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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: September, 2021
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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