How To Prepare For Retirement Ep. 123

People come to us for financial planning at different stages of life. Most of our clients are closing in on retirement or they’re in retirement, but that can be a 10- to 15-year window of when people generally become a client of our firm. I’ve gotten a bird’s-eye view into what works well and what doesn’t.

We normally recommend that people begin working on their financial plans for retirement when they are five years out from retirement. It makes sense to begin making the transition from an accumulation stage to an income and distribution stage five years out. Once we are closer to potentially using our funds, it makes sense to dial down our risk on some of our funds in order to figure out a way to increase our probability of being able to successfully take income out of our accounts. For that reason we are downside focused first because most of our clients are transitioning into retirement.

We also want to begin figuring out how much income you may be able to sustainably draw from your retirement accounts and make them last as long as possible. This may include tax planning strategies like converting tax-deferred 401k accounts to tax-free accounts and the implications around this. Healthcare planning and taking a crash course on Medicare is often helpful, as is figuring out your best Social Security claiming strategy.

We can do all this quickly, but when there is a window of time to work through these things, it allows for you to not feel like you have an exhausting summer of activities and you have time to rest in between mental exercises. It’s not easy planning the next 25 to 40 years of your life, and it’s best done methodically. If you’re like most of our clients, it took you 30 to 40 years to accumulate the funds you have. It definitely merits taking a few hours off work to figure how to make them last for the next 30 years.

Whenever you have questions about your financial plan, please reach out at 864.641.7955. Get David's book How To Excel in Retirement. 

Investment advisory services offered through CreativeOne Wealth, LLC. Clients Excel, LLC and CreativeOne Wealth are not affiliated companies. Licensed Insurance Professionals. Investing involves risk, including potential loss of principal. Any references to protection or lifetime income generally refer to fixed insurance products, never securities or investments. Insurance guarantees are backed by the financial strength and claims paying abilities of the insuring carrier. Annuity withdrawals are subject to ordinary income taxes and potentially a 10% IRS penalty before age 59-1/2. Roth distributions are tax free after age 59-1/2 and the account has been open for at least 5 years. This video is intended for informational purposes only. It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet particular needs of an individual’s situation. Clients Excel is not permitted to offer and no statement made during this show shall constitute tax or legal advice. Our firm is not affiliated with or endorsed by any governmental agency. The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed by Clients Excel. The use of logos and/or trademarks of hosting sites are the property of their respective owners and are not an endorsement by those owners of our firm or our program.

Episode Transcript

SPEAKER_01 (00:00):
Welcome back to the Excel in Retirement podcast,
where we help good people makewise financial decisions so that
they may excel in retirementwith confidence.
Learn more at clientsexcel.com.
Now to your host, David Treese.

SPEAKER_00 (00:24):
Welcome back.
Thank you for listening.
This is episode 123.
Well, we have gotten to thepoint in our summer where we are
tired at our house.
The summer beach trip has comeand gone, and Amelia and Ansley
have had swim lessons a coupletimes a week.
Amelia has had tennis.
She's gone to camp three weeksthis year.

(00:47):
And I don't know of manysix-year-olds that are as busy
as she is.
I mean, she went to art camp,sports camp, STEM camp, and on
and on and on.
I remember when I was a kid, Iwas a kid looking forward to
summer so much.
I was so ready to be done withschool so I could spend time
outside and we would always goto the beach in the summer.

(01:09):
That was just a lot of fun, butit kind of got depressing when
school was about a week or twoout and it was time to go back
to school.
Unfortunately, that's the waythat I felt about it.
But Amelia, our six-year-old,boy, she launched out of bed
like a rocket this morning.
She was ready to go.
That's how she is most mornings.

(01:29):
And so maybe I should rephrasethat first sentence.
And Mallory and I are the onesthat are tired.
And you know, I heard on theradio over the weekend when I
was coming back from a mountainbike ride that taking naps is
biblical.
So Jesus took a nap, right?
He was in the stern of the boat,and I believe it's Mark 4, and
his disciples awoke him during astorm and they were distraught.

(01:52):
But Jesus was down there takingit easy.
And the DJ on the radio said itmust be biblical to take naps.
Boy, that resonated with me.
I don't know about you.
In our modern world, it's easyto go, go, go.
and never really slow down torest.
Come to think of it, resting isa lot like preparing in many
ways.

(02:13):
So planning to rest prepares usfor what we need to do the next
day or what we need to do afterour nap.
And so I've heard it in somekind of personal development.
Maybe it was Zig Ziglar.
I'm not sure.
I think it was.
He said that a good day startsthe day before.
And so he would plan his daybeforehand.
And I've really gotten in theyour day go off a lot more

(02:37):
seamlessly if you don't startyour day reactionary.
So Mallory and I got a fitnesstracker called a WHOOP and I've
had mine since Christmas and itgauges your overall readiness
for the day.
It tells you how recovered youare based on several bodily
metrics like your heart ratevariability and heart rate and

(02:57):
how you slept and how intensethe day has been and stress.
It even illustrates how stressaffects you and it tells you how
ready you are for differentactivities from cycling to
running to doing whatever andand it shows how these
activities affect your physicalperformance.
So we get to see in real timehow staying up too late affects

(03:21):
us, or how that late nightbrownie in the kitchen when
everybody's gone to bed, howthat affects us, or how working
out too hard or stress affectsus.
It's really been eye-opening tobetter understand the way that I
feel.
And it's interesting gettingthat real-time information.
And so People tend to come to usat different times and different

