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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: March, 2021
Mar 29, 2021

You have fraud protection on your bank accounts and your credit cards, but what about your retirement accounts? Today we’ll explore an article from the Wall Street Journal outlining a case of cyber fraud in a 401K account. We’ll also discuss ways for people to safeguard their savings. 

In the listener questions segment, I’ll answer a question about buying an RV in retirement and we’ll wrap up this episode with a question from Hal about whether to make Roth conversions or pay off the mortgage. Press play to get started on this episode of Retirement Starts Today. 

Outline of This Episode

  • [1:22] Retirement accounts are not offered the same protections as 401K accounts
  • [3:04] Steps you can take to protect yourself from cyber fraud
  • [6:20] John asks whether to get a loan for his RV or use his retirement account
  • [12:36] Hal asks, Roth conversions or pay off the mortgage?

Retirement accounts are not offered the same protections as 401K accounts

Our retirement headline this week is titled Retirement Planning Gives Bigger Role to Theft Prevention as Risks Lurk OnlineThis article warns us against cyber fraud of retirement accounts. The laws regarding retirement income were enacted well before the internet, so they don’t address who should be responsible for this type of crime. We often have more money saved in our retirement accounts than in our checking accounts, so this kind of theft can be life-changing. 

Retirement account cyberfraud is increasing 

Retirement account cyber fraud used to be typically perpetrated by members of one’s own family, but in the past few years, strangers have played a bigger role in committing these types of crimes. 

The article highlights one particular case where the account owners were shocked to discover that ⅔ of their retirement savings had been transferred to an unknown account. The couple then had to postpone their retirement indefinitely. 

5 steps you can take to protect yourself from cyberfraud

If you don’t want to have this happen to you there are steps you can take to protect yourself from cyber fraud. 

  1. Have an online account. Even if you prefer paper statements, set up online access since unclaimed online accounts are easier for impersonators to set up and control.
  2. Check in regularly. Check your 401K account along with your email and street addresses monthly. You can also sign up for text alerts that notify you of changes or transactions. Make sure to use multifactor authentication which verifies your identity by sending codes to multiple devices.
  3. Practice good internet hygiene. Avoid public wi-fi and never click on emails or texts that seek personal information including passwords. Make sure to install software updates regularly.
  4. Create good passwords. Choose a unique password and keep them confidential. If you use a third-party service to help you remember your financial passwords understand that could be grounds for denying reimbursement of any stolen funds. 
  5. Evaluate the logistics of how you withdraw money from your retirement accounts. Check with your custodian to see what the protocol is for moving money between accounts. 

Thieves always want to be ahead of us and the regulators so we have to stay on our toes. Listen in to hear the tips on how you can protect your hard-earned money and retire comfortably. You’ll also hear the answers to 2 relevant listener questions. 

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Mar 22, 2021

If you have listened to the news at all lately, you probably know what our Retirement Headlines segment will cover. The American Rescue Plan is all any financial news is talking about these days, so in today’s episode, we’ll explore what you need to know about this recent piece of legislation. 

Then in the Listener Questions segment, I answer the question: should having a pension change the way we invest the rest of our portfolio? Press play to find out. 

Outline of This Episode

  • [1:22] Eligibility has been expanded in this new round of stimulus checks
  • [5:36] What does this mean for you?
  • [9:22] What wasn’t included in the American Rescue Plan?
  • [12:10] How to invest if you are in line to receive a pension?

Eligibility for stimulus checks has changed

The American Rescue Plan is all over the news lately, but the article that I am referencing is written by Jeffrey Levine from Kitces.com titled The American Rescue Plan Act Of 2021: Tax Credits, Stimulus Checks, And More That Advisors Need To Know! 

The most talked-about part of this tax legislation is, of course, the $1400 stimulus checks which will be soon sent to eligible Americans to provide economic relief from the ongoing pandemic.

Not only are the checks more generous, but there are also key eligibility changes from the previous rounds of stimulus checks. Eligibility in this cycle has been expanded from including only children under the age of 17 to include all dependents in the household.

However, just because you got a stimulus check last time does not mean you will receive one this time. The income limitations of this package mean that there is a narrower margin of income eligibility. While the beginning of the phaseout starts at the same level of income, $75,000 for individuals and $150,000 for married couples, it phases out much more quickly. The cap for individuals is $80,000 and couples is $160,000.

