October 10, 2023 • 26 mins
In this episode, James emphasizes the importance of having a well-thought-out financial plan for retirement, rather than relying solely on the size of your investment portfolio. Financial security doesn't come from a specific portfolio number but from having a comprehensive plan.
Using a listener's question, James walks through a step-by-step approach to assessing retirement readiness. He discusses aspects like income planning, investment strategies, tax optimization, and protection through insurance and estate planning.
Shifting your mindset from a saving mentality to a spending mentality in retirement allows you to fully enjoy your savings. Learn how to determine if you'll be financially secure in retirement and how to optimize your financial resources to enhance your overall retirement experience.
Questions Answered:
How do you assess your retirement readiness?
How can you optimize their retirement plan to enhance their overall retirement experience?
Timestamps:
0:00 Intro
1:26 Listener question
4:03 The bills
6:03 Alternative strategy
10:36 The first thing we looked at
12:55 How to maximize
15:35 Your investments
18:58 Risk capacity
21:05 Deductions
23:19 Big picture consideration
25:28 Outro
Create Your Custom Strategy ⬇️
Mark as Played
Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
It doesn't matter if you have 1 million, 5 million,
10 million or even more in yourinvestment portfolio.
You're not going to feelfinancially secure until you
have a plan in place that showsyou how to optimize that and not
just optimize it, but optimizeit in a way that allows you to
fully fund everything that'smost important to.
You Think when the biggesthang-ups most people have is
thinking that once they reachsome net worth or some portfolio
(00:22):
value, that's when they'regoing to feel more confident,
that's when they're going tohave more peace of mind.
I'm here to tell you that's notthe case.
It does not matter how muchmoney you have in your portfolio
.
Financial security doesn't comefrom a number.
It comes from having a plan.
So today I'm going to walkthrough a real-life scenario to
show you how to think about yourplanning as you prepare for
retirement.
(00:45):
This is another episode of Readyfor Retirement.
I'm your host, james Cannell,and I'm here to teach you how to
get the most out of life withyour money.
And now on to the episode A lotof education around retirement
planning and investments.
It's fairly abstract In general.
Here's what you should do, orhere's a principle that you
should follow, which is helpfulin many instances, but sometimes
(01:06):
an actual example, somethingthat's concrete and you can use
to almost view yourself in,that's what's actually going to
help you see what's importantwhen it comes to your own
planning.
So we're going to go through anactual question today that a
listener submitted and I'm goingto walk through it and say
what's the framework or what'sthe order of things that I want
to make sure there's a plan forbased upon real numbers.
So this is from Peter.
(01:28):
Peter is a listener and Petersubmitted this question.
He said I am 64 years old andmy wife is 60 and she's retired.
We have combined retirementaccounts of $2.5 million.
Mine is $2.1 million and mywife's is $400,000.
Mine is in a 70-30 stock andbond mix and my wife's is in an
80-20 stock and bonds mix.
We have $600,000 in cash andCDs which we plan on living off
(01:50):
of and not touching ourretirement accounts for six to
seven years.
We also have $50,000 in RothIRA.
My wife has a pension of $500per month and our expenses are
$80,000 to $90,000 per year.
We have a primary home with$1.1 million, a second home
worth $625,000 and my officecondo worth about $225,000, and
(02:11):
we have no mortgages on any ofthe properties.
I will make a salary of about$170,000 in 2024 and I plan on
retiring at the end of that year.
I plan on taking my socialsecurity at $70,000 and then
required minimum distributions.
After that, the only incomewill be my wife's pension and
rental income, which is acombined $29,000 per month.
(02:33):
My question is does my wife takeher social security early, at
62 or wait, and when should westart converting money from our
retirement plans into our RothIRA way?
Also, do you feel we are on agood track for retirement?
Thank you for your time.
Your podcast keeps me informedand has helped me plan
retirement, peter.
Well, peter, thank you for thatquestion.
Like I said, let's take that,while I cannot provide specific
(02:54):
advice so none of this is everintended to be a recommendation
or advice we can provide aframework and a way of thinking
about this.
