Retirement Answer Man

If you are the non-planning type, it can be easy to worry about whether your retirement plan is on track. How are you supposed to know what is going on and whether you should have the confidence to know if your plan is working?

On this episode of Retirement Answer Man, you’ll learn 5 things that you can check periodically to give you an idea if your retirement plan is on the right track. If you are wondering how to investigate whether or not your retirement plan is on track, then make sure to listen to this episode to learn what you need to know. 

Where does confidence come from?

The whole point of retirement planning is to give you the confidence to live life in your retirement without worry. Before you create your retirement plan you need to understand what it is that will give you confidence in that plan. 

Confidence comes from understanding. To understand your plan you need to first set your goals. What is your vision? Once you have a vision of your ideal retirement then you can deconstruct that vision to map out your journey. That journey will take you from the current version of yourself to the future you. To map your journey you need to have clear action items to lead you along each step of the way. 

There is no need to look around at others on their journey since each one is personal. Your retirement journey is yours alone. 

5 things you should track to feel confident in your retirement plan

  1. Have your goals changed? Assess your goals with your significant other or advisor to make sure they still reflect what you really want. Are you still aiming for the same target? Is this still the life you want to build or has anything changed? 
  2. Check in with your spending. How is your current spending relevant to your overall plan? Track your spending goals to see if they are still relevant. At the end of each year look back at what you actually spent your money on. You’ll want to make sure to track how you did relative to your plan. Sometimes you may deviate from the plan a bit, but by tracking you can identify trends over the long term. Tracking can help you to tease out opportunities and risks
  3. Is your plan still feasible? Should you make a change? Big expenditures can pop up, the market could go down, expenses could go up: all of these things could change your plan’s feasibility. One way to check to see if your plan is still feasible is to track your withdrawal ratio. This is the percentage of your assets that you take out of your portfolio each year. Tracking your withdrawal ratio can help you recognize whether your retirement plan is sustainable. Listen in to learn what else you should consider to ensure that your plan will actually work.
  4. Make sure your retirement plan is sustainable. Is it resilient? Do you have enough financial nutrients in the near term, midterm, and long term? Check out last week’s episode to hear more about how to plan for the short-term, mid-term, and long-term in retirement. 
  5. Focus on the WHAAM. Think about what you should do next. Then figure out how to do it, get accountability, take action, and finally, achieve momentum. In your retirement planning, think about how you can shift your focus to best serve yourself.

If you want to ensure that you will rock retirement, then continually check in with these 5 areas.

Are you ready for more Retirement Answer Man?

For the past 7 years without fail, we have brought the Retirement Answer Man to your earbuds on a weekly basis. That is about to change.

Starting in October we will be splitting the podcast into two separate parts released on two different days. Coming on Tuesdays you’ll hear the Q&A part of the show. On Fridays, we’ll focus on the monthly theme. 

This split will allow us to dive a bit deeper into our monthly topics and answer more of your questions. It will also allow you to decide to listen to what you want to hear. We value your feedback, so please let us know what you think of this new setup. 

 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [6:25] A triathlon story to illustrate how humans overcomplicate things
  • [14:40] Where does confidence come from?
  • [16:13] 5 things you should track to feel confident in your retirement plan

LISTENER QUESTIONS

  • [27:00] How does Josh designate pretax and post-tax contributions when they are commingled
  • [33:26] How to understand the options to deal with precious metals

COACHES CORNER WITH BW

  • [37:31] What do people need to know about retirement planning the non-financial side of retirement?
  • [39:26] How will you spend your days in retirement?

TODAY’S SMART SPRINT SEGMENT

  • [43:34] Get answers to the 5 things we covered

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM397.mp3
Category:general -- posted at: 2:00am CST

As the non-planner of your family, you may not be interested in all the nitty-gritty details of retirement investments, but it is important to know the basics. That’s why today we will cover the main concepts about investing your assets. Hopefully, my nutrition analogy will help make these financial concepts more understandable. Press play to hear what you need to know about investment basics for the non-planner. 

