had a lot of friction with this discussion with uh clients uh mentioning to them because they just have it in their head that I'm going to lose my home and I'm going to there's all these things that can go wrong and then you have to explain it's a big education process and of course they are required to do education as well no we don't sell reverse mortgages but we always you know if we if we you know we mention it to people as a source and you know having it there makes a lot of sense uh and and the same thing with the annuities um you know I have a love hate relationship with annuities but I'm becoming to love them more and let me tell you why before it was all commission driven you know and we're fiduciaries we don't do commission stuff now with the Advent of finally the insurance companies have really gotten to the point where there's at least enough of them now doing products that make sense with the guarantees I mean there was always companies out for a long time there's companies out there like Americas Etc that had just pure plain vanilla uh va's variable annuities that had just lowered your expenses and maybe eliminated a surrender or something but the guarantees is where the real there were folks too much on tax deferral and not enough on guarantees what were the guarantees is really really what we're really looking for here uh and the only way you could even get them you guarantees would be if you did a commissionable product so we'd be handing you know we would be referring people to Insurance guys who were selling commissionable products and then sometimes you don't know what's going to happen after that happens uh with that client so now thank God we have uh we're in a scenario now where the where the financial industry has finally caught up to what needed to happen with annuities yeah the only annuities yeah yeah the only annuities and there's it still has a lot more to be done it's it's you shouldn't be overlooked and I think what happens one of the reasons that I think they're so helpful uh for people is that risk tolerance is time variant people say their risk tolerance is X and then as soon as you have a market decline then their risk tolerance is all all of a sudden why which is more conservative and and uh these annuities can help people psychologically overcome that right you can always look to something that is either staying equal or growing and you can also have growing income streams during the Gap we see that a lot there's a gap between uh when they get Social Security and when they retire and it kind of fills that Gap and it's funny when I was when I was I actually had my assistant who's also a CPA excuse about my financial planning system I had to read this book first and she uh she said it sounded like like you uh were like in the room with him uh because there's so much stuff in here that you and I agree with it's amazing uh before not even knowing you so and I think it might have to do more with the approach of taking things more from uh your academic background and your CFA background it gives you a different perspective than what kind of the traditional financial planners had who had come more from a sales background and now what's happening is is we have uh the whole industry is now moving in the I think moving in the right direction and I think you've been a big uh reason why that's happening so I I really want to thank you for that all your work is really making a difference I want to talk a little bit about Medicare if we can and health insurance this is probably one of the most the hardest part is the medical the medical discussions in some ways um people don't want to think about long-term care people don't want to think about health costs I was looking at some of the statistics you know long-term care statistics is how much it costs it's a big number how would you how would you model the contingency planning you know for let's just start with long-term care how would you model that would you model it as a present value number or would you try to put it as a as something that's over time how how would you how do you approach that yeah actually so I did try to make the retirement planning guidebook as comprehensive as possible and and so I as part of that developed a long-term care calculator and the the basic logic of it is develop a scenario that you would feel comfortable that if you could fund that scenario uh you'll feel like okay things things will work out whether that's three years in a nursing home whatever the case may be but develop that scenario where you're saying okay at age 90 I will spend the next three years in a nursing home right now in the United States the average cost for a semi-private room in a nursing home is a little bit under a hundred thousand dollars I'll say in today's dollars a hundred thousand dollars a year but then I'm gonna plug in the the math gets complicated but you've got what's the inflation rate in long-term care what's the overall inflation rate and then back to this whole idea of the asset liability matching like what's the investment return discount rate you're comfortable assuming as well and also recognizing that if I do go into a nursing home I don't have to also fund my entire budget of a like if I thought I was going to spend 80 000 a year well I'm not going to be going on any sort of trips I don't have to go to restaurants or anything uh a lot of my other expenses would reduce not not 100 but they would reduce so plug it in what I think is a reasonable reduction to the rest of my budget and then you get calculated a present value of here's how much money I'd have to have set aside as a reserve asset to feel comfortable that I would be able to fund this long-term care need and and be able to have a successful retirement and for people who are worried about and who may be paying out of pocket for long-term care that could be several hundred thousand dollars to be blunted on average that's what it comes out to I actually had a coffee with a gentleman and he said uh what is it just tell me what the number is I said well it depends on your age he says no just tell me what the number I said it's roughly about 300 000 roughly on average it could be more it could be less uh you know uh okay and and there's there's there's different ways you can fund it right you can do long-term care insurance uh traditional Standalone you could do um you know life insurance policies that have embedded features you could do if you can't like qualify for um you know you know get a policy you can maybe get it embedded in an annuity of some sort you can sell fund um so it's not an easy thing that you can uh solve it with a quick answer um but but it's important to have in a plan and I and I like the fact that that uh you've emphasized that a lot in your work um it's just it's just great that that people are thinking about it from that perspective I want to switch gears a little bit um and talk a little bit about tax efficiency uh you know taxes are such a huge part of the impact of a plan and there's so many different angles to it and and the tax rules change so much um I'll tell you one of the challenges that I have asset location the concept of balancing you know where you put a certain asset according to us is tax efficiency versus keeping an asset allocation in line right up you know operationally keeping it in line with the objectives and then as money is being spent taking it from the right place it's a challenge even with excellent software and then sometimes I'm finding that it doesn't actually work out as planned so can you can you give me some practical tips on how to deal with asset location well the the basic logic of asset location but yeah I mean in practice it gets incredibly complicated as you're spending from these accounts to think about also rebalancing and making sure you're keeping the right asset allocation between stocks and bonds and the NASA location is where do you keep these things but generally just is a basic guideline your taxable brokerage accounts of course you want some cash there for your liquidity but otherwise that's your most tax efficient stock Investments so if you own stock index funds and so forth the on a relative basis they're most likely to be best off in your taxable account because a lot more of their returns will be those long-term capital gains that get the preferential tax treatment then with like your tax deferred IRAs and 401ks that's more of a place where less tax efficiency so bonds and so forth maybe lower returning type asset classes and then for your Roth accounts the Roth IRA and so forth that's where less tax efficient but higher expected return type asset classes could go the Emerging Market funds and small cap value and that sort of thing and that does also work with distribution ordering as well because the Roth will be what you tend to spend last and so also having these uh riskier asset classes that may have more growth prospects over the long term that can be a good place to set them aside since you're not likely to be spending from those accounts until later in retirement okay yeah it I think for a lot of people it's a little bit of a daunting thing and in practice it can be with contingencies and things like that can be hard to to do correctly and keep managed and I know there's good news is there's good software now that that helps with that um as far as tax efficiency the other you mentioned the order of withdrawals I mean traditionally you know you have the you know your traditional order of withdrawal that you would you would uh do in in the past a lot a lot of recommendations has been you know you want to take from your taxable accounts first right let those tax-free tax deferred accounts grow and then and then you start taking from those other sources but you make a really good point that that's not always the best thing to draw that taxable account down too fast can you expand upon that a little bit well the yeah the the basic tax efficient distribution is spent down taxable assets than tax deferred like IRAs and then tax exempt like Roth against last but you you can do better and so the the better approach is to have a blend of taxable and tax deferred until the taxable account depletes and then a blend of tax deferred and tax exempt after that and as part of that blend you can do rock conversions to in the short term pay higher taxes if that can better position you to pay less taxes over the long term and to have a higher Legacy value from assets over the long term yeah and then getting more specific than that it's there's no you really got to run the the individual numbers on a case-by-case basis but generally there's the opportunities to sustain your assets for much longer by having a more tax efficient distribution strategy that digs into that taxable plus tax deferred and then later tax deferred plus tax exempt exactly and and that's why it's important while you when you're an accumulation phase make sure you have some tax diversification if you can yeah have Assets in all those different types of accounts yeah so that you're not nailed so bad uh later on uh and then there's a lot of complexities that can happen with happen that we see quite a bit with concentrated stock positions and things like that which is probably outside the scope what we're talking about today so um and lastly here last last topic here non-financial aspects of retirement this is a huge huge huge thing uh it's funny it was the last towards the end of your book and I'm glad that you talked about it uh because uh there's I can't tell you how many times um you know you see people think that they're going to be happy sitting on the beach and then they they do that and they're miserable uh or or spouses that wind up hating each other for some reason can you tell can you give us some ideas about um like what should people be doing like say they're five years into retiring or ten years into retirement retirement What should people be thinking about doing to kind of get their their overall lifestyle satisfactory when they actually do retire yeah and and that's this is in some ways more important than any other Financial stuff because with the finances it's easier to adapt but work does so many things in a person's life it's not just that it provides a salary and you need a way to replace all the other aspects of work such as structure to the day camaraderie feeling part of a team feeling like you're creating value for a society all these different aspects that you need to be able to replace with something that gives you motivation to wake up in the morning in retirement and so to say simply it's not the best starting scenario if you retire because you hate your job you want to be able not to retire away from something but to be able to retire to something you want to have and it gives you purpose and passion and meaning to give you the motivation to wake up and and have something be active each day because in all too many cases people just they start doing passive things like watching too much television or surfing the internet too much and that can lead to a really miserable and unsatisfactory retirement wow that's huge that's interesting have something to retire to so uh and and start figuring that out sooner rather than later right not don't wait till the very end and go yeah what am I doing uh and sitting there staring at your wife or your husband yeah that's the idea that there's all these things you you want to get done but you just think well when I retire then I'll have more time to do it well if it's something you've been holding off on doing for the past 40 years it's not likely that just having more time in retirement is what you need you may just simply either not be interested if it's a hobby like oh I want to go back to playing the guitar or something if you're waiting for retirement to do that sort of thing there you go that retiring may not be enough and then people might start feeling bad that you no longer have the excuse and that's where if that sort of bad feeling compounds it can create a spiral like a downward spiral where people just become less engaged and less positive and it can even impact Health which then in turn makes it harder to be engaged and involved and and can lead to downward spirals it's really important to try to avoid that and as part of that not waiting for retirement to to consider all these other aspects of your life outside of work but making sure you're nurturing relationships and having hobbies and having things outside of work so that it will then be easier to transition into the retirement yeah that's great so is there anything as we close here is there anything that you're really excited about that you're working on right now that you want to share or is there at all right now I am just trying to get the updates done for the retirement planning guidebook and where we're doing the best we can to build out that retirement income Styles ideas uh something that people can benefit from and uh the other main research area is with the tax planning as well that I think this will be a Hot Topic and I've already done a lot of work in that area but it is such a complicated area that just trying to push forward as well about like Roth conversion strategies and and how to best Implement those in a most of the work in that area just assumes a fixed rate of return and with the reality of not fixed rates of Returns on your Investment Portfolio that also dramatically complicates some of those tax planning decisions so I'm continuing to push ahead in those areas interesting so more stochastic modeling in your future yes stochastic modeling and now you're probably going to be uh that Technology's got to be in there somewhere too any plans uh that you want to announce or share with new technology that you're going to be coming out with or software programs or anything like that or I mean I just have this Vision in my head if I were you I'd be doing something like that but I mean I'm just saying yeah don't Envision creating tax planning software but uh the retirement income style awareness that's where I'm putting on my efforts in terms of having software and that's an easier problem than the tax planning problem definitely yeah there's a lot of changes always yeah you'll be coding to your uh blue in the face all your staff would be so uh the uh it's interesting I I I'm actually going to be diving into that that profiling software that you have um I had a conversation yesterday about that so that's very good so where would people uh would you like people to send you see learn more about you um anything that you're up to oh yeah uh so my website retirementresearcher.com all one word retirement researcher and if you go there you can sign up every Saturday morning we send out an email with different articles and things and then my retirement planning guidebook is on Amazon or any other major book retailer and also I do have a podcast as well they're retire with style podcast with Alex mergia who's my a co-co-researcher and and co-founder of the retirement income style awareness excellent all right Wade thank you so much appreciate you coming on it's been a pleasure thank you the information in this podcast is informational and General in nature and does not take into consideration the listeners personal circumstances therefore it is not intended to be a substitute for specific individualized Financial legal or tax advice to determine which strategies or Investments may be suitable for you consult the appropriate qualified professional prior to making a final decision wealthnet Investments is a registered investment advisor advisory services are only offered to clients or prospective clients where wealthnet Investments and as representatives are properly licensed or exempt from licensure [Music] foreign

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The BEST time to START planning for retirement is?

