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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: 2021
Oct 18, 2021

The end of the year is coming up right around the corner, and you know what that means: it’s time for end-of-the-year tax planning! However, this year’s tax planning may look a bit different with new tax legislation making its way down the congressional pipeline. Many wealthy individuals are nervous about what the current regime has in store for them. This is why when I saw the headline Tax Moves Advisors Should Be Making Before Year's End in Financial Advisor Magazine I knew I had to share it with my audience. If the news of the tax legislation has you worried, you won’t want to miss this episode. 

Outline of This Episode

  • [2:22] It’s time for year-end tax planning
  • [8:53] Why you should donate to charity this year
  • [12:44] How to offset future inherited income taxes
  • [18:08] How a qualified charitable distribution could help with taxes

Do you have tax-change proposal fatigue?

Keeping up with all the changes in tax legislation over the past few years can be exhausting. It seems like once in a generation tax law changes happen every couple of years. 

One of the most troubling things about new tax legislation is wondering when it will take effect. Will the new law come into play at the end of the year, or will the changes be retroactive? While this can cause a bit of worry there is no sense in speculating. There is only so much that you can do to prepare. 

Realize more income now to be proactive about the potential tax law changes

While we have no idea what the future might hold, we can still have the presence of mind to plan ahead. One way to combat a hefty tax bill next year is to accelerate your income now. 

For instance, if companies typically give bonuses at the beginning of the next year, they could pay those bonuses out in December instead. 

Another way to realize more income sooner rather than later is to close any business sales before the end of the year to lock those earnings in under the current tax law. 

Enter into deduction mode if you are close to retirement

If you are nearing retirement and you know your income will drop once you retire, you should be in deduction mode. Take advantage of HSAs and 401Ks rather than Roth IRAs to reduce your income and maximize your contributions between now and the end of the year 

If your income decreases once you retire then you can start Roth conversions to mitigate the tax deductions you took when you had a higher income. 

Year-end tax tips

If you file the standard deduction, don’t miss out on the charitable deduction of $300 for singles and $600 for married couples. 

If you are able to itemize your deductions and you are charitably minded, consider funding future years' charitable contributions through a donor-advised fund (DAF). If you have highly appreciated stock then you could use it to contribute to charity while also realizing a valuable tax deduction. 

Another way to finish out the year is to anticipate your year’s earnings so that you can fill up your tax bracket with Roth conversions. This is a great way to take advantage of the historically low tax rates. 

Worrying about future changes won’t help at all, instead, do what you can to take advantage of this year’s low tax rates to prepare for an uncertain future.

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Oct 11, 2021

Do you wish that you could have a mulligan when it comes to taking your Social Security benefit? Once you file for Social Security, it seems like your decision is set in stone. But what if I told you that you have options to reverse your decision? 

In this episode of Retirement Starts Today, we’ll explore an Investment News article written by one of my favorite Investment News contributors, Mary Beth Franklin. This article provides options for those who have remorse about the timing of their Social Security claim.

In the listener questions segment, we’ll discuss Jerry’s question about his health insurance premiums under the Affordable Care Act and how they are affected by the 8.5% rule.

This episode is jam-packed with helpful retirement information, so press play now to continue your retirement education.

Outline of This Episode

  • [3:02] 3 Social Security do-over options
  • [8:25] Check out the Retirement Repair Shop podcast
  • [9:24] Jerry’s ACA insurance premium questions
  • [13:50] Clarification on the ACA 8.5% rule 

There are 3 ways that you could reverse your Social Security timing

Have you found yourself regretting the timing of your Social Security benefits claim? Maybe you wish that you had waited longer to receive a larger benefit or maybe your retirement timeline has changed based on the pandemic or other factors. If so, I have good news for you. There are 3 ways that you could reverse your decision. 

There are many people that wish they could go back and change the timing of their Social Security claim, so if you are one of them make sure to listen to this episode to learn which choice might best fit your needs. 

Withdraw your application

You may not realize this, but you can withdraw your Social Security benefits application. Use form 521 to do so, but keep in mind that there’s a catch. 

You’ll have to repay any earnings you or your dependents have received. Withdrawing your application can only be done once, but doing so will allow you to apply again later when your monthly check would be higher. 

You’ll also want to consider whether you are already enrolled in Medicare. If you withdraw your application, your Medicare premiums will no longer be automatically deducted from your Social Security benefit, so you’ll have to find another way to pay. 

Suspend your benefits

If repaying your Social Security benefits isn’t feasible, then you might want to consider suspending your benefits. This way you don’t have to repay anything, however, keep in mind that not only will your benefits stop, but also this action will stop any benefits to a dependent family member. Your benefits would then start again at age 70. Listen in to discover why this may be a good strategy for married couples. 

Request a lump sum payout

Requesting a lump sum payout works only for individuals who have reached full retirement age. They can request a lump-sum payout of up to 6 months of retroactive benefits. This option would best be used by someone who has an urgent need for cash or for people who waited until after their full retirement age to claim either spousal or survivor benefits. After receiving a lump-sum payment, that person could then voluntarily suspend benefits and earn delayed retirement credits up to age 70 which would boost future monthly benefits. 

Claiming Social Security seems like such a permanent decision so if life comes along and changes your plans it’s good to know that you have these alternatives to consider. 

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Oct 4, 2021

Do you wish that there was a list of what to do and what not to do in your retirement? I recently discovered an article from MorningStar.com written by Sheryl Rowling titled 8 Financial Do's and Don'ts for the 7-Figure Retirement, and I thought it would be perfect to share with my listeners. You'll learn several tips that you should consider when planning your retirement.

After we analyze the article’s do’s and don’ts, we’ll turn to Debbie’s question about taking Social Security early in order to protect beneficiaries. 

Outline of This Episode

  • [1:42] 8 Financial Do's and Don'ts for the 7-Figure Retirement
  • [4:11] Boredom is a 4 letter word in retirement
  • [6:25] Don’t take Social Security too late
  • [10:19] Don’t write checks to charity
  • [12:07] Consult a financial professional
  • [13:45] Should Debbie take Social Security early?

8 Financial tips for a successful retirement

Don’t retire too early. Retiring too early can be detrimental to both your psyche and your savings. If you have to retire early or sooner than expected, make sure that you retire to something rather than away from something. Creating a purpose in retirement can ensure that you don’t get bored. Boredom is a four-letter word in retirement. 

For every year that you retire early, you have one less year of savings and one more year of spending. Do the math to learn what that could mean for your portfolio.

Do watch your taxable income level. This may sound odd, but it often makes sense to pay more taxes now in order to pay significantly less later. Retirement is one time in your life when you have control over the taxes you pay. Implementing careful tax planning strategies can save you over the course of your retirement.

Don’t take Social Security too early or too late. When to take Social Security is a complex question, and the answers vary depending on the individual. It’s usually best to wait until full retirement age to start taking benefits and it’s often even better to delay until age 70 especially if you’re married. Listen in to hear what I usually recommend to my clients.

Do consider Roth conversions. If you have the opportunity to convert your IRA to a Roth you should even though you must pay tax on the amount converted. Remember that since these are after-tax dollars, the income they provide is never taxed.

Do consider retirement stages and safe withdrawal rates when determining your budget. Spending more in the early years of retirement makes sense as long as you consider several factors. You’ll need to ensure that you have a safety net in place and that you have a plan to reduce your spending over time or whenever the market becomes uncooperative.

Don’t lock yourself into financial commitments or expensive payments. Long-term expenses like leasing a luxury car can lock you into financial commitments that you can’t free yourself from. Becoming the Bank of Mom and Dad can not only ruin your kids’ chances of financial independence, but it can also ruin your relationship and your own financial security in retirement. 

Don’t write checks to charity. Instead of writing checks to charity, consider contributing appreciated stocks. This way of charitable giving can save you more in taxes. One way to utilize this strategy is by creating a donor-advised fund (DAF) which could be likened to a charitable IRA.

Do consult a financial professional. Obviously, I agree with this tip. Consider consulting a CPA as well as a financial advisor so that you can ensure that you are considering every angle in your retirement plan.

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Sep 27, 2021

 Do annuities give retirees a different attitude towards spending in retirement? In this week’s retirement headlines, we’ll examine an article that discusses the psychological benefits that retirees who shift their assets from savings to lifetime income enjoy. This group of retirees has more of a license to spend attitude and ends up gaining more enjoyment from their retirement savings. 

Make sure to stick around until the end of this episode to hear my thoughts on the article. You’ll also hear me compare the advantages and disadvantages of using Cobra instead of the ACA before Medicare. 