Investing in retirement is all about solving for risk

Last week you learned how inflation and market volatility are the two risks to overcome when investing in retirement. Solving for these risks are the most important part of creating a retirement portfolio. 

To explain retirement investing, I like to think of nutrition. When you eat you solve the problem of being hungry now, but you also solve the problem of getting nutrients to your body to help ensure that you stay healthy in the future. Investing also serves to help you in the short and long-term.

How are you nourishing your investments in the short-term and the long-term?

With every meal you eat you are investing in your short-term energy. The vitamins and minerals that you may take help you invest in your long-term health. We keep enough cash and bonds on hand to sustain ourselves for the next 1-5 years and protect from market risk. 

Stocks and real estate investments can have ups and downs which can be scary in the short term but in the long-term they help to hedge against inflation. 

Ask your financial planning partner how you are nourishing your investments in the short-term and the long-term.

The building blocks of investment

It is important to learn the building blocks of retirement investing. Building a retirement portfolio is much like building a meal. There is the salad, the main course, and the dessert. Short-term investments are the funds that you plan to use within 1-5 years, mid-term investments will be used within 5-10 years, and long-term investments are funds that you don’t plan to use for more than ten years. Listen in to learn how these different investments are like building a meal.

Be sure to join us in October for the Taxes in Retirement series

Make sure to join us next month as we dive into taxes in retirement. We have certainly covered this topic before, but a lot has changed since the last time we discussed taxes. We’ll explore proposed tax law changes and discuss how that could affect you and your retirement. 

Andy Panko from the Taxes in Retirement Facebook Group will join me over the course of the entire series. If you are really looking to nerd out on taxes, then don’t miss the episode with Wade Pfau who joins me to discuss his tax management academic research. If you are a part of the RRC you’ll get the added benefit of having both of these guests in the Clubhouse for meetups. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:30] An investment analogy
  • [10:04] How to invest for the short and long-term
  • [18:25] The building blocks of investment

Q&A WITH NICHOLE

  • [22:51] What are some solutions to the Social Security funding problem
  • [29:19] The Rock Retirement book has been helpful to Steven
  • [33:32] Why I haven’t covered the sale of a business to fund retirement
  • [35:25] Will Jim’s retirement strategy work?

TODAY’S SMART SPRINT SEGMENT

  • [40:24] Think about how you will pay for life in the short-term, mid-term, and long-term

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM396.mp3
Category:general -- posted at: 2:00am CST

Are you the person in your family that stays away from financial planning? Do numbers and financial jargon put you to sleep? If so, this is the right retirement planning series for you. This episode is the third in the Retirement Planning for Non-Planners series. In this series, I explain what you need to know without all the financial lingo so that you can understand the most important aspects of retirement planning. 

In this episode, Fritz Gilbert from The Retirement Manifesto blog joins me to discuss the basics of retirement planning risks. Listen in so that you can understand what to look out for in retirement planning.

This is a financial jargon-free series

If you aren’t interested in finance it can be difficult to discuss retirement planning with someone who is. They start throwing terms like RMD, sequence of returns risk, and the 4% rule. When people start using these terms it can be easy to become overwhelmed. The purpose of this series is to empower you so that you can have an understanding of what is happening with your money to help make better choices. My goal is to explain retirement planning in a non-geeky way that anyone can understand.

What are the financial risks in retirement?

Retirement brings different types of risks for your money. Essentially there are two types of risks to be aware of: short-term and long-term risks.

Think about a teeter-totter. On either side of the teeter-totter, you have your short-term risk and your long-term risk. The short-term risk is losing money today and the long-term risk is losing money in the future. You need to come up with a solution that balances both of these risks without tilting too much to one side. 

We lose money in the short term through market risk. If the market takes a tumble, you could lose a significant portion of your savings. The solution to that is to take all of your money out of investments and have it sit in cash. Unfortunately, this solution to the short-term risk doesn’t work in the long term. 

