January 14, 2025 • 25 mins
How much is enough for retirement? In our debut episode, we explore practical ways to calculate your retirement savings goal, key factors that influence it, and simple methods to ensure you’re on track for the freedom and lifestyle you want.
• Importance of knowing your personal retirement number
• Common benchmarks for planning retirement savings
• Methods for calculating retirement needs
• Overview of the safe withdrawal rate and its significance
• Actionable steps for pre-retirees
• Key takeaways for individuals already in retirement
Episode Resources:
Retirement Roadmap Worksheet
Questions or Feedback?
Send us a note! podcast@conradsiegel.com
Disclosures:
Information on this show is for educational purposes only and should not be considered personalized investment, tax, or legal advice. Before making decisions, you should consult with the appropriate professionals for advice that is specific to your situation."
All investment advisory services and fiduciary services are provided through Conrad Siegel Investment Advisors, Inc. (“CSIA”), a fee-for-service investment adviser registered with the U.S. Securities and Exchange Commission which operates in a fiduciary capacity for its clients. Registration does not imply any level of skill or training. Investing in securities involves the potential for gains and the risk of loss and past performance may not be indicative of future results. Any testimonials do not refer, directly or indirectly, to CSIA or its investment advice, analysis or other advisory services.
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Intro (00:03):
Welcome to the Real Talk Retirement Show, where we
explore the financial side ofretirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now let's get real about yourmoney and your retirement.
(00:29):
Now let's get real about yourmoney and your retirement.
Brian Graff (00:31):
Welcome, everyone, and thank you so much for tuning
in to episode number one of ourReal Talk Retirement Show.
My name is Brian Graff and I'mhere with my co-host, tracy
Burke.
Tracy, how are you doing today?
Are you ready to jump into thispodcast thing with me?
Tracy Burke (00:43):
Absolutely Super excited to be with you, Brian.
Brian Graff (00:46):
Yeah, well, and as you might have guessed by the
title of our show, this podcastis really about retirement.
But if we're being honest, youknow we don't know a lot about
podcasting.
This is, I think, a first goaround for both Tracy and I, so
please bear with us as we kindof get our footing here and work
through the process, but we'resuper excited about the
opportunity.
(01:06):
But one thing we do know quitea bit about, I think it's safe
to say, tracy, is retirement.
I've been in the industry forabout 25 years now talking about
retirement to people every day.
And to put that intoperspective, 25 years if a child
was born the day I startedtalking about retirement, they
(01:29):
would qualify for discountedrates on auto insurance.
So I think maybe that ages me alittle bit, but yeah, this has
kind of been my passion for thelast two decades and a half.
Tracy, tell us a little bitabout what you do here at Conrad
Siegel.
Tracy Burke (01:39):
Yeah, thanks, brian , and again, I'm thrilled to be
doing this with you and seeinghow we can help everybody that's
listening, both that are inretirement and also preparing
for retirement.
So I've been an advisor workingwith investors and families for
, I guess, about 20 years nowand really look forward to
sharing some of what I've seenover those years.
Our wealth management team hereat Conrad Siegel is really
(02:03):
fantastic.
We spend most of our timeworking with, or, I guess, on
behalf of, our clients to helpthem be successful, and we try
to have this down-to-earthapproach and giving them the
peace of mind as we help themnavigate the financial world
together, together.
And, brian, I would say you knowI'm super excited about this
podcast because I think you know, as you know, those who view it
(02:27):
just as another outlet to helppeople, and of course, that's
our goal.
But really we want to helpsimplify these financial topics,
want to help to provide claritywhen it comes to everybody's
retirement.
So we want to help, you know,these folks that are listening
be confident, and sometimesthese topics can seem
(02:51):
complicated and we just want tounpack it in a simple to
understand way.
So I think, with all that inmind, brian, I would say let's
just jump right into our firsttopic today, and this is a
question that we get a lot,which is why we wanted to start
with this topic.
But the question really is howdo we know if we have enough
money saved for retirement?
Brian Graff (03:08):
Right, it's that million-dollar question, right,
Tracy?
I mean as a retirement educatorand, by the way, I work
predominantly with employees intheir workplace retirement plans
.
So everybody some people I talkto have a zero balance in their
retirement plan.
Some people have a milliondollars or more.
So it really does run the fullgamut there.
And that question comes up byeverybody what is that magic
(03:31):
number?
What do I need to save?
And it's a stress point for somany of us, right?
So I think it's important thatwe address it.
But, Tracy, in your opinion,why is it so important for us to
figure this out, this magicnumber?
Tracy Burke (03:42):
Yeah.
So of course everybody wants tohave enough money to live
through retirement, and that'sthe ultimate goal for both those
in retirement that they don'twant to run out of money at some
point in the future, or forthose pre-retiring and again
trying to figure out what's thatnumber.
I need to be able to walk away.
And of course nobody wants torun out of money, even you know
(04:03):
some people say, oh, you know, Iwould love to bounce that last
check that I write, you know,way down the pike.
I think that's that's, you know, very unlikely to do.
But you know, as I think backthrough, you know, in 20 years
I've been doing this, I don'tthink I've ever heard somebody
say I wish I didn't save so much, didn't save so much, and you
(04:27):
know so.
Obviously we want to get peopleto be able to get to that spot
really to retire on their ownterms.
And you know, whatever age thatis, as people think through
into the future of when theymight want to retire, for those
who are currently pre-retirement, you know, trying to think, you
know I want to get to thispoint where I can retire on my
terms.
Brian Graff (04:45):
Yeah, tracy is almost kind of like you know,
waking up every day and saying,hey, I can kind of do whatever I
want today, right Within reasonand certainly within the law.
But I mean really just havingthe independence and the freedom
to do that.
Tracy Burke (04:56):
Yeah, absolutely, and that's exactly what it is.
So you know, brian, as we thinkabout what, what all kinds of
information is out there andwhat key pieces of information
we want to share with thelisteners here today, there's
tons of statistics out there,right, everything in life.
You see tons of statistics andyou know many ask that question
well, what should I have, orwhat's the normal?
(05:18):
What sort of rules of thumb?
So, brian, what are some ofthose numbers that we use?