Outline of This Episode

  • [2:42] 3 need to know bullet points about annuities
  • [6:52] What do I think about using annuities?
  • [12:12] Cobra or the ACA?

Are you spending less than you should in retirement?

Are you having a hard time loosening the purse strings in retirement? If so, you are not alone. Many retirees find it challenging to shift from a savings mindset to a spending mindset, so they find it difficult to spend their hard-earned savings even on the things they most enjoy. As a result, many retirees end up spending far less in retirement than they could. David Blanchett and Michael Finke at ThinkAdvisor.com recently wrote an article about the shift in mindset that annuities can provide. 

Why do people purchase annuities?

The biggest question in retirement is how much you can safely spend. Retirees are always at the risk of outliving their savings if they spend too much or they end up living a less enjoyable life if they spend too cautiously. For this reason, many decide to transfer the risk of an unknown lifespan to an insurance company that provides guaranteed income. 

Do annuities provide a shift in the spending mindset?

The authors of the article reference a study that discovered that people don’t spend more simply because they are wealthier, instead they spend more based on the form of wealth that they hold. 

Households that hold more of their wealth in guaranteed income end up spending significantly more each year than those which hold a greater share of their wealth in investments.

Retirees end up spending twice as much each year when they have guaranteed income. Every dollar of assets converted to guaranteed income results in twice the equivalent spending compared to the money that is left invested in an investment portfolio. 

Are annuities the only way to shift your spending mindset?

However, you don’t necessarily need an annuity to change your spending mindset. Behavior management and accountability are the most important aspects of retirement planning. If you can hold yourself accountable and adjust your spending habits when necessary you can come up with a successful retirement plan. 

To achieve that, you need a plan that you can have confidence in. If you can create a financial plan in retirement that you feel confident in then you will be able to spend with confidence. One way to increase your confidence in your retirement income is to defer Social Security for as long as possible. By waiting until age 70 you can increase your benefit amount by 32%.

What are you doing to create a successful retirement plan? Listening to this podcast can help you gain the knowledge and confidence you need to successfully plan your retirement.

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Sep 20, 2021

 The annual Social Security beneficiary report was recently released and just like every other year that they release it, it has caused people to worry about their future. Social Security is a crucial, foundational element of most retirement income plans, so when you read headlines that it will run out soon how should you react? 

Should you go about changing your retirement plans altogether? Should you file for Social Security early to ensure you get the most out of your benefit? We’ll explore these questions in this episode of Retirement Starts Today.

Outline of This Episode

  • [1:52] Will Social Security run out in 12 years?
  • [4:44] How to fix the Social Security math problem
  • [11:20] What you should do to prepare for a Social Security pay cut

Covid has exacerbated the Social Security funding crisis

The recent report released by the government was unsurprising to anyone who has been paying attention. This year’s statement revealed that the Social Security trust fund will ‘run out of money’ in 12 years which is one year sooner than previously anticipated. The time frame has been accelerated due to the Covid pandemic. 

The issue of ‘running out of money’ is caused by a math problem. There are insufficient people entering the workforce to support the increasing number of baby boomers that collect Social Security each month. The record unemployment rates during the pandemic resulted in even fewer people contributing to the Social Security fund. 

There is a myth that there are fewer people in the generations succeeding the baby boomers than there are in the baby boomer generation, but this myth isn’t true. There are actually more people in each of the generations that follow the Baby Boomers. So, the problem isn’t due to a lack of work-age people. It is due to a lack of funding.

How to fix the lack of Social Security funding

Before I continue, I need to address the wording that everyone uses surrounding the shortage in Social Security funding. It is commonly stated that Social Security will run out of money. However, Social Security cannot run out of money while workers continue to pay into it. The issue is that there won’t be enough income coming in to support the money going out to the beneficiaries. This means that there will be a reduction in benefits rather than a complete lack of funds.

There are two ways that Congress could alleviate the Social Security funding problem. They could increase payroll taxes beyond the current $142,800 cap or they could increase the percentage of the 12.4% payroll tax that comes from each worker. 

What you should do to prepare for a Social Security pay cut

Hopefully, now you aren’t worried about the complete elimination of the Social Security program, but you may still be concerned about getting a Social Security pay cut in retirement. Many people feel pulled to file early so that they can get into the program as soon as possible. However, if there is a reduction in Social Security benefits those people will be taking a cut on an already reduced benefit. 

If you wait until age 70 to collect your Social Security payment you will receive 132% of your original benefit. So if there does end up being a reduction in the Social Security program, then you will end up taking a cut on an increased amount. 

What would you prefer--taking a cut on a cut or a cut on a larger amount?

Don’t let sensationalist headlines dictate your retirement plans. Create your retirement plan based on your own unique needs. By maintaining a long-term focus you could end up saving hundreds of thousands of dollars in opportunity costs. 

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Sep 13, 2021

Have you been feeling the pull to retire? This feeling isn’t constrained to those nearing retirement age; many people have been feeling the desire to quit their jobs lately. So many workers are considering a job change that this wave of people has begun what is called “The Great Resignation.” I read about this phenomenon on The Guardian website in an article written by Elle Hunt. Elle considers 17 questions that you should ask yourself before you make the leap into the unknown. If you have been contemplating retirement or a job change you won’t want to miss this episode.

Outline of This Episode

  • [2:02] 17 questions to ask yourself if you are ready to quit your job
  • [4:53] What do you actually want to do?
  • [8:08] What could you gain by quitting your job?
  • [12:55] You can’t bootstrap your mortgage

Attitudes surrounding employment are changing

A recent survey indicated that over 40% of people have considered a job change this year. This trend could be a byproduct of stress brought on by the pandemic, but it could be due to a global shift in mindset which has led to a changing shift in employment priorities. 

Have you considered retiring early or leaving your current job? If so, you’ll want to make sure that you ask yourself these questions before making any rash decisions.

17 questions to consider if you are ready to quit your job

  1. What are your frustrations? Before you up and quit, you’ll want to ask yourself why you really want to quit. What are the underlying causes of your dissatisfaction? Make sure to go deep in your thinking since your first thought is rarely the true reason for your unhappiness. To explore this question further write down every thought and feeling you have surrounding your job for 10 days. 
  2. How did you get to where you are now? Reflect on what led you to your current job and what brought you to it in the first place
  3. How long have you been feeling this way? Were you unhappy before the pandemic or is the feeling more recent? Consider whether your feelings are pandemic related. If so, this could mean you are actually seeking more control over your life. You may simply feel burned out and need some time off.
  4. What do you actually want to do? How do you want to live your life? Who do you want to be? These questions cut to the core and ensure that you explore your values. You may find that your unhappiness runs deeper than your career choice.
  5. How would your perfect day be different than it is now? Coming up with your perfect day can also help you explore whether you are ready to eliminate all work-related activities. If so, you may be ready to retire. 
  6. What do your friends and family say? Use your support system as a sounding board for your thoughts.
  7. What would you be giving up by quitting? If you are thinking of retiring early, think about the costs of healthcare before Medicare and other stabilizing factors that your job brings. 
  8. What would you gain by quitting? Try to steer clear of revenge retirement. It may lead you to a situation that you can’t come back from. Your negative feelings might pass, so don’t box yourself into a corner. 
  9. Have you explored every option with your employer? Try negotiating. You may be able to work out reduced hours, higher pay, or other changes in your workplace.
  10. Should you wait until you’re back in the office to make a decision? Be clear with your own needs and desires when considering this question.
  11. Should you quit due to a toxic boss? It can be challenging to see a toxic relationship while you are in the thick of the situation. A toxic work environment could mean that it is time for a change.
  12. When should you quit over stress? Is stress causing you to lose sleep, enjoy time with your family, or negatively affect your downtime? If your job adversely affects your life and health then you’ll want to assess why you feel stress.
  13. Are your expectations realistic? Can you actually leave your job?
  14. Can you afford to cover your expenses? If you can’t, then you may need to stick it out a bit longer.
  15. Could caring less help? Try setting boundaries in your workday. Define your values and step away from work when needed. and define values. 
  16. Is now the right time? You can empower yourself by filling in the gaps.
  17. Why can’t you make a decision? Set a decision date so that you don’t let your indecisiveness drag on.

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Sep 6, 2021

In retirement, you have all the time in the world, but are you using your time wisely? I recently read an op-ed article from CNBC about the power of delegation and it got me thinking about the way we spend our time. 

On this episode of Retirement Starts today, we’ll explore that op-ed article, I'll share what I learned about inherited IRAs this week, and I’ll answer a listener question about retirement planning beyond the 4% rule. 

