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Retirement Starts Today Radio

Benjamin Brandt wants to teach you how to retire! Listen in as Benjamin Brandt CFP©, RICP© answers the questions on the minds of the modern retiree, often joined by the top experts in the retirement planning industry. Ask Benjamin a question here: https://retirementstartstodayradio.com/ask-a-question/
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Now displaying: June, 2020
Jun 29, 2020

Retirement Manifesto blogger, Fritz Gilbert joins me today. Fritz was actually my very first guest on the show and is now my first repeat guest. I’m excited to have him join me again since he has recently retired. Fritz shares insight from his research in writing his blog and book but also from his first-hand knowledge of retirement. Listen in to our conversation as we discuss hidden challenges of retirement, how it feels to be newly retired, and how to get the most bang for your buck in retirement planning. 

Outline of This Episode

  • [2:22] The first cup of coffee you drink after you retire is the best cup of your life
  • [5:25] Even if you don’t plan to retire you should still save for retirement
  • [9:48] Books can offer a lot of knowledge
  • [13:28] Is 2020 the golden era of Roth Conversions?
  • [16:27] The hidden challenges question
  • [20:21] Embrace your passion to create your ideal retirement

The first cup of coffee is the best cup of coffee of your entire life 

In Fritz’s book he mentions that the first cup of coffee he drank the day after he retired was the best cup of coffee he ever had in his life. Fritz was obsessed with trying to figure out what retirement would be like, but mentions that it is something that you can never understand until you actually do it. He compares it to marriage or having a child. One metaphor he uses is that it’s like having a locked door in front of you your whole life and then you are finally given the key. 

Did he always think about retirement?

At 38 years old, I can’t picture myself retired. So I ask Fritz, did he always picture retirement? His response is that he didn’t really begin to think about retirement until his mid 40’s and then when he was in his early 50’s he began to get serious about retirement planning. When he started running the numbers he realized that retirement was a possibility sooner rather than later. He realized he could get out of the rat race early and enjoy more out of life. He thinks it is important to do some serious planning when you are within 5 years of retiring. 

One thing that is important to consider is that many people get pushed into early retirement, so whether you are planning for it or not, it is important to be prepared financially. We both agree that whether you are thinking about retirement or you plan to work forever, it is important to save for it.

The hidden challenges of retirement

One of the chapters of his book discusses the hidden challenges of retirement. I was surprised that market volatility was not one of the challenges that he mentioned in that chapter. His reasoning is that market volatility is not a hidden challenge. It is to be expected and planned for. If you create a sound financial plan then market volatility won’t worry you. The hidden challenges that he mentions are not financial and not as widely communicated as the financial aspects of retirement. Listen in to hear what some of those hidden challenges are. 

Embrace your passion to create your ideal retirement

In his book, Fritz states that finding a focus or passion in retirement is so important. But what should someone do if they don’t have a passion? How should they go about finding their passion? Should they do that before retirement or can they wait until after they have already retired? Fritz answers that finding your passion is a matter of being curious and maintaining a willingness to learn. Discover how Fritz found the passion he never knew he had and how you can find your passion to create an ideal retirement by listening to this chat.

Resources & People Mentioned

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Jun 22, 2020

I’ve got an exciting episode planned for you today. This episode will focus solely on listener questions but as an added twist I’ve asked my friend Grant Bledsoe over at Grow Money Business Podcast to join me in answering these questions. I think you’ll benefit from Grant’s expertise as a Registered Investment Advisor and enjoy hearing his perspective as he helps me answer your questions. Listen in to hear our two points of view about rebalancing in difficult markets, quarterly tax payments, and choosing between a lump sum or monthly payments. 

Outline of This Episode

  • [1:22] How to rebalance your portfolio when dealing with difficult markets
  • [7:00] What is the classification of REITs?
  • [15:30] After a Roth conversion should you send in quarterly tax payments?
  • [17:55] A $200,000 lump sum or $1500 a month payments for life?

How to rebalance your portfolio when dealing with difficult markets

With all of the market turmoil over the past few months, many of us are left scratching our heads when the time comes to rebalance. How are we supposed to rebalance when the stock market is so volatile?

Grant sees 2 sides to this thought equation. One side contains the math and the other part has the psychology. The math side will tell you that you are better off investing all your cash at once. But, psychologically, not many of us are prepared to jump all in today’s turbulent market. Grant suggests waiting or using the dollar cost average to divide up the cash over the next year or two. He stresses that you should choose a reasonable method and stick with it. Consistency is key, especially in times of uncertainty. Listen in to hear my response to this timely question. 

How should REITs be classified?

Do you have REITs in your portfolio? One listener wonders whether they should be classified as a stock or a bond. While Grant thinks they act more like a stock, I tend to put them in the same category as bonds, but really, they are neither. Most REIT funds will invest in big commercial real estate, such as hospitals and shopping malls. They behave in their own way since the returns are driven by rents, interest rates, and appreciation. Having REITs in your ‘other’ category is one way to diversify your portfolio. Discover the risks of owning REITs as well as the difference between traded and non traded REITs on this episode of Retirement Starts Today. 