That will hopefully shed a lotof light on what you could do in
multiple different scenarios.
When I'm looking at stuff likethis for clients, there's a
two-pronged approach.
I'd like to take Number onefirst and foremost are you going
to be okay?
(03:14):
Then, number two how do wemaximize this?
How do we optimize every singlething that you're doing.
We're not just doing okay, butwe're doing the best we possibly
can.
When I start by saying are yougoing to be okay?
Why do I say that?
Well, for most people, theirbiggest concern in retirement is
am I going to have enough moneyto pay my bills?
My salary is going away.
What income can I create to beokay and know that I'm not going
(03:37):
to run out of money, whichessentially means running out of
income?
When Peter's question he says,quote do you feel we are on a
good track for retirement?
There's two parts to this.
If we're just starting, highlevel of answering the first
part, which is are you going tobe okay?
The second part is now how dowe optimize?
When we're looking at that andagain, are we going to be okay?
It means, do we have enoughincome to pay our bills for the
(03:57):
rest of our lives?
What are the two parts of thatequation?
Are we going to be okay andwhat's the income going to be?
So let's start with the bills.
Well, in Peter's situation, hesays they want to live on 80 to
90 thousand dollars per year.
I'm assuming that Peter and hiswife want to live on that after
taxes, so I don't know whatstate they live in, I don't know
what tax bracket they're in,but let's assume that to get 80
(04:19):
to 90 thousand dollars per yearafter taxes, they really need
100 thousand dollars per yearpre-tax.
Nice round number and probablynot too far off, depending on
the specifics.
So, going back to our equation,part one of the equation what
are the bills?
Well, for the sake of thispodcast, I'm going to assume the
bills are exactly 100 thousanddollars per year.
Part two where's the incomegoing to come from?
(04:40):
Well, this is the scary part forpeople who are in Peter's
position is it starts out as notmuch.
So yes, peter has good amountof money in his portfolio.
He's talking about collectinghis social security at 70.
But what about those yearsbetween retirement and social
security?
So if he's going to retire at64 and social security kicks in
at 70, that can be kind of scary.
Where does that money actuallycome from?
(05:01):
We're so used to collectingpaycheck our whole lives.
It just feels weird not to havethat paycheck coming in.
Well, let's go back to Peter'squestion, or his overview.
He says we'll have pension andrental income of 29 thousand
dollars per year.
Well, if the pension is 500dollars per month.
That's his wife's pension.
That's 6,000 per year.
So by process of elimination,the rental income is 23 thousand
(05:23):
.
But when you look at thecombined number they have 29
thousand dollars of incomecoming in.
But if we compare that 200thousand there's a shortfall,
and so $71 thousand dollars ofthat is what the shortfall is.
So where's that uncoveredamount going to come from?
What do you do in that situation?
Do you live on cash?
Do you invest in stocks thatpay that amount in dividends?
Do you invest in bonds that paythat amount in interest?
(05:45):
Do you do some combination ofthese?
Well, there's quite literallyhundreds of different
alternative options here.
I want to explore just one,though for a second.
I know Peter mentioned thathe's probably going to collect
Social Security at 70.
For the sake of illustration,though, let's just quickly
review or examine an alternativestrategy.
Let's assume that Petercollects his Social Security at
(06:05):
64.
That's when he's going toretire.
I'm going to assume he'llreceive $2,500 per month.
The reality is, I have no ideahow much Peter will earn, but
looking at his income, heprobably has a decent benefit.
And if he's collecting at 64,he's accepting a bit of a
reduction from what he would getat full retirement age, but
still probably a solid benefit.
I have no idea what his wife'sincome is.
(06:26):
If she collects hers at 62,though, which is the assumption
I'm going to make, let's bereally conservative and assume
even just a spousal benefitthat's reduced because of
collecting early, and I'm justgoing to assume that her benefit
is $1,000 per month.
In reality, I would say there'sa pretty good chance that both
of their benefits are higherthan what I'm assuming, but I
want to be fairly conservativefor this walkthrough as we
(06:47):
illustrate this.