Outline of This Episode

  • [2:22] What I learned in my office this week
  • [5:24] An inherited IRA example
  • [6:35] The value of paying others to do services for you
  • [10:55] A question about episode 193
  • [14:52] Check out my retirement guardrails video

What is the highest use of your time?

Are you planning to live your best life in retirement? If so, you may want to consider delegating various tasks that could be better handled by someone else. Even if you have lived a life of frugality you should ask yourself if doing certain tasks is the best use of your time. You may receive a better return on investment and return on your health by hiring someone else to do certain services for you. Use your time to enjoy life rather than by doing menial tasks. 

Tasks that may be best done by others

If you can afford it, consider hiring someone to complete these tasks for you. 

  1. Hire a lawn care service - Not only will having someone else care for your lawn save you time, but it could also save your energy, and maybe even save you from heatstroke, or worse.
  2. Use a travel agent for vacation planning - A professional travel agent can help keep your vacation costs down and save you time on research. A travel agent can also assist you with problems during your trip which can be extremely valuable when traveling abroad.
  3. Grocery pick-up, delivery, and ready-made meals - Many of us discovered the magic of grocery pick-up or delivery services during the pandemic. Choosing a grocery pick-up or delivery service can help save you time on meal prep and also alleviate any COVID-19 related fears associated with shopping in person.
  4. Hire a business coach - A business coach can help you overcome hurdles that stand in the way of your personal and professional goals. They can also help you navigate career options and even reduce stress. 
  5. Quit doing your own taxes - Leaving the tax prep and planning to a professional can save you time and money. 

Which of these services would best serve you?

How will you spend your time in retirement?

Even though you will have more time on your hands in retirement, it still makes sense to use your time wisely. Think about the highest and best use of your time. What could this extra time mean to you? Would it bring an improvement in your quality of life? Could you plan your bucket list or how to leave your legacy? Retirement is all about the what if, so what if you could take some of these tasks off your plate? 

Make sure to listen to hear what I learned this week about inherited IRAs and you won’t want to miss a listener question about using retirement guardrails. This episode is packed full of information so press play now to get started. 

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Aug 30, 2021

Since travel is on many soon-to-be retirees' must-do lists I have created this summer travel series with various travel experts. Danielle Desir from the Thought Card podcast joins me today to discuss how to travel to any destination on a budget. Recognized by Flight Network as one of the best travel hackers in the world, Danielle has figured out how to travel to bucket-list destinations on a dime. Are you ready to learn how to plan your next big trip on any budget? Listen in to discover how.

Outline of This Episode

  • [1:22] Danielle’s journey to bucket list budget travel
  • [3:23] Identify the things that you value
  • [7:21] Take an individual approach 
  • [10:53] Danielle’s top destinations
  • [12:32] How to choose to repeat a destination
  • [15:41] Jet lag tips
  • [20:47] Where to learn more about travel hacking with Danielle

If you’re on a budget, don’t settle for inexpensive destinations, think big!

Many people think that if they are on a budget they can only travel to budget-friendly places, but Danielle Desir takes a different approach. As a travel hacker, Danielle has learned how to make travel to bucket-list destinations more affordable. She describes using an abundance mentality as a way to make affordable travel work. She recommends getting creative when planning, “take what you have and make it work.”

Identify what matters to you

The first step in becoming a financially savvy traveler is to identify what you value in travel. Is it important to you to be comfortable on a flight? Do you like to eat out and try the best local cuisine? Do you want to see everything you can in one location? Do you prefer luxury accommodations? 

Once you have identified what the most important aspects of travel are to you then you will understand where you can be flexible in your spending. If eating out isn’t important to you then you can save money by packing a sack lunch each day. If a fancy hotel room isn’t important then you could save money by staying in a hostel or an inexpensive Airbnb or motel. 

Understanding what you value in travel will help you save money and ensure that you have an amazing time on your trip. 

Make a game of saving money

Another way to save money is to gamify your planning experience. By making a game of saving money you can compete with yourself to see how much money you can save each time you travel. You can cut costs in a variety of ways by looking for inexpensive accommodation, saving on flights, or by using travel points. Gamifying your travel costs allows you to get creative and save more. 

Communication is key when it comes to couples’ travel

When traveling with your significant other it is important to take into account what they value as well. Make sure to communicate with them so that you are both on the same page. They may value different things about travel so it is important not to skimp in the areas that matter to them. 

You should also be understanding of your partner's travel experience. There may be one partner that is more travel savvy than the other. That means that the travel-savvy partner needs to be patient and explain the importance of the things that you do to save money when traveling. 

It is also important to remember that traveling in retirement will be much different than traveling for work. You are out there to have fun. Listen to this episode with travel expert Danielle Desir to hear how you can travel to any destination affordably. 

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Aug 23, 2021

 Do you have bond funds in your portfolio? Many people understand the way that bonds work, but they may not know how bond funds work. El has written in to ask this question which I will answer in the listener questions segment. 

Before we get to that retirement question, we’ll take a look at a MarketWatch article titled Are You in Retirement Hell? It was such a catchy title that I had to check it out. 

The article expresses the author’s struggle with finding challenge and meaning in retirement. You won’t want to miss the ways that you can avoid your own retirement hell. 

Outline of This Episode

  • [2:32] Are you in retirement hell?
  • [5:38] How to prevent retirement hell
  • [6:56] How do bond funds work?
  • [12:53] What are alternative options to bond funds?
  • [16:52] Does John have enough money to retire?

Are you in retirement hell?

Retirement is a time of fun and relaxation. You no longer have exhausting work schedules, long commutes, or alarm clocks waking you up every morning. Every day is yours to do as you wish. 

Passing the days pursuing leisurely activities like playing golf or visiting the grandkids may be just perfect for some laid-back retirees, but for those looking for more challenging pursuits, these carefree days could quickly turn into retirement hell. 

You can recognize if you are in retirement hell if you are feeling lost and vulnerable. You may even sink into a depression as the activities that you once enjoyed feel empty and meaningless. 

How to fix (or prevent) retirement hell

In the article, the author mentions that he didn’t break out of retirement hell until he finally sat down and defined his concept of fine

Contentment is an important part of retirement, it’s so important that I even discussed it once in a previous episode with Fritz Gilbert. When you’re done listening to this episode, pop back over to that one and have a listen. 

I always like to say that you shouldn’t be retiring away from something, instead retire to something. It’s important to consider what you will do with those extra 40 hours a week that you now have at your disposal. 

You don’t want to wait until you are in the thick of retirement hell to figure this out. Try creating a practice retirement with some of your vacation time. Take a couple of weeks off and don’t go anywhere or do anything exciting. Instead, try passing the days as you would like to when you retire. 

How do bond funds work?

A bond fund is similar to a mortgage, but you have a group of investors and a company instead of the mortgage lender and home buyer. 

Bonds can be purchased individually and held to maturity or they can be traded. Bonds are similar to stocks in that they can go up or down in value but they have different interest rates and different rates of maturity. 

To spread out the risk of buying individual bonds, most investors choose to invest in a basket of bonds or a bond mutual fund. The risk is spread in the same way that you spread out the risk in your stock portfolio. 

What are alternative options to bond funds?

If you aren’t happy with the bond funds that you have now try Googling portfolio immunization. Portfolio immunization means that you match your retirement liabilities with your retirement assets. 

The way to do this is to purchase a bond in advance so that it matures the year that you need the cash flow. The specific benefit of this strategy is holding the bond until maturity. By holding the bond until it matures you remove the interest rate risk. 

Make sure to stay tuned until the very end where I answer John’s question about whether he has enough money to retire. You may be surprised by my recommendation. 

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Aug 16, 2021

Are you preparing for a successful retirement? If you are, you’ll need to consider more than just your finances because 80% of a successful retirement has nothing to do with money. However, when people focus on retirement planning, money is often the only thing they focus on. In the retirement headlines segment this week, we’ll check out an article from Financial Advisor Magazine titled Right Way Retirement. This article takes a look at the non-financial aspects of retirement that many financial advisors miss when it comes to retirement planning. 

In the listener questions segment, I answer a question from Majid about working while collecting Social Security. Make sure to tune in until the end to hear how to complete the earnings test so that you will understand how much you can earn and how to avoid Social Security penalties.

Outline of This Episode

  • [2:12] To plan for retirement you need to stay ahead of the curve
  • [4:00] 6 items to focus on in retirement planning
  • [8:03] Will income from a part-time job affect the amount of Social Security I receive?

Retirement isn’t only about the money

Robert Laura recently published an article in Financial Advisor Magazine about doing what it takes to create a successful retirement. The author noticed that most financial advisors that help people get ready for retirement focus solely on the financial aspect of this life change. However, retirement isn’t all about the money. He has noticed that advisors often have a blind spot for the areas of retirement that aren’t financially related. To truly prepare for retirement, people need to take a more holistic approach. 

