Retirement Answer Man

“In preparing for battle I have always found that plans are useless but planning is indispensable.” Dwight D. Eisenhower

Ike is reminding us that the plan is not as important as the process. It is the practice of planning that is critical to success. You’ll never have everything figured out since the perfect retirement plan doesn’t exist, but by planning and staying agile you will be able to correct your course along the way. 

This month we have gone from theory to practice to mastery. On this episode of the Retirement Answer Man show, you’ll learn how to optimize your feasible, resilient plan so that you can rock retirement. 

Have a feasible, resilient plan in place before trying to optimize

Most retirement planning blogs and articles focus on optimization since optimizing retirement plans is the bling of financial planning. 

However, without first having an inspiring goal for your retirement, you wouldn’t have the hope of rocking retirement. It is important to start with a goal at the beginning to ensure that you build a feasible, resilient plan before trying to optimize your retirement plan. Remember that you create a retirement plan to help you focus on achieving the life outcomes that you have envisioned for yourself in retirement not to find the best Roth conversion strategy or qualify for ACA credits. 

Retirement tax planning is the best way to optimize your retirement plan

There are so many ways that you can optimize your retirement plan that it can end up being an infinite pool of possibilities. So you may be wondering what the best way to enhance your retirement journey is. The biggest way you can optimize your retirement journey is through tax management. 

In retirement, you have more control over your taxes than at any other time in your life. This means that instead of planning your taxes from year to year, you now have the capability to plan for lifetime tax savings. Retirement tax management is not about avoiding taxes, instead, it's about timing your taxes

You can plan your withdrawal strategy to optimize for taxes not just for this year but in the future as well. By forecasting your tax rate over the next 5-8 years using a traditional withdrawal approach you can gain an idea of what your RMDs will be once you turn 72. 

From there you can work backward to see if it would make more sense to do Roth conversions and pay more in taxes now so that you don’t have to withdraw so much later on in life. Listen in to hear how working backward can ensure that you focus on where you are going rather than where you are now.

Timing your Social Security benefit is another way to optimize your retirement plan

Social Security timing is another area that is important to think through in an organized way. Once you understand your withdrawal strategy then you can analyze where your Social Security benefits fall into your pie cake structure. 

Establish a retirement plan of record

Once again it is important to start with the end in mind. As you revise your retirement plan it is important to create an abstract with a summary of all the decisions you have made so that you can have a log of how everything plays out within the context of your thinking. This method will give you the framework to see how your decisions fit together over time. 

Every 6 months you’ll want to revisit your plan and ask yourself what has changed. Are your goals still the same? If not, then you can realign as needed. By revisiting your plan you can focus on the risks and opportunities that lie ahead. Try to set action items that focus on 1 or 2 of these risks and opportunities. This will give you an inspiring goal to work toward, the agency to achieve it, as well as the confidence to rock retirement. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [5:53] What can you do to enhance this journey?
  • [6:12] Tax management is the biggest thing you can optimize
  • [14:42] Should you try to get ACA healthcare subsidies?
  • [16:21] Take a look at Social Security
  • [20:55] The little conversations

LISTENER QUESTIONS

  • [23:37] Why should you use your house on your net worth statement?
  • [25:46] On using the strategic assumption of no inflation
  • [28:17] A Social Security timing question
  • [30:08] An observation on inflation
  • [33:23] Using caveats on Roth conversions
  • [36:34] How to report decreased income to Medicare

TODAY’S SMART SPRINT SEGMENT

  • [41:04] Map out the process that you want to take to walk through your strategy in a fresh way

Resources Mentioned In This Episode

Form SSA-44

Episode 402 with Andy Panko - The Retirement Tax Toolbox

LTCI Partners

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: RAM428.mp3
Category:general -- posted at: 2:00am CST

Now that you have come up with a retirement vision and learned to create a retirement plan that reflects your vision it’s time to make your plan agile. On this episode, you’ll learn why you need to have an agile retirement plan and how to make your plan resilient to the unexpected forces that could derail your retirement plans. Make sure to stick around until the end of the episode to hear BW talk about why it’s so important to master the fundamentals of retirement planning.