Brian Graff (05:24):
Yeah, and I'll start off by saying and I say
this in a lot of the education Ido is that magic number is
different for everybody, right?
So it's not a one size fits all.
So much of it depends on yourincome level that you're used to
living at what your retirementvision looks like.
Do you want to travel the worldor do you just want to make
sure your debt's paid off and gofishing on the weekends or play
with the grandkids?
Those are two extremes, right,most of us fall somewhere in
(05:47):
between.
But, as Tracy alluded to, youknow, there are some really
popular benchmarks used in ourindustry to kind of help you
along as you plan for retirement.
And, for example, our friendsat T Rowe Price recommend that
you have about seven and a halfto 13 and a half times your
final year's salary saved forretirement by the age of 65.
To simplify that even a littlebit more, fidelity uses a number
(06:10):
that says by age 67, which isconsidered full retirement age
for most of us by SocialSecurity these days, you should
have about 10 times your finalyear's salary saved for
retirement, again for thatcomfortable retirement.
So to put an actual number tothat, let's say your final
year's salary is $100,000.
Using Fidelity's model, youshould have about 10 times that,
(06:33):
or $1 million, saved forretirement.
So just some benchmarks tothink about.
Everybody likes to have somegoals or numbers to kind of
ponder.
Those are ones that we wouldrecommend you consider.
Tracy Burke (06:45):
Yeah, and Brian, as you said earlier, it's not a
one size fits all approach,right?
So certain factors that willmake the difference, the amount
that you're planning on spendingand we're going to talk about
that in a little bit here whenyou're going to retire those
metrics that you just gave wereretirement age perhaps, and some
people want to retire earlier,Some people want to retire later
(07:07):
, so that all affects.
Obviously you need more ifyou're going to retire earlier
and less maybe if you retirelater.
You know how aggressive you areinvesting, right, If you're
looking for, if you're puttingyour money into bank CDs and
getting, maybe, over the longerterm, two or 3%, your number's
going to have to be higher aswell, versus if you're getting,
(07:27):
you know, rolling the dice andgetting some maybe higher
expected returns.
And then the last thing thatcomes to mind is how long you're
going to live.
You know and I don't know,Brian, if you figured that out
yet I don't think I have, youknow, but trying to figure out
how long you're going to live,and we've heard people say well,
I have longevity in my family,or everybody in my family, my
heritage, you know they passaway by a certain age, an
(07:51):
earlier age, but nobody knowsthat answer.
Brian Graff (07:56):
Yeah, that's true, Tracy, and hopefully we all live
a long, long prosperous lifeand get to enjoy our retirement.
But again, you just never know.
But let's kind of get into themeat of today's podcast, Tracy,
if you will.
And what are some of the waysthat you recommend individuals
figure out if they do haveenough money saved for
(08:16):
retirement?
Maybe that's just a little bitmore in-depth than those
benchmarks we talked aboutearlier.
What are you telling people outthere, Tracy?
Tracy Burke (08:23):
Yeah for sure, and there's really three different,
pretty common methods here andwe'll try to go through them
briefly as we do it.
So I'm going to geek out alittle bit here.
The good news is we do have aresource, or really a worksheet,
to help everybody through this.
We're going to put that out inthe show notes, so visit the
show note page and you'll beable to download that PDF and
(08:46):
help you through it.
But so the first one mentioned.
There's three.
The very first one, it's what wecall the income replacement
ratio method and what that meansis sort of what it sounds like
You're going to take your finalincome that you're making
pre-retirement and taking aratio of that to replace your
(09:06):
income pre-retirement intoretirement.
So a broad example Brianmentioned maybe $100,000 of an
income before retirement.
So what we do is we take thatnumber, then we back out any
expenses that will likely beeliminated, that were there
during our working careers.
Now some of this is some ofthose pesky payroll taxes, the F
(09:28):
, the FICA.
Sometimes you know state andlocal taxes and it depends on
what state you live, localityyou live, all those type of
things, work-related expenses.
You know even savings thatyou're saving for retirement.
We back those out, because inretirement you're no longer
saving, right?
So any of those outflows thathave been happening during
(09:48):
retirement, we back those out.
Outflows that have beenhappening during retirement, we
back those out.
Then we add some expenses thattypically will show in
retirement or come up.
So maybe that's additionalhealthcare expenses, maybe it's
leisure expenses Golfing I know,brian, you're a big golfer, so
a lot of folks go in and havethese hobbies that take up a
little bit more.
(10:08):
So we back out some expenses,we add in some expenses that
happen after retirement and thenwe sort of get to whatever that
number is and generally therule of thumb I think we've seen
is generally 80% plus or minus.
Brian Graff (10:22):
Yeah, tracy, why don't we use that number?
By the way, real quick sidenote too, tracy said I'm a big
golfer, but that does not meanI'm a good golfer, but anyway,
just a quick aside there.
But yeah, I hear that 80%number used a lot.
Why is that so common?
Because of some of thoseexpenses that go away, and I
know there's some that get added.
What's the general rule of 80%?
Tracy Burke (10:41):
Yeah, absolutely, and a lot of folks we talk about
this a lot with investors right, brian, that you should be
saving 10% to 15% of your incomefor retirement.
That's one of those numbersthat's getting backed out.
We think those expenses forthose FICA taxes or other taxes
FICA it's Social Security,medicare taxes you pay while
(11:03):
you're working.
Right there, that's over 7.5%.
That's backed out Some of theother taxes that come in.
So typically you could see 25%,maybe 30% of your
pre-retirement earnings beingbacked out before what you add.
Yeah, thanks for that.
Brian Graff (11:23):
That makes sense.
And this number we use a lot.
We throw it out there and I getthat question sometimes why 80%
, why don't I need 100% of myincome?
I'm used to this lifestyle, butI think when you mention all
those different figures andthose takeaways or those
subtractions, I think that itreally starts to make sense to
people.
So yeah, thanks for expandingon that a little bit.
Tracy Burke (11:40):
Yeah for sure.
So then that takes us to thesecond method I mentioned.
Now, rather than ballparking it, which is the first method, it
was really ballparking it rightNow.
The second method is really thedetailed expense analysis
component.