6 ways to create a successful retirement 

  1. Replace your work identity. Many retirees feel like they lose a significant piece of their identity when they leave the workforce. To combat this sense of loss, identify the specific areas of your career that you get fulfillment from. Then think of ways that you can parlay that area of fulfillment into your life in retirement. A couple of ways that retirees choose to carry on their former work identity in retirement is through mentoring or consulting.
  2. Fill your time with meaningful tasks. Once you retire you’ll have a 40-50 hour space to fill in your week. Creating a retirement routine can help combat boredom. Try filling the gap with an active and healthy lifestyle. This will not only leave you fulfilled but healthier as well. 
  3. Stay relevant and connected. When you leave work behind you also leave much of your social network. Retirement can be an opportunity to re-establish old connections and create new ones.
  4. Keep mentally and physically active. You can do this by creating healthy routines.
  5. Express your spiritual beliefs. Not everyone is religious, so if you're not, you could work on improving your mindset by cultivating a gratitude practice. 
  6. Feel financially secure. If you’ve been listening to this show for a while, hopefully, you are well on your way to meet this goal. 

Create a plan to gain the most fulfillment from your retirement

Creating a retirement plan that addresses all 6 of these areas can help you create a greater sense of satisfaction with your life in retirement. You don’t want to get into the thick of retirement and discover that there is something missing from your life. Start a more holistic approach to retirement planning now so that you can create a meaningful life in retirement. 

Make sure to tune into the listener questions segment to hear about receiving Social Security while you are still working. You’ll learn just how important it is to know your full retirement age and how the Social Security Earnings test can help you keep the most from your benefit. 

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Aug 9, 2021

Do you have a case of frugality syndrome? Many of us are so used to saving and living frugally that we have a hard time pivoting from the accumulation stage of retirement planning into the distribution stage. 

A recent retirement headline from Advisor Perspectives titled Overcoming the Frugality Syndrome caught my eye. This article discusses the difficulty that some retirees have in switching from saving to spending. I wanted to share this with you all since so many of you are diligent savers.

After the retirement headlines, we move on to our listener questions segment. Wendell is concerned about having all his eggs in one custodian’s basket and Stella would like to learn about rolling a 401K into a Vanguard target-date fund. 

Outline of This Episode

  • [1:22] What is frugality syndrome?
  • [4:18] 3 tips for overcoming frugality
  • [8:55] A question about target-date funds
  • [14:49] Should you consolidate accounts into one financial firm?

Can too much frugality be a bad thing?

Rick Kahler at Advisor Perspectives recently wrote an article about the problems that can arise from too much frugality. He uses one particular example to make his point: the FI/RE movement. FI/RE stands for financial independence/retire early and those that try to achieve this goal often do so by becoming exceedingly frugal. 

Many of you have been amazing savers over the years which is why you are on track to achieve your retirement goals. However, while your frugality can help you achieve your retirement goals, a long-term focus on constantly saving can make it hard to stop being thrifty and start spending. 

Over the long-term, frugality becomes a habit and thriftiness becomes ingrained in one's being. This mindset makes the act of switching to the distribution stage of retirement a challenge for many people. Rick offers 3 tips on shifting gears from accumulation to decumulation.

3 ways to shift gears from accumulation mode to distribution mode

  1. Recognize that frugality syndrome is normal. First, it is important to congratulate yourself on your financial achievement. Once you do so, then you can give yourself the grace and understanding that the transition from saving to spending will be a challenge. 
  2. Create a spending plan. A spending plan with set limits can help you overcome any anxiety that you may feel about overspending your carefully saved money. This will also help to ensure that your money will last and that you aren’t squandering away your financial future. 
  3. Get a financial checkup. Consider consulting a fiduciary financial planner a year or so before your target retirement date. You may also look into seeing a Certified Financial Therapist or Certified Financial Transitionist. These financial professionals can help prepare you for the mindset shift that comes with this monumental life change. 

Creating a retirement plan can help you spend confidently

Don’t think of frugality as a light switch that you can turn on and off. It will end up being a mindset that you have to ease out of. 

Early planning can help with the emotional aspects of shifting your financial mindset. Creating a thorough retirement plan can help you to spend confidently. I like to set retirement guardrails that help to safeguard a person from market risk. These set limits protect against sequence of return risk as well as helping with one’s financial mindset. 

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Aug 2, 2021

How’s this for a headline? I’m 62, unemployed, living off my savings, and waiting on Social Security — ‘Can I go fishing for the next 25 years and forget about work? It naturally caught my eye since there was fishing in the title!

Today we’ll check out this MarketWatch article and answer the headline’s question as well as explore the additional recommendations the article mentions on ways to make retirement savings last.

In the listener questions segment, I’ll answer a complex question about borrowing against your home for a gift for a child. Once you’re done listening please head on over to our annual listener survey to make sure you voice your opinions on the trajectory of the show. 

Outline of This Episode

  • [1:22] Can I go fishing for the next 25 years?
  • [4:58] Financial advisors weigh in on this question
  • [14:20] Should I take out $150,000 of my IRA to help my family buy a house?
  • [19:35] Make your voice heard--go check out our listener survey!

Is it time to forget work and go fishing?

A recent Market Watch article caught my eye since it had fishing in the headline. The article opens with a question from a reader about his decision to quit his job early and go fishing for the rest of his life. The recent retiree did a great job saving for retirement and the MarketWatch author and I agree--he is absolutely ready to go fishing for the rest of his life.

I enjoyed reading this article since it included other experts’ responses, so I thought I would dig in and explore them a bit further and add my own 2 cents. 

The dangers of leaving ‘moldy money’ lying around

One commenter pointed out that the writer had a substantial amount of money in a savings account. He warned of the dangers of inflation by leaving that money in a low-yielding savings account. 

I agree with these concerns. Unless there is a specific reason, you need to be wary of leaving ‘moldy money’ lying around in low-yielding accounts. This money will end up losing purchasing power over time due to inflation. 

If you do have a substantial amount of money that isn’t invested consider converting a portion of that savings into a Roth IRA. Listen in to hear how I disagree with one advisor’s approach to investing for retirement. 

Why the bucket approach works

Another advisor suggested the bucket approach for asset allocation. This approach requires you to divide your assets into categories based on your withdrawal timeline. 

The super-conservative category is the first bucket you’ll dip into. The less conservative bucket has a longer time horizon, and the aggressive bucket won’t be touched for a long time. 

The bucket approach is a great idea and allows you to visualize your near-term assets and distinguish them from your longer, more volatile investments. 

Recognizing the difference between the boring short-term assets from the more exciting long-term assets will help you keep your sanity when the market starts misbehaving. 

To delay Social Security or not

The next area that the article discusses is Social Security. The letter writer plans to wait until full retirement age in order to receive 100% of his Social Security benefit, but there is the possibility of delaying even longer until the age of 70. 

Generally, my suggestion is to wait until age 70 to receive the maximum benefit, however, in this case, I don’t think it is as important. Listen in to hear why. 

 

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Jul 26, 2021

What do you think about senior living communities? Would you want to move to one? According to a recent WSJ article, occupancy in senior housing is on the decline despite the fact that baby boomers are aging and more of these communities are springing up all over the country. In the retirement headlines segment, we’ll take a look at the reasons for this phenomenon.

But before we get to the retirement headlines I also want to share a conversation I had with a client about how to plan sales of his company stock. Make sure to listen in if you have a significant amount of stock in your company. You’ll want to hear what you should consider before selling. 

Outline of This Episode

  • [1:22] Identify you pain threshold when selling company stock
  • [5:58] Boomers want to stay home
  • [10:38] Who will win?
  • [11:40] How does long-term care insurance play into this equation?
  • [13:03] Don’t forget to answer our annual listener survey!

Boomers want to stay home

It may not be a surprise to you that seniors want to stay in their homes for as long as possible. A recent WSJ article investigates these low occupancy rates in senior housing developments. People born during the Depression and World War II are moving into senior housing, but baby boomers plan to stay in their homes longer. Even though boomers would like to age in place, the oldest of this generation will start reaching their mid-80s within the next decade which is the age when many people start moving into senior housing. 

Why are senior housing occupancy rates falling?

There are a couple of reasons that senior housing occupancy rates are in decline. One reason is that improved health has led to people entering senior housing later in life than in years past. People are not only living longer, but they are also staying healthier longer. 

Another reason for the senior residency decline is technology. There are several new technologies that can help the elderly stay in their homes longer than in the past. Seniors can remain independent for an extended period with technologies like Uber, self-driving cars, and grocery delivery services. 

