Episode Transcript
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Speaker 1 (00:00):
Hey everyone, welcome
back to another episode of Low
Income Rich Life.
Today we're diving into a topicthat's near and dear to many of
us retirement.
Now, I know retirement mightsound like it's eons away for
some of you, and for others itmight be just around the corner.
But here's the kicker Whetheryou're 25 or 65, retirement
planning is one of those thingswe all think about, usually with
(00:22):
a mix of excitement and sheerpanic.
So why are we talking aboutthis today?
Well, because there are a lotof myths out there about
retirement, and if you're likemost people, you might have
heard a few of these myths andthought wait, do I really need a
million dollars to retire?
Will Social Security have myback?
Well, folks, today we'reputting those myths to rest.
(00:43):
We're going myth-bustingretirement style.
Here's what we're tacklingtoday the myth that you need a
million dollars to retire, theidea that Social Security is
your golden ticket, the notionthat it's too late to start
saving if you haven't already,and a few more juicy ones.
So grab a cup of coffee ormaybe something stronger if this
topic gives you anxiety, andlet's get into it.
(01:14):
Welcome to Low Income Rich Life,the podcast that helps you
prepare for a secure andfulfilling retirement even on a
limited income.
Each week, we will explorepractical tips and strategies
for getting out of debt,lowering expenses, living a
simpler life and finding truecontentment.
Whether you're nearingretirement or just starting to
plan, join us as we navigate thejourney to a brighter future.
Let's dive in and discover howto make the most of your golden
years without breaking the bank.
(01:40):
All right, let's start with thebig one.
You need a million dollars toretire comfortably.
If I had a nickel for everytime I heard this well, I might
actually have a million dollarsby now.
But seriously, is this numberrealistic, or is it just another
scare tactic to get us all intoa savings frenzy?
Here's the deal.
(02:01):
While having a million dollarssounds pretty sweet, it's not
the magical number everyoneneeds.
The truth is, the amount youneed for retirement depends on
your lifestyle, where you planto live and how much you plan to
spend.
If you're planning to retire ina luxury penthouse in New York
City, sure you might need a coolmillion or more, but if you're
more of a retire-by-the-beach,living-by-the-simple-life kind
(02:22):
of person, your number could bemuch lower.
So what should you do?
Instead of stressing abouthitting that million dollar mark
, start by calculating your ownretirement needs.
Take into account your expectedexpenses, any income from, like
pensions or social security,and see what you really need to
save.
There are plenty of retirementcalculators out there.
Heck, I've even got one on mywebsite.
(02:44):
So give it a go and see whatyour magic number is.
And hey, if you do find out youneed a million bucks, don't
panic.
Maybe just cut back on yourdaily lattes and your Amazon
buys.
After all, every little bitcounts right.
Moving on to our next myth andthis one's a doozy Social
security will cover all yourretirement needs.
Now, wouldn't that be nice.
(03:06):
Just kick back, relax and letUncle Sam take care of
everything.
Well, I hate to break it to you, but if you're banking on
Social Security to fund yourdream retirement, you might want
to think again.
The reality is, social Securitywas never meant to be your sole
source of income in retirement.
It's designed to supplementyour savings, not replace them.
The average Social Securitybenefit is around $1,500 a month
(03:29):
, which might cover your rent ifyou're lucky, depending on
where you live.
But what about groceries,health care and that annual trip
to visit the grandkids?
That's where your own savingscome in.
So what's the game plan here.
Think of Social Security asjust one piece of your
retirement puzzle.
You're going to need additionalincome sources, like a 401k IRA
or even a side hustle.
(03:50):
If you're feelingentrepreneurial and if you
really want to make the most ofSocial Security, consider
delaying your benefits until age70.
The longer you wait, the biggeryour checks will be.
Just don't wait too long, oryou might be using those bigger
checks to buy bigger glasses toread them with.
You know what they say age maybring wisdom, but it also brings
bifocals.
(04:10):
Let's talk about another myththat tends to hold a lot of
people back it's too late tostart saving for retirement.
Now, this one really gets undermy skin.
The idea that there's someinvisible deadline for starting
your retirement savings is justplain wrong.
So if you're sitting therethinking you've missed the boat,
let me assure you there's stilltime to hop on board.