So this is where you're justdoing sort of a line by line
item.
You're figuring out what are myexpenses going to be in
(12:02):
retirement In this worksheetthat we're providing.
It breaks it down into differentareas, but housing is one that
we're providing.
It breaks it down intodifferent areas, but housing is
one, and that includes utilitiesand everything property taxes,
insurances, all those type ofthings that go into housing.
Obviously that can be a bigchunk, whether it's
transportation, other livingexpenses, certainly groceries,
(12:25):
clothing, all kinds of stuff ofthat nature.
Taxes, of course that's part ofwhat's going to be going out
the door and that's going tochange in retirement, but still,
unfortunately still got paidtaxes right In terms of
insurances we talked about, andthen sort of that
all-encompassing other category.
So more discretionary expenses,just personal care, cell phone,
(12:50):
and probably most people saythat's not discretionary anymore
.
You know you need that cellphone, but dining out,
entertainment, gifts, all thosetype of categories where again
you're going sort of line byline and trying to figure it out
.
So, brian, as you can imagine,that way can get a little tricky
because you can there's areaswhere you might forget about,
(13:11):
right, you know that that can besomething where you might go
through and you just mightforget about even major
categories.
So that can be a little bit,you know, a little bit tricky to
go that way.
So you know, before we go on tothe third method, really for
either those first two the nextstep then is to figure out what
(13:32):
you need to take from yourportfolio.
And again we're sort of backinginto that ultimate question,
right, how much do I need forretirement?
So the next step is afteryou're figuring out what you
need for your retirement incomenumber.
Well, thankfully, almosteverybody has social security
coming through the door and somefolks might have other income
sources.
Well, thankfully, you know,almost everybody has social
security coming through the doorand some folks might have other
(13:52):
income sources.
Maybe it's rental properties,maybe they're doing some
part-time work in retirement,maybe they even have one of
those old-fashioned pensionplans, right?
So you know, in that example wewere talking about, brian, if
we, you know, have 80% ofreplacement and say, you know,
$80,000 is the number we need.
Maybe that person has $20,000coming in the door through
(14:14):
social security, collectively,you know whether it's, you know,
just single or married.
And then you know maybe there'sanother 10,000 coming from a
pension.
So we back out 20 plus 10 fromthe 80.
Now we're down to 50,000.
So in that first year ofretirement that person would
really need to withdraw fromtheir savings of $50,000.
(14:37):
And again, backing out what'scoming in the door and then sort
of the final step to get toyour number and sort of drum
roll.
Here we're coming down to homestretch in terms of that.
You know, finding what's a safewithdrawal rate.
So if I need to take up $50,000from my portfolio, what's you
know what percentage can I takeout that's going to be
(14:58):
sustainable throughout time?
And there's been many, manystudies on this and sort of that
4% range.
You know it can be three to 5%,probably a safe withdrawal
range, but you know the mostcommon one we've seen out there
is 4%.
So if I take $50,000 that Ineed to take out of my portfolio
, divide it by 4% if you'reusing Calculator, divide it by
(15:20):
0.04, and you get to the numberand the math in that example
comes out to $1.25 million.
So if you need to take out$50,000 of your portfolio and
you feel that 4% is that safewithdrawal rate, you need $1.25
million to take out.
Does that make sense, brian?
Brian Graff (15:37):
Yeah, it does.
I like the math element of it,and it's something like Tracy
said.
Look at the show notes for somehelp with that, maybe for some
guidelines.
But for those of you that enjoykind of nerding out like Tracy
does on the math part, it'sreally not that hard of a
calculation, I promise, but thatdoes make sense.
And I think one of the keythings, though, too, is and
you're right that 4% rule comesup all the time in my
(15:59):
conversations.
It's something that's tried andtrue, it's been around for a
long time, but also it's not100%, is it, tracy?
I think it's not 100% as atracing.
I think it's really importantto have that flexibility in
retirement, right Knowing thatthese equations are not
necessarily a one size fits all.
So would you agree that that'strue too?
4% isn't necessarily foreveryone in every situation.
Tracy Burke (16:21):
Yeah, yeah, absolutely.
And again, it depends on howyou're investing.
If you're super concerned, a 4%might be pushing the envelope.
If you're only getting 3% offof CDs or something like that,
that might be inhibiting in thefuture or, on the other end, if
you're much more aggressive,like to see people use to figure
(16:44):
out what their number is.
This one, I think, is, in mymind, the easiest method and one
that we use with many of ourclients as well, and it's just
really called a 5% guardrailsapproach.
So you know it's a guardrail andif you think about you're
driving down the highway, youknow of retirement, you're
(17:04):
driving down through there.
Nobody wants to run off thecliff or off the edges, right,
you want to stay on the road.
So imagine you have guardrailsboth sort of on maybe the top
and the bottom.
So you're taking yourretirement income and what
sometimes, brian, we've seenwith a 4% number for folks that
are moderate type of investorsand maybe that's anywhere
(17:25):
between 40% and 60 percent ofstock exposure in their
portfolio, the allocation sortof moderate investors, what
we've seen.
You know the four percentnumber.
You know their money continuesto grow and grow and sometimes
they might retire with a millionbucks and when they pass away
many years down the pike, theymight have two or three million
dollars.
(17:46):
And I think for a lot of peoplethat's not the goal to have
more money when you die thanwhen you retire, right.
The opposite, of course, isn'tthe goal either, where you start
in retirement with whatever youhave and you go down to zero,
right.
That's not the goal.
So really, this guardrails isthat nice middle-of-the-road
approach.
It sort of keeps you in thatrange.
Your portfolio is not drivingup, it's not driving down, it's
(18:12):
sort of keeping you in there.
And really what it does if youhit the top barrier, guess what
you can spend more.
If you hit the bottom barrier,you might have to cut back some
from the withdrawals.
So that mindset, it's reallyabout a 5% number give or take
and it depends on how aggressiveyou are and that's how we work
with our clients and just tryingto figure what that number is.
Obviously there's other ways todo it, but that's a pretty good
(18:35):
way that we like to see it.
And again, just like the firsttwo approaches, back out where
you're going to get from socialsecurity and other income as you
get there.
But again, that's my favoriteapproach to guard girls.