Should you send in quarterly tax payments when doing a Roth conversion early in the year?

One listener asks if you do a Roth conversion early in the year should you be making quarterly tax payments to the IRS? This is a great question to ask your tax professional. If you do your own taxes then the IRS website is the resource to help you with the logistics. Basically, if you have 90-100% of the payments prepaid you won’t incur a penalty. This is why it is important to understand what your tax burden will be. 

A $200,000 lump sum or $1500 a month payments for life? 

To people that love math problems, deciding whether to take a lump-sum or monthly payments may seem as easy as plugging in the numbers. But there are more factors to consider beyond the math. You should examine what your retirement plan looks like. Will you be receiving Social Security payments? Think about your risk tolerance and your longevity as well. Grant helps me answer this common listener question, find out his take on it by pressing play.

Connect with Grant Bledsoe

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Jun 15, 2020

Can you imagine this nightmare? You’re newly retired and then a global pandemic comes along and threatens financial markets all over the world leaving you bankrupt in only two weeks. Listen to this cautionary tale in the retirement headlines segment of our show today. But what is more important than hearing the frightening scenario is learning what you can do to prevent yourself from taking this kind of risk. 

Outline of This Episode

  • [3:22] How did one man go from retired to bankrupt in just 2 weeks?
  • [7:40] How to protect yourself from risk
  • [9:15] Few use the CARES Act to tap into their retirement savings
  • [11:50] Should you cover non-discretionary expenses with Social Security or an annuity?

Retired to bankrupt in 2 weeks

How could someone go from retired to bankrupt in two weeks? This Wall Street Journal article notes that one investor reentered the stock market after the 2008 financial crisis by investing solely in leveraged exchange-traded notes (ETN’s). ETN’s are similar to ETF’s but they don’t own the assets they track. The investor’s ETN’s were earning 18% a year until the bottom dropped out. It’s important to remember that highly profitable investments come with added risk. 

How to protect yourself from risk

Hearing a story like that may cause you to think twice about risk, but to stay on top of inflation we have to take on some risk. Instead of running from risk, we must understand it. If you want to maintain your purchasing power your money has to grow beyond inflation. You can do this safely by creating a war chest of cash and bonds that has several years’ worth of income. Your war chest will allow you to ride out the market dips so that your portfolio has time to recover. Listen in to learn what else you can do to protect yourself from risk. 

Few use the CARES Act to tap into their retirement savings

If you’ve listened to this show in the past few months you have heard the different retirement benefits of the CARES Act. One of the provisions waives RMD’s for 2020. Another allows individuals younger than 59.5 to access their retirement portfolio without penalty. According to this Investment News article, few people have taken advantage of this aspect of the new law. Even those who did dip into their retirement savings didn’t typically take too much out. This leaves me cautiously optimistic about people’s retirement plans. 

Should you cover non-discretionary expenses with your guaranteed income?

Mike has an interesting question. He asks if his essential expenses should be covered by Social Security or other guaranteed income. I think it’s a smart idea to pair non-discretionary expenses with your known income. Although I like Mike’s idea, it’s not what I do. 

I create a budget based on expenses then subtract guaranteed income. The deficit is what needs to be covered by the retirement portfolio. Find out more by listening to this episode of Retirement Starts Today. 

Resources & People Mentioned

Connect with Benjamin Brandt

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Jun 8, 2020

Do you know what you would do if your employer offered you an early retirement package? Before you rush into an answer, I have 4 questions for you to consider. Given the present economic climate, this is an important consideration. On this episode, we’ll also talk about survivorship bias and what you can learn from it. Then I answer a listener question about alternative minimum tax and donor-advised funds. Lastly, we’ll discuss 3 different retirement headlines. Don’t miss out if you have been considering taking an early retirement package from your employer. 

Outline of This Episode

  • [1:32] Survivorship bias
  • [4:21] AMT’s and DAV’s
  • [6:45] Unlikely to be a social security boost in 2021
  • [8:53] Retirement savers stayed calm during the market hiccup
  • [11:05] Delta airlines is offering a buyout package
  • [14:12] What is the appropriate amount of time to give when contemplating retirement?

What can we learn from survivorship bias?

Survivorship bias can often leave us dead wrong. We often look to the successes to try and learn how to succeed ourselves. This is often because we don’t see the failures. But in failure is where we can find the lessons to be learned. For every Amazon or Apple, there are hundreds of potential ideas that didn’t pan out. Next time you plan for success look to the failures to guide you. Listen in to hear an interesting story of how to learn from failure.

Will a donor-advised fund be excluded from alternative minimum tax calculations?

I don’t often get questions about alternative minimum tax (AMT) so I am excited to share some insight on this one. According to the American Endowment Foundation, there are 5 primary tax benefits to becoming a donor with a donor-advised fund (DAF).