Today I’m going to share with you the best time to start planning for retirement. My name is Stephen Stricklin. I'm a certified financial planner and the president of Wise Wealth. I've been helping people plan for retirement for over 15 years. And today, I want to help you by talking about the best time to start planning for retirement. This might be the shortest and easiest video ever! The time to start planning for retirement is now. The time to start saving and investing is now. There is nothing more valuable than time when it comes to investing and planning.

It's never too soon to start planning. If you’re 20 years old, start now. If you're 40 years, old start now. If you're 60 years old, start now. Everyone needs a plan and you need one now. When I say a plan, what do I mean? A plan is something that is written down and is based on your goals, and the answer to the four questions I talked about in my last video. A plan is not an investment, or a 401k, or an insurance policy. All of those things are important, and fit into a plan, but a plan is a written guide or a visual GPS.

So what does a plan do for you? Number 1, it provides clarity. It's like, we all love putting the maps in our phone. You put your starting point and you put your ending point and the GPS does the rest. And that's what a plan does for you, it gives you clarity. Number 2, it tells you what you need to be saving, and how much you need to be earning. In other words, it tells you how to get there just like a GPS. Number 3, it provides a great deal peace of mind. I don't know about you, but sometimes I go to a new town, a new place and I don't even have to do anything about the area. I can type in the GPS, where I'm at now, where I want to go, it tells me how to get there and I don't have to worry about anything. Just follow the directions. And that is what a plan does for everyone. That's why you need one. No matter where you are in the process of planning for retirement, you need to know if you were on track.

Are you on pace, like an estimated time of arrival to reach your goals? The only way to do that, is with a written retirement plan. I can help you with that, feel free to reach out. If you enjoyed this video, feel free to hit the like and subscribe button for more content just like this. I will be releasing videos at least twice per month. My passion is to guide people on the path to financial significance where they are free to give and serve and enjoy life like never before.

Thanks again and see you in the next one.
.

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Retirement Planning at Every Age

While retirement planning was once thought
of as an issue for older, wealthier adults to deal with, the truth is that preparing
for a secure future is no longer considered a life stage or income-specific endeavor. Providing for financial wellness in our later
years is now an individual responsibility, and the earlier you start, the better off
you’ll be. From students to grandparents, there are steps,
both large and small, that we can be taking in every phase of life to empower ourselves
for the future we envision. Hi, I’m David Schnitzer. Today, I’m going to talk about “Retirement
Planning at Every Age: What should you be doing right now?” Students
Even at this young age, children watch and absorb how the adults around them manage money.

The saving and spending habits they witness
now will form lasting impressions on how they handle their own money in the future. Something as simple as putting spare change
in a jar can send a great message to developing minds about setting money aside. Similarly, raising financially-literate teenagers
will set them up for retirement-planning success. Parents can help them understand the basics
of budgeting, saving smart, and working toward a financial goal. From the money he receives as a birthday gift,
to the part-time job income she earns at the local grocery store, teenagers need to understand
what to do with the money they have in their hands before it burns a hole in their pockets.

In Your 20s
Once you reach your 20s, you have more control over your income and what to do with it. While your life as an independent financial
adult is just beginning, complete with benefits and an actual salary, that starting salary
is likely going to be on the lower side… despite the student loan debt and full living
expenses with which you now have to contend. While retirement seems to be a long way off
in the future, and today’s challenging expense-to-income ratio is very much in the present, it’s
easy to move financial planning to the side… and credit cards to the front.

The younger you are, however, the more saving
power you have thanks to a concept called compound interest. A few dollars saved today can mean thousands
of dollars later, and time is very much on your side. Manage your credit wisely, set a practice
of saving before you spend, and get the jump on retirement planning that so many wish they
had had. In Your 30s & 40s
Kids. A mortgage. Minivan payments. As you continue to build your credit, your
family, and your life, there seems to be no shortage of bills to pay, and saving seems
even more challenging at this stage of the game. How can you think about retirement when your
toddlers don’t even sleep through the night? On the upside, your earning power is on the
rise, your good financial habits have led to great credit and better interest rates
when you do have to borrow money for the big stuff, and your employer likely offers a retirement
savings plan at work. During this mid-career life stage, it’s
a good time to set a retirement-savings goal, and enlist the help of your financial professional
to help you reach it.

In your 50s & 60s
During your 50s, your life becomes less about the kids (who are more independent or out
of the house altogether), and more about you. You can focus more on your career, and put
more energy into what you want, both for today and for the future. If you haven’t already, decide on your planned
retirement age, determine if your savings is adequate or on track, and tackle any retirement
planning catch-up you may need by accelerating your saving and investing. In your 60s, you can finally see retirement
on the horizon. The time has actually come to plan that trip
to Italy, to meet that first grandchild, and to downsize from that big house. The time has also come to better research
your Social Security benefits (and when it’s best to start accessing them), Medicare coverage
and long-term care options. In your 70s & Beyond
You’ve made it. You have retired with financial security and
a lifetime of memories.

Now it’s time to make sure you protect what
you’ve achieved for the people you love. Take your will out of the filing cabinet and
make sure it is up to date and still reflects your intentions. Name a power of attorney, and settle any inheritance
or taxation concerns you may have with a professional. Although the process of planning for your
retirement may seem daunting, your financial advisor can help guide you through the entire
process. No matter what age you are, be sure to contact
your advisor today to develop, review, and/or revise your retirement plans..

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The BEST time to START planning for retirement is?

Today I’m going to share with you the best time to start planning for retirement. My name is Stephen Stricklin. I'm a certified financial planner and the president of Wise Wealth. I've been helping people plan for retirement for over 15 years. And today, I want to help you by talking about the best time to start planning for retirement. This might be the shortest and easiest video ever! The time to start planning for retirement is now. The time to start saving and investing is now. There is nothing more valuable than time when it comes to investing and planning. It's never too soon to start planning. If you’re 20 years old, start now. If you're 40 years, old start now. If you're 60 years old, start now. Everyone needs a plan and you need one now. When I say a plan, what do I mean? A plan is something that is written down and is based on your goals, and the answer to the four questions I talked about in my last video.

A plan is not an investment, or a 401k, or an insurance policy. All of those things are important, and fit into a plan, but a plan is a written guide or a visual GPS. So what does a plan do for you? Number 1, it provides clarity. It's like, we all love putting the maps in our phone. You put your starting point and you put your ending point and the GPS does the rest. And that's what a plan does for you, it gives you clarity. Number 2, it tells you what you need to be saving, and how much you need to be earning. In other words, it tells you how to get there just like a GPS. Number 3, it provides a great deal peace of mind. I don't know about you, but sometimes I go to a new town, a new place and I don't even have to do anything about the area. I can type in the GPS, where I'm at now, where I want to go, it tells me how to get there and I don't have to worry about anything. Just follow the directions. And that is what a plan does for everyone.

That's why you need one. No matter where you are in the process of planning for retirement, you need to know if you were on track. Are you on pace, like an estimated time of arrival to reach your goals? The only way to do that, is with a written retirement plan. I can help you with that, feel free to reach out. If you enjoyed this video, feel free to hit the like and subscribe button for more content just like this. I will be releasing videos at least twice per month.

My passion is to guide people on the path to financial significance where they are free to give and serve and enjoy life like never before. Thanks again and see you in the next one.
.

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Critical Retirement Planning Ages: 55, 62, 70, & More

When you're planning for retirement, your age is important, and that's because as you reach certain milestones, you may qualify for certain benefits, or you might need to take certain actions to avoid penalties. So that's what we're going to talk about in the next couple of minutes here. We'll go over these critical retirement dates so that you can get them in your planner or at least know what to expect as you move toward retirement. Two things happen at age 50. The first is you get to make catch up contributions. So if you are maximizing your contributions to your retirement accounts like a 401K or an IRA, you get the ability to put in even more money each year, which helps you boost your retirement savings as you near the end of your career. There's a separate benefit that might apply to certain public safety workers, so for example, if you're a firefighter employed by the federal government, you might have the opportunity to take withdrawals from retirement accounts as early as age 50 without any early withdrawal penalty from the IRS.

So make sure that you triple check the requirements, and of course, the longer you can keep your money saved, that might help you make it last longer. At age 55, the ability to take those early distributions from a workplace retirement plan. Opens up, and to meet that criteria, you have to terminate your job at age 55 or later and take the funds out of that job's retirement plan, like the 401k, for example. Again, this is something that you want to check carefully with your tax advisor, and this is probably a good time to give you a friendly reminder that this is just one short video, and it's not individualized advice. You really do need to speak with an expert who is familiar with your situation, and they can help you make sure that you avoid any problems and potentially identify some opportunities for you. By the way, if you check the description below, you can look at some free retirement planning resources that I've put together, and I think you'll find useful. At age 59 and a half, you have the ability to take withdrawals from retirement accounts without that early withdrawal penalty, so it doesn't just have to be a workplace account after you terminate employment, it can be your IRA, your 401K, deferred annuities, and other types of accounts.

So you get a lot of flexibility once you reach age 59 and a half. Age 62 is the time when most people can start taking Social Security benefits, and that's what's called Early claiming, and if you do that, you get a reduced Social Security benefit, so you get less each month. This can be a big deal, so it can be helpful to get that income early, but you get a smaller monthly income amount, for example, if your full retirement age is 66 and a half, and your benefit is $1,000, or for every $1,000 of benefit, you're going to see a reduction of 27.5%, or to put that in dollar terms, you would get $725 each month instead of $1,000 each month, and that reduction lasts for the rest of your life and it could impact a spouse if they take over your benefit as a survivor, so you want to think carefully before you claim early, sometimes it makes sense, but you really want to do it mindfully.

Now to age 63, so your Medicare premiums are based on your income from two years back, so when you're 63 years old, you're within two years of 65, which is when you typically begin Medicare. That means if you have any way to control your income or if you're making Roth conversions to take some income intentionally, for example, at age 63, you want to get extra careful about how much income you're taking because you might bump up those Medicare premiums, it might make sense for you to do that, but you want to know what you're getting into. And when you reach age 65, that's when it's time to enroll in Medicare, and it's critical to enroll on time, because if you enroll late, you may face a late enrollment penalty that's going to last for the rest of your life, so that can be an unnecessary cost. It's smart to start the process three months before you turn age 65, and that gets you some time to get your ducks in a row. Now, if you are still working and you get healthcare from your employer, it's really important to speak with your employer's benefits department and with the insurance company, just to find out what you need to do, if anything, and to set your expectations for when you might leave that job, you want to triple check this, especially if you're still working and you're covered under your employer's plan.