I think it's probably prettysimple of figuring out how much
you really need and how much youcan spend in your retirement.
Brian Graff (18:55):
Yeah, tracy, a couple of times I know you
mentioned sometimes you can beinvested a little too
conservatively, which may youmay have a little bit of a hard
time staying in line with yourretirement objectives.
Sometimes you're a little tooaggressive, which maybe kind of
hurts your portfolio a littlebit of a hard time staying in
line with your retirementobjectives.
Sometimes you're a little tooaggressive, which maybe kind of
hurts your portfolio a littlebit in those early years.
I'm curious I know futureepisodes of this podcast we're
going to take a little deeperdive to investing specifically
(19:16):
but a number that we hear a lot,or a mix we hear a lot, is like
that 60-40 portfolio and I'mjust curious to see, like if
you're for a normal retiree,that maybe they're right in line
with their retirement goals youknow they've done the planning,
they feel like they've got justenough in their portfolio Is
60-40 still?
Is that an appropriate numberor does it really just depend on
the situation and the goals ofthe investor?
Tracy Burke (19:37):
Yeah, I think it certainly depends, and mostly on
risk tolerance.
Right, you know 60-40portfolios in retirement can
take a nosedive and will.
It's not if it's going tohappen, it's when it's going to
happen.
You have to prepare for thatand just have to be able to
tolerate and ride it through.
But the other factor is the 40is, I think, in retirement, the
most important number, and evensome people are 70-30 or 80-20.
(20:01):
You want to have enough in thatfixed income bucket because when
equities go down, most of thetime fixed income goes up.
And most of the time Iemphasize that a little bit
because in 2022, and probablymany of our listeners are
thinking, well, yeah, everythingwas down in 2022, and it was
(20:23):
Generally that's not the case.
But when stocks go down, bondsnormally hold their own and you
don't want to be forced to sellfrom stocks when you're taking
money out of your portfolio.
Right, Successful investorssell high and buy low, so you
don't want to sell when thestocks are down.
So, again, with that mentality,you have money in that 30, 40%
(20:46):
bond exposure, 50%, whateveryour comfort level is.
Make sure you have enough inbonds so you can take money out,
maybe for a couple of years ina row to allow the stocks to
recover after that decline.
Brian Graff (20:58):
Okay, yeah, thanks, tracy, again, because that one
comes up so often in myconversations.
People hear that 60-40 all thetime, so I appreciate your
insight on that.
All right, so you know our goalhere at Conrad Siegel, through
this podcast and pretty mucheverything we do, is really to
simplify the complex, right?
We don't want this to bedifficult for you.
I know we threw out a lot ofnumbers at you, hopefully in
(21:19):
pretty easy to understand terms,but maybe, if we kind of finish
things out today, tracy, Ithink we need to get some action
items right, because I don'tthink these podcasts are going
to help too many people if wedon't give them some clear,
concise things that they can donow or in the near future to
maybe be prepared for retirement.
So do we want to go over someaction items?
Yeah, absolutely.
Tracy Burke (21:39):
And let's start with pre-retirees.
So again, we said thateverything we're going to talk
about on all these shows applyto both people in retirement as
well as people preparing for it.
So let me start with the folksthat are looking to retirement
and obviously, the number oneaction items and these are
pretty big picture items, butfigure out what's your number or
(21:59):
have that plan, that retirementplan, in place so you know when
you can retire, and, as wementioned a couple times now,
the resources out there in theshow notes.
So take advantage of that,reach out to us to help and
we're happy to help you walkthrough that.
And then I would say the secondaction.
I'm sure you start dreaming orthinking about what retirement's
going to look like for you.
(22:20):
If that's in horizon, whetherit's within a couple of years or
five or 10 years or maybe eveneven longer term, start to
formulate that.
What do you want yourretirement to look like?
Because that can help you planfor it.
You know, if I want to take avacation to Hawaii every three
months in retirement, I need toplan for that.
I'm going to need to save aheck of a lot more than I'm
(22:42):
saving right now, right?
So so those are a couple ofaction items I'm thinking of for
people leading into retirementor pre-retires.
But, brian, what are youthinking of for those already in
retirement?
Brian Graff (22:53):
Yeah, for sure.
And I guess, tracy, one of theother expressions we use a lot
here is retired to something,right, not from something.
So I like to throw that in aswell too.
I think we all have thoserelatives or people we know that
work so hard their whole livesand one day they're retired and
they're like, oh my gosh, now,what am I going to do?
And a lot of times they go backto work or they're miserable or
whatever.
(23:13):
So make sure, yeah, like Tracysaid, you do have that
retirement vision picked out.
But for those folks that arealready in retirement, I think
one of the most important thingsyou can do is simply confirm
that you won't run out of money,right, use some of those, like
the 5% guardrails that Tracy wasjust talking about and, you
know, just revisit are youliving your ideal retirement?
Do you need to make somechanges, both, you know,
(23:35):
personally and financially, tomake sure you are doing
everything you dreamed aboutdoing and just kind of living a
happy rest of your life, right?
That should be the goal of allthis again, financial and
otherwise.
So I think those are some keytakeaways for both.
Tracy, any closing thoughtsbefore we wrap things up for
today about everything wediscussed.
Tracy Burke (23:54):
Yeah, and again, everybody's situation is
different.
We're here to help.
We encourage our viewers toreach out to us.
Podcast at conradsiegelcom isthe email address to shoot us a
note.
Let us know what you think, anyfuture topics that you might
have, questions, comments,anything we can do to help.
That's what we're here to do.
Brian Graff (24:13):
Yeah, for sure.
And again, this has been a funtime.
Again, episode number one.
So bear with us.
I think we're going to get alot better at this as we go by
too, and I'm pretty sure wedon't have any sponsors.
Like we can't be canceled, canwe, tracy?
Is that a thing if we're justkind of doing this on our own?
I hope?
Tracy Burke (24:26):
not yes.
Brian Graff (24:32):
Well, we hope that everybody did enjoy it and, if
you did, please tell a friend, afamily member to tune in.
The more people we havelistening, the more people will
be able to help, and that's whatwe love to do at Conrad Siegel.