  1. If you are subject to AMT your contribution to a DAF will reduce the AMT impact.
  2. You will receive an immediate income tax deduction in the year you contribute to your DAF. The deduction for a cash donation is up to 60% of AGI. The deduction for securities or other appreciated assets is up to 30% of AGI.
  3. You will not incur any capital gains tax on gifts of appreciated assets.
  4. Your DAF will not be subject to estate taxes.
  5. Your investments in a DAF can appreciate tax-free.

Delta is offering buyout packages to its employees

I recently read an article from CNBC about employee buyouts. Delta airlines is offering a buyout package to its employees since under the conditions of their federal aid package they cannot layoff or cut the pay of any workers until September 30. Those who qualify for early retirement would receive up to 26 weeks of severance, 2 years of medical coverage, and a year of travel benefits. Given the current economic climate, Delta may not be the only large company we see offering buyouts in the coming months. 

Tips to consider if you are offered an early retirement package

Have you considered what you would do if your employer offered you an early retirement package? I chose to highlight the article about Delta’s buyouts to get you to think a bit about what to do if you are offered early retirement. Here are 4 questions to ask yourself if your job offers you an early retirement package. 

  1. Why is your employer is offering this package? This early retirement package may be a sign that your employer is in financial distress. If you don’t accept the buyout, you may still be laid off later on and the terms may not be as good. 
  2. Where will your income come from? While periods of 4-26 weeks like the Delta offers may sound like a long time, they will go by quickly. You may have the opportunity to withdraw from your retirement funds, but doing so earlier than projected may deplete your savings faster than you think. 
  3. Where will you get your health insurance? Early-retirement packages typically allow workers to keep their health insurance for a period after leaving the company, but after that, those people are on their own unless they have reached age 65 and can enroll in Medicare. 
  4. Is there a good reason to stay put? Your pension may be based on the average of your last three years of income. If you expect that number to rise, you may have a good reason to reject the offer. 

Listen in to hear what you should consider when offered an early retirement package and to learn why you might not want to give too much notice of your retirement. 

Resources & People Mentioned

Connect with Benjamin Brandt

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Jun 1, 2020

Are you an eternal optimist or a prudent pessimist? It may seem like the stock market is the eternal optimist. Have you seen the headline that Uber laid off 3,000 employees? If you have, you may be wondering why their stock jumped up. Learn why this is a common occurrence by listening in. Then on the other side of the coin, you’ll learn how you can be a prudent pessimist after reading the latest Social Security headlines. But first, let’s get to a listener question from Jennifer. 

Outline of This Episode

  • [1:22] Should Jennifer roll over her lump sum pension payment into a Roth IRA?
  • [6:45] Bad news and stock prices
  • [10:15] Should you worry about the latest Social Security news?
  • [16:10] If you want to be a pessimist, be a pessimist the right way

Should Jennifer roll over her lump sum pension payment into a Roth IRA?

We may be hearing more and more questions regarding lump sum pension payments in the coming months due to dropping interest rates. These lowered interest rates make lump sum pension payouts more attractive. Jennifer is considering rolling over her lump sum pension payment into a Roth IRA. I would advise against this due to the high tax rate. You don’t want to have that heavy tax bill all at at the same time. Instead of rolling everything into a Roth IRA, a partial Roth conversion could be a better option. Listen in to hear why. 

Why does the stock market favor bad news?

I recently came across an article on Tech Crunch which stated that Uber laid off 3000 employees. However, the stock market’s reaction to the tightening of Uber’s purse strings was positive. Many people wonder why news like Uber’s often leads to increased stock values. This is because the stock market looks forward in time, months, or even years ahead. While the news is bad for the company and the employees right now, this fiscal responsibility may pay off in the long run, or so investors think. 

Should you worry about the latest Social Security news? 

While the stock market may seem overly optimistic, any news surrounding Social Security seems pessimistic. How about this headline from Investment News? Pandemic Will Deplete Social Security Trust Fund, is that scary enough for you? Of course, like all headlines, this one is meant to grab your attention. The truth is, legislators will probably figure this out in the end. The pandemic will not last forever and soon people will get back to work and their Social Security tax contributions will be collected once again. As long as people are paying into Social Security, this fund will not run out of money. 

If you want to be a pessimist, be a prudent pessimist the right way 

If you still believe that Social Security is doomed, don’t let that cause you to change your retirement plans. If you think that claiming your benefit early at age 62 will be the best way to make use of your contribution, think again. If you really want to be the prudent pessimist you’ll wait all the way until age 70 so that you receive a 32% increase on your benefit. Listen in to hear why waiting to take Social Security at age 70 is the best choice for the prudent pessimist. 

Resources & People Mentioned

Connect with Benjamin Brandt

Subscribe to Retirement Starts Today on

Apple Podcasts,Stitcher,TuneIn,Podbean,Player FM,iHeart, orSpotify

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