Most people reach their Social Security full retirement age sometime around 66 to 67, and once you reach for retirement age, that means you don't have a reduction in your benefits and it also means that if you are earning money through work, which isn't exactly retired, but maybe you are still earning income, those earnings would not cause the deduction from your monthly Social Security income, so this is an important milestone for you to reach… If Social Security is a big part of your income. When you delay taking Social Security income after your full retirement age, you get a bigger benefit, so the benefit increases by about 8% per year, it happens monthly, so you don't have to wait for a full calendar year, and then any future increases like cost of living adjustments go off of that higher amount, so it's nice to have a bigger income, and of course, the longer you expect to live, the more helpful that tends to be in many cases.

Although there are other factors at play. And then when you reach age 70, those delayed retirement credits stop building up, so it doesn't make sense to wait any longer to take your benefits. Age 70 and a half is a weird one, because it used to be when you had to start your required minimum distributions or RMDs, but they changed the law, except for they left these qualified charitable distributions or QCDs in there at age 70 and a half. It doesn't make any sense, but that's the way it is.

So if you do want to make those QCDs, you can start doing that even before your RMDs if it makes sense, so please forgive all the acronyms, we will explain all these, but just be aware that you can begin doing those qualified charitable distributions at age 70 and a half, these are distributions that you make directly from a retirement account to the qualifying charity, and when you do it that way, you can exclude that from your income, which can be helpful. Age 72 is when most people these days have to start taking their required minimum distributions or RMDs. This is where the IRS says you cannot leave your money in a retirement account, tax sheltered forever, you have to start taking some distributions and generating a tax liability, so they start out relatively small and build up over time. Technically, you have until April 1st of the year following the year when you turn 72, so that's an option, if you want to wait till then or you can just do it in that same year, it's up to you, but the most important thing to know might be that there is a very steep penalty for missing these required minimum distributions, if you don't take one in a given year, the penalty is 50% of the amount that you were supposed to take…

So if you were supposed to take 10,000, it's a 5,000 penalty. That's a big one. So far, we've talked about government programs and tax rules, but there might be some other programs that you qualify for, maybe a pension from an employer, for example, and those might have totally different numbers that apply to them, so check with your plan administrator, read through the documents and you can get all of those details. Now, I hope you've found this helpful. If you did, please leave a quick thumbs up, thanks for watching, and take care..

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Planning Retirement the RIGHT Way (with Veronica McCain)