The article also mentions more innovative examples of how technology can help the elderly. One example is LifePod Solutions, a voice remote monitoring platform that can identify seniors' needs and send care when needed. An architectural design firm, Gensler is using technology to redesign senior-friendly homes that can adapt to the elderly’s changing needs. Tolent Construction in the U.K. has designed a mixed-use development that includes senior-friendly homes which will allow the elderly to age in place longer. Innovation is responding to demand and creating myriad ways to help the elderly stay in their communities with friends and family for as long as possible. 

Who will win?

The commercial real estate market has been betting big on the idea that aging baby boomers will be needing senior housing, but improved technology that can help the elderly stay home longer may change this reality. The beauty of capitalism is that competition will drive the best solution. I see a very bright technology-enabled future for our aging population. 

How will long-term care insurance play into this equation?

With all of these improvements in technology, will our aging populous still need long-term care insurance? Or will long-term care insurance legislation need to change? One way this insurance could adapt is to allow policies to pay for home upgrades that use technology-based solutions that allow elderly homeowners to age in place. Only time will tell how the technology, real estate, and insurance industries will adapt to baby boomers’ needs.

Before you go, be sure to chime in on what you think of Retirement Starts Today by filling out our annual listener survey. I produce this show with your needs in mind and want to ensure that I am addressing the issues that you find most important. Any changes in the coming year will be based on the results of this survey, so make sure your voice is heard!

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Jul 19, 2021

Has the Covid pandemic caused you to reevaluate your life and consider early retirement? If so, you are not alone. Now that we are starting to emerge from the pandemic, many Americans have a new 'life is short' mindset. This, coupled with an upswing in investments and home values is leading many affluent Americans in a rush to retire.

Check out the retirement headlines segment where we explore a recent Bloomberg article that explores this topic. Then, stick around for the listener questions where I answer a question from Randy about paying off his mortgage with a Roth IRA and if you stay until the very end you’ll hear the story behind the Retirement Starts Today theme song. 

Outline of This Episode

  • [3:22] Affluent Americans Rush to Retire in New ‘Life-Is-Short’ Mindset
  • [7:47] There is a downside to the loss of older workers
  • [9:32] Should we consider paying off our home loan with a Roth IRA?
  • [16:21] The story behind the theme song

Participate in our annual listener survey

Every year I send out a listener survey to our Every Day Is Saturday newsletter subscribers to give you all the opportunity to guide the content over the next year. In the past, I have made changes based on your answers and I look forward to hearing your thoughts this year.

If you haven’t yet subscribed to the newsletter you can do so here. In addition to being able to participate in the survey, the newsletter also contains all the links from the show each week, as well as free book offerings from the authors I interview, and all kinds of useful retirement tips. If you want to complete the survey now, simply click here

Many affluent Americans are ready to retire

One of the most surprising aspects of the pandemic has been the unprecedented surge in the stock market. Investors have enjoyed double-digit returns and this swell in portfolio values has led many to reconsider their retirement plans. This is in stark contrast to those on the opposite end of the spectrum that had little savings and lost their jobs over the past year. Life for affluent Americans is looking good and many are taking advantage of the situation by considering early retirement. 

Changes in work environments are another reason for the mass exodus

Another reason people may be considering early retirement is the toll that the past year has had on workers. The pandemic has changed the way that many companies do business. Zoom fatigue and stressful work environments are also contributing factors in the rush to retirement. Teachers and healthcare professionals are experiencing record levels of burnout. While this mass exodus is positive for those ready to retire, there could be a downside.

As the most experienced and productive workers exit the workforce, businesses are experiencing labor shortages. Older workers have higher productivity, lower absenteeism, and usually train the newcomers so this loss significantly affects companies. 

Life is short, enjoy it!

I love to see the newfound freedom that many are experiencing post-pandemic. Life is short and we should enjoy it fully. To do so, make sure to have a written retirement plan to help guide you. 

I also recommend taking a practice retirement before you actually retire. This can help you get a feel for retirement and help you build retirement routines. This trial run will also show you if you are mentally and emotionally prepared for retirement. 

Have you been thinking of retiring early? If so, what have you been doing to prepare? Listen in to hear how a retirement rehearsal could help you prepare for your retirement journey.

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Jul 12, 2021

Episode 200! I can’t believe I’ve made it to this landmark episode. Thank you all for joining me on this journey and I hope you'll join me for the next 200.

I enjoy looking back and reminiscing on previous episodes, but I don’t have to go too far back to find my most recent favorite. Episode 199 is one of my most recent favorites. In it, I interviewed world-renowned Disney expert, Lou Mongello, to discuss multigenerational Disney trips. Check it out if taking the grandkids to Disney is on your bucket list. 

In this episode, we’re covering two retirement headlines. The first is from Investment News and it describes how some leading retirement experts question whether advisors should rethink their assumptions about retirement spending when creating financial plans. The 2nd retirement headline is from HumbleDollar.com titled Secret SauceThis article describes the aspects of work that we want to hang onto, those that we might not, and it outlines six steps to design a successful and ideal retirement.

Outline of This Episode

  • [2:22] How we should rethink our assumptions about retirement spending
  • [9:30] How to plan your retirement withdrawal rate
  • [11:20] To have a successful retirement, you need to have an understanding of work

People in retirement live differently

Mary Beth Franklin recently wrote an article for Investment News about retirement spending. She sourced a study completed by the Employee Benefit Research Institute (EBRI) which analyzed the spending of 2000 retirees. The study found diversity in the way people live in retirement based on financial status, retirement goals, demographics, and spending habits. Mary Beth's article focuses on the results for those that were classified as affluent and comfortable retirees.

Not many affluent retirees plan to spend their savings

In the article, affluent retirees were defined as those with financial assets exceeding $320,000 and an annual income of $100,000 or more. Most of them were also mortgage-free with zero debt. Their most common sources of income were defined as employer benefit plans, Social Security, and personal savings. They reported that they feel they have saved enough for retirement and only 1 in 3 plans to spend all or a significant portion of their savings. 

Comfortable retirees may spend only a small portion of their assets

Comfortable retirees had mid-levels of financial assets between $99,000 and $320,000 and an annual retirement income of less than $100,000 a year. Many still had a mortgage and other debts. Most of these people cited workplace retirement savings and Social Security as their major sources of income. Almost 75% of these comfortable retirees said that their retirement savings are sufficient or more than meet their needs, however, more than half of them plan to grow, maintain, or spend only a small portion of their assets. 

Why are affluent and comfortable retirees hesitant to spend their retirement savings?

The study found that the Baby Boomer generation wishes to retain assets rather than spending them down. So the question is, why don’t these retirees wish to spend their retirement savings?

This may be due to the fact that their Social Security income or pension provides enough to meet their expenses, but it could also be due to an inability to switch gears from accumulation to decumulation. Another reason may be that many retirees don't know how to determine a sustainable withdrawal rate that considers future uncertainties, and this lack of knowledge makes them wary to spend their nest eggs. 

I think the key to confidently spending and living off your savings is to understand how much it costs for you to live for a year in retirement. Listen in to hear how you can learn how to calculate your spending so that you can determine your sustainable withdrawal rate in retirement. 

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Jul 5, 2021

What is the number one travel goal for people approaching retirement? Disney! People young and old alike love to go to Disney. In my 15 years of retirement planning, I have discovered that a multi-generational trip to Disney is at the top of most people’s bucket lists. That is why I have brought the world’s foremost expert on Disney travel, Lou Mongello, on to Retirement Starts Today for an interview. Lou and I discuss all things Disney: the must-see attractions, when to go, how to plan, and what is so special about Disney. 

Outline of This Episode

  • [1:52] What’s so special about Disney?
  • [4:29] What are the must-see attractions?
  • [8:45] When to go
  • [12:53] Plan in advance
  • [15:56] Lou’s favorite thing at Disney

What’s so special about Disney that everyone wants to go there?

Since Disney is the number one bucket list item for many people there must be something extra special about it. When I ask Lou why it is so special, he is unable to quantify this phenomenon. He chalks it up to the way Disney makes us feel. If you have been, you know what he means. 

One way that Disney is able to give us those warm fuzzy feelings is with its customer service. Disney’s level of service is unparalleled. They always go beyond expectations which is why everyone remembers Disney with such fondness. No other place in the world enjoys such a level of brand loyalty. 

What are the must-see attractions?

There is so much to do at Disney. In Orlando, there are not only the 4 main theme parks but there are water parks and resorts to enjoy as well. It can be challenging to figure out what to do when there is so much to choose from. 