Here's the thing.
Yes, starting earlier gives youmore time to save and take
(04:33):
advantage of that magical thingwe call compound interest.
But starting late doesn't meanyou're out of the game.
Every dollar you save now isstill a dollar that you didn't
have before, and it can stillgrow over time.
If you're a late starter, here'swhat you can do.
Start by saving as much as youcan now.
Max out your retirementaccounts if possible, and if
(04:54):
you're over 50, take advantageof catch-up contributions.
Also, look for ways to boostyour income, whether it's
picking up a side gig, cuttingunnecessary expenses or even
delaying retirement a few yearsto give yourself more time to
save.
Think of it like getting to aparty late Sure, you miss the
appetizers, but there's stillplenty of cake to go around and
who doesn't love cake?
Right?
All right on to our next mythyou shouldn't invest in the
(05:16):
stock market close to retirement.
Now, I get it.
The stock market can be a wildride, and the idea of watching
your hard-earned savings dipjust as you're about to retire
is enough to make anyone nervous.
But let's pump the brakes onthis myth.
While it's true that you shouldreduce your exposure to risk as
you get closer to retirement,completely bailing on the stock
market might not be the bestmove.
(05:37):
Why?
Because your retirement couldlast 20, 30, even 40 years.
That's a long time to relysolely on low-yield investments
like bonds or savings accounts.
Instead of pulling out of thestock market entirely, consider
shifting to a more conservativeasset allocation.
This might mean more bonds andless stock, but keeping some
stock exposure can help yourmoney continue to grow
(05:58):
throughout retirement.
And remember, diversificationis key.
Spread your investments acrossdifferent asset classes to
reduce your risk.
Think of it like this youwouldn't want to eat plain
oatmeal every day for 30 years,right?
Same goes for your investments.
Mix it up a bit to keep thingsinteresting and maybe even a
little tasty.
Let's tackle another big one.
(06:18):
Medicare will cover all yourhealth care needs in retirement.
Wouldn't that be nice.
Just sign up for Medicare andvoila, all your medical bills
vanish like a magic trick.
Unfortunately, that's not quitehow it works.
While Medicare is a greatprogram and can help cover a lot
of health care costs, itdoesn't cover everything.
Things like long-term care,dental vision and hearing aids
(06:40):
are not included.
Plus, there are premiums,deductibles and co-pays to
consider, which can add upquickly, especially if you have
ongoing health issues.
So what's the solution here?
First plan for out-of-pockethealth care costs that are going
to happen in retirement.
You might want to consider asupplemental insurance plan,
also known as, like Medigap, tocover some of the gaps that
(07:01):
Medicare doesn't.
And if you're really planningahead, think about setting up a
health savings account, ifyou're eligible, and it's a
great way to save tax-free forfuture medical expenses.
And just to keep things light,remember an apple a day might
keep the doctor away, but a goodhealth care plan will keep the
bills at bay.
So eat your apples, but don'tforget to plan for those health
(07:21):
care costs too.
Here's another common myth youcan live off the interest of
your savings alone.
Now, I don't know about you,but with today's interest rates,
this one makes me chuckle a bit.
Sure, living off your savingssounds nice, but let's get real
about what that actually means.
The idea here is that you canjust park your money in a
savings account, live off theinterest and never touch the
(07:42):
principal, but with most savingsaccounts offering interest
rates that can barely keep upwith inflation, this strategy
isn't exactly a golden ticket.
In fact, if you rely solely oninterest, you might find
yourself running out of moneysooner than expected, especially
if inflation picks up or yourexpenses increase.
Instead of relying solely oninterest, consider a more
diversified approach.
(08:02):
This could include acombination of interest from
savings, dividends from stocks,rental income and a planned
withdrawal strategy from yourretirement accounts.
The goal is to create asustainable income stream that
keeps up with your needs overthe long haul.
Think of it this way trying tolive off just the interest from
(08:23):
your savings is like trying tolive off the crumbs of a really
good cake.
Sure, the crumbs are tasty, butwouldn't you rather enjoy the
whole slice?
All right.
This next myth is one that Iknow a lot of people are guilty
of you can wait until later tostart planning for retirement.
Now, I'm all for living in themoment, but when it comes to
retirement planning,procrastination is not your
friend.