So Peter's getting $2,500 permonth.
His wife is getting $1,000 permonth.
So combined that's another$3,500 per month.
That's coming in on top ofpension and rental income.
Now Peter wanted guidance onwhen does it make sense to
collect Social Security.
This may not be the beststrategy, but let's run the
numbers at this rate, because myphilosophy towards this is look
(07:08):
if things work with thisstrategy.
Well, if we can find a strategythat's better, it means things
will work even more.
So let's just use this as astarting point.
So, combined Social Security of$42,000 per year.
Now, when we look at theirincome sources of pension, plus
rent, plus Social Security well,now that's $71,000 per year.
(07:29):
So now, only $29,000 of theirtotal bills or total expenses
are uncovered, but there's stilla gap.
Well, that gap is what yourportfolio is for.
If your portfolio is growingand growing and growing and you
never spend it, it's kind ofgoing to waste.
Think of your portfolio asdeferred spending, deferred
lifestyle income that you havetoday, but you're deferring it
(07:51):
for a future date so that youcan spend it down the road.
So your portfolio is designedto be spent in between cash and
retirement and Roth accounts.
Peter and his wife have about$3.2 million in investments.
So, with that information, whatdoes $29,000 per year look like
from a $3.2 million portfolio?
Well, what it is is itrepresents a withdrawal rate of
(08:13):
a little less than 1% per year.
In other words, peter and hiswife could retire at the end of
2024, both collect SocialSecurity assuming the numbers
I'm assuming are accuratecollect pension, collect rent
and if their expenses are$100,000 per year, pre-tax, they
only need less than 1% of theirportfolio to bridge the gap and
(08:35):
fully allow them to doeverything.
So, going back to his questionam I on track?
Am I going to be okay?
Well, assuming you don't makeany major investment mistakes
and assuming your expenses areaccurate and assuming you plan
for kind of one-off risk eventslong-term care, health events,
death et cetera then yeah, thenumbers here say you're in a
really good position For someperspective.
(08:56):
Depending upon your approachtowards withdrawing money from
your portfolio, you can take 4to 5%, sometimes even a little
bit more, out of your portfoliothat first year of retirement
and be reasonably assured thatyour portfolio is going to last
30 plus years into retirement.
So the fact that Peter and hiswife are taking out less than 1%
means that's a veryconservative withdrawal rate,
which means there's a lot thatwould have to go wrong for them
(09:17):
not to be okay with theirposition.
Now that's where I start and Ialso cannot give advice.
So, peter, I will not say Irecommend you retire and you're
absolutely in a good position.
But, as we illustrate that, allI will say is, generally
speaking, standard withdrawalrates are higher than what Peter
and his wife could take out inthis scenario and still be just
fine.
So today, peter's firstquestion are we going to be okay
(09:40):
?
Can't give specific advice, butthe numbers would say you're
probably in a pretty good spot.
But here's the thing there's adifference between the numbers
looking good and you being okayand optimizing every single
aspect of what you're doing.
So I'll tell clients all thetime.
People aren't coming to us justto say am I going to be okay?
You can save your way to justbeing okay, you can invest your
(10:01):
way to just being okay.
But to optimize everythingtakes some pretty serious
planning and intentionality tomake sure that everything you've
worked so hard for everythingyou've sacrificed for how do we
make sure that's working as hardfor you as it possibly can?
So there is a better way thanjust being okay, and that's one
that looks at optimizingeverything.
So here's the general frameworkwe look at at root when we go
(10:23):
through this.
So we call this system Sequoiasystem in terms of how do we
look at every single core aspect, every single pillar of a good,
strong foundation to yourretirement.
What would that look like as wego through Peter's situation?
Well, the first thing we lookedat is optimizing what I wouldn't
even consider the financialplan, but the life plan.
What I mean by that is are youreally living?
(10:45):
Are you really doing everythingthat you want to possibly do in
retirement?
And the hardest part for thatfor most people is, it's very
difficult to move from thesaving mindset.