Don’t get overwhelmed by retirement planning

Over fast few months I’ve been working with a project manager to create an SOP (standard operating procedure) for Agile Retirement Management. This is such a huge project and it can be easy to get overwhelmed. But just like planning your own retirement can be complicated and overwhelming when you break the giant project into smaller actionable steps, it becomes more manageable. Walking through baby steps one by one takes away a bit of the overwhelm that can come with such a grand project.

Creating a resilient plan will help you prepare for the unexpected 

In the last episode, you learned how to turn your retirement vision into a feasible plan. But just like with any plan, it can be easy to knock your retirement plan off course. This is why it is important to create a resilient plan. Incorporating resiliency into your plan will help you to prepare for the unexpected. 

What could knock you off course on your retirement journey?

There are many things that could derail your retirement. Sequence of return risk is one. The markets don’t provide the same returns each year and these ups and downs can greatly affect your retirement–especially if there are a few bad years at the beginning of retirement. Those bad years could easily knock your retirement plans off course. 

Inflation is another issue. As we discussed all last month, inflation over time can put a dent in your purchasing power. 

Unplanned life events have a way of sneaking up and catching us off guard. Illness, death, long-term care events, or children in need are further events that could impact your retirement plan. 

The most common disruption of retirement plans is you. You may simply change your mind. Since you are always changing your needs, wants, and wishes change over time. 

Listen in to hear how you can make your retirement resilient against all of these bumps in your retirement road. 

How to develop slack in your retirement plan

It is important to have slack built into your system. Similar to the way that a very taut rope may break if you try to adjust it, we need to ensure that there is a bit of slack in the line of your retirement plan so that you can ensure that your desired life outcomes are feasible. When you press play you’ll hear how building a pie-cake can help you create slack in your retirement plan. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:08] You don’t need to get overwhelmed by retirement planning
  • [5:05] You need to create a resilient plan to prepare for the unexpected
  • [7:10] Why you need slack in your retirement plan
  • [12:12] The difference between the return on your money and return of your money
  • [14:32] How to build resilience into your retirement plan
  • [25:27] How the pie cake can help you build resiliency in your plan

COACHES CORNER WITH BW

  • [32:45] Kevin’s experience with pivoting in retirement

TODAY’S SMART SPRINT SEGMENT

  • [40:39] Understand how much liquidity you have on your balance sheet

Resources Mentioned In This Episode

Boomer Benefits 

DISC assessment

Enneagram

RISA retirement profile

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: RAM427.mp3
Category:general -- posted at: 10:50am CST

“Our mind is dyed with the color of our thoughts”--unknown. If this is true, then how are you thinking about retirement in the right way? To have confidence in your retirement plan you need to be thinking about the things that you can control and focusing on what has the biggest impact on your life. 

On this episode of Retirement Answer Man, you’ll learn how to create a feasible retirement strategy by analyzing your goals against where you are now. You’ll then learn about the three types of capital and how to build a net worth statement so that you can create a retirement plan of record. You won’t want to miss this important stage in developing your retirement plan, so press play now. 

Contrast your goal with where you are now 

According to the latest goal-setting research, merely setting goals alone isn’t that empowering. It is important to cast your vision; however, you also need to contrast your goal with your current state of affairs. This way you can see where the gaps lie. These gaps may make you uncomfortable, but acknowledging the incongruency will help you understand how far you need to go to reach your goals. This way you can also start collecting the little wins that inch you closer to your goals. 

The 3 types of capital to fund your retirement 

To create a feasible plan of record, you have to examine the resources that you have to fund your spending. To do this, you need to understand the different types of capital available to you in retirement. 

The first resource to consider is your social capital. Social capital is the payments you receive from a collective program like Social Security or a pension. These are guaranteed payments for the rest of your life. You’ll need to have a good estimate of what those payments are and when they start.

Human capital is next. You may not realize it, but you have used human capital as your primary resource for your entire working life. Human capital is the work you use to create income. 

Traditionally in retirement, this resource is absent, but many people now choose to work differently during, what I call, pretirement. You may choose to do a bit of consulting, open a small business, or do some part-time work for a few years. No matter how small the income may be, include it in your plan of record. Project when will it start, when will it end, how much you plan to make. 

Whatever human capital and social capital don’t pay for has to come from your financial capital. Your financial capital is simply your money. You will need financial capital to fill the gap between your retirement goals and your projected income. 