What does this mean for you?

If your income is close to that income cap and went down this year then you’ll want to file your taxes as soon as you can. However, if you are one of the lucky few whose income rose in 2020 compared to 2019 and are near or above the phaseout range then hold off on filing your income taxes until after you receive your stimulus payment. 

What else is in the stimulus package?

The stimulus checks weren’t the only thing included in this $1.9 trillion bill. Another significant change included is a significant increase in the child tax credit. This credit has been increased from $2000 to $3000 and $3600 for children under the age of 6.

It is important to note that not everyone with children age 17 and under will qualify to receive the enhanced 2021 child tax credit amount since the phase-out ranges will be at significantly lower income amounts than the standard child tax credit.

Listen in to find out what else was included and what wasn’t included in the American Rescue Plan and stick around to hear the listener question.

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Mar 15, 2021

Enrolling in Medicare can be extremely stressful and confusing. There are so many choices to make, there are different rules to follow, and timelines to be met. Additionally, there is so much information out there that it merely adds to the confusion. 

On this episode of Retirement Starts Today, I share with you an article written by Joanne Giardini-Russel from Advisor Perspectives entitled, 5 Tips to De-Stress the Entry into Medicare. If you are starting to dive into the Medicare enrollment process you won’t want to miss these 5 tips. 

Make sure to stick around for the listener questions segment to hear a question about enrolling in Medicare as an expat as well as whether you should be doing Roth conversions if your income will decrease. You’ll also learn why it has taken me a year to get around to answering some listener questions!

Outline of This Episode

  • [1:32] 5 Tips to lessen the stress of the entry into Medicare
  • [6:14] As an expat would it make sense to buy plans G or N now or wait?
  • [9:43] Should you do Roth conversions now if you will have a decrease in income?
  • [14:33] Why I haven’t been answering some listener questions

5 tips to ease the Medicare enrollment process

If you are approaching age 65 you may have noticed all the literature surrounding Medicare that has come in your mail. Rather than help you answer the questions you have about Medicare, they often add to the confusion. The whole process can be overwhelming, but these 5 tips can help you understand what to do to enroll. 

  1. Don’t automatically enroll in Medicare at age 65 unless you need or want to. Understand that there are situations where you want to enroll and where you don’t want to enroll in Medicare at 65. This is one of the keys to understanding Medicare. If you do want to enroll in Medicare at age 65 you’ll need to understand all the hoops to jump through. If you are drawing your Social Security benefits before age 65 then you will be automatically enrolled in Medicare parts A and B.
  2. Don’t overwhelm yourself with too much information. You can find thousands of Medicare webinars, workshops, and seminars with a simple web search, but overwhelming yourself with too much information isn’t beneficial. You may even fall prey to businesses that are looking only to serve themselves. A good place to start your Medicare research is with the official Medicare and You Handbook directly from Medicare.
  3. Understand the 2 paths to Medicare. You’ll want to decide whether to go with a Medigap plan or a Medicare Advantage plan. Learn the differences between the two and think about which one best fits your budget and lifestyle. 
  4. Use technology to take advantage of everything that you can access from the comfort of your home. 
  5. Secure a good Medicare guide. Contact several different agencies and agents before turning 65. Prepare a list of questions for them and make sure to check their Google reviews. When selecting an agent you’ll want to make sure to choose one who will stick with you over time and provide follow-up support. 

Key takeaways about signing up for Medicare

Try not to get overwhelmed by the Medicare enrollment process. Begin your research before you turn 65, and spend time finding a good agent or agency who will be there to support you over the long haul. Educate yourself with available government resources so that you can make informed decisions.

Check out the Boomer Benefits YouTube channel in April to see me on a 3-part series with Danielle Roberts. Make sure that you are subscribed to the Every Day is Saturday newsletter to receive a direct link when it comes out.

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Mar 8, 2021

How long have you been saving for retirement? Are you hesitant to break into your retirement funds and start living it up once you retire? 

This week I share two Retirement Headlines articles. The first is called Right-Sizing Retirement and it comes from the Financial Planning Association. In this article, the authors pose an important question: why save for retirement if you're not going to spend it?

We’ll also check out another article from Wharton Magazine entitled The Economics of Living to 100. Is your retirement plan ready for you to live until 100? Listen to this episode to understand how you can best combat the uncertainty that retirement brings.