We are fiduciaries and we lovehelping people.
So, yeah, thanks everyone fortaking time.
Tracy, thanks for doing most ofthe heavy lifting today.
I promise I'll do my share infuture podcasts, but had a great
time everybody.
Good luck and tune in next timefor episode two of Real Talk
(24:53):
Retirement.
Intro (24:56):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(25:18):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
Welcome to the Real Talk Retirement Show, where we
explore the financial side ofretirement and beyond.
Whether you're currentlyretired or planning for the
future, we offer real, relatableconversations about money and
personal finances.
Most importantly, we dive intoall these topics using Real Talk
.
Now let's get real about yourmoney and your retirement.
(00:29):
Now let's get real about yourmoney and your retirement.
Brian Graff (00:31):
Welcome, everyone, and thank you so much for tuning
in to episode number one of ourReal Talk Retirement Show.
My name is Brian Graff and I'mhere with my co-host, tracy
Burke.
Tracy, how are you doing today?
Are you ready to jump into thispodcast thing with me?
Tracy Burke (00:43):
Absolutely Super excited to be with you, Brian.
Brian Graff (00:46):
Yeah, well, and as you might have guessed by the
title of our show, this podcastis really about retirement.
But if we're being honest, youknow we don't know a lot about
podcasting.
This is, I think, a first goaround for both Tracy and I, so
please bear with us as we kindof get our footing here and work
through the process, but we'resuper excited about the
opportunity.
(01:06):
But one thing we do know quitea bit about, I think it's safe
to say, tracy, is retirement.
I've been in the industry forabout 25 years now talking about
retirement to people every day.
And to put that intoperspective, 25 years if a child
was born the day I startedtalking about retirement, they
(01:29):
would qualify for discountedrates on auto insurance.
So I think maybe that ages me alittle bit, but yeah, this has
kind of been my passion for thelast two decades and a half.
Tracy, tell us a little bitabout what you do here at Conrad
Siegel.
Tracy Burke (01:39):
Yeah, thanks, brian , and again, I'm thrilled to be
doing this with you and seeinghow we can help everybody that's
listening, both that are inretirement and also preparing
for retirement.
So I've been an advisor workingwith investors and families for
, I guess, about 20 years nowand really look forward to
sharing some of what I've seenover those years.
Our wealth management team hereat Conrad Siegel is really
(02:03):
fantastic.
We spend most of our timeworking with, or, I guess, on
behalf of, our clients to helpthem be successful, and we try
to have this down-to-earthapproach and giving them the
peace of mind as we help themnavigate the financial world
together, together.
And, brian, I would say you knowI'm super excited about this
podcast because I think you know, as you know, those who view it
(02:27):
just as another outlet to helppeople, and of course, that's
our goal.
But really we want to helpsimplify these financial topics,
want to help to provide claritywhen it comes to everybody's
retirement.
So we want to help, you know,these folks that are listening
be confident, and sometimesthese topics can seem
(02:51):
complicated and we just want tounpack it in a simple to
understand way.
So I think, with all that inmind, brian, I would say let's
just jump right into our firsttopic today, and this is a
question that we get a lot,which is why we wanted to start
with this topic.
But the question really is howdo we know if we have enough
money saved for retirement?
Brian Graff (03:08):
Right, it's that million-dollar question, right,
Tracy?
I mean as a retirement educatorand, by the way, I work
predominantly with employees intheir workplace retirement plans
.
So everybody some people I talkto have a zero balance in their
retirement plan.
Some people have a milliondollars or more.
So it really does run the fullgamut there.
And that question comes up byeverybody what is that magic
(03:31):
number?
What do I need to save?
And it's a stress point for somany of us, right?
So I think it's important thatwe address it.
But, Tracy, in your opinion,why is it so important for us to
figure this out, this magicnumber?
Tracy Burke (03:42):
Yeah.
So of course everybody wants tohave enough money to live
through retirement, and that'sthe ultimate goal for both those
in retirement that they don'twant to run out of money at some
point in the future, or forthose pre-retiring and again
trying to figure out what's thatnumber.
I need to be able to walk away.
And of course nobody wants torun out of money, even you know
(04:03):
some people say, oh, you know, Iwould love to bounce that last
check that I write, you know,way down the pike.
I think that's that's, you know, very unlikely to do.
But you know, as I think backthrough, you know, in 20 years
I've been doing this, I don'tthink I've ever heard somebody
say I wish I didn't save so much, didn't save so much, and you
(04:27):
know so.
Obviously we want to get peopleto be able to get to that spot
really to retire on their ownterms.
And you know, whatever age thatis, as people think through
into the future of when theymight want to retire, for those
who are currently pre-retirement, you know, trying to think, you
know I want to get to thispoint where I can retire on my
terms.
Brian Graff (04:45):
Yeah, tracy is almost kind of like you know,
waking up every day and saying,hey, I can kind of do whatever I
want today, right Within reasonand certainly within the law.
But I mean really just havingthe independence and the freedom
to do that.
Tracy Burke (04:56):
Yeah, absolutely, and that's exactly what it is.
So you know, brian, as we thinkabout what, what all kinds of
information is out there andwhat key pieces of information
we want to share with thelisteners here today, there's
tons of statistics out there,right, everything in life.
You see tons of statistics andyou know many ask that question
well, what should I have, orwhat's the normal?
(05:18):
What sort of rules of thumb?
So, brian, what are some ofthose numbers that we use?
Brian Graff (05:24):
Yeah, and I'll start off by saying and I say
this in a lot of the education Ido is that magic number is
different for everybody, right?
So it's not a one size fits all.
So much of it depends on yourincome level that you're used to
living at what your retirementvision looks like.
Do you want to travel the worldor do you just want to make
sure your debt's paid off and gofishing on the weekends or play
with the grandkids?
Those are two extremes, right,most of us fall somewhere in
(05:47):
between.
But, as Tracy alluded to, youknow, there are some really
popular benchmarks used in ourindustry to kind of help you
along as you plan for retirement.
And, for example, our friendsat T Rowe Price recommend that
you have about seven and a halfto 13 and a half times your
final year's salary saved forretirement by the age of 65.