So it's mindset you've had forthe last 40 years of your career
putting money into retirement,putting money into a Roth's,
putting money into property.
It's really hard to shift fromthat mindset to a spending
mindset, to actually being ableto enjoy the fruits of your
(11:07):
labor and do everything that youwant to do.
So, peter, the thing I would askyourself, or anyone listening
to this, the thing I would askmyself, is why do you want to
live on 80 to $90,000 per year?
Does that truly allow you to doeverything you want to do,
whether that's experiences, orliving comfortably, or charity,
or gifting to family or just allthe things that you could do
with money?
Or is that simply because youfeel that's a responsible number
(11:30):
to live on?
So I think, in looking at thosedraw rates, going back to what
we talked about, if you'rewithdrawing less than 1% per
year of your portfolio to fullymeet your needs, what that means
is there's potentially quite abit of room for you to enhance
lifestyle, enhance spending andstill be okay for the duration
of your lifetime.
So what does that look like?
(11:51):
Well, check out podcast episodenumber 182, just a couple of
weeks back where I talk aboutthis of how do you go from a
savings mindset to a spendingmindset, and not just spending
flippantly, not just spendingfoolishly, just to spend money
because you have it, butspending money in a way that
aligns with what's most valuableto you.
That's the crucial componenthere.
So the first step in anyplanning process we go through
(12:14):
is set the finances aside.
What do you actually want to doin retirement?
What would have to happen forthis to be one of the best
seasons of your life in terms ofthe things you're able to do,
the things you're able toexperience, the people you're
able to be with, the sitesyou're able to see?
Start there and then workbackwards into saying is this
truly enough income?
Is this the right amount ofincome for us to fully support
(12:34):
that and if not, what is thatamount so we can optimize
everything that we worked for?
Hey, everyone, it's me againfor the Disclaimer.
Please be smart about this.
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
(12:55):
The next thing is how do wemaximize income?
Well, right now, if we go backto the example I generated, or I
just assumed there's only$29,000 of income needed from
this $3.2 million portfolio thatPeter and his wife have.
If you look at that, aportfolio of $3.2 million could
generate somewhere between$125,000 and $160,000 or more
(13:17):
per year of income before taxes.
Those numbers come from simplyapplying standard withdrawal
rates.
They're assuming you'reinvested a certain way and
they're assuming you followcertain rules as you take money
out of your portfolio.
But just use that as an anchorpoint or as a starting point.
Peter and his wife are taking$29,000, at least based upon the
way that I assumed they takeSocial Security but they could
(13:39):
be taking five to six times asmuch from their portfolio and
still be in a position wherethat portfolio could last for
the rest of their lives.
That's before we even considerany of the equity value they
have in their primary home,their second home or the office
building.
How do you maximize income?
Not just how do you maximize it, but how do you now coordinate
that on top of pension income orrental income or Social
(14:01):
Security income?
That would be something thatyou want to dive deep on to see
what's the right combination ofall these different income
sources to maximize the lifetimeincome you can create Within
that is, when does it make senseto collect Social Security?
Peter, you mentioned you'regoing to defer until 70.
That may be the best option,but at the same time, there's
many reasons.
(14:21):
I can think that it might notbe.
The typical person thinks and Idon't mean this in any
disrespect, peter but thetypical even advisor I would say
thinks oh, the breakeven agefor Social Security is age 80 or
81.
If you're going to live pastthat, then wait to collect your
benefit at age 70.
What they're not taking intoaccount is that you waiting
until 70 to collect SocialSecurity means you're drawing
(14:44):
down your portfolio assets alongthe way.
What they're not factoring iswhat's the opportunity cost on
those extra dollars that you hadto draw down?
Not just extra dollars, butextra tens of thousands of
dollars, maybe even hundreds ofthousands of dollars that you
drew out of your portfolio thatare no longer going to continue
compounding for you like theyotherwise would have.
You have to factor in the bigpicture when you're looking at
(15:05):
this.
So, peter, does it make sensefor you to collect at 70 or 64?
Should your wife collect at 62or wait?