There is something for everyone at Disney. Lou recommends the classics from Magic Kingdom in addition to some of the newer attractions. Grandma and the littles are sure to enjoy It’s a Small World and the Jungle Cruise. The Haunted Mansion is another Magic Kingdom classic. At Hollywood Studios, the Tower of Terror and Rock n Roller Coaster are fun for the thrill-seekers in the family. And Frozen and Toy Story are hits with the kids. The Animal Kingdom safari also brings joy to the entire family.

When to go?

When planning your Disney vacation it is you’ll need to consider when to go. This will depend on your family’s schedule, but there is more to consider. Disney has different travel seasons. The peak season includes major holidays and summer. The off-peak times are the rest of the year. During the off-peak times, you can find values on food and lodging prices. 

One tip to use while planning your Disney vacation is to use a Disney travel agency. Many don’t realize that Disney agents are free to the consumer since they get paid by Disney. When planning your Disney vacation make sure to take advantage of these experts. They can help you make the most of your holiday. 

What is the best age to go to Disney?

There is no bad age to go to Disney. There is so much to do that appeals to every age group. That is what makes Disney such a great multigenerational vacation getaway. Not only is there something for everyone, but there is a wide variety of accommodations and food choices. You can customize your vacation to your family’s specific wishes. The most important thing to do is plan ahead. Much like financial planning, planning before you go to Disney will ensure that you get the most out of your family holiday.

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Jun 28, 2021

Have you ever thought about your relationship with work? As retirement looms ahead, many people become fearful of the unknown that it brings. A common way to express this fear is to worry about money, but this fear goes beyond money. The real fear that people have about retirement is about how they will spend their time when they no longer have work to fill their days. 

In 2017, Paul Millerd changed his relationship with work. After climbing the corporate ladder for 10 years he decided to slow down and become a freelancer. Listen to this conversation to hear what Paul learned from this experience and how his wisdom can help you prepare for retirement.

Outline of This Episode

  • [3:22] What kind of benefits do people see from a long break in work?
  • [5:16] Taking the first steps towards a sabbatical
  • [8:15] How can we use the curiosity that emerges with a sabbatical to explore retirement?
  • [11:01] Did Paul always think this way?
  • [13:17] Are there any types of careers that sabbaticals wouldn’t work for?
  • [16:24] People will refuse to take into account what they spend

What defines a sabbatical?

I often ask my clients to take a couple of weeks off of work before retirement to explore what they will be doing when they retire. I liken this exercise to a practice round of retirement. A sabbatical can be a similar experience, but it goes even deeper. The time frame of a sabbatical isn’t strictly defined and can extend anywhere from 2 weeks to 2 months or more. The biggest difference between a sabbatical and a vacation is that a sabbatical is more of a change in mindset. 

How is a sabbatical different from a vacation?

Paul explains that vacations are packed full of activities, much like a workweek. People try to pack as much into a vacation as possible. However, a sabbatical is like taking a vacation without ever going into vacation mode. To try out a sabbatical, Paul suggests staying at an Airbnb and simply living there. Cook your meals rather than eating out, shop locally, and simply bike or walk around your new surroundings. Try to discover a state of non-doing. This can be challenging and can even become uncomfortable for many people. The result of this contemplative state is self-realization and a newfound curiosity.

How can we use the curiosity that emerges from a sabbatical to explore retirement plans?

Taking a sabbatical can completely change your way of thinking and may even disrupt your plans for retirement. We have worked so hard our entire lives for a future payoff, so it can be hard to stop delaying gratification. By taking a sabbatical, it allows people to take the time to explore the work and hobbies that inspire their passion. In doing so, people can get a better understanding of the ways that they can spend their time in retirement.

A sabbatical can prepare you for retirement

If you have been working your way towards burnout, perpetually delaying gratification, or even if you simply need a retirement trial run, you may want to try taking a sabbatical. Listen to this interview with Paul Millerd to hear how a sabbatical can provide you with a shift in mindset and truly prepare you for retirement. 

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Jun 21, 2021

We’ve all been sitting at home for the past year and now everyone is getting the travel bug. That’s why today we’re kicking off the Summer Travel Series with an interview with Lee Huffman. Lee hosts a podcast called We Travel There and he writes a frugal travel blog at BaldThoughts.com. I’ve been curious about the world of travel hacking, so I have plenty of questions for Lee about using travel points, how to find the best travel resources, and, of course, where to travel. Check out this interview to help you plan your summer vacation. 

Outline of This Episode

  • [1:32] Where should we get started?
  • [5:45] What should one look for in travel points?
  • [11:02] How saving miles and points are like saving for retirement
  • [13:00] The go-to resources to use
  • [17:53] Places to check out 

How should we all get started traveling again?

The pandemic has left many of us homebound for over a year, so now that many people are fully vaccinated, everyone is ready to get on the road again. The big question is: how should we get started? 

Lee recommends using the travel credits that you may have accrued from canceled vacations over the pandemic. Those credits and vouchers may have expiration dates, so be sure to check the fine print to ensure that you don’t lose out. 

He also suggests getting your summer trips booked ASAP. The sooner you book, the sooner you’ll be able to find reward availability and lower prices. The more people begin traveling the higher the prices will rise. 

What about international travel?

Travel within the U.S. is on the rise, but people are also itching to travel internationally. Since the vaccine rollout has been different in each country, it is important to carefully investigate the specific travel rules for the country you wish to go to. Each country has its own pandemic rules and regulations. Some countries require negative Covid tests upon arrival and others may require you to be fully vaccinated. It is also important to remember that if you travel internationally, you will need a negative Covid test to enter the U.S. again, regardless of your vaccination status. Listen in to hear how many hotels in Mexico are helping travelers with this requirement.

What are the best ways to earn points?

You can earn travel points and rewards even when you are not traveling by using a credit card. Lee recommends the Capital One Venture Rewards card to get started. You can get cash back or earn extra miles with each purchase that you make. Listen in to hear how you can get started with the Capital One Venture rewards program to start traveling this summer. 

Lee compares saving miles and points with saving for retirement. He states that the two best days to start saving your miles are 10 years ago and today. He also mentions the importance of using your miles periodically. You don’t want them to become devalued over the years. 

How to use your travel miles

There are more ways you can earn travel miles than just making purchases. There are apps that you can use like Dosh to help you earn extra miles on each transaction. 

If you have had a travel rewards card for years but find it difficult to use, you won’t want to miss this interview with Lee Huffman as he explains how you can best use your hard-earned miles. He not only mentions how to use your miles, but he also includes fantastic resources that you can check out to help you find availability so that you can actually use the points that you have accrued. 

Make sure to check out Lee’s podcast, We Travel There, to get inspiration for your next travel destination. He interviews locals to help his listeners understand how to get there, where to go, what to do, how to get around, and where to stay. 

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Jun 14, 2021

Nobody wants to think about becoming a widow or widower, but unfortunately, if you are married, there is a 50/50 chance that you could. In addition to the crushing grief that comes with losing a spouse, there are many details to take care of in that first year alone. This is why I want to share an article with you from NextAvenue.org.

The article, written by Anna Byrne, outlines 7 steps that you can take to help manage that first year on your own. Anna was only 28 years old when she lost her husband, so she has firsthand experience with this overwhelming stage of life. Her professional estate planning experience also lends practical tips to the article. Don’t miss this episode so that you know what you can do to help keep your head above water during that first year alone. 

Outline of This Episode

  • [2:22] 7 steps to take to manage the first year of widowhood
  • [8:34] My top 2 tips for a new widow or widower
  • [10:26] A question on the ACA subsidy under the American Rescue Plan

7 steps to manage the first year of widowhood

There’s no doubt that losing a spouse will cause overwhelming grief, but on top of that, there is so much to do in the wake of this personal tragedy. To help you wrap your head around all that there is to do, Anna Byrne from NextAvenue.org came up with 7 steps to help you through this challenging time.

Step 1 - Take care of immediate things. The small steps matter early on. You’ll need to notify family members and advisors right away. You’ll also need to make decisions about organ donation and funeral arrangements. Lean on family and friends if possible.

Step 2 - Find and organize key documents. Whether you want it or not, you are now in control of all aspects of your finances. You’ll need to find and organize important documents. Make sure to call your estate planning attorney if you used one since they will have the original will in their office. They will also have useful information to guide you through this process.

Step 3 - Take inventory of your financial situation. This is a good time to take inventory of your assets. You’ll want to create a list of all assets and debts owed by you and your partner. A good place to start is by looking at your tax returns since they detail itemized income and list the financial institutions. Look for bank accounts, retirement accounts, pensions, life insurance, real estate deeds, and Social Security information. 