so you'll pick me up tonight 
at 7 45. yo well no I got a   few things to take care of first but 
why don't we make a quarter to eight I'm 45. live from Joe's mom's basement it's 
the stacking Benjamin show [Music]   I'm Joe's mom's neighbor Doug and good news 
today is all about getting your way which is   my favorite here to help us work out our goals 
and find happiness we welcome retirement coach   Veronica McCain for our Tick Tock minute we'll 
discuss tips on getting your vocab right to   succeed in the corporate world in our headlines 
why is it that instead of money at the end of the   month the month seems to go too many days for 
our wallet we'll share an explanation from one   popular publication plus we'll throw out the Haven 
Lifeline to Lucky stacking Benjamin's listener Jim   who wants to know what percentage to put into his 
Roth IRA and then I'll share some heartbreaking   trivia and now two guys who like to color way 
Outside the Lines the Philistines it's Joe and oh [Music] and a happy Monday to you stackers nice open 
duck you know given your history I think that   was fantastic we got a great show today fantastic 
show Veronica McCain is here I can't let that go   what do you mean given my history I am Flawless 
day after day show after show let what go I don't   know what we're talking about Veronica giving 
my history great open given my history Veronica   McCain is here today she is a retirement coach 
and uh oh gee we don't get enough time to talk   about just retirement so I'm I'm super happy we 
get to do that sweet I'm gonna retire after this   Marathon recording episodes podcast for the 
last freaking week and a half so you can go   on vacation so like yeah by the time people hear 
this I've had a wonderful vacation in Spain which   meant that uh that yeah we've been talking to 
each other a fair amount lately however we got   a fantastic show today not only Veronica became 
we got a fantastic Tick Tock minute super happy   headline today comes to us from the Wall Street 
Journal the oh gee sorry the Wall Street Journal   The Wall Street Journal are they like the Ohio 
state of newspapers forgot to put the emphasis in   the right place and they get angry those Buckeyes 
no it's the Ohio State I thought it was just oh no   no it's the this is from the personal finance 
section it's written by our friend Veronica   dagger a Veronica writes why it's now easier to 
underestimate your expenses and overspend let's   dive in Veronica writes many people have a gap 
between what they think they spend and what they   actually spend this gaps wide recently is the 
financial and psychological effects of higher   prices further strain people's budgets Elevate 
inflation is rippled through Americans wallets   for more than a year now some have cut back While 
others have increased their spending to keep up   credit card balances were staying relatively flat 
for a while but have jumped higher recently oh   gee you and I let's take it from here I think 
that this is a year where it's crucial to have   your finger on the pulse of what your expenses are 
you know you hear people joke about eggs you hear   people joke about the grocery store of course for 
a while there you saw the gas pump that seems to   have leveled off at least where you and I live but 
I think if you don't have your finger on the pulse   you're just gonna have less money at the end of 
every month well the availability of credit cards   and accumulating that Consumer Debt really makes 
it easy to continue to live the life that you want   to live even if the cost of living has increased 
a little bit because you don't feel the pain of   that right away you know it's like that kind of 
slow death by a thousand paper cuts type of thing   it's like you have a little bit of a balance that 
carries over then you have a little bit more of a   balance that carries over and a little bit more of 
a balance that carries over and so that's a really   good really good signal I think is if you if you 
go month to month and you're not paying off your   Visa bill every single month or if you had been 
and now you're not yeah that's a good trigger to   go like whoa what changed here that'll snowball 
pretty quickly listen to this statistic just to   tell you how many people are not paying off their 
credit cards Veronica writes in the fourth quarter   of 2022 the average household's credit card 
balance was nine thousand nine hundred ninety   dollars up nine percent from a year earlier nine 
percent higher it's a huge big number according   to wallet Hub customer Finance website meanwhile 
the average credit card interest rate of course   rose with spread right yeah uh to record high of 
about 20 percent last week according to bank rate   those are some there's some big downsides for 
not tracking your expenses yeah thinking about   the math on that real quick it's like okay ten 
thousand dollars at twenty percent you're spending   150 100 you know 200 a month of Interest that's 
not going to pay that off if you think okay well   I make 80 grand after taxes bringing home you 
know 60 after taxes and health insurance and   401ks and all that sort of stuff that's a solid 
chunk of your annual budget that's just going to   interest payments that doesn't really accomplish 
anything for you so if you're one of those people   that that balance is increased on I think it's 
really important to figure out how to tighten   I think one way if you have an accountability 
partner a spouse a friend that you're working with   I really think this can be way easier than people 
think that it is Cheryl and I just have a weekly   meeting we meet for 20 minutes it's over wine or 
over pancakes depending on what time of day it is   it's not complicated we just look through it OG 
and I think it can be that simple it doesn't have   to be you know you're using what you know I love 
the tiller money app I think it's fantastic how it   takes a spreadsheet and downloads everything every 
day and you've got whatever numbers you want you   can plug those into your spreadsheet and get it so 
you can slice and dice however you want I like the   cube app as well we of course have lots of fans 
who use YNAB as a great budgeting tool but it's   not really it doesn't even have to be that hard 
it just has to be having just a finger on on the   pulse like where where's our money actually going 
you know it might have been you who mentioned it   years ago oh gee it could have been Paula pant but 
but a lot of people feel handcuffed when they feel   like the advice is look at your budget every 
month and decide all the details that you're   spending on and I think that's one of the things 
that intimidates people or just is a huge Downer   against budgets I don't think you have to do it 
forever and ever I honestly think you set up a   budget we use whatever template you want to use 
make your own or use some of the ones that Joe   mentioned and then you check in on it for let's 
say the first six months or eight months however   long it takes you to establish habits for just the 
way you live just the normal everyday stuff and   then once you've sort of curtailed yourself from 
essentially taking out a loan to buy that pair of   pants or that whatever that thing is you think you 
need uh I don't think you need to check in on that   budget that often I think it's I mean honestly 
I'm checking in on mine every maybe six months   to a year I think that I think the big Point here 
Doug with inflation having gone up as quick as it   did the point is to have these early warning trip 
wires that if you're not going to check it that's   fine but you got to have a tripwire that alerts 
you then that stuff is real and it's different   than it was three months ago because to OG's point 
if you don't catch it early this gets Beyond you   I mean but Wells Fargo's PR team finally getting 
getting ahead of the story here and got themselves   in this piece listen to this I like this money 
grows much faster than most people expect because   interest is not interest says Michael learsh head 
of Wells Fargo and companies advice and planning   center it's a great quote a similar concept 
though applies to inflation prices rise and if   inflation remains high prices continue to grow on 
top of already inflated prices leaving people off   guard quote people get constantly surprised that 
their money isn't going as far as they thought it   would and in fact the cost of eating out and going 
for drinks continues to take Dina lion aback even   though the 36 year old married mother of one's 
dining out and ordering in far less than she did   a year ago some prices still give her sticker 
shot she says the difference between cooking at   home about ten dollars for nice pasta and quick 
sauce from canned tomatoes versus Italian takeout   for now 50 bucks is astronomical said Miss line 
who lives in Brooklyn I think those trip wires   are are what you if you're not going to set it up 
Doug well let me ask you this I mean given your   history with money how exactly do you set up your 
own tripwires so we focused all of our spending   on One credit card I have a rough idea every 
month of what that that number should look like   at the end of the month and if it's significantly 
higher I kind of raise an eyebrow and then I start   scrolling through transactions and realize okay 
those are all legit time to cut it back that's my   trip but you know then where to cut well then 
I start to it's usually uh the same thing for   probably 90 percent of Americans Amazon but uh 
Amazon could be anything though I know that's such   a brilliant way for them to disguise what you're 
buying that it just says Amazon yeah because   you're like there's no way I spent forty one 
thousand dollars on Amazon last year yeah you did   like well what did I buy wouldn't you like to know 
right I bought Fruit Loops and a backhoe exactly but yeah then I just dig in a little bit if if 
the number is significantly higher usually when   that has happened it's because of a couple of 
big purchases and I know right where it was and   um I know that that big purchase isn't going 
to happen again the next month it's you that   for me that's usually what it is it's not the 
trickle effect of Amazon it's usually some big   some big Bill I had but uh yeah that's that's my 
tripwire yeah I just know that given your history   that we really need to make sure that um people 
hear the story you are harshing on me today what   is happening what am I doing I don't give up 
your history and what then you you yeah yeah   harsh on my open what is going on I don't I'm just 
saying that given your history there we go again I   think we need we need to make sure that people 
hear the story like it's a it's a great tale   hey uh speaking of great Tales time for a tick 
tock minute this is the part of the show where   we either have some Brilliance from the people at 
Tick Tock or we have hashtag brilliance from those   very same people uh Doug which one do you think 
we got today this one's legit it's solid yeah well   more solid than my backdrop which is just about 
fell over I love it how people are about to see   they're about to see all the canned goods here 
in the basement when your professional backdrop   goes bye-bye I think you're correct doug because 
oh gee today what we're going to talk about is   how to succeed in corporate life how to how to 
figure out the right things to say let's listen   one of the most important skills you'll need 
to learn if you want to be successful in the   corporate world is how to speak like an absolute 
[ __ ] week and a great way to do this is just   to totally ignore the basic principles of 
English grammar so first take a random noun   and then change it into a verb so a word like 
idea becomes ideate then take that new verb and   turn it back into a noun so id8 becomes ideation 
then take that now and change it back into a verb   so ideation becomes ideation Inc finally take the 
new verb and change it into a meaningless seven   word cluster an all hands Blue Sky ideationing 
session then sit back and wait to be promoted right that immediately it's pretty 
funny after your blue sky ideation   session you're you're good that's pretty 
funny brilliant Joe tell them some of   the we've got some of that same kind of 
corporate phraseology here that that just   develops organically just happens we have 
we've come up with our own lexicon here uh   OG we need to talk to you over by the can 
peaches we say that you're getting canned   first time Doug got canned he thought it was a big 
deal oh God I was remember that yeah I was I I had   Joy I mean uh tears in my eyes and when it's nice 
outside so you know we want to leave the basement   we meet up by the clothesline which we call Doug 
getting hung out to dry there it is we didn't need   the bump this is serious work OG we're all trying 
to get promoted here hey coming up is a woman that   I don't think we need to promote a lot because 
when it comes to retirement planning people   take it way too cavalierly oh gee you know this 
better than most people spend more time planning   their family vacations than they do planning their 
retirement which shows why so many people are not   successful at retirement planning well Veronica 
McCain worked a full career and then realized that   as a second career which we may talk about as well 
she was going to become a certified professional   retirement coach and a charter retirement 
planning counselor after 31 years of Public   Service work decided you know what time to do that 
other thing that I've really really wanted to do   so she founded Savvy retirement coach with the 
mission to provide holistic retirement planning   Concepts focused on self health and wealth we're 
going to talk to Veronica here in a second about   doing a better job planning retirement but Doug to 
get there I think you've got some history well I   think of it as trivia you call it history 
tomato well given your history of doing the   trivia I think we should just have the trivia now 
there's some massive punchline coming I can tell   I don't know what it is but okay fine here's 
the trivia Joe hey there's stackers on Joe's   mom's neighbor Duggan did you know that on this 
day in 1956 Heartbreak Hotel by Elvis Presley   became a number one hit the Smash Hit was written 
by the Queen Mother of Nashville Mae Boren Axton   and Tommy Durden Axton played a recording of 
Heartbreak Hotel for Elvis at a disc jockey   convention in Nashville and the rest is history 
so since we're on the topic of hotels I got some   hopefully not heartbreaking Hotel trivia for 
you my question is if you're evaluating hotels   as an investor what is the difference between 
these statistics average daily rate ADR versus   average published rate or APR I'll be back right 
after I asked Joe's mom to celebrate Elvis by   making me a peanut butter and banana sandwich 
while I tee up Heartbreak Hotel on my Walkman Burning Love Joe's mom's neighbor Doug and we are 
commemorating the anniversary of Elvis Presley's   Heartbreak Hotel becoming a number one hit on 
this day in 1956 with some Hotel related trivia   so my question was if you're evaluating hotels as 
an investor what is the difference between these   statistics average daily rate versus average 
published rate in maybe our most thrilling   trivia question yet try to stay awake non-hotel 
investors the average published rate is believe   it or not this is going to be amazing are you 
ready I'm just settle down because I know the   excitement is building it's the amount a hotel 
asks for rooms well the average daily rate are   you ready for this I know you've been waiting 
by your device all day just trying to figure   out what this definition is that is the amount 
they're actually getting paid for the rooms   if you're a hotel investor this is the opposite 
of boring because if those numbers are close   together it means the hotel is in demand and 
if they're far apart you know maybe not so much   maybe I should suggest our writing team retires 
So speaking of retirement Let's help you get there   permanently it's time to learn how to create 
your retirement your way with Veronica McCain and I'm super happy she's here at the card table 
with us Veronica McCain joins us how are you that you're here because we're about to talk if 
this goes according to plan we're about to talk   about all the things that you and I think people 
should talk about during retirement but often kind   of gloss over because they're you know just don't 
get me wrong we're gonna talk about the money too   but it's about more than money but as a way to 
get there Veronica I've always believed that   if you want advice it's helpful to get it from 
somebody who's kind of walked that path right   when I was a financial planner I had been one 
in a long time but when I was the fact that I   worked with 200 families and I'd seen retirement 
over and over and over again should give people a   little bit of comfort that yes you want to do this 
once I've done it a bajillion times but but I had   not at that point ever retired you have actually 
retired tell me about that do you remember the   countdown to your retirement oh yeah definitely 
I mean I remember when I was working you did you   know you do the usual countdown on your calendar 
kind of exiting out the days until it actually   hits and then that when that day comes I think 
you get a overwhelming emotions because then I   realized you know I'm leaving my work and my work 
was not just work for me I actually had you know   work family what did you do by the way I worked 
for the federal government so I was a associate   director over several various departments within 
an agency a very small agency about 300 people but   um because you're a small agency you kind of 
have to sometimes do a lot so oversaw a lot of   different departments yeah so so you have this 
flood of emotions where the emotions about loss   were they about excitement I don't know is it now 
all the above is it purpose yeah I kind of had an   idea sort of what I wanted to do so I kind of knew 
what path I was going to take once every time I   know it's going to go into some type of coaching 
field didn't know exactly what way I was going to   go with it at first I thought maybe more in the 
Executive coaching area but then as I thought   about that more it kind of gave me flashbacks for 
work so then I decided to get into more of the   the retirement because people were asking me so 
many questions about you know what do you do and   what you retire how do you feel your days and that 
kind of thing so um you know as I was approaching   looking into the coaching area I did look at 
retirement coaching and I said oh this will be   an interesting field to pursue because I like to 
motivate people to have people get excited about   their goals and what they want to do in life and 
I like the kind of the financial side as well so   um you know that's why I decided to kind of lean 
more toward the retirement coaching but getting   back to when that final day came yeah I think 
it was when I had the actual retirement you know   sometimes that work to give you a retirement uh 
party and you see everybody and they're like uh   say something say something and then when I got up 
to say something all of a sudden I started feeling   like I was gonna cry yeah I was looking out at 
everybody and I was like wow I'm you know this   is this is really the end um even though I had 
something you know like I said to look forward   to going through I didn't expect that emotion to 
come over me like that but it did and I think a   lot of people experienced that when the final 
day comes of their retirement there is like a   I don't know I mean it's just morbid but there is 
like a death I mean you're it is it is your last   cake right right you've been to see other people's 
cake but all of a sudden you realize this is your   last slice yeah it is that that's exactly what 
it is it's kind of you know that you're gonna   try to keep in contact with the people that 
you work with and try to have some kind of   relationship but it does change it really does 
because you just you know everything usually that   you talk about with people at work is work related 
stuff and over time when you retire that kind of   goes by the wayside with you so do you feel like 
we're too Cavalier about that about that process   about the uh you know the fact that we're going 
to have these emotions we just think oh I'll deal   with it when I get there yeah I think a lot of 
people are just so caught up and I'm going to be   retired I'm going to be tired I can do whatever I 
want it's so exciting or whatever so yeah I think   you don't really feel like that you're going to 
have those type of emotions I think you just feel   like you're going to go to this next chapter 
in your life and it's going to be oh this this   burst of excitement and it is I'm not saying that 
you're not going to have it but I do think there's   also a period of of where you kind of adjust uh 
to you know what you've left behind in your job   and your identity and all that with that and 
then going forward pursuing what what you had   to look forward to in retirement so it's kind 
of a mixed bag those first couple of years you   tell your own story but you also tell stories 
of a few other people in the workbook one is   a woman named Susan Susan seems a little lost 
can you tell our stackers about Susan Susan is   the one who the days and the walls were kind of 
closing in yes yeah yeah she was the one person   in the book that I talk about and the people 
that I talk about the book are actual people   that I coach I just use different names and 
scenarios names change to protect the guilty yeah she was kind of diverse and this is a this 
is a lot like when you're working you're kind of   looking forward to those days that you have off 
where you can kind of do some things that you   want to do but then when you retire and it's every 