(03:46):
stages in their lives for theirfinancial planning well-being,
and that's sort of like gettinga gauge on where they're at in
real time, right?
Kind of like the fitnesstracker, meeting with an advisor
can help you see your readinessfor retirement and see if you're
on track for your goals.
Most of our clients that we workwith are closing in on

(04:06):
retirement or they're inretirement.
But that can really be a 10 to15 year window when people
retire a lot of times.
I mean, some people retire alittle bit earlier and some
people work well into their 70s.
And that window of time cangenerally be a pretty big from
client to client.
But what the point is, is I'vegotten a bird's eye view into

(04:29):
what works well and what doesn'twork for folks.
Now, we can come into thesituation on two wheels and say,
hey, we're going to retire insix months or three months or
whatever.
And we can make that work andfigure out our best options but
from a best practices standpointI think it makes a lot of sense
to start evaluating where you'reat when you think you've got a

(04:51):
tentative plan about five yearsout from retirement.
And so we want to make thattransition from an accumulation
stage that I talk about to anincome and distribution stance
about five years out fromretirement.
Because once we are closer topotentially using our funds, it
makes sense to dial down ourrisk on some of our funds,

(05:14):
right?
In order to figure out a way toincrease our probability of
being able to successfully takeincome out of our accounts.
And for that reason, we aredownside focused first at our
firm because most of our clientsare transitioning into
retirement.
When we have years to recoverfrom market losses, we may be

(05:36):
able to take a little bit morerisk.
But when we're within five yearsof retirement, it makes sense to
begin transitioning to astrategy where we can increase
our probability of success.
Yeah, we don't have a crystalball.
In fact, I was talking to an81-year-old guy on the phone, I
believe it was last week, and Iwas asking him how he was

(05:56):
feeling about the stock marketand the economy and so forth.
And he said, well, David, mycrystal ball is a little bit
cloudy right now.
And it seems like the older youget, the more that crystal ball
gets cloudy, right?
Or the more aware you are of itbeing cloudy.
Maybe that's a better way to putit.
But what we also want to begindoing is figuring out how much

(06:17):
income we might be able tosustainably draw from our
retirement accounts and makethem last as long as possible.
Now, this process may includetax planning strategies like
converting tax-deferred 401kaccounts to tax-free accounts
and the implications aroundthis.
Healthcare planning is anotherthing.

(06:38):
So we want to take a crashcourse on Medicare and figure
out how to maximize that andfigure out our best choices with
health insurance.
That's often helpful.
And also, we want to figure outwhat our best Social Security
claiming strategy is.
And we want to figure out how tomaximize that or at least know
all the details so that we canmake the best well-rounded

(07:00):
decision going into it.
We can do all this quickly, butwhen there's a window of time to
work through these things andthese math issues, it allows for
you to not feel like you'rehaving to exhaust or you're not
having exhausting summeractivities and you have time to
rest in between these mentalexercises, oftentimes important

(07:24):
questions come up that can be alittle laborious to figure out
mentally.
And so it's easier if we have alittle bit of time to figure
these things out becausefinancial planning is a fluid
situation.
Things change, right?
And we have to say, it's noteasy planning the next 25 to 40
years of your life.

(07:44):
And when we are retiring at,say, 60 years old, there is a
possibility that Maybe some ofthose folks could live well into
their 90s.
And so 30, 35 years you'replanning there and you're
planning to not work for thoseyears.
And so it pays to be methodicalabout the situation and figure

(08:06):
out if all of your I's aredotted and all of your T's are
crossed.
If you're like most of ourclients, it probably took you 30
to 40 years to accumulate thefunds you have.
It definitely merits taking afew hours off work to figure out
out how to make your funds lastfor the next 30 years, don't you
think?
That's always so perplexing tome when people say, I can't meet

(08:29):
until 5.30 or 6 or Saturday.
I don't understand why peoplecan't And if you have questions,

(09:06):
we'd love to preview somequestions in the podcast.
So please put those together.
But I hope you have a great dayand look forward to our next
show.
Take care.

SPEAKER_01 (09:18):
Investment advisory services offered through
Creative One Wealth, LLC,Clients Excel, LLC, and Creative
One Wealth are not affiliatedcompanies.
Licensed insuranceprofessionals.
Investing involves risk,including potential loss of
principal.
Any references to protection orlifetime income generally refer
to fixed insurance products,never securities or investments.

(09:42):
Insurance guarantees are backedby the financial strength and
claims paying abilities of theinsuring carrier.
Annuity withdrawals are subjectto ordinary income taxes and
potentially a 10% IRS penaltybefore age 59 1⁄2.
Roth distributions are tax-freeafter age 59 1⁄2, and the
account has been open for atleast five years.

(10:03):
This podcast is intended forinformational purposes only.
It is not intended to be used asthe sole basis for financial
decisions, nor should it beconstrued as advice designed to
meet particular needs of anindividual's situation.
Client's Excel is not permittedto offer and no statement made
during this show shallconstitute tax or legal advice.

(10:26):
Our firm is not affiliated withor endorsed by any governmental
agency.
The information and opinionscontained herein provided by
third parties have been obtainedfrom sources believed to be
reliable, but accuracy andcompleteness cannot be
guaranteed by clients Excel.
The use of logos and ortrademarks of hosting sites are
the property of their respectiveowners and are not an

(10:48):
endorsement by those owners ofour firm or our program.