To simplify that even a littlebit more, fidelity uses a number
(06:10):
that says by age 67, which isconsidered full retirement age
for most of us by SocialSecurity these days, you should
have about 10 times your finalyear's salary saved for
retirement, again for thatcomfortable retirement.
So to put an actual number tothat, let's say your final
year's salary is $100,000.
Using Fidelity's model, youshould have about 10 times that,
(06:33):
or $1 million, saved forretirement.
So just some benchmarks tothink about.
Everybody likes to have somegoals or numbers to kind of
ponder.
Those are ones that we wouldrecommend you consider.
Tracy Burke (06:45):
Yeah, and Brian, as you said earlier, it's not a
one size fits all approach,right?
So certain factors that willmake the difference, the amount
that you're planning on spendingand we're going to talk about
that in a little bit here whenyou're going to retire those
metrics that you just gave wereretirement age perhaps, and some
people want to retire earlier,Some people want to retire later
(07:07):
, so that all affects.
Obviously you need more ifyou're going to retire earlier
and less maybe if you retirelater.
You know how aggressive you areinvesting, right, If you're
looking for, if you're puttingyour money into bank CDs and
getting, maybe, over the longerterm, two or 3%, your number's
going to have to be higher aswell, versus if you're getting,
(07:27):
you know, rolling the dice andgetting some maybe higher
expected returns.
And then the last thing thatcomes to mind is how long you're
going to live.
You know and I don't know,Brian, if you figured that out
yet I don't think I have, youknow, but trying to figure out
how long you're going to live,and we've heard people say well,
I have longevity in my family,or everybody in my family, my
heritage, you know they passaway by a certain age, an
(07:51):
earlier age, but nobody knowsthat answer.
Brian Graff (07:56):
Yeah, that's true, Tracy, and hopefully we all live
a long, long prosperous lifeand get to enjoy our retirement.
But again, you just never know.
But let's kind of get into themeat of today's podcast, Tracy,
if you will.
And what are some of the waysthat you recommend individuals
figure out if they do haveenough money saved for
(08:16):
retirement?
Maybe that's just a little bitmore in-depth than those
benchmarks we talked aboutearlier.
What are you telling people outthere, Tracy?
Tracy Burke (08:23):
Yeah for sure, and there's really three different,
pretty common methods here andwe'll try to go through them
briefly as we do it.
So I'm going to geek out alittle bit here.
The good news is we do have aresource, or really a worksheet,
to help everybody through this.
We're going to put that out inthe show notes, so visit the
show note page and you'll beable to download that PDF and
(08:46):
help you through it.
But so the first one mentioned.
There's three.
The very first one, it's what wecall the income replacement
ratio method and what that meansis sort of what it sounds like
You're going to take your finalincome that you're making
pre-retirement and taking aratio of that to replace your
(09:06):
income pre-retirement intoretirement.
So a broad example Brianmentioned maybe $100,000 of an
income before retirement.
So what we do is we take thatnumber, then we back out any
expenses that will likely beeliminated, that were there
during our working careers.
Now some of this is some ofthose pesky payroll taxes, the F
(09:28):
, the FICA.
Sometimes you know state andlocal taxes and it depends on
what state you live, localityyou live, all those type of
things, work-related expenses.
You know even savings thatyou're saving for retirement.
We back those out, because inretirement you're no longer
saving, right?
So any of those outflows thathave been happening during
(09:48):
retirement, we back those out.
Outflows that have beenhappening during retirement, we
back those out.
Then we add some expenses thattypically will show in
retirement or come up.
So maybe that's additionalhealthcare expenses, maybe it's
leisure expenses Golfing I know,brian, you're a big golfer, so
a lot of folks go in and havethese hobbies that take up a
little bit more.
(10:08):
So we back out some expenses,we add in some expenses that
happen after retirement and thenwe sort of get to whatever that
number is and generally therule of thumb I think we've seen
is generally 80% plus or minus.
Brian Graff (10:22):
Yeah, tracy, why don't we use that number?
By the way, real quick sidenote too, tracy said I'm a big
golfer, but that does not meanI'm a good golfer, but anyway,
just a quick aside there.
But yeah, I hear that 80%number used a lot.
Why is that so common?
Because of some of thoseexpenses that go away, and I
know there's some that get added.
What's the general rule of 80%?
Tracy Burke (10:41):
Yeah, absolutely, and a lot of folks we talk about
this a lot with investors right, brian, that you should be
saving 10% to 15% of your incomefor retirement.
That's one of those numbersthat's getting backed out.
We think those expenses forthose FICA taxes or other taxes
FICA it's Social Security,medicare taxes you pay while
(11:03):
you're working.
Right there, that's over 7.5%.
That's backed out Some of theother taxes that come in.
So typically you could see 25%,maybe 30% of your
pre-retirement earnings beingbacked out before what you add.
Yeah, thanks for that.
Brian Graff (11:23):
That makes sense.
And this number we use a lot.
We throw it out there and I getthat question sometimes why 80%
, why don't I need 100% of myincome?
I'm used to this lifestyle, butI think when you mention all
those different figures andthose takeaways or those
subtractions, I think that itreally starts to make sense to
people.
So yeah, thanks for expandingon that a little bit.
Tracy Burke (11:40):
Yeah for sure.
So then that takes us to thesecond method I mentioned.
Now, rather than ballparking it, which is the first method, it
was really ballparking it rightNow.
The second method is really thedetailed expense analysis
component.
So this is where you're justdoing sort of a line by line
item.
You're figuring out what are myexpenses going to be in
(12:02):
retirement In this worksheetthat we're providing.
It breaks it down into differentareas, but housing is one that
we're providing.
It breaks it down intodifferent areas, but housing is
one, and that includes utilitiesand everything property taxes,
insurances, all those type ofthings that go into housing.
Obviously that can be a bigchunk, whether it's
transportation, other livingexpenses, certainly groceries,
(12:25):
clothing, all kinds of stuff ofthat nature.
Taxes, of course that's part ofwhat's going to be going out
the door and that's going tochange in retirement, but still,
unfortunately still got paidtaxes right In terms of
insurances we talked about, andthen sort of that
all-encompassing other category.