day it gets a little daunting if you really don't   have an idea of what you're going to be doing to 
for your days your day-to-day life I think is the   hardest thing that most people struggle with when 
they retire they have some huge aspirations maybe   of traveling or doing that but once they're 
sitting in their house house on a day-to-day   basis and in the you know the walls of you know 
has kind of quiet and not a lot going on you   don't have that routine of going to work anymore 
it's kind of like what do I do on a day-to-day   kind of thing and that's kind of challenging but 
what Veronica separates your workbook from a lot   of the retirement discussions I've seen is that 
you take this day to day and challenge all of us   to think really bigger about our life like I got 
this feeling even in the beginning Pages as you're   telling the story that well let me just quote 
you you wrote a big void needs to be filled in   retirement but it should not be filled just with 
things to keep you busy like this is not just a   March to the Grave this is a whole different 
piece of your life and it shouldn't just be   about rearranging the salt and pepper shaker every 
day or you know figuring out that the dog needs   to go for a walk like you challenge us to think 
a lot bigger about this period exactly it is an   exciting time for you to think bigger about your 
life because it's probably the first time in your   life that you're actually able to do what you want 
to do on your own schedule and hopefully have the   finances to do that so I think it's more than just 
trying to fill your days with just the stuff to do   and I think a lot of times when you first retire 
if you don't really have an idea of what path   you're going to go down once you retire that's 
what you start doing you start trying to just   okay let me do this do this and do that and you're 
not feeling you're still not feeling fulfilled so   I'm hoping in the workbook I give you exercises 
to help you because people struggle with like   what does this mean purpose meaning fulfillment 
or whatever yeah those are I think sometimes big   words that we use but I hopefully going through 
some of the exercises in the book you will be able   to figure that out by going through the exercises 
and then trying to say okay well what do I really   want to look for as far as my next chapter in my 
life of what I want to pursue and what I want to   do more than just these little small things that 
are keeping you busy I get uh coaching from a   group called strategic coach long time stackers 
have heard me talk about them before but we have   we have a workbook similar to yours with these big 
questions about leadership and about coaching but   you do the same thing here with retirement and 
this is not guys this is not a long workbook but   if you're doing this right it may take you months 
to fill this stuff out because I could see myself   Veronica peeling off maybe two pages and really 
because the thought that goes into each page of   this is really the important part well let me give 
everybody some of the tips from the book that you   have early on because you have workbook pieces 
and then you have some tips here's some tips   early on for when you first get to retirement to 
kind of send you on this path while you're filling   out the workbook schedule activities you enjoyed 
during when you took time off from work journal   and reflect on your expectations of yourself as 
a retired person I love that word Expectations by   the way read books and articles listen to podcasts 
and a variety of topics to discover what most   interests you now and volunteer for different 
organizations to discover how you most enjoy   helping people and helping help being out it feels 
to me Veronica like you're challenging people   also to don't be afraid to explore like go go try 
stuff expecting that it might not be a fit exactly   that's exactly right Joe I want people to not be 
kind of Trapped into thinking they have to have   everything planned out to just go out and just do 
things that they find intriguing or they interest   them and then from there they can determine what 
they want to continue to pursue what they don't   want to continue to pursue but don't don't limit 
yourself on what you what you think you should be   doing or how you should be doing it this is a time 
for you to be adventurous and explore at different   Avenues and things that interest you and a lot of 
times that's kind of a hard thing to do for people   because they've lived this kind of structured life 
up to this point with work and all that and to try   to say oh just go out here and do whatever and try 
to figure it out it can be a little intimidating   like whatever what yeah yeah so I'm hoping that 
the exercise in the book gives you clue you know   kind of cute used to okay these are some things 
volunteering doing some other things that you   know she thought about what maybe when you were 
younger and didn't pursue kind of go back to those   times of those thoughts and and try to figure out 
if there's um things that you want to pursue now   so yeah it's it it's funny because I I really 
went through this crisis where I felt like not   just there's a lot of stuff not interest me but 
but I'm like okay I want to get involved in my   community I want to get involved in organization 
but but which ones I don't this could sound very   horrible Veronica but I just didn't I just didn't 
care about any of them and then I realized that it   wasn't about that I need to just go get involved 
and when I found out and ultimately at first it   was the Arthritis Foundation I got involved 
with I found out about juvenile arthritis I   found out about all of these things happening in 
the arthritis Community I got involved in walking   trails around town and I realized how walking 
trails uh not only your Healthy Living but   beautify a city but they're also very inexpensive 
ways for cities to raise property values like I   learned it by exploring exactly what you're saying 
to do in the book exactly that sounds so great Joe   because that's exactly what I'm hoping people 
would do once they start retiring just like you   said you did you just started going out and doing 
things and as you started doing those things you   learned so much and it got your interest even more 
into whatever activities you were pursuing the one   thing that people have to realize when they retire 
you have to be just to be intentional you have to   go out and do it it's not going to come to you and 
a lot of times I think you know when I'm working   uh coaching with clients they're like well I don't 
know I don't know I'm like well you got to go out   and try you can't it's not going to come to you 
you've got to go out there and pursue it and once   you do and when you know you will see oh okay this 
doesn't just me or this doesn't interest me but   you've got to go out there and do it can we talk 
about that what you just said about you kind of   kicking people in the butt and and kicking them 
out the door to go you know like my mom used to   say don't come back inside until that light turns 
on you know we we back when kids went outside   side maybe I'm dating myself there but you end 
almost every chapter of this workbook with who   are going to be your accountability Partners it 
seems to me like accountability partners are a   big piece of this tell me about how you how do you 
find these people Veronica maybe just before you   retire yeah and sometimes say you know who they 
can be they can be trusted friends and and people   that you know I think sometimes there are people 
that are asking you questions about yourself and   are intrigued about you as an individual but you 
do have to find sometimes an accountability person   because in retirement there's nothing pushing 
you to do anything and if you don't sometimes   have somebody that you can hold accountable and 
if you can't find someone within your your network   I would advise you to look for a coach because 
that's because what they can be as well pursue   look um for a retirement coach or a life coach 
or or someone in that field because they can be   your accountability partner but if you're finding 
that you're struggling trying to get stuff done   and you're not really getting out there or you're 
bored and you're restless and you want to not get   some pickup and you're like you definitely need 
to look into getting somebody to be accountable   and help you because I even have coaches that I 
work with and I'm a coach yeah yeah me so it's   just something that just like I said it helps 
you keep you accountable to someone to keep   you motivated to do things I think that kind of 
like you Veronica I just get this feeling that uh   with my coach if I say it out loud to Mary Lou 
it means I gotta go do it like that if somebody   tells you or if you tell your coach then you 
then you have to go do it I want to stick with   this theme of uh friends and family a little bit 
because those might be some of the people you're   bouncing stuff off of but you also say if you're 
having trouble finding your sense of purpose that   friends and family might be a good Outlet yeah 
and that's what I found for me that's why I said I   want you know I knew I wanted to go into coaching 
I wasn't really sure which way I wanted to go and   the reason why I decided to be a retirement coach 
is because friends and stuff are saying you're   good at coaching and talking about this retirement 
stuff or whatever and I'm not like you should   do something with that and that's why I pursue 
becoming a retirement coach but I think oftentimes   friends and family see things within you that you 
don't even see yourself they recognize talents and   things that you have that you're like oh okay 
you're right I do enjoy that you kind of brush   it off and maybe not pay attention to where they 
might be and I think when you're listening to your   friends and family you have a tendency because you 
trust them to listen to their guidance a little   bit maybe more than somebody else that doesn't 
really know you so I say I always lean into   your friends and families to help you if you're 
trying to figure out maybe you know some things   you might want to do they might say well you're 
good at organizing or you're good at accounting   or you're good at this or whatever and they might 
give you some cues to help you figure out where   that next chapter is going to be in your life in 
retirement so definitely look for them for that   I like the fact that you go through a lot of 
this first about about purpose and value and   meaning before you get to the money in chapter 
two because your chapter two then really is   structured around okay now that you know that we 
can focus on spending money where it's important   and saving money where it's not and hopefully I 
have an idea there you start off with some good   tips you talk about traveling a lot of people 
in retirement want to travel uh you say to be   a conscientious traveler what is what does that 
mean yeah everybody always says when they retire   they want to travel and then all of a sudden 
they just start going places and not really   thinking of where they really want to go and why 
they want to go there I kind of had to regroup   because when I first retired I kind of I think 
everybody does that you go through that I just   want to get out and go go go go go go and you're 
just going everywhere but you're spending money   going everywhere and so you want to kind of 
maybe reel that back in it's okay to have that   little brief period of doing that but you want to 
reel that back in and really think about you know   where is it where do I really want to go why do 
I want to go there what do I want to experience   once I get there make sure you're spending your 
travel dollars on things that are value to you   and make yourself more conscious of the type 
of traveling you're doing I know I did a lot   of girlfriend getaway travels you know spy and 
all that and that's great but I really want it   I want to explore the world that's what I really 
want I want bigger trips and so you know you need   to just be conscious of what your goal is as far 
as you're traveling and where you what you want to   see and make sure you're you know you're putting 
your money into that type of travel versus just   doing things yeah yeah what I really like that 
you shine a light on is now that you're retired   you can really lean into off season and one thing 
that's not in your workbook that I love about off   season that Cheryl and I have found because she 
is a somewhat flexible job and I could travel   whenever man off season you get more of the local 
experience because the places aren't full of a   bunch of tourists people are more likely to be 
able to linger and talk to you like off season   is great but to your point you save you save a 
bunch of money there too exactly and I travel   now that's all I do is try to travel off season 
because just like you say as far as you want to   make sure with your dollars that you're spending 
them in a conscientious way as far as when you're   traveling too going off season I feel like those 
retirees the best time for you to travel because   you really get a feel for everything without 
the crowds and like you said the pricing is   better you're able to enjoy it in a different 
way what are some other ways that new retirees   and people that are stackers that maybe are are 
getting close to retirement can think about areas   where they might be able to save money besides 
on discount or off season travel at first I would   just look in your budget overall of what you you 
know you have developed as far as your I think   everybody should be tracking their costs before 
they retire and coming up with a overall budget   um what they think their retirement is going 
to be but some of the things you can look at is   cars you know the insurance and things of that 
nature look at that to see if there's ways you   you can save on that once you retire there's 
also lots of discounts and stuff like we were   talking about off Seasons but also if you kind of 
pursue looking you know if you want to go to Parks   or whatever whatever your um interest might be 
looking for ways you can get discounts on things   of that nature and just be aware of any ways you 
can save money with traveling it's just a lot of   different ways out there too for other things as 
well two big ones I really like that you had uh   if you've got two vehicles you might be able to go 
to one you know think about what you think about   Transportation evaluate your life insurance do 
you need it anymore are you financially solvent   enough where maybe you could get rid of that and 
then a medical one which I really liked was hey   this medical thing is going to get expensive 
stay healthy which also gets you out of the   house I feel like Veronica again you're kicking 
people's butt out of the house I definitely with   the medical and the exercising and now that you've 
got all this time you've done definitely can get   a nice physical routine into your everyday life 
just simple walking I know I take morning walks   every morning and not just for exercise but for 
meditation purposes for me as well but yeah we   all know the medical cost is a big expense when 
you retire and we also know that you get more you   know seditary in your way you're not as active as 
you were where you were working so I do recommend   that you do have a physical fitness routine for 
yourself when you retire to keep yourself healthy   so you can reduce those medical costs because 
a lot of the Medical classes stuff you can   prevent yeah and things that you could be doing to 
prevent you get but you got to start early on your   retirement and start doing things to keep yourself 
healthy when we go to the doctors at a certain   age you're all getting those oh you're close you 
know borderline there's water flush that and stuff   it's time for you to really you know we're at that 
point you can do things within your health to keep   yourself more healthy so yeah yeah definitely I 
look at a hamburger now and my cholesterol goes up   I just look at it I don't know how that medically 
happens but it's crazy that is we all we all know   that feeling with people that own their house 
you have a section of your workbook to go through   Renovations on your house and thinking about 
your housing situation this is the number one   area in our budget our house what are some of 
those key considerations about our housing we   should be thinking about yeah a lot of people 
like especially if they want to stay in their   houses should look in as far as their as I call 
Aging in place in the houses and look how well   their house is going to be able to support them 
once they start aging and look at you know I have   a checklist in there of things that you should 
look at as far as your stairs and your appliances   and just repairs and stuff that you might need 
to do to your house as you start getting older   those kind of costs if you're not prepared for 
them can wreak Haven on your retirement budget   so if your house is where you want to stay then 
you definitely need to look at it like even the   showers grab bars and um stuff yeah steps if 
that's going to work as you get older I know   with my husband he had had accident he couldn't 
go up the steps but it made me start thinking   you know as we age you know we're not able to go 
up the steps how are we going to do it because   we don't have bedroom on our main level so those 
are the things that you need to really think about   if you're going to decide to stay in your house 
so what you need to do and kind of come up with   a plan so it doesn't all hit you at once because 
sometimes it does you know unfortunately it'll be   unexpected like your husband's too I mean there's 
no you know Tuesday everything's fine Wednesday   the game's changed exactly and you need to kind of 
be thinking about that especially like I said if   you plan on stay in your house what your game plan 
is and start trying to figure out how you can get   your house accessible so that as you age it'll 
it'll still suit you yes you talk about moving   and about a lot of people of course think about 
moving when they retire and you also talk about   friendships and I'm glad that you coupled the two 
of those together because one thing I've always   thought and now I know we're here to interview you 
Veronica but I'm going to pontificate for just a   second no problem because I feel like people think 
of moving wait we talked about being too Cavalier   with this whole thing this especially to me is 
an area where people are too Cavalier I'm just   going to move closer to to my kids and what you 
find is that your kids are really busy they got   a bunch of stuff going on you become a full-time 
babysitter but you don't end up interacting with   them in the way that they want and all of 
these close friendships that you developed   over the last 30 40 years I'm a guy who lived for 
a decade in Texarkana I moved away to Detroit for   two years and Veronica we came back and not 
because I have family here in quotes because   all my friends are here I see some of my friends 
as my friends are getting older you know I find   them getting vacation houses that are far away 
and we're we never get to see them anymore and   I feel like this loneliness this isolation that 
we put ourselves into because we think it's great   like we're I feel like we're way too Cavalier 
about that but anyway I will shut up I'm gonna   get off my steps duel what do you think do you do 
you're sad at all Joe that is exactly what people   do they're very Cavalier they have this idea of 
oh I'm gonna live here and it's going to be this   great but they have no special connections there 
yes or I'm gonna go near the grandkids and the   grandkids are getting older the grandkids are 
going to grow up they're not going to be here   forever be little kids they're gonna grow up and 
have their own things or even if they're already   older they you know have their own activities and 
stuff to do so that's why in the in the workbook   I give a checklist you know it just even asked 
them oh yeah we want you close by and I say also   don't let your only connections be your kids your 
grandkids or your kids you know you need to have   other social connections outside of them because 
a lot of people say I'm a little bit closer for   the children and that might not work out so yeah 
it's one of those things that I think everybody   has this idea of how it's going to be yeah this 
grandiose kind of idea so not true so not true   and that's why hopefully when you go through 
the workbook and you look through the checklist   and if you do the exercises that are focused on 
that you'll have a clear perspective of whether   that's a great move for you or not whether it's 
going to work for you and as you retire because   I think it's hard harder once you get there to try 
to move back so oh agree yeah yeah uh you talked   about how I was a retiree now you know you're not 
forced to get up and go to work you don't have to   now lead the charge like you did in your career 
Veronica with your department with your agency   time management then becomes really important 
then for retirees if you're going to get what   value you want out of life so you talk about 
morning routine daytime routine idea week   again accountability Partners but but I 
wanted to end by talking about this time   management system for retirees you call it uh 
postek p-o-s-e-c can you walk us through that   one of the things that people struggle with 
the most and I kind of alluded to that before   is you had a routine when you were going to 
work once you retire that routine is no more   and I find a lot of times with new retirees 
especially that's where they feel the most lost   is there's no structure to the day anymore they're 
kind of and all you know all over the place and   don't know how they can spend time sometimes just 