The long-term financial risk is inflation. You may have noticed gas prices or food prices increasing over time. This means that your dollar today won’t be worth the same as your future dollar. As prices increase the value of your money decreases. We combat long-term inflation risk with investing, however, this solution puts us at risk in the short term. 

How to balance retirement risk

To balance both sides of the risk spectrum it is important to think about how much money you will need to support your lifestyle in the near future. You’ll want to consider how much cash you should have on hand if the market drops. This will help you mitigate the short-term risk while at the same time leaving the rest of your savings to grow in the long term. The goal of balancing these risks is to have the confidence to have money to spend next year and also to spend when you are 80.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT WITH FRITZ GILBERT

  • [2:30] Financial lingo can be intimidating
  • [6:37] Short term risks
  • [10:47] Inflation is a long term risk
  • [18:37] How to deal with spending shocks
  • [25:55] Understand what types of questions to ask
  • [28:39] Catching up with Fritz in retirement

LISTENER QUESTIONS WITH NICHOLE

  • [38:24] 6-Shot Saturday drama
  • [42:15] Should Shari take the lump sum or an annuity?
  • [48:20] How do I feel about LIRPs?
  • [54:36] What are the non-financial boundaries of a fiduciary?
  • [1:00:24] A question about my pronunciation of words
  • [1:02:47] A proposal for changing the GAA acronym

TODAY’S SMART SPRINT SEGMENT

  • [1:04:34] Organize the strategy that best works for you

Resources Mentioned In This Episode

Retirement Manifesto

Retirement Planning for Non-Planners - start with this first episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM395A.mp3
Category:general -- posted at: 11:22am CST

When you hear financial lingo do you immediately begin to tune out? Does retirement planning make you nervous? If so, this is the right series for you. You’re listening to a 5-part series on retirement planning specifically designed for non-planners. 

The goal of this series is to educate you on retirement planning without all of the confusing lingo. We’re going to keep it simple and focus on teaching you the most important aspects of retirement planning. If you haven’t listened to episode 393, go back and check it out so that you can understand how to begin planning for retirement. 

You only need to focus on the important aspects of retirement planning

There are many retirement planning geeks out there that love to focus on the economy, markets, and business cycles. They relish mapping out different Roth conversion scenarios to reduce their RMDs. But if you aren’t a planning geek, talking to those people can make retirement planning seem overwhelming. 

You’ll be happy to learn that to successfully plan for retirement you don’t need to have a degree in economics, you just need to make sure that you focus on the most important things. That is what we are doing here today. I’m here to help you understand what the most important aspects of retirement planning are. 

Can your retirement dreams come true?

During the previous episode, you created a vision of your ideal retirement. Now it’s time to see if you can make your retirement dreams a reality. The biggest question everyone has in retirement planning is will I run out of money? 

The answer is, no one knows. The economy, life’s surprises, and people’s perpetual habit of changing their minds make it impossible to be sure. There are too many unknowns to be certain about the future. However, it is okay to have that uncertainty. 

If you can get a good approximation of a retirement plan then you can make adaptations to your plan as life unfolds. I use agile retirement management to help my clients make adjustments to their retirement plan when life shocks or bad markets disrupt their plan. 

Where will your retirement income come from?

When planning your retirement you’ll want to consider the income you will receive from Social Security, pensions, or even part-time work. The rest of your retirement income will need to be covered by your retirement savings. 

There are many software tools that can help you plan your retirement. It is important to use a retirement calculator to estimate how much money you will need to live out your retirement dreams. In the Rock Retirement Club, we use the New Retirement Plus Calculator. A retirement calculator can give you a long-term projection of your retirement income needs. 

Have your first 5 years of retirement income readily available

While retirement planning software can help you plan out the long-term, you’ll want to understand where your money is coming from in the near term. You should have the next 5 years of spending readily available in accounts that aren’t exposed to the winds of the economy like money market accounts or CDs. 