Well, that's part of anintegrated plan and looking at
the big picture, that'ssomething that you'd be able to
determine.
Then other things, like Imentioned will you keep your
office building forever?
What about the second home?
Do you turn those into incomeproperties?
It sounds like one maybealready is.
(15:26):
Do you sell and investincome-generating assets?
All these types of things needto be considered as you're
looking at maximizing yourincome.
The next thing I'd want to lookat, after determining your
income strategy, is now look atyour investments.
How do your investments fitwithin your income strategy?
Because the strategies that youhad when you were accumulating
(15:46):
and growing your assets are notthe same strategies you should
have on the back end or when youstart retiring from it and you
begin decimulating your assets.
Here's what I mean by that.
Peter mentioned he has a 70-30portfolio, so 70% stocks, 30%
bonds, and his wife has an 80-20portfolio.
I don't ask why.
Where does that allocation comefrom?
(16:07):
It could be a great allocation,it could be the right
allocation or it could not be,but I'd like to know why that
allocation?
Specifically because what I seeis all too often people start
shifting their allocations basedpurely on their stage in life.
I'm young.
I need a more aggressiveallocation.
I'm getting close to retirement, I need a moderate growth
(16:27):
allocation.
I'm in retirement.
I need a moderate or even abalanced allocation.
That's the cookie cutter way ofthinking about it, but it's the
wrong way of thinking about itin my perspective.
Here's what I would do instead.
What I would start with is I'dstart by looking at the overall
portfolio to see how much ofthat portfolio is in cash or
(16:47):
conservative investments.
Well, what we know is 600,000is in cash, in CDs.
What we also know is that Peteris 30% of his $2.1 million in
bonds and his wife has 20% ofher $400,000 retirement account
in bonds.
So if you do the math on that,that's $710,000 in bonds.
(17:08):
So, between cash and bondsinside of their portfolio, Peter
and his wife have $1.31 milliontotal in what I might consider
the conservative bucket of theirportfolio.
Now keep this in mind the roleof that portion of your
portfolio, the conservativebucket, it's not to grow.
Yes, ideally it grows a littlebit, but that's not its primary
(17:29):
objective.
Its primary objective is toprotect, provide stability and
provide some income as well.
Here's how I think about that.
If Peter's living expenses are$100,000 per year, then he and
his wife having $1.31 milliontotal dollars in cash and bonds
is the equivalent of having 13years of safety.
It's like a 13 year emergencyfund in the event the stock
(17:52):
market drops and doesn't recoverfor a very long time.
That's a lot of years.
Well, let's take that a stepfurther.
When you look at Peter and hiswife's expenses, yes, it's
$100,000, but only $29,000 ofthat is actually coming from
their portfolio, assuming theycollect Social Security early.
So when you look at yourportfolio, it's not up to the
entire portfolio to generate all$100,000 per year.
(18:14):
Your portfolio only needs togenerate a portion of it because
another amount is coming fromSocial Security, pension and
rent.
So if $29,000 is coming fromtheir portfolio, then that $1.3
million actually representsabout 45 years of living
expenses.
Meaning the stock market coulddrop and fall off a cliff and
(18:34):
take 45 years to recover, andPeter and his wife would still
have enough money and cash andbonds to fully fund everything
without having to sell stocks.
So is that excessive?
Well, maybe it looks at onepart of the equation.
When you're looking at the rightinvestment mix for you high
level, there's two things youshould look at.
There's what's called your riskcapacity and there's your risk
(18:57):
tolerance.
Risk capacity is what we justlooked at.
How much risk can you afford totake based upon your various
income sources, based upon howmuch you want to spend, based
upon your high level plan?
That's more of a mathematicaldetermination.
Your risk capacity says what,financially speaking, can your
plan afford?
Risk tolerance is more of theemotional component.
(19:18):
Theoretically, many people couldhave 100% stock portfolio in
retirement, but they would behorrified to actually have that.
They just wouldn't be able tostomach the ups and downs and
the craziness of the market byhaving all their portfolio in
stock.
So even if their risk capacitysays you could be all stocks,
their risk tolerance might be inthe opposite end of that
spectrum.