Milling around not doing anything or whatever so   I want you to I you know sometimes when I tell 
people you know structure they kind of you know   like that's why I'm not working anymore I 
don't know why not I don't like yeah well   easy easy there all right if you want to try to 
put me back at work with destruction my name is this is the whole purpose of retirement I thought 
for me to just kind of Mill around and not do   anything but I thought we find that when people 
do that they get very bored so I just ask that   you just think of your days and more how am I 
going to start my mornings how am I going to   get up in the morning get started and get going 
through the day I think once you get that start   up in the morning of what you're gonna do it kind 
of guides you through the rest of the day but you   do need to think about how am I gonna just get 
my day started you know when you don't have an   alarm clock to get you going every morning so yes 
the workbook is is my retirement my way it's a   workbook for the newly retired it's funny the way 
that you go through goal setting like a 30 year   old would just reminds me the purpose is important 
no matter no matter where you're at in life and uh   the book's available everywhere correct yes it 
is yes well thanks so much Veronica for helping   our stackers get successful with their retirement 
it's funny we talked to a guy Wes moss in Atlanta   about his book what the happiest retirees know 
and it's so funny how it lines up so well like   if you read that and do your workbook you're 
gonna implement this and you're more likely to   be one of those happy retirees so thanks for 
this work no thank you thanks for having me   this is Daryl from Pennsylvania when I'm not busy 
arguing with a four-year-old um stacking Benjamins oh gee I love that we can talk to Veronica 
for over 25 minutes and uh the concept of   asset allocation doesn't even come didn't make it 
doesn't make the cut we're so busy talking about   what about my efficient Frontier it's all going to 
change I mean not the efficient Frontier but just   your emotional landscape I totally agree with her 
you see it all the time you go through this this   metamorphosis when you hit retirement and even get 
close to it that I think most people are way too   wait I guess they're not expecting it's a whole 
different world I mean if you've been successful   in your entire life this is the transition I 
mean just inside the money concept not not all   the other stuff that she was talking about right 
like time and energy and all that sort of stuff   but just the money piece of it transitioning from 
being a good saver your entire life to being a   good spender for the rest of your life in and of 
itself is a difficult change so hard to make that   switch and it's even harder when you don't really 
know what you want yeah you're much more likely to   just hold on to the money and the thing that you 
underestimate is time you don't have forever to   decide what you want to do would you rather have 
Charlie munger's money at uh 90 or his wisdom at   uh or you know what is he a hundred or something 
like that is his you want to trade places with   him basically no nobody would trade places with 
Charlie hunger right now for all the money in the   world well what if Charlie Munger likes what 
he's doing I understand that I'm just saying   like nobody would trade places with him because 
of the time you know because he's 90 something   oh like he's got billions of dollars so it's not 
it's not necessarily always about the money I see   what you mean but so you so to Joe's Point you'd 
end up with a really really happy last two years   of your life yeah that's right well it's our 
it's our friend uh doc G's book about hospice   you know about these people who spent their 
whole life chasing dollar bills or people   that spent zero time chasing dollar bills they 
spend all their time going no I don't need any   money and then they realize if I would have 
had some I could have had better family time   that's a good book hey let's throw out David 
lifeline and tackle some of life's most important   questions our friends at Haven life insurance 
agency Doug they put what you value first I   tell you what uh white breasted nut hatches white 
breasted nut hatches yeah what is that that's a   bird and it's also a realization that you've 
become old because one day you're joy riding   your frat brothers brand new car to Florida when 
all he thought was you were like driving around   the block and you're like we're going to Florida 
and the next day you're getting out your bird   ID app because some Bird shows up outside your 
window what is that at least it's an app and not   a book yeah true but uh and then I also spotted a 
fairly rare for my area a brown merger [Laughter]   both of those are fantastic names for birds and 
I saw them both this morning but you know you   know number one thing OG is it's an app on his 
phone but the thing that makes him proudest is   that it's his most used app on his phone like he 
gets that report from Apple and they're like you   open that Bird app a lot well thank you next 
to his uh walking step counter app and the one   that monitors his blood pressure he's he's also 
the continuous glucose monitor blood pressure   number of steps in the New Balance app 
I don't see a problem with any of this   to order new shoes every six months given his 
history Anything Could Happen hey uh speaking   of anything happening we should uh go ahead and 
throw a Paving Lifeline because the answer that   question Doug was your loved ones in your time 
with a bird app it's why they've made buying   quality term life insurance actually simple more 
time to catch the brown and merger beeping out of   the hole hey stackabenjamins.com havenlife now 
please go there and then fast forward this 15   seconds to get us out of this bird discussion 
their application's simple getting us to cover   his decision their parent company Mass Mutual is 
more than 160 years old so you know that they've   done this before hey uh today we we I I love 
Karen repine our show Runners notes for us this   is uh Jim from Wisconsin calling in and Karen 
says Jim from Wisconsin a real person not Doug thanks we actually have a real Wisconsin 
idea is that was is it wisconsinite or   is it just cheese head do you just 
say cheesehead yeah I think that's   the preferred term it's in their 
state either Constitution hey Jim hey guys Jim here and I actually am from 
Wisconsin I have a question about what   percentage to contribute to my traditional 401K 
versus my Roth 401k I'm five to seven years away   from retirement maxing out my 401k contributions 
I read somewhere that when you have saved six   times your annual income you should move all 
your future contributions to the Roth option   what's the thought process in deciding how much 
to put where I'll be looking for that shirt thanks   Jim thanks for the call thanks by the 
way for proving that you're really from   Wisconsin uh Burton from Minnesota needs to 
learn from Jim he's got to put some Midwest   on that uh yeah if you're listening 
from last week take a note from Jim   it's a good effort Jim I'll give you that 
I mean you made a You made an attempt but [Music] it didn't you don't 
think Jim really talks like that   but that is not a Wisconsin accent oh not 
as good as yours was is that what you're   saying I don't know what you're talking 
about not as good as the interloper yeah   Jim thanks for the call oh gee have you heard 
this uh rule of thumb that he's using six times   nope six times what six times something I've 
never heard that gym next time something I've   never heard it yeah the answer to when should I 
put money in a Roth 401k versus a regular 401K   is largely determined by your ability to pay the 
taxes today you know you think about it if you're   making a hundred grand and you're contributing 
the maximum to your 401k you're putting 22   000 in your 401k this year which if it's pre-tax 
is going to lower your taxable income to 78 000   before your deductions and all that other sort of 
stuff that roughly is going to save you maybe four   or five thousand dollars in federal taxes because 
of that contribution not including any state taxes   if you switch to the Roth side then that deduction 
doesn't appear in your W-2 so you effectively are   going to have a four or five thousand dollar 
additional tax withholding throughout the year   so it's you know back to our discussion at the 
beginning of today your budget is going to be   affected by call it 400 bucks a month if you can 
afford that if you can fold that into your budget   and not go into credit card debt or not have to 
borrow more money for cars or student you know   like if you can deal with it then obviously it's 
better to pay your taxes today well not obviously   but it makes most sense I think to pay your taxes 
today because it's a known thing you know in the   future all of that money becomes tax-free forever 
and there's no there's no government requirements   of withdrawals there's no government requirements 
of those distributions that you have to take once   you are retired it's all in all the roths side 
is way way better but it comes at a cost which   is that 500 bucks a month well and I think I would 
think OG you know he talked about doing the Roth   later in the pretext earlier I would think that 
to pay that cost and to make it even more worth it   because of the fact that you are prepaying the tax 
you need those assets to grow much much much more   so I would think that at the very least flipping 
that around and doing the Roth first makes more   sense like the further you are away do the Roth 
don't don't do pre-tax first and then switch to   Roth I would do Roth as early as I can and switch 
to I mean if I'm choosing one or the other which   you and I know this most people that listen to 
this don't we haven't had this discussion a long   time we don't think either one of these is right 
we think you should be doing some of each because   you don't know what the future is going to hold 
but certainly or Roth first approach versus the   other way around it doesn't make more sense 
if you're thinking about it from the kind of   historical context of your earnings you're going 
to make the least amount of money early in your   career and the most amount of money on the back 
end right like usually that's how it works you   your income continues to increase throughout 
your career so if you have to pay your taxes I   would rather pay them at a lower rate if possible 
versus when I'm 50 and I'm making 200 000 a year   maybe that's the time to use the pre-tax bucket 
because of the fact that most 401ks come with   company matches and those matches are also pre-tax 
I think that if you can start out doing a Roth   early in your career and continue to do it your 
entire career you'll end up with a good enough   balance of Roth 401k and pre-tax because of the 
company matching contributions being pre-tax but   if you're really trying to optimize tax brackets 
and that sort of thing you can kind of manipulate   it as you get toward those higher tax brackets 
the problem with all of this of course is that   we're taking a very big guess at what tax rates 
are the day you withdraw the money how do we   know whether or not this worked pre-tax versus 
Roth well if you put the money in a Roth 401k   and you take it out in the future you're betting 
that today's tax rates are better than tomorrow's   tax rates you're saying I'd rather pay taxes today 
than in the future because the future I think are   going to be higher that's what you're saying and 
the vice versa is also true if you put the money   in pre-tax today you're saying I think I can take 
this money out at a better tax rate in the future   then I can pay it today so I'm you know I'm at 
a high tax bracket today I think I'll be in a   lower tax bracket in the future the only way that 
you know whether or not you're right is after you   know that you're right because we don't have 
the chart that says what are tax rates in 2037   because if we did then we would be able to 
calculate it and say with certainty this is   a better choice based on the circumstances 
all we're saying is I think I might have a   lower tax rate in the future or I think 
tax rates might be higher in the future   the one thing that I can say is that if Congress 
doesn't change any of the rules Roth contributions   Roth growth and earnings are 100 tax-free forever 
so I don't care what the tax rates are in 20 years   from now when I take the money out because it's 
tax-free yeah if I'm gonna lean I'm leaning toward   pay the taxes today be done with it that said 
slots approach too by the way which is to say   you got the cash today pay it today so that you 
don't look at your IRA and go I've got a million   bucks in my IRA it's like no you don't you have 
500 000 in your IRA because half of it is for the   government Doug I think this is really important 
uh stuff for you I mean given your history with   taxes and I have no history with taxes so I'm 
good well maybe that's the point you gotta earn   something to pay taxes maybe that's the point big 
thanks to you Jim for the call if you would like   to call and ask a question you know what we will 
send you a Haven life stacking Benjamin's greatest   money show on earth circus t-shirt and Jim from 
Wisconsin really from Wisconsin is getting one   cent his way slash voicemail gets you the shirt 
and we're happy very happy to send it to Jim as   I stare ready Doug as I say that I don't know why 
I'm staring at Doug as I said Jim well he sounds   hideous what are you talking about well it's 
just I mean it's like a fiction just thing right   this gym it's like the the State Farm guy that's 
who you're talking to I know I think it's Jim I   think somebody's having a tough day there OG well 
before we say goodbye today time for our community   calendar man we've got a great week over on the 
stacking deed show where Crystal Hammond and Alan   Corey dive into real estate Alex e Edwards is 
a guy who helps uh has helped a lot of people   in the southeast part of the United States 
get out of intergenerational poverty through   real estate teaching some real estate helps them 
learn how to buy houses how to learn to do it in   a responsible way he's going to be their guest on 
tomorrow's show over on stacking Deeds of course   our other sisters show the earninginvest podcast 
doc G always has guests who dive deep into Allah   into some some topic that is uh always exciting 
and a fantastic and a fantastic discussion he   has a friend of ours Fritz from the retirement 
Manifesto coming up on Thursday Fritz is a guy   who retired young documented his retirement an OG 
to Veronica's Point earlier in today's show Fritz   has really done it right this guy is so busy but 
now doing that second career I think he serves on   a couple of boards he Volunteers in the city of 
Asheville in a couple different capacities one   is working with animals he's always out in his 
wood shop this guy has so much going on he's not   sitting there wondering what he's going to do 
so if you're interested more in in retirement   Fritz will be over on earn invest of course here 
on Wednesday the draft the NFL draft is Thursday   so we've got Rob Welch he and a former NFL player 
wrote a book together about going pro with your   money we're going to talk Wednesday about no 
matter what you're trying to go pro in how do the   pros treat their money A lot of pro players about 
to get a big payday on Thursday and as we already   know a lot of them don't do the right thing with 
that sudden money OG it goes in the wrong place   that's what's coming up this week thanks so much 
for hanging out with us today if you're somebody   that's my kind of person and will leave a 
review for people that they only know via   podcast or maybe you've hung out with this 
on one of our social media channels please   leave a review of the show that helps us so 
much helps new stackers realize what they're   getting into a little different take on money 
than maybe some of the other shows out there   thanks to everybody who's done that Mom puts those 
on her refrigerator if you're not here though to   hang out with us on social media you're not here 
just for Doug's trivia you're here because of the   fact that you're worried about the economy you're 
worried about your money and and how it works   together and as a lot of those fears begin to ramp 
up for people you might be feeling anxious to make   some moves in your finances what I'd like you 
to do instead is check out this free guide that   OG and his team have put together that'll help you 
plan more and panic less no matter what the market   does it has some great insights on what you should 
be doing and smart questions to ask yourself so   that you make financial decisions your future self 
will thank you for head to stackybenjamins.com   guide that's stackybenjamins.com guide to get that 
free guide from OG all right that is what's going   on in the community man a lot of takeaways today 
but Doug what are the top three man well Joe first   take some advice from our guest Veronica McCain 
and create your own unique roadmap to retirement   second take a memo from our Tick Tock minute 
to up your vocab game and Excel above the   competition I'm sure you'll get promoted in no 
time but the big lesson turns out five times in   a row is the limit to singing Heartbreak Hotel 
at the top of your lungs after that Joe's mom   starts to get irritable and make threats now that 
I think about it probably was the hip thrusting thanks to Veronica McCain for joining us 
today you can find her book my retirement   my way a workbook for the newly retired to 
create meaning set goals and find happiness   wherever finer books are sold we'll also include 
links in our show notes at stackingbenjamins.com this show is the property of SB podcasts LLC 
copyright 2023 and is created by Joe salsi   High our producer is Karen rebein this show was 
written by Lacey Langford who's also the host of   the military money show with help from me Joe and 
Doc G from the earn an invest podcast Kevin Bailey   helps us take a deeper dive into all the topics 
covered on each episode in our newsletter called   the 201 you'll find the 4-1-1 on all things money 
at the 201 just visit stackingbenjamins.com 201   Tina eichenberg makes the video version of this 
show Once We bottle up all this goodness we ship   it to our engineer the amazing Steve Stewart Steve 
helps the rest of our team sound nearly as good as   I do right now want to chat with friends about the 
show later mom's friend Gertrude and Kate Younkin   are our social media coordinators and Gertrude is 
the room mother in our Facebook group called the   basement so say hello when you see us posting 
online to join all the basement fun with other   stackers type stackingbenjamins.com basement 
not only should you not take advice from these   nerds don't take advice from people you don't 
know this show is for entertainment purposes   only before making any financial decisions 
speak with a real financial advisor I'm Joe's   mom's neighbor Doug and we'll see you next time 
back here at the stacking Benjamin show foreign [Music] the after show this is uh the part of 
the show that doesn't exist if you're   new here what happens in the after show stays 
in the after show getting back to your clothes   I think that singing Heartbreak Hotel at the 
top of your lungs just you know given your   history might not be might not be great well 
since my baby left I find a new place to dwell   they're down at the end the lonely streets 
called speaking of speaking of Doug's history   um there's unfortunately OG a doctor 
out there who has violated HIPAA rules   and um got us audio from Doug's latest therapy 
session and uh well I thought that as long as   they broke the rule we didn't we should probably 
play it look at the look OG can't wait for this   he is so excited about that well I think 
this is bad I think doctor shouldn't be   doing this but as long as they have let's no 
this is this is Doug's latest therapy session you what well you had waffles for dinner and you had   waffles for breakfast so we're 
gonna eat something else oh I oh I don't know sounds like you're obsessed now 
you're really crying pretty good there now   everybody is thinking about waffles like that 
brain worm is in there and you're going to   be thinking about it now for the rest of the 
day well I I think I I mean I I really think   that uh you shouldn't be thinking about waffles 
given your history you're begging for me to ask   I've resisted this whole time I'm not gonna 
ask I'm not gonna ask why you keep harping   on my history so OG and I saw this uh this video 
that these guys said that that if you really just   want to mess with somebody just end as many 
sentences as possible when you talk to them   with given your history just say it over and over 
and see what happens and watch them watch Doug   unravel the entire show they melt it is surgically 
effective like it has just been driving me crazy   I said it's Alyssa I don't even 
remember what it was about but I just   you know she was like brushing her 
teeth or something and said well you   know given your history and she's 
like what is that supposed to mean you know just totally like around everything 
to a halt just like you said yeah I think that   is a bad marital move I said this will work 
well with Doug I would not yeah I would not   do that right before bed because you are not 
sleeping that night stackers you may or may   not want to try that your results May Vary but 
ours ours I thought today were pretty good Doug   didn't know what the hell was going on 
actually now that I know it's actually   more impressive that you found a way to 
dodge my question the whole the whole   episode you know given your history of course 
yeah I'm not not enjoying your company anymore