Step 4 - Pull the pieces together. Every state has different laws and procedures regarding wills and probate. Familiarize yourself with the probate process in your state. You’ll also want to have a good understanding of the value of your spouse’s assets at the time of death since this is how estate taxes are calculated.

Step 5 - Build a team of trusted advisors. Having a financial and legal advisor that you can count on will help you navigate this process and avoid difficulties down the road. 

Step 6 - Plan for your immediate future. Create a new household budget and develop your own financial and retirement objectives. 

Step 7 - Plan things for your loved ones. Now it’s time to get your own affairs in order. This is a good time to update your will, power of attorney, and health care directive. Update your beneficiaries and create trusts as needed. 

Listen in to hear my own top two tips for a recent widow or widower. Stick around for the listener questions as Linda asks about the ACA subsidy under the American Rescue Plan. 

Don’t miss our summer travel series!

Over the course of the summer, we’ll sprinkle in travel episodes among the usual retirement planning content. When I was working with my clients for their May tax planning, the number one non-tax-related topic on their minds was travel. Everyone is excited to start traveling again. This is why I’ve been reaching out to folks in the travel blogging space, so we can all learn tips and tricks to make the most out of travel. If you are looking for travel hacks, rewards programs, and budget travel make sure to tune in this summer. 

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Jun 7, 2021

Do you consider being rich and being wealthy the same thing? In the book by Morgan Housel, The Psychology of Money, the author argues that these words mean two different things. In this episode of Retirement Starts Today, we’ll explore the difference between rich and wealthy as well as the connotation of the word money. 

Outline of This Episode

  • [1:42] A review of the psychology of money
  • [4:30] The difference between being rich and wealthy
  • [6:13] How to declutter the filing cabinet

Thank you for 1 million downloads

I want to thank you all for helping me hit an exciting podcasting milestone. In May of this year (2021), we hit 1 million lifetime downloads. Wow! When I started this podcast several years ago I was thrilled to reach 100 listeners a month, so this kind of reach boggles my mind. Thank you for joining me on this journey.

To celebrate this milestone, I have an extra heaping helping of retirement headlines today. Both articles hail from the Wall Street Journal. The first article, written by Jason Zwieg, is a review of the book, The Psychology of Money, by Morgan Housel and it explores the different mentalities of the rich and the wealthy. The second article will reveal the best way to declutter your filing cabinet. 

The Psychology of Money

Have you ever thought about what money really is? Money is more than a way to show the value of things. Money is also a carrier of emotion, ego, hopes, fears, dreams, heartbreak, confidence, envy, surprise, and regret. There is so much of ourselves that we wrap up in the concept of money. 

This is one of the central arguments in Morgan Housel’s new book, The Psychology of Money. The author juxtaposes two stories of two different men with two very different outlooks on money, and in doing so, he reveals that great fortunes can be built from old-fashioned values like delayed gratification. 

Have you ever thought of money from a values perspective?

What is the difference between being rich and being wealthy?

Housel explores the differences between those who are rich and those who are wealthy in his book. He describes being rich as having a high current income and being wealthy is having the freedom to choose not to spend money. He explains that many rich people aren’t wealthy because they spend much of their high income to show others how rich they are. 

How the difference between rich and wealthy can figure into retirement

“The ability to do what you want, when you want, with whom you want, for as long as you want pays the highest dividend that exists in finance.” This is what many people are looking for in retirement. Most people think of retirement as a time when you stop working, however, retirement could mean, “the ability to do what you want, when you want, with whom you want, for as long as you want.” 

What are you looking for in retirement? Are you ready to give up working completely or do you simply want more freedom and flexibility?

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May 31, 2021

Are you one of the many that are being held back from early retirement by the exorbitant cost of health insurance? If so, you won't want to miss this episode. This week’s retirement headline comes from Carolyn McClanahan at AdvisorPerspectives.com and it outlines the enhanced health insurance subsidies that stem from the American Rescue Plan (ARP). 

You’ll want to stick around for the listener questions segment if you are a fan of retirement podcasts. I have a treat for you all as I crowdsource the answer to John’s question about asset location. Listen in to hear 4 different answers from voices that you may recognize.

Outline of This Episode

  • [2:12] Could the American Rescue Plan be the answer to your health care before Medicare question?
  • [5:05] What do you need to do to act?
  • [8:49] An asset location question from John
  • [10:01] Peter Lazaroff’s answer
  • [12:02] Roger Whitney’s answer
  • [15:45] Taylor Schulte answer
  • [18:44] Chad Smith’s answer

Could the ARP be the answer to your health care before Medicare question?

The number one issue that holds back potential retirees from retiring early is how to find affordable health care before Medicare. If this sounds like you, then the American Rescue Plan may have the solution that you have been waiting for. Carolyn McClanahan's article is geared toward financial advisors, but we’ll take a look at it and see if the ARP could help you solve this common problem. 

How can the ARP help lower the cost of health insurance?

With the ARP, you may now be eligible for enhanced health insurance subsidies. The Affordable Care Act (ACA) subsidies have been limited to those with a modified adjusted gross income (MAGI) of less than 400% of the poverty level. However, the ARP has lifted these levels with a credit that is based on the cost of the second-cheapest silver plan available in any person’s given area. Unlike the previous credit under the ACA, it isn’t suddenly wiped out when someone’s income jumps over the income limit. Instead, it is phased out gradually.

What do you need to do to qualify?

To qualify, you must purchase your health insurance via www.healthcare.gov. The open enrollment period lasts through August 15, and the tax credits apply only for the months a person is using a plan from the ACA. Therefore, the sooner you apply, the more savings you will receive.

Additionally, anyone who has received even one week of unemployment benefits in 2021 and is without access to affordable insurance through a family member will qualify for a silver plan at no premium cost. They also will qualify for cost-sharing subsidies to help lower their deductible.

You can utilize the calculators at www.healthcare.gov or the Kaiser Family Foundation to determine your tax credit amount. States that have opted out of the healthcare marketplace may operate differently, so you’ll want to work with a local health insurance agent to help you navigate the process. 

The ARP also offers COBRA subsidies

If you lose employer-based coverage due to job loss or reduction in hours, the ARP provides COBRA premium subsidies from April 1 to September 30, 2021. After that, you can continue coverage at full cost. It is important for you to weigh whether you should accept this benefit or choose an exchange-based plan. Will take advantage of the benefits offered in the ARP to retire early?

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May 24, 2021

I’m sure you’ve all heard about the 4% rule for retirement planning. This rule is great for speculating your likelihood of success, but it isn’t always the best rule to follow in practice. 

Druce Vertes at AdvisorPerspecives.com offers a different approach to implementing the original 4% Rule. On this episode of Retirement Starts Today, we’ll dive into his technical article which explores the idea of making the normally rigid 4% rule more flexible to maximize spending for different levels of risk aversion.

I’m always looking for innovative ways to help you turn your retirement portfolio into income and that’s exactly what we’re exploring this week. Tune in to hear how to tweak the 4% rule and maximize your spending in retirement. 

Outline of This Episode

  • [2:52] Infinite risk aversion
  • [9:04] Constant relative risk aversion
  • [14:06] Thoughts on 401K rollovers

What exactly is the 4% rule?

The original 4% rule was theorized by Bill Bengen in the 1990s. This rule is handy for napkin math but doesn’t allow much flexibility and it may be overly cautious.

The 4% rule states that you can invest an equal amount in stocks and bonds and withdraw 4% of your starting portfolio during each year of retirement. As long as you adjust for inflation each year, you would never exhaust your money over the course of a 30-year retirement. Have you used the 4% rule to help you calculate the likelihood of financial success of your retirement?

How can one make the 4% rule more flexible?

Our retirement headline this week is titled Beyond the 4% Rule: Flexible Withdrawal Strategies Using Certainty-Equivalent Spending. It examines what would happen if we explored options beyond Bengen’s 4% rule. It asks, what flexible rules would maximize spending for different levels of risk aversion? The author used the programming language Python to maximize certainty-equivalent spending. This led him to three generalized rules based on one’s risk tolerance. 

3 rules for 3 separate risk tolerance categories

For those that are completely risk-averse, Bengen's 4% rule is the safest bet. The fixed constant withdrawal level never experiences a shortfall or reduction in withdrawals. 

The next category is for those who don't mind plenty of risk in their portfolio. This is why this rule is not recommended for most people. It finds the withdrawal amount that historically maximized spending irrespective of market volatility. This risk-neutral category is for those that can tolerate reductions in spending or shortfalls in some years as long as they are offset by gains in other years.