You can gain a better understanding of your financial capital by creating a net worth statement. Make sure you’re signed up for this week’s 6 Shot Saturday newsletter to receive a net worth statement template that you can use to create your own. 

How to know whether your plan is feasible

To understand whether your plan is feasible you’ll need to create your net worth statement by listing your assets and your liabilities. Even if you have no debt, you’ll want to list your future consumption as a liability to understand how your assets and liabilities balance out. By comparing both sides of the net worth statement you’ll understand your fundedness level. 

Listen in to hear how I use two ways to calculate fundedness to see whether a financial plan is feasible. On next week’s episode, you'll learn how to make your plan resilient, so make sure to check it out.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:38] Contrast your ideal retirement with your current situation
  • 6:35] How to create a feasible plan of record
  • [14:28] Your assumptions will be incorrect
  • [18:03] How to know whether your plan is feasible
  • [28:20] What does feasible mean?

LISTENER QUESTIONS

  • [30:10] Jim’s question on Social Security
  • [34:05] Moving from a balanced fund to a stable value fund
  • [38:30] Mark’s question about using I bonds in bond ladders

TODAY’S SMART SPRINT SEGMENT

  • [41:52] Take baby steps to create micro wins

Resources Mentioned In This Episode

Social Security detailed calculator

LTCI Partners

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: RAM426.mp3
Category:general -- posted at: 2:00am CST

Retirement is a journey into the unknown that can be intimidating. This is why you need to build up confidence in your plan so that you can rock retirement. To build your confidence it is important to master the fundamentals which simply means that you must practice them over and over again. 

Last week you learned to let go of the things that are out of your control and how to concentrate on working with the controllables by using an agile approach. This will give you the agency you need to prosper in retirement. 

Today we’ll focus on developing an inspiring goal for your future. Over the rest of the month, we'll explore the pathways to get you to your goal. If you are ready to learn how to rock retirement press play now. 

4 roadblocks that could hinder fulfilling your vision

With retirement on the horizon, you are ready to jump right in, but there can be some things that could hinder your progress. 

The paradox of choice

Who do you want to be when you grow up? This is a challenging question when you are already in your 50s or 60s. You have competency and interest in many domains at this stage of life, so it can be hard to choose what you want for your future. Or you may feel that when you set your goals they are set in stone since there's not a long time to change course. Don’t worry about this because you will change your mind. Life unfolds in twists and turns and plans will change. Don’t let the paradox of choice paralyze you. 

Start retirement with a clean slate

If you are like most of us, your life has been organized around your work or children. When you retire, your commute disappears and your kids are will have been sprung. You can now design your life any way you want. Think about how you can start your new life fresh from a clean slate. 

The accumulation mindset 

You have been a good saver your whole life and at this point, you have built up your net worth. Having these assets is comforting, so it can be challenging to begin to use your savings. However, you chose to defer that income to provide for your life in retirement. Eventually, the balance in your retirement accounts will level off or go down. You’ll have to overcome the fact that your savings are no longer growing. It is important to get over your frugality mindset to enjoy all that you have accumulated. 

Tomorrow is the day

We often plan retirement thinking about tomorrow. We think that tomorrow is the day that we will start x, y, or z. But it is important to remember that we are not guaranteed any tomorrows. To truly rock retirement you have to live for today. Today is the day to show up and pay attention to your life. Life is happening now, so rock your life today.

How to create a vision for your future

Before you begin to financially plan for retirement you need to create a vision for your future. One way to do that is to use the wisdom from those at the end of their lives to make the most of your own. Listen in to hear the top 5 regrets of the dying to help you make the most of your own life.

Have you given much thought to your values? Spend some time establishing your values so that you can envision building a life that is true to yourself. Once you have created a vision for your future you can create a plan to make it feasible. Don’t miss next week’s episode to learn how to create the pathways to reach your retirement vision.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [3:57] Who do you want to be when you grow up?
  • [6:05] Your life is organized around your work
  • [9:07] Tomorrow is the day
  • [12:02] A 3 step process to create a vision for your future
  • [19:10] How to bring these goals into a financial perspective

LISTENER QUESTIONS

  • [25:57] A question on the 4% expected return used in the Retirement Plan Live webinar
  • [29:43] Why use a 5% expected return rate?
  • [33:35] A question on delaying taking RMDs
  • [35:50] How I pick case studies for Retirement Plan Live
  • [40:03] What to do with an inherited IRA

TODAY’S SMART SPRINT SEGMENT

  • [44:08] Create a compelling vision for your retirement

Resources Mentioned In This Episode

Check out Boomer Benefits for all your Medicare questions!