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Member retirement process

it's time for a fresh take on retirement at Catholic super we don't believe people retire it isn't about bowing out stepping down or pulling back retirement is a time of promise and possibility a chance to re-fire rewire renew so what might your retirement look like whether it's years away or just around the corner it's never too early or too late to start planning your next chapter start by asking yourself what type of Lifestyle do you want to have and how much income will you need to support it will your superb be enough where does the age pension fit in how will you invest your money in retirement and how will you transition your money there's a lot to consider but you're not alone a Catholic super we've helped thousands of Australians retire with confidence make a start today use our online retirement income calculator to see how you're tracking so far explore our knowledge Hub to learn more about retirement what's involved and how to prepare book an appointment with one of our financial advisors an initial appointment is available at no extra charge simply complete our online booking form or call us directly on 1-800-065-753 and let's start writing your next chapter foreign

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Critical Retirement Planning Ages: 55, 62, 70, & More

When you're planning for retirement, your age is important, and that's because as you reach certain milestones, you may qualify for certain benefits, or you might need to take certain actions to avoid penalties. So that's what we're going to talk about in the next couple of minutes here. We'll go over these critical retirement dates so that you can get them in your planner or at least know what to expect as you move toward retirement. Two things happen at age 50. The first is you get to make catch up contributions. So if you are maximizing your contributions to your retirement accounts like a 401K or an IRA, you get the ability to put in even more money each year, which helps you boost your retirement savings as you near the end of your career. There's a separate benefit that might apply to certain public safety workers, so for example, if you're a firefighter employed by the federal government, you might have the opportunity to take withdrawals from retirement accounts as early as age 50 without any early withdrawal penalty from the IRS.

So make sure that you triple check the requirements, and of course, the longer you can keep your money saved, that might help you make it last longer. At age 55, the ability to take those early distributions from a workplace retirement plan. Opens up, and to meet that criteria, you have to terminate your job at age 55 or later and take the funds out of that job's retirement plan, like the 401k, for example. Again, this is something that you want to check carefully with your tax advisor, and this is probably a good time to give you a friendly reminder that this is just one short video, and it's not individualized advice.

You really do need to speak with an expert who is familiar with your situation, and they can help you make sure that you avoid any problems and potentially identify some opportunities for you. By the way, if you check the description below, you can look at some free retirement planning resources that I've put together, and I think you'll find useful.

At age 59 and a half, you have the ability to take withdrawals from retirement accounts without that early withdrawal penalty, so it doesn't just have to be a workplace account after you terminate employment, it can be your IRA, your 401K, deferred annuities, and other types of accounts. So you get a lot of flexibility once you reach age 59 and a half. Age 62 is the time when most people can start taking Social Security benefits, and that's what's called Early claiming, and if you do that, you get a reduced Social Security benefit, so you get less each month. This can be a big deal, so it can be helpful to get that income early, but you get a smaller monthly income amount, for example, if your full retirement age is 66 and a half, and your benefit is $1,000, or for every $1,000 of benefit, you're going to see a reduction of 27.5%, or to put that in dollar terms, you would get $725 each month instead of $1,000 each month, and that reduction lasts for the rest of your life and it could impact a spouse if they take over your benefit as a survivor, so you want to think carefully before you claim early, sometimes it makes sense, but you really want to do it mindfully.

Now to age 63, so your Medicare premiums are based on your income from two years back, so when you're 63 years old, you're within two years of 65, which is when you typically begin Medicare. That means if you have any way to control your income or if you're making Roth conversions to take some income intentionally, for example, at age 63, you want to get extra careful about how much income you're taking because you might bump up those Medicare premiums, it might make sense for you to do that, but you want to know what you're getting into. And when you reach age 65, that's when it's time to enroll in Medicare, and it's critical to enroll on time, because if you enroll late, you may face a late enrollment penalty that's going to last for the rest of your life, so that can be an unnecessary cost.