Outline of This Episode

  • [1:42] Right-sizing retirement
  • [6:28] Combat uncertainty with contingency planning
  • [7:22] What if you live until 100?
  • [11:50] There is a need for longevity income
  • [13:39] What is your plan B?

Why are Americans underspending in their first 10 years of retirement?

David Blanchett and Warren Cormier recently wrote an article for the Financial Planning Association in which they explore the first 10 years of retirement. What they discovered from the RAND Health and Retirement Study is that early retirees tend to underspend. The authors wanted to find the underlying reasons for why we are seeing this trend in America. This research explores the retirement consumption gap and considers both the wealth available to fund retirement and spending before and after retirement.

There are 2 types of retirees

Retirees can be broken down into 2 main categories: those who have saved enough to cover their levels of pre-retirement spending and those who did not. Interestingly, both of these types of retirees tend to underspend in early retirement but for different reasons.

Only 18 percent of households in America have enough wealth to cover their pre-retirement spending during retirement. This tells us that most households will not be able to maintain their pre-retirement lifestyle in retirement because they don’t have enough money. 

You may think that only those that don’t have enough saved cut their spending in retirement, however, the data shows that most households that have saved more than enough to fund their lifestyles in retirement also decrease their spending in early retirement.

Why don't well-funded households spend more in retirement?

Many well-funded households could increase consumption but don’t. So, why does this group of retirees spend less during early retirement? Potential reasons include the desire to leave a legacy, uncertain medical expenses, or an uncertain life expectancy. There also could be psychological or other reasons not easily discerned from survey data.

Uncertainty leads to spending less

The main reason for this lack of spending in the first 10 years of retirement is uncertainty. Does the uncertainty that retirement brings give you pause to live out your retirement fully? 

One way to combat this unpredictability is with contingency planning. If you’re listening to a retirement podcast then you probably have a retirement plan, but do you have a plan B? What will you do if life throws a wrench in your plans? Listen in to hear what you can do to combat the uncertainty that retirement brings.

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Mar 1, 2021

Have you heard of the Monte Carlo retirement projection analysis? It is being used more and more by advisors and even popular retirement planning websites. Today, in the Retirement Headlines segment, I offer some insight on an article from Kitces.com that argues that using the Monte Carlo projection, a 50%probability of success rate is good enough. Then in the listener questions segment, I answer the question: what should you do if you plan on never retiring? Don’t miss out on my 5 step plan for those that plan on never retiring. 

Outline of This Episode

  • [1:32] A 50% probability of success is actually a viable Monte Carlo retirement projection
  • [7:34] Your retirement plan doesn’t have to be carved in stone
  • [11:11] What should you do if you plan on never retiring?
  • [16:00] Steps to follow if you don’t plan to retire

What is the Monte Carlo analysis?

The Monte Carlo analysis is increasingly becoming the most common method of conducting retirement projections for clients. I use it in my own practice and many online retirement calculators such as Vanguard and Fidelity use it too. This risk management technique was actually developed by an atomic nuclear scientist in 1940 to analyze the impact of risks of a project and had nothing to do with retirement. 

Would you be comfortable with a probability of success under 70% for your retirement?

You may hear financial advisors discussing a client’s probability of success to describe their retirement portfolio. Reflecting on your grades in school, you probably aren’t comfortable with anything less than 70% since anything below that would be a failing grade. However, in his article, Derek Tharp argues that a probability of under 70% is still realistic for clients who are willing to make some spending adjustments.

Your retirement plan doesn’t have to be carved in stone

Your retirement isn’t static, it’s a constantly changing dynamic picture that should use a dynamic strategy that fits your unique situation and shifting goals. If you are willing to make the needed adjustments on your path to retirement, then when you hear the news that you have a 50% (or even lower) probability of success, don’t panic, you may actually be in better shape than you may realize as long as adjustments are made.

The drawbacks of retirement models

The Monte Carlo simulation is a useful planning tool but it has its drawbacks. Like many retirement tools, it doesn’t do a great job of modeling human behavior in retirement. If the markets start dropping most people adjust their spending habits accordingly. Guyton’s Guardrails are a better tool for predicting how people might behave as the markets rise and fall. You can learn more about Guyton’s Guardrails in episodes 153149, and 93. Stick around until the end of this episode to hear my 5 step plan for those that never plan to retire.

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