So when I'm looking at Peter'splan, this is why I would say
(19:41):
why do you have 70, 30, and 80,20 allocations for your
portfolio?
It could be a very good reason.
I would just be curious whatthat is.
His risk capacity, based onthis preliminary analysis, would
be higher in my opinion.
But what I don't know is hisrisk tolerance, his comfort
level with investing, hiscomfort level with any of the
experiences that a wild marketmight have on you in retirement.
(20:04):
But that's where I'd start withthat.
The next piece is in the taxstrategy?
So Roth conversions first andforemost do you have the ability
to keep income very low thosefirst few years of retirement
while you simultaneously movemoney from pre-tax retirement
accounts to Roth accounts?
Peter's already alluding to thefact, I think, that they're
going to do this.
If they have that much money incash, they're going to live on
(20:25):
that cash Because that cash hasalready been taxed.
It's not going to put them in ahigh income tax bracket.
They will pay taxes on theinterest that cash generates,
but actually living on that cashwill not put them into a higher
tax bracket.
So for 2023, just for some basicnumbers here, if you make
$117,150 of adjusted grossincome these are 2023 numbers
(20:47):
then what you've done is you'vefilled up the 0%, 10% and 12%
tax bracket.
After that it jumps to 22%.
Now there's not technically a0% tax bracket, but what that is
is that's the amount of yourstandard deduction or your
itemized deduction, if youitemize.
So if your itemized deduction,for example, in 2023, is $27,700
(21:10):
, which is what it is if you'remarried finally and jointly,
then what that means is youcould earn up to $27,700 and pay
$0 in federal taxes, becauseyour standard deduction and this
is married, finally jointlycompletely wipes it out.
The standard deduction forsingle is $13,850, so exactly
one half of that.
So that's an important numberfor many retirees to keep in
(21:31):
mind, because there's a big jumpfrom the 12% bracket to the 22%
bracket.
So if you can prioritizefilling out the 10% and the 12%
bracket not for everybody, butfor many people that becomes a
priority early in retirement.
So what I would want to look atfor Peter is what's the adjusted
gross income that they have?
Well, his wife has a pension,so that's going to contribute.
(21:52):
They have rental income, butit's not the gross income from
rent that you're going toinclude in your adjusted gross
income.
It's the net income.
So you have rental income, butthen there's some property taxes
, then there's some maintenanceand there's some depreciation,
then there's some other expenses.
So once you deduct all of those, the remaining amount is what's
actually taxable income andthat's included in your adjusted
(22:13):
gross income.
So look at all that and thenany gaps.
Let's assume, for example,peter and his wife want to
convert up to the 12% bracket.
Well then, any gaps betweenwhere their adjusted gross
income is in $117,150, theymight want to consider shifting
that amount from IRAs orretirement accounts into Roth
IRAs to fully fill up the 10%and 12% bracket.
(22:36):
Once again, that's not aspecific recommendation to Peter
or to anyone, that's just acommon tactic.
Most people take is to say look,the 10% to 12% bracket, that's
relatively low.
The next bracket jumps to 22%and that's a fairly big jump.
So what can we do to staybeneath that?
I don't want to know from Peterare you charitable inclined at
all?
Do you give to charity?
(22:56):
Do you have specific donationsyou give?
If so, do qualified charitabledistributions make sense?
I also want to take a look atdo you use cash to do large Roth
conversions, like we justmentioned, or do you do more of
a balance strategy where youtake some from cash each year
and some from pre-tax retirementaccounts each year to maintain
your living expenses, all whilestaying under certain thresholds
?
So various tax things I want toconsider.
(23:18):
And then the finalconsideration, at least the
final big picture considerationis just protection.
Okay, so you have the life planin place, you have the income
strategy in place, you have theinvestment strategy in place,
you have the tax strategy inplace.
Now how do we protect it?
Protection falls in two maincategories.
The first is insurance.
So do we have the rightinsurances?
(23:39):
This is health insurance orMedicare.
This could also be long-termcare insurance.