The truth is, the earlier youstart planning for retirement,
(08:45):
the better off you'll be, why?
Because of the magic ofcompound interest, the more time
your money has to grow, themore you'll have when you retire
.
Waiting until later meansyou'll have to save a lot more
aggressively, or worse, worklonger than you'd like.
Here's what you can do Starttoday, no matter where you are
in life.
If you're young, start small,but be consistent.
(09:05):
If you're older and haven'tstarted yet, don't panic.
Just focus on saving as much asyou can and consider working a
few extra years if you need to.
And, most importantly, set somegoals, even if they're modest.
Have a plan is better than noplan at all.
And hey, don't think of it asyou're missing out on fun now.
Think of it as ensuring you canhave a whole lot of fun later
(09:27):
without the stress of wonderinghow you're going to pay for it
Next up.
We're tackling the myth thatdownsizing is the only way to
make retirement affordable.
Now, don't get me wrong.
Downsizing can be a greatstrategy for some people, but
it's not the only option outthere.
Sure, moving to a smaller homeor less expensive area can free
up cash and reduce your livingexpenses, but it's not a
(09:48):
one-size-fits-all solution.
Depending on your situation,there might be other ways to
make your retirement moreaffordable without giving up the
space or location you love.
Consider other strategies likecutting discretionary spending,
picking up part-time work oreven renting out a room in your
home for extra income.
If you're willing to getcreative, there are plenty of
ways to make your retirementdollars stretch further.
(10:09):
And let's be honest, who reallywants to downsize their
collection of pricelessknickknacks?
I mean?
Sure, that ceramic cap mightnot be worth much, but to you
it's practically the crownjewels.
Okay, last but not least, let'stackle the myth that retirement
means you stop workingcompletely.
That one's a bit tricky,because for some people, the
(10:30):
idea of never working again isthe ultimate dream, but for
others, the thought of doingnothing at all sounds well kind
of boring.
The truth is, retirementdoesn't have to mean you stop
working entirely.
Many retirees find that theywant to stay active, either
because they enjoy their work orbecause they like the extra
income.
Whether it's part-time work,consulting or even starting a
(10:50):
small business, there are plentyof ways to stay engaged and
productive in retirement.
If you're nearing retirement andstill love what you do,
consider scaling back instead ofquitting altogether.
Or if you're ready for a change, think about what hobbies or
interests you might want to turninto a small side gig.
The key is to find a balancethat works for you, both
financially and personally.
(11:10):
Remember, retirement isn't somuch about doing nothing.
It's about doing what you wantto do.
So if what you want is to worka little here and there, go for
it.
After all, it's not really workif you're having fun, right,
all right.
Folks, let's quickly recap themyths we busted today.
We don't need a million dollarsto retire.
Social Security isn't yourgolden ticket.
(11:30):
It's never too late to startsaving, and you don't have to
ditch the stock market ordownsize your life just because
you're getting older.
Plus, you can keep working inretirement if you want to and no
, you can't live off just theinterest from your savings.
Retirement planning doesn'thave to be scary or overwhelming
.
The key is to get informed,make a plan and take action, no
(11:51):
matter where you are on yourjourney.
Remember it's your retirement,so make it work for you.
If you found this episodehelpful, be sure to check out my
website for more resources,including that retirement
calculator I mentioned earlier,lowincomerichlifecom calculator.
And don't forget to join ourFacebook group where we talk all
things finance and retirementplanning every day.
(12:13):
That's facebookcom slash groupsslash low income rich life.
Thank you for joining us onthis episode of low income, rich
life.
I hope you found today's tipsand strategies helpful.
If you enjoy the show, pleasesubscribe, rate and leave us a
review on your favorite podcastplatform.
Your feedback helps us reachmore listeners and improve the
content we bring to you.
(12:33):
Don't forget to visit ourwebsite at lowincomerichlifecom
for additional resources, shownotes and links to everything we
discussed today.
You can also join theconversation in our Facebook
group at facebookcom slash groupslash lowincomerichlife for
more updates and retirement tips.
Remember Remember a truly richlife is not about how you spend
your money, but how you spendyour time.
(12:55):
I'm Kevin Bass, wishing you aprosperous and joyful retirement
journey.
Stay well and stay inspired Bye.