So more discretionary expenses,just personal care, cell phone,
(12:50):
and probably most people saythat's not discretionary anymore
.
You know you need that cellphone, but dining out,
entertainment, gifts, all thosetype of categories where again
you're going sort of line byline and trying to figure it out
.
So, brian, as you can imagine,that way can get a little tricky
because you can there's areaswhere you might forget about,
(13:11):
right, you know that that can besomething where you might go
through and you just mightforget about even major
categories.
So that can be a little bit,you know, a little bit tricky to
go that way.
So you know, before we go on tothe third method, really for
either those first two the nextstep then is to figure out what
(13:32):
you need to take from yourportfolio.
And again we're sort of backinginto that ultimate question,
right, how much do I need forretirement?
So the next step is afteryou're figuring out what you
need for your retirement incomenumber.
Well, thankfully, almosteverybody has social security
coming through the door and somefolks might have other income
sources.
Well, thankfully, you know,almost everybody has social
security coming through the doorand some folks might have other
(13:52):
income sources.
Maybe it's rental properties,maybe they're doing some
part-time work in retirement,maybe they even have one of
those old-fashioned pensionplans, right?
So you know, in that example wewere talking about, brian, if
we, you know, have 80% ofreplacement and say, you know,
$80,000 is the number we need.
Maybe that person has $20,000coming in the door through
(14:14):
social security, collectively,you know whether it's, you know,
just single or married.
And then you know maybe there'sanother 10,000 coming from a
pension.
So we back out 20 plus 10 fromthe 80.
Now we're down to 50,000.
So in that first year ofretirement that person would
really need to withdraw fromtheir savings of $50,000.
(14:37):
And again, backing out what'scoming in the door and then sort
of the final step to get toyour number and sort of drum
roll.
Here we're coming down to homestretch in terms of that.
You know, finding what's a safewithdrawal rate.
So if I need to take up $50,000from my portfolio, what's you
know what percentage can I takeout that's going to be
(14:58):
sustainable throughout time?
And there's been many, manystudies on this and sort of that
4% range.
You know it can be three to 5%,probably a safe withdrawal
range, but you know the mostcommon one we've seen out there
is 4%.
So if I take $50,000 that Ineed to take out of my portfolio
, divide it by 4% if you'reusing Calculator, divide it by
(15:20):
0.04, and you get to the numberand the math in that example
comes out to $1.25 million.
So if you need to take out$50,000 of your portfolio and
you feel that 4% is that safewithdrawal rate, you need $1.25
million to take out.
Does that make sense, brian?
Brian Graff (15:37):
Yeah, it does.
I like the math element of it,and it's something like Tracy
said.
Look at the show notes for somehelp with that, maybe for some
guidelines.
But for those of you that enjoykind of nerding out like Tracy
does on the math part, it'sreally not that hard of a
calculation, I promise, but thatdoes make sense.
And I think one of the keythings, though, too, is and
you're right that 4% rule comesup all the time in my
(15:59):
conversations.
It's something that's tried andtrue, it's been around for a
long time, but also it's not100%, is it, tracy?
I think it's not 100% as atracing.
I think it's really importantto have that flexibility in
retirement, right Knowing thatthese equations are not
necessarily a one size fits all.
So would you agree that that'strue too?
4% isn't necessarily foreveryone in every situation.
Tracy Burke (16:21):
Yeah, yeah, absolutely.
And again, it depends on howyou're investing.
If you're super concerned, a 4%might be pushing the envelope.
If you're only getting 3% offof CDs or something like that,
that might be inhibiting in thefuture or, on the other end, if
you're much more aggressive,like to see people use to figure
(16:44):
out what their number is.
This one, I think, is, in mymind, the easiest method and one
that we use with many of ourclients as well, and it's just
really called a 5% guardrailsapproach.
So you know it's a guardrail andif you think about you're
driving down the highway, youknow of retirement, you're
(17:04):
driving down through there.
Nobody wants to run off thecliff or off the edges, right,
you want to stay on the road.
So imagine you have guardrailsboth sort of on maybe the top
and the bottom.
So you're taking yourretirement income and what
sometimes, brian, we've seenwith a 4% number for folks that
are moderate type of investorsand maybe that's anywhere
(17:25):
between 40% and 60 percent ofstock exposure in their
portfolio, the allocation sortof moderate investors, what
we've seen.
You know the four percentnumber.
You know their money continuesto grow and grow and sometimes
they might retire with a millionbucks and when they pass away
many years down the pike, theymight have two or three million
dollars.
(17:46):
And I think for a lot of peoplethat's not the goal to have
more money when you die thanwhen you retire, right.
The opposite, of course, isn'tthe goal either, where you start
in retirement with whatever youhave and you go down to zero,
right.
That's not the goal.
So really, this guardrails isthat nice middle-of-the-road
approach.
It sort of keeps you in thatrange.
Your portfolio is not drivingup, it's not driving down, it's
(18:12):
sort of keeping you in there.
And really what it does if youhit the top barrier, guess what
you can spend more.
If you hit the bottom barrier,you might have to cut back some
from the withdrawals.
So that mindset, it's reallyabout a 5% number give or take
and it depends on how aggressiveyou are and that's how we work
with our clients and just tryingto figure what that number is.
Obviously there's other ways todo it, but that's a pretty good
(18:35):
way that we like to see it.
And again, just like the firsttwo approaches, back out where
you're going to get from socialsecurity and other income as you
get there.
But again, that's my favoriteapproach to guard girls.
I think it's probably prettysimple of figuring out how much
you really need and how much youcan spend in your retirement.
Brian Graff (18:55):
Yeah, tracy, a couple of times I know you
mentioned sometimes you can beinvested a little too
conservatively, which may youmay have a little bit of a hard
time staying in line with yourretirement objectives.
Sometimes you're a little tooaggressive, which maybe kind of
hurts your portfolio a littlebit of a hard time staying in
line with your retirementobjectives.
Sometimes you're a little tooaggressive, which maybe kind of
hurts your portfolio a littlebit in those early years.
I'm curious I know futureepisodes of this podcast we're
going to take a little deeperdive to investing specifically
(19:16):
but a number that we hear a lot,or a mix we hear a lot, is like
that 60-40 portfolio and I'mjust curious to see, like if
you're for a normal retiree,that maybe they're right in line
with their retirement goals youknow they've done the planning,
they feel like they've got justenough in their portfolio Is
60-40 still?