It's going to be property andcasualty insurance.
So liability protection on yourautomobile, your home?
What about umbrella coverage?
So what are all the types ofinsurances you may need, and do
you have the appropriatecoverage to protect what you
have?
The second form of protection isyour estate plan.
(23:59):
So do you have the right estatedocuments in order?
This is a trust, this is a will, this is your advance
directives.
This is making sure that youhave all the right things in
place, and it's oftentimes notincredibly complicated, but a
lot of people never get aroundto doing it or they never get
around to updating it.
So how do we make sure thatassets are properly titled?
How do we make sure thebeneficiaries are properly
(24:23):
registered?
How do we make sure that youhave all of your necessary
documents so that you havecontrol both over what happens
while you're living as well asonce you've passed?
So making things easy on youand your family, and that's one
way in which you protect theplan.
Now, after that, there's allkinds of details and little
questions and ongoing review ofthis that comes into play, but
(24:44):
the general strategy.
Going back to Peter's question,it's number one are we going to
be okay?
It's nice to have a back of thenapkin assessment of are we
going to be okay or not, andgenerally you can get to a good
answer pretty quickly.
But how do you not just do okay, but make the best of
everything?
That's a more thorough process.
How do we identify your purposeand what you want life to look
(25:04):
like in retirement?
How do we then filter everysingle thing that you're doing
from a financial standpointthrough that lens so you can
optimize income, investments,taxes and security to make sure
that you're living awell-aligned and optimized life
in using your financialresources as a tool to support
that, as opposed to viewing yourfinances something separate but
(25:25):
not fully integrated with therest of your life?
So that is it for today'sepisode.
Peter, thank you very much forthat question.
Thank you to all of you who haveleft questions and thank you
especially to those of you whohave left reviews.
It really helps more people findthis podcast.
If you haven't left a review,please go ahead and do so.
If you have someone that youthink could benefit from this
episode or any of the contentwe've put out there.
(25:45):
Please share it with them.
It's fun to hear feedback fromall of you of how much this has
helped as you've explored yourown retirement plans and,
ultimately, the goals to helpyou get the most out of life
with your money.
So thank you, as always, forlistening and I'll see you all
next time.
Thank you for listening toanother episode of the Ready for
Retirement podcast.
If you want to see how RootFinancial can help you implement
(26:06):
the techniques I discussed inthis podcast, then go to
rootfinancialpartnerscom andclick Start here, where you can
schedule a call to one of ouradvisors.
We work with clients all overthe country and we love the
opportunity to speak with youabout your goals and how we
might be able to help.
And please remember, nothing wediscuss in this podcast is
intended to serve as advice.
You should always consult afinancial, legal or tax
(26:27):
professional who's familiar withyour unique circumstances
before making any financialdecisions.
It doesn't matter if you have 1 million, 5 million,
10 million or even more in yourinvestment portfolio.
You're not going to feelfinancially secure until you
have a plan in place that showsyou how to optimize that and not
just optimize it, but optimizeit in a way that allows you to
fully fund everything that'smost important to.
You Think when the biggesthang-ups most people have is
thinking that once they reachsome net worth or some portfolio
(00:22):
value, that's when they'regoing to feel more confident,
that's when they're going tohave more peace of mind.
I'm here to tell you that's notthe case.
It does not matter how muchmoney you have in your portfolio
.
Financial security doesn't comefrom a number.
It comes from having a plan.
So today I'm going to walkthrough a real-life scenario to
show you how to think about yourplanning as you prepare for
retirement.
(00:45):
This is another episode of Readyfor Retirement.
I'm your host, james Cannell,and I'm here to teach you how to
get the most out of life withyour money.
And now on to the episode A lotof education around retirement
planning and investments.
It's fairly abstract In general.
Here's what you should do, orhere's a principle that you
should follow, which is helpfulin many instances, but sometimes
(01:06):
an actual example, somethingthat's concrete and you can use
to almost view yourself in,that's what's actually going to
help you see what's importantwhen it comes to your own
planning.