For those that fall somewhere in between the two ends of the risk tolerance spectrum, different rules apply which trade off higher mean withdrawals against the risk of lower withdrawals.

Using some of these rules, a retiree could achieve more than the 4% expected withdrawal rate. All of these models are simplifications, but they are useful and allow you to visualize the choices between different rules that have varying levels of risk tolerance.

Visualize your retirement spending

The author strived to create a simple model to help people understand strategies that may improve on a fixed withdrawal at varying levels of risk aversion. You can test out the different rules by using this online tool which allows you to try out and visualize each one.

It’s always refreshing to learn about new ways to live off your retirement savings. Vertes’ idea splits the difference between the 4% rule and a dynamic distribution plan. This hybrid plan would allow for higher spending in good markets and a scientific way to gradually reduce portfolio withdrawals when the market dips. 

Listen in to hear how each of these rules could play out with concrete examples using actual numbers. You’ll also hear Joe’s question regarding multiple 401Ks. 

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May 17, 2021

As you prepare yourself for retirement, you probably have a vision of your retired self traveling, spending more time on your hobbies, or with loved ones. Retirement will give you time for all that and more.

I read an article recently that describes the 6 phases of retirement. I had never defined it that way before, but this was an interesting way to delineate a natural progression of this time period. Press play to learn what these 6 phases are. 

Outline of This Episode

  • [1:42] There are 6 identifiable phases in retirement
  • [4:25] If you retire mid-year, is it better to reduce pretax and post-tax deductions?
  • [7:06] What should we do if our RMD rules violate our safe spending rules?
  • [11:04] What about using the 4% rule?

The natural progression of retirement

Have you ever thought about the natural phases of retirement? This week’s retirement headline is written by Andy Millard from AndyTheAdvisor.com. In the article, Andy mentions that much like the 5 stages of grief, retirement can also be broken into 6 identifiable phases. These stages don’t take the same amount of time and can vary from person to person.

  1. Honeymoon - This is likely the most active phase of retirement and probably the one you have been looking forward to the most. People are likely to use their newfound freedom to pursue hobbies, take trips and classes, and do home improvement projects. This stage will get you out and about in the world.
  2. Rest and relaxation - After enjoying the hustle and bustle of the honeymoon phase you may be ready to settle down a bit. This is the time to sit back and relax into the new slower-paced lifestyle. This stage may also bring on some introspection. You may reflect on a life well lived and think about what brought you to this point.
  3. Disenchantment - During this phase, people begin to realize that the changes they’ve made to their routines are permanent. You may begin wondering about your purpose in this part of your life. This can be an emotional time period for many and consist of both physical and mental adjustments to a new way of life, whether it be a change in spending habits, a move to a new community, or changes to health. 
  4. Reorientation - Hopefully the disenchantment won’t last long and you can quickly move onto the reorientation phase. This is a time when people begin to adjust to retirement and realize that there’s still more living ahead of them. Some examples of things that happen during this period are new marriages, learning new artistic disciplines, or finding new interests and hobbies. 
  5. Retirement routine - This stage is inevitable since humans find comfort in and crave routine. Whether it be club meetings, volunteering at your favorite charity, or a weekly coffee chat with friends, your new reality becomes your new normal.
  6. Termination - Unfortunately, at some point, retirement will end for everyone. This is--hopefully--a peaceful phase where people reflect on their life’s journey, their accomplishments, and whatever the next season holds.

Do you recognize these phases? Have you noticed them from your parents or older friends’ retirements? What are you most looking forward to in retirement?

Check out the newsletter for more links and retirement learning opportunities

Be sure to listen until the end of this episode to hear what to do if RMD rules violate your safe spending guidelines. I’ll also include links to the Guyton-Klinger rules in the Every Day Is Saturday newsletter. Head on over to www.retirementstartstodayradio.com/newsletter to sign up if you aren’t on the mailing list. The newsletter focuses on sending out relevant retirement information to educate you on your next phase of life.

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May 10, 2021

Have you ever considered going back to school? Early retirement can be a fantastic time to explore new learning opportunities. 

In this episode of Retirement Starts Today, we’ll take a look at a Market Watch article that describes the burgeoning culture of adult learning for those at or near retirement age. We’ll continue by exploring many higher education programs across the United States that are aimed at people aged 50 and above.

Make sure to stick around for the listener questions segment where I answer a question about using home equity as long-term care insurance. You’ll hear my opinion on the matter and learn how much home equity you may need to make this strategy work. 

Outline of This Episode

  • [1:36] It’s time to rebalance
  • [4:22] Have you considered taking an adult gap year?
  • [8:32] Real-world examples of retirement age students
  • [12:51] Using your home’s equity as long term care insurance
  • [17:19] How much home equity would you need?

It’s time to rebalance

We all know that the market has had an incredible run this past year. Many people’s portfolios are up 30%. When you’re seeing these kinds of returns it can be especially difficult to take those earnings and put them into the calmer side of your portfolio, but as you approach retirement it’s a good time to edge closer to a 60-40 split.

If you are within a year or two of retirement, you should know where your first few years of retirement income are coming from. That means that this is the time to be prudent and squirrel away some of those profits in any boring type of account so that you can fund the first few years of your retirement without worrying about the ups and downs of the markets. 

Now is the time to take a gap year

If you have ever had the inkling of going back to school early retirement is a great time to start. Many people are turning to higher education as a way to find fulfillment after long and successful careers. 

The rise of Covid and the ease of learning through technology are augmenting this trend. The pandemic has caused stagnant enrollment rates in many colleges around the country. This has led those institutions to find new ways to make money. Many universities are turning to alternative programs and continuing education as a way to reach a broader audience. 

What kinds of learning opportunities are out there?

There are learning opportunities offered through many different types of programs at different universities, private subscription programs, and even free online programs. 

These are a few of the programs are offered by different universities:

You don’t have to turn to a university to continue your education. There are many types of subscription learning programs available as well. 

If you don’t want to invest any money into continuing your education you can take advantage of free or low-cost programs through these websites:

Learning is easier than ever before

There are so many amazing educational opportunities to enjoy. The pandemic has caused a giant leap forward in virtual learning. With modern technology, you can learn anything at any time from any place. Since people are living longer, retirement can last for 30 years or more. This leaves plenty of time for an encore. So, if you ever had the notion to go back to school to either pursue your options for a second act or simply to explore new educational opportunities, the world is your oyster. Have you ever considered going back to school? What would you want to study?

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May 3, 2021

Since 2020 was the year of working from home, you may be wondering how you can deduct your home office expenses from your taxes now that tax time is upon us. For this reason, we explore an article written by Jeffrey Levine at Kitces.com. Learn the home office deduction rules and discover if they will apply to your situation.

Outline of This Episode

  • [2:12] The specifics of the home office deduction
  • [9:19] How to calculate the home office deduction
  • [11:55] Should he open an additional IRA?

Who is eligible for the home office deduction?

Many small business owners can claim a home office deduction as a tax break. However, not every person working from home can claim this deduction. For instance, the deduction is not accessible for employees who work from their own home offices. People owning partnership interests, on the other hand, are potentially eligible for this deduction. There are specific rules that need to be followed in order to determine whether your home office qualifies.

What are the rules to claim the home office deduction?

In order to claim the home office deduction, there are requirements that must be met.

The home office must pass the exclusive use test. This test dictates that in order to claim a home office deduction, the portion of the home that is deemed the home office must be used entirely for business purposes.

Something that limits a person’s ability to claim a home office deduction, but not necessarily eliminates it, is the ability to claim a separately identifiable space within their home that is used exclusively for business purposes.

Another stipulation of a home office deduction is the regular use requirement. Occasional office use is not enough, even if the business is the only use for that particular space. It must be used regularly in order to qualify for the home office deduction. 

Another requirement is that the home office must be considered the taxpayer’s principal place of business for a particular business activity. This means that this is the space where the majority of business is done. Deciding on this can be tricky if you have a home office as well as one in an office building. When deciding on a principal place of business, individuals should consider both the amount of time they spend at their various business locations, as well as the relative importance of the tasks performed at each location. 

Because of the pandemic, many have had to shift work that they typically did in an office building to spaces in their homes. For the year 2020, people in this situation may be able to claim a home office deduction.

How to calculate the home office deduction

There are two ways that you can calculate the home office deduction. The regular method will calculate the actual expenses of using your home office space. The simplified method will calculate the square footage of your home office and multiply it by $5. The maximum deduction using the simplified method is $1500. 

If you are considering using the home office deduction it is important to work with your tax professional to ensure that you are within the detailed guidelines. Make sure to click on through to the article to learn all the details about claiming the home office deduction.

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