Listen in to learn what the most important aspects of retirement planning are so that you don’t get worried about getting caught up in the small details that don’t matter as much. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:51] Can you safely pay for your dream retirement?
  • [6:55] Where will your retirement income come from?
  • [13:45] Recheck your retirement compass periodically

LISTENER QUESTIONS

  • [19:31] Does it make sense to make after-tax 401K contributions?
  • [23:14] How to estimate MAGI for an IRMAA appeal?
  • [28:12] Can you start Social Security benefits from one spouse early and then wait for the other spouse’s benefit?
  • [29:35] Should I open a non-retirement account?

TODAY’S SMART SPRINT SEGMENT

  • [33:45] Understand the resources you have available to use in retirement

Resources Mentioned In This Episode

NewRetirement.com

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM394.mp3
Category:general -- posted at: 2:00am CST

Do your eyes glaze over when your significant other starts talking about money? Or maybe you are single and you know that retirement is coming soon, but you simply can’t get motivated to plan it out? Or perhaps you are the planner of the family and you would like your partner to take an interest in what lies ahead in retirement? If so, then this is the series for you!

Those of us who are into retirement planning can quickly overcomplicate things, but to someone that is new to all this or not really into this planning stuff, retirement planning can be overwhelming. In this Retirement Planning for Non-Planners series, I will introduce you to retirement planning in a lingo-free way that won’t put you to sleep. 

The objective of the Retirement Planning for Non-Planners series

My goal for this series is to give you the power to participate in the retirement planning process. If you are planning your retirement on your own I want you to understand what you need to take care of and understand the basics without becoming overwhelmed. You’ll learn the fundamentals and be able to discuss retirement planning in an educated way. Are you ready to get started? Press play now!

What do you envision yourself doing after your working life?

What do you want for your life after work? Have you thought about this question? This is actually one of the most difficult questions to answer, but it is also the basis for retirement planning.

It can be challenging to consider your life after work. There are so many options to consider and you are starting with a clean slate. Many of us treat this question the way we chose a major in college or our first job. But you don’t have to take this so seriously. Your life will not be ruined if you don’t get this question right. Since we use an agile approach to retirement planning, if you want to switch gears you can. Consider your future life after your working years. What can you imagine?

The retirement fundamentals

Once you know what you want to do in retirement, the next question is can you afford it?

After you discover whether you can afford your dream life then you need to learn how to pay for it. You’ll want to find out how you actually create a retirement paycheck. The last question we’ll consider is how to gain the confidence to make it all work. You must have confidence in your plan to rock retirement. 

Over the course of this series, we’ll be taking a look at these questions so that you can build a retirement plan that works for you. 

Set your retirement goals

To prepare for your retirement you’ll need to forecast your spending. To do so, can create different levels of spending. Your must-haves are things like housing, electricity, water, gas, and food. These barebones expenses are nonnegotiables.

In the next category, put the things you would like to do in retirement. Maybe you would like to play golf once a week, travel once a year, or eat out a few times a month.

The last level is your unspoken dreams that you like to think about but you may have never written down. This is your opportunity to think big.

You’ll want to group these different types of spending so that you can have an idea of how much money each type of retirement would need. 

Listen in to hear why this type of exercise is so important in your retirement planning. You won’t want to live a life of regret thinking about what you might have been able to do had you thought bigger when planning your retirement. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [2:55] What are the fundamentals of retirement planning?

PRACTICAL PLANNING SEGMENT

  • [5:49] What do you want?
  • [8:34] Setting retirement goals
  • [13:45] Don’t let someone else dictate your life
  • [18:51] What will you do every day in retirement?

LISTENER QUESTIONS

  • [22:29] When to apply for Social Security
  • [23:32] How to reduce the effect of inflation in your 5-year income floor
  • [27:48] How to get started early in retirement planning and saving
  • [34:30] My own plans for retirement

TODAY’S SMART SPRINT SEGMENT

  • [39:48] Think about your must-haves, like-to-haves, and cool-to-haves

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM393.mp3
Category:general -- posted at: 2:00am CST

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