It's smart to start the process three months before you turn age 65, and that gets you some time to get your ducks in a row. Now, if you are still working and you get healthcare from your employer, it's really important to speak with your employer's benefits department and with the insurance company, just to find out what you need to do, if anything, and to set your expectations for when you might leave that job, you want to triple check this, especially if you're still working and you're covered under your employer's plan. Most people reach their Social Security full retirement age sometime around 66 to 67, and once you reach for retirement age, that means you don't have a reduction in your benefits and it also means that if you are earning money through work, which isn't exactly retired, but maybe you are still earning income, those earnings would not cause the deduction from your monthly Social Security income, so this is an important milestone for you to reach…

If Social Security is a big part of your income. When you delay taking Social Security income after your full retirement age, you get a bigger benefit, so the benefit increases by about 8% per year, it happens monthly, so you don't have to wait for a full calendar year, and then any future increases like cost of living adjustments go off of that higher amount, so it's nice to have a bigger income, and of course, the longer you expect to live, the more helpful that tends to be in many cases. Although there are other factors at play. And then when you reach age 70, those delayed retirement credits stop building up, so it doesn't make sense to wait any longer to take your benefits. Age 70 and a half is a weird one, because it used to be when you had to start your required minimum distributions or RMDs, but they changed the law, except for they left these qualified charitable distributions or QCDs in there at age 70 and a half.

It doesn't make any sense, but that's the way it is. So if you do want to make those QCDs, you can start doing that even before your RMDs if it makes sense, so please forgive all the acronyms, we will explain all these, but just be aware that you can begin doing those qualified charitable distributions at age 70 and a half, these are distributions that you make directly from a retirement account to the qualifying charity, and when you do it that way, you can exclude that from your income, which can be helpful. Age 72 is when most people these days have to start taking their required minimum distributions or RMDs. This is where the IRS says you cannot leave your money in a retirement account, tax sheltered forever, you have to start taking some distributions and generating a tax liability, so they start out relatively small and build up over time. Technically, you have until April 1st of the year following the year when you turn 72, so that's an option, if you want to wait till then or you can just do it in that same year, it's up to you, but the most important thing to know might be that there is a very steep penalty for missing these required minimum distributions, if you don't take one in a given year, the penalty is 50% of the amount that you were supposed to take…

So if you were supposed to take 10,000, it's a 5,000 penalty. That's a big one. So far, we've talked about government programs and tax rules, but there might be some other programs that you qualify for, maybe a pension from an employer, for example, and those might have totally different numbers that apply to them, so check with your plan administrator, read through the documents and you can get all of those details. Now, I hope you've found this helpful. If you did, please leave a quick thumbs up, thanks for watching, and take care..

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Retirement Planning for Singles

Retirement is a big deal for anybody, and that's especially true for single people who may be retiring with just one income and who may have built up a nest egg solely off their own savings. So, we know that single people can and do retire comfortably. In fact, one quarter of people over age 60 are living alone in their household, and that number is slightly higher for women, and that's, of course, due to women's longevity. So what we're going to talk about here is retirement for single people. First, we'll go over some averages to give you a rough idea of what the landscape looks like for single people, then we'll get into how much money you might need as you go into retirement, then we'll talk about some tips that can help improve the chances of retiring comfortably.

Let's start with the average retirement income for single people. So it's $42,000 on average for an individual in retirement, and that comes from the US Census Bureau. The median is a little bit lower at $27,000. So a friendly reminder of how this works: The median is the middle, so if you line up all of the survey results, people telling you what their income is, for example, that arrow points at the middle observation, which would give us the median down at the bottom. But if we go to the average, that is going to get skewed by, in this case, wealthy people, for example, they have a very high income. When it comes to Social Security, the average is about $1,500 a month or $18,000 per year.Your level depends, of course on your earnings, if you had higher earnings during your working years, then you tend to potentially have a bigger benefit than that, and it could be lower, and then of course, your claiming age is also an important thing.

If you claim early at age 62, you get a reduced benefit. That's likely to bring down the amount you get. Next, we have pensions, some people get an income from a job they worked at. That might be in the public sector as a teacher, a firefighter, that sort of thing, or even in the private sector, you could have a pension from your job, and those incomes just are all over the board, it could be high, it could be low, but these are different sources of income that people might have in retirement. This is just a friendly reminder that this is just one video and it may cover some interesting information, but it's not specific to you so I hope you'll do a lot more research, hopefully check with some professionals and get some individualized advice, and that way you can improve the chances of things going well for you. So now let's talk about how much you might need as you go into retirement. Unfortunately, there's no single answer on what you need because it depends. So the first step is to figure out what sort of income you're going to need, and I've got other videos on that, I'll put links in the description to get you some more information, but you can look at replacing a portion of your income, or you can just say, I want X amount of dollars per year, or you can go with other approaches, but first we need to know how much income you are hoping for.

Next, we tally up your income sources, so that might be some guaranteed income that comes in from Social Security, for example, or from your pension at your workplace, but that forms a base of income and that might or might not cover what you need. But it gives us a base and then if we need to fill that in, we can supplement withdrawals from your retirement savings, so that might be out of your IRA, your 401, 403, these accounts that you have built up over time can provide supplemental income to help fill the gap between that guaranteed income you get and the amount you actually want to spend. There are a number of ways to figure out how much to withdraw and to set up different strategies, there might be bucking strategies, there might be withdrawal strategies like the 4% rule. Or if you don't like that, make it the 3% rule to be safer, or take out more if you think that's not enough and you're selling yourself short.

Ultimately, there are a number of ways to approach this, so you just pick one that works well for you, and again, I can point you to some resources on figuring that out. And finally, you will want to look at taxes and inflation, so during your retirement years, it's reasonable to assume that prices may increase on many of the things you buy, so we want your income to be able to increase as well, Social Security typically does rise, but maybe not at the same rate as the things you're buying, so your withdrawals may need to account for that. Plus we've got taxes. You typically will owe taxes if you're taking distributions or you're taking withdrawals from pre tax retirement accounts. If you have a pension that might be taxable as well. We just want to look at all of these things and figure out what your ultimate money left over to spend each month is going to be.

For an over simplified example, let's just look at Jane Doe. She's 60 years old, she's single, she wants to retire in about five years, she makes about 80,000 a year and has 700,000. A lot of people retire with less than that, a lot of people retire with more. I'm going to bring up my financial planning software that I use with clients, and we'll just go over kind of why there's no single answer on how much you need. Now, if you can tell me exactly how long you'll live and what the markets will do and what inflation will look like, we can tell you exactly what you'll need. But there are a lot of unknowns, so a lot of times we start with a probability of success and I'll go over what that means, and then we look at little tweaks and how different changes might affect that probability of success, so working an extra year might bring her from…

Let's say 75% to 84% likely to succeed. Now, success and failure are pretty complicated. They don't necessarily mean that you go completely broke, but you may need to make some adjustments, so let's talk about what does the success mean? We, again, cannot predict the future, so we say, Let's look back and say, You get dealt 1,000 hands. You're playing a game of cards and you get 1,000 hands. Some of those are good and some of those are bad, so the very good ones tend to be up here, near the top. And you actually end up with a lot of money left over.

Some of them are not as good and you end up running out of money early. The median is, again, that one that's right in the middle when we line them up in order for best to worst. And so you might say, you're probably not going to get the best, you're probably not going to get the worst, although anything is possible. So that's how we go with this likelihood of success. Now, maybe she doesn't want to work an extra year, so we can look at different ways of accomplishing things here.

By the way, we've built in some long term care in case she does get sick and needs that at the end of life. She's looking to spend about 4,000 a month, that's after some health care costs that are going to inflate each year, and she's saving a decent amount in some 401K and taxable accounts. Let's say she goes ahead and maxes out that Roth, is it going to make a big difference? Not really, 'cause she only has five years left. So what we do here is we start looking at all of these different variables and playing with the pieces and figuring out what does it take to make her successful at her retirement, or at least successful enough that she's comfortable making that transition.

So here are some tips to improve your chances. The first is to plan for long term care. If you're living on your own, you don't have somebody in the house who can help you do things, and it's arguable if even a couple is capable of managing this on their own… I mean, if you think about a couple, is one of the people physically able to move the other person around and do they have the skills to provide health care, and the time and the energy, frankly, to provide all that type of care? So it's important for everybody, but it's especially important for single people to plan for this care.

So you can look at getting insurance, you can look at budgeting for some costs, like we showed you in the software, you might want to budget for a much bigger number if you go into memory care or something like that with 24 hour supervision, it can get really expensive quickly. And you can explore different living arrangements, maybe doing things with friends or certain communities that might be a good fit for you.

Next is to avoid leaving money on the table so if you were previously married and your spouse passed away or you've been divorced, you may be eligible for benefits. That's maybe from Social Security, you can potentially get a survivor's benefit, or if you were married for at least 10 years and you've been divorced, you can potentially get spousal benefits on your ex spouse's work record. It's just important to explore all of these to see if there are any resources available for you. Next is to make a plan, and I am of course biased as a financial planner, but I think it is really helpful to go through the process, and the main goal isn't to get a big document that tells you what your financial plan is.

Instead, really, the benefit is going through that process and learning a lot about your finances as you do it, and in that process, you get an idea of what the risks are, how you're doing, you might get confidence and clarity on whether or not you can go ahead and retire, if you should do certain things or not. It's just a very valuable process for a lot of people, but I'll leave that for you to decide. If you found this video helpful, please leave a quick thumbs up. That gives me feedback that this is something you might enjoy more of, so thanks for watching and take care..

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Retirement Planning for Singles

Summary of Video Transcript

Navigating Retirement for Single Individuals

Retirement is a significant transition, more so for single individuals who rely on their sole savings and a single income stream. Understanding the intricacies of retiring single provides clarity on the planning process and the necessary adjustments to ensure a comfortable retirement.

Understanding the Landscape for Single Retirees

Statistics reveal that one in four individuals over age 60 live alone, a figure slightly higher for women due to their longer life expectancy. For single individuals, the average retirement income is around $42,000 annually, as reported by the US Census Bureau, with the median income being around $27,000. Social Security, a primary source of income for many retirees, averages around $1,500 monthly or $18,000 annually. Other income sources can include pensions, which vary significantly depending on the job and sector.

Choosing the Right Gold IRA Rollover Company

As you evaluate your retirement strategy, diversifying your investment options can prove beneficial. One approach is to choose a gold IRA rollover company. By doing so, you add a layer of security to your portfolio and potentially increase your returns. Precious metals like gold often act as a hedge against economic downturns, making it a strategic choice for retirement planning. When you choose a gold IRA rollover company, ensure it aligns with your retirement goals and has a solid reputation in the market.

Planning Your Retirement Finances

To establish a comfortable retirement, understanding your expected expenses and estimating your required income is crucial. By aligning your guaranteed income (from sources like Social Security and pensions) with your expected expenses, you can identify any potential gaps. To bridge these gaps, withdrawals from retirement savings, such as IRAs, 401ks, or 403s, can supplement your income. Strategies, including the 4% rule, can guide withdrawal amounts, while also considering inflation and taxation impacts.

A Look at Success in Retirement

Using financial planning software can aid in evaluating the potential success of your retirement strategy. By analyzing various scenarios, you can identify the best strategies to ensure a comfortable retirement. For example, analyzing a hypothetical case of a 60-year-old single individual, Jane Doe, who intends to retire in five years, can provide insights into the potential success rates of various strategies.

Key Takeaways for a Successful Retirement

  1. Planning for Long-Term Care: Especially for single individuals, planning for potential long-term care is essential. This can involve getting insurance, setting aside funds, or exploring communal living options.
  2. Maximizing Benefits: Former spouses or deceased spouses may offer additional benefits through Social Security or spousal benefits. It's vital to explore all potential income streams.
  3. Structured Financial Planning: Undertaking the financial planning process offers clarity, reduces risks, and boosts confidence about retirement readiness.

Remember, this video provides general insights. For personalized advice tailored to your situation, it's beneficial to consult with professionals and undertake thorough research. If this content was valuable, consider providing feedback for more tailored insights in the future.

 

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