Is that an appropriate numberor does it really just depend on
the situation and the goals ofthe investor?
Tracy Burke (19:37):
Yeah, I think it certainly depends, and mostly on
risk tolerance.
Right, you know 60-40portfolios in retirement can
take a nosedive and will.
It's not if it's going tohappen, it's when it's going to
happen.
You have to prepare for thatand just have to be able to
tolerate and ride it through.
But the other factor is the 40is, I think, in retirement, the
most important number, and evensome people are 70-30 or 80-20.
(20:01):
You want to have enough in thatfixed income bucket because when
equities go down, most of thetime fixed income goes up.
And most of the time Iemphasize that a little bit
because in 2022, and probablymany of our listeners are
thinking, well, yeah, everythingwas down in 2022, and it was
(20:23):
Generally that's not the case.
But when stocks go down, bondsnormally hold their own and you
don't want to be forced to sellfrom stocks when you're taking
money out of your portfolio.
Right, Successful investorssell high and buy low, so you
don't want to sell when thestocks are down.
So, again, with that mentality,you have money in that 30, 40%
(20:46):
bond exposure, 50%, whateveryour comfort level is.
Make sure you have enough inbonds so you can take money out,
maybe for a couple of years ina row to allow the stocks to
recover after that decline.
Brian Graff (20:58):
Okay, yeah, thanks, tracy, again, because that one
comes up so often in myconversations.
People hear that 60-40 all thetime, so I appreciate your
insight on that.
All right, so you know our goalhere at Conrad Siegel, through
this podcast and pretty mucheverything we do, is really to
simplify the complex, right?
We don't want this to bedifficult for you.
I know we threw out a lot ofnumbers at you, hopefully in
(21:19):
pretty easy to understand terms,but maybe, if we kind of finish
things out today, tracy, Ithink we need to get some action
items right, because I don'tthink these podcasts are going
to help too many people if wedon't give them some clear,
concise things that they can donow or in the near future to
maybe be prepared for retirement.
So do we want to go over someaction items?
Yeah, absolutely.
Tracy Burke (21:39):
And let's start with pre-retirees.
So again, we said thateverything we're going to talk
about on all these shows applyto both people in retirement as
well as people preparing for it.
So let me start with the folksthat are looking to retirement
and obviously, the number oneaction items and these are
pretty big picture items, butfigure out what's your number or
(21:59):
have that plan, that retirementplan, in place so you know when
you can retire, and, as wementioned a couple times now,
the resources out there in theshow notes.
So take advantage of that,reach out to us to help and
we're happy to help you walkthrough that.
And then I would say the secondaction.
I'm sure you start dreaming orthinking about what retirement's
going to look like for you.
(22:20):
If that's in horizon, whetherit's within a couple of years or
five or 10 years or maybe eveneven longer term, start to
formulate that.
What do you want yourretirement to look like?
Because that can help you planfor it.
You know, if I want to take avacation to Hawaii every three
months in retirement, I need toplan for that.
I'm going to need to save aheck of a lot more than I'm
(22:42):
saving right now, right?
So so those are a couple ofaction items I'm thinking of for
people leading into retirementor pre-retires.
But, brian, what are youthinking of for those already in
retirement?
Brian Graff (22:53):
Yeah, for sure.
And I guess, tracy, one of theother expressions we use a lot
here is retired to something,right, not from something.
So I like to throw that in aswell too.
I think we all have thoserelatives or people we know that
work so hard their whole livesand one day they're retired and
they're like, oh my gosh, now,what am I going to do?
And a lot of times they go backto work or they're miserable or
whatever.
(23:13):
So make sure, yeah, like Tracysaid, you do have that
retirement vision picked out.
But for those folks that arealready in retirement, I think
one of the most important thingsyou can do is simply confirm
that you won't run out of money,right, use some of those, like
the 5% guardrails that Tracy wasjust talking about and, you
know, just revisit are youliving your ideal retirement?
Do you need to make somechanges, both, you know,
(23:35):
personally and financially, tomake sure you are doing
everything you dreamed aboutdoing and just kind of living a
happy rest of your life, right?
That should be the goal of allthis again, financial and
otherwise.
So I think those are some keytakeaways for both.
Tracy, any closing thoughtsbefore we wrap things up for
today about everything wediscussed.
Tracy Burke (23:54):
Yeah, and again, everybody's situation is
different.
We're here to help.
We encourage our viewers toreach out to us.
Podcast at conradsiegelcom isthe email address to shoot us a
note.
Let us know what you think, anyfuture topics that you might
have, questions, comments,anything we can do to help.
That's what we're here to do.
Brian Graff (24:13):
Yeah, for sure.
And again, this has been a funtime.
Again, episode number one.
So bear with us.
I think we're going to get alot better at this as we go by
too, and I'm pretty sure wedon't have any sponsors.
Like we can't be canceled, canwe, tracy?
Is that a thing if we're justkind of doing this on our own?
I hope?
Tracy Burke (24:26):
not yes.
Brian Graff (24:32):
Well, we hope that everybody did enjoy it and, if
you did, please tell a friend, afamily member to tune in.
The more people we havelistening, the more people will
be able to help, and that's whatwe love to do at Conrad Siegel.
We are fiduciaries and we lovehelping people.
So, yeah, thanks everyone fortaking time.
Tracy, thanks for doing most ofthe heavy lifting today.
I promise I'll do my share infuture podcasts, but had a great
time everybody.
Good luck and tune in next timefor episode two of Real Talk
(24:53):
Retirement.
Intro (24:56):
Thank you for tuning into today's show.
The Real Talk Retirement Showis created and produced by
Conrad Siegel, an advisory firmthat specializes in helping
people prepare for retirementand beyond.
If you want to learn more aboutour work or meet the team, you
can visit conradsegelcom.
Information on this show is foreducational purposes only and
(25:18):
should not be consideredpersonalized investment tax or
legal advice.
Before making decisions, youshould consult with the
appropriate professionals foradvice that is specific to your
situation.
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