BOOK - Wooden by John Wooden

BOOK - The Top 5 Regrets of the Dying by Bronnie Ware

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: RAM425.mp3
Category:general -- posted at: 10:05am CST

 We can be easily distracted by the bright shiny objects of retirement planning which is why it is important to master the fundamentals first. Understanding the fundamentals of retirement planning will help you to create a solid foundation so that you can cope with all of the uncertainty that retirement brings. 

Here on the Retirement Answer Man show, I typically dive into the foundational concepts of retirement planning in bits and pieces by answering questions. However, I haven’t taken a deep dive into teaching the fundamentals here on the show.

Over the course of this 5 week segment, we will start at the beginning and explore the fundamentals of retirement planning in greater detail so that you gain a working knowledge that will give you the confidence to execute your plan. If you have been wondering what Agile Retirement Management is this is the perfect time to press play.

Areas where traditional retirement planning is lacking

There are so many uncertainties surrounding retirement, but most people are worried about just one thing: running out of money.

Traditional retirement planning methods help people build a financial plan to ensure that they don’t run out of money. In conventional planning, retirement becomes a one-dimensional math problem to be solved with investment products. Retirees are asked to place all their trust in the numbers of long-term returns and hope that all will be well.

These planning methods focus solely on the financial future and without considering the person’s life goals. While it is important to plan for the future, life exists now. Retirement should be about living life to the fullest extent that you can. An agile approach to retirement helps you balance the future while living a great life today.

What is an agile approach to retirement?

I designed the agile approach to retirement planning by using a project management methodology. Agile retirement management focuses on achieving an objective by focusing on one thing at a time without trying to figure everything out all at once. With this approach, people are able to quickly iterate as needed as their situation changes. 

The key to an agile methodology lies in understanding the fundamentals of retirement planning so that you can increase your agency and control the controllables. This ensures that you can refine your goals and dreams based on what you can control. 

The principles of an agile approach to retirement planning

An agile approach accepts that you can’t figure out everything. There is no way to predict what will happen with inflation, markets, or even your life in the future. This is why it is important to try not to dial in exactly what will happen 20 years from now. By staying agile, you’ll be able to quickly respond to any shifts in life or the markets and consider how to improve your reactions.

These are the principles to developing an agile approach to retirement: 

Collaboration - It’s important to collaborate rather than delegating someone to plan your retirement. Use your strengths to inform your decision-making. Being creative together allows you to discover joint solutions

Flexibility - You can't figure out everything at once, so value optionality and flexibility.

Prioritize - Try as you might, you can’t do everything at once. With so many levers to pull, it can be easy to focus on the wrong thing. Prioritize to improve focus and find the areas that will make the biggest impact on your life. 

Communication - Even if you do it on your own, you still need to have the right communication. Use a series of little conversations to check in with your plan to make sure that you are on the right track. Take action then review the action once it is complete. Periodically evaluate risks and opportunities in your plan.

Traditional retirement planning doesn't allow you to explore the things that matter in life. You don’t want to miss out on the ride of life, so master the fundamentals of retirement planning. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

PRACTICAL PLANNING SEGMENT

  • [2:55] Why it is so important to master the fundamentals of retirement planning
  • [9:40] What is an agile approach?
  • [11:50] Principles of an agile approach

LISTENER QUESTIONS

  • [19:34] Worries about the long term stability of Anne’s annuity
  • [23:29] Chen was relieved to hear Dom’s story
  • [24:45] A life insurance question
  • [26:41] How to determine payout options when the female has the pension

TODAY’S SMART SPRINT SEGMENT

  • [30:28] Review the controllables that were discussed in your last retirement plan meeting 

Resources Mentioned In This Episode

Episode 422 - with Don’s interview

LTCI Partners

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: RAM424.mp3
Category:general -- posted at: 2:00am CST

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