So we're going to go through anactual question today that a
listener submitted and I'm goingto walk through it and say
what's the framework or what'sthe order of things that I want
to make sure there's a plan forbased upon real numbers.
So this is from Peter.
(01:28):
Peter is a listener and Petersubmitted this question.
He said I am 64 years old andmy wife is 60 and she's retired.
We have combined retirementaccounts of $2.5 million.
Mine is $2.1 million and mywife's is $400,000.
Mine is in a 70-30 stock andbond mix and my wife's is in an
80-20 stock and bonds mix.
We have $600,000 in cash andCDs which we plan on living off
(01:50):
of and not touching ourretirement accounts for six to
seven years.
We also have $50,000 in RothIRA.
My wife has a pension of $500per month and our expenses are
$80,000 to $90,000 per year.
We have a primary home with$1.1 million, a second home
worth $625,000 and my officecondo worth about $225,000, and
(02:11):
we have no mortgages on any ofthe properties.
I will make a salary of about$170,000 in 2024 and I plan on
retiring at the end of that year.
I plan on taking my socialsecurity at $70,000 and then
required minimum distributions.
After that, the only incomewill be my wife's pension and
rental income, which is acombined $29,000 per month.
(02:33):
My question is does my wife takeher social security early, at
62 or wait, and when should westart converting money from our
retirement plans into our RothIRA way?
Also, do you feel we are on agood track for retirement?
Thank you for your time.
Your podcast keeps me informedand has helped me plan
retirement, peter.
Well, peter, thank you for thatquestion.
Like I said, let's take that,while I cannot provide specific
(02:54):
advice so none of this is everintended to be a recommendation
or advice we can provide aframework and a way of thinking
about this.
That will hopefully shed a lotof light on what you could do in
multiple different scenarios.
When I'm looking at stuff likethis for clients, there's a
two-pronged approach.
I'd like to take Number onefirst and foremost are you going
to be okay?
(03:14):
Then, number two how do wemaximize this?
How do we optimize every singlething that you're doing.
We're not just doing okay, butwe're doing the best we possibly
can.
When I start by saying are yougoing to be okay?
Why do I say that?
Well, for most people, theirbiggest concern in retirement is
am I going to have enough moneyto pay my bills?
My salary is going away.
What income can I create to beokay and know that I'm not going
(03:37):
to run out of money, whichessentially means running out of
income?
When Peter's question he says,quote do you feel we are on a
good track for retirement?
There's two parts to this.
If we're just starting, highlevel of answering the first
part, which is are you going tobe okay?
The second part is now how dowe optimize?
When we're looking at that andagain, are we going to be okay?
It means, do we have enoughincome to pay our bills for the
(03:57):
rest of our lives?
What are the two parts of thatequation?
Are we going to be okay andwhat's the income going to be?
So let's start with the bills.
Well, in Peter's situation, hesays they want to live on 80 to
90 thousand dollars per year.
I'm assuming that Peter and hiswife want to live on that after
taxes, so I don't know whatstate they live in, I don't know
what tax bracket they're in,but let's assume that to get 80
(04:19):
to 90 thousand dollars per yearafter taxes, they really need
100 thousand dollars per yearpre-tax.
Nice round number and probablynot too far off, depending on
the specifics.
So, going back to our equation,part one of the equation what
are the bills?
Well, for the sake of thispodcast, I'm going to assume the
bills are exactly 100 thousanddollars per year.
Part two where's the incomegoing to come from?
(04:40):
Well, this is the scary part forpeople who are in Peter's
position is it starts out as notmuch.
So yes, peter has good amountof money in his portfolio.
He's talking about collectinghis social security at 70.
But what about those yearsbetween retirement and social
security?
So if he's going to retire at64 and social security kicks in
at 70, that can be kind of scary.
Where does that money actuallycome from?
(05:01):
We're so used to collectingpaycheck our whole lives.
It just feels weird not to havethat paycheck coming in.
Well, let's go back to Peter'squestion, or his overview.
He says we'll have pension andrental income of 29 thousand
dollars per year.
Well, if the pension is 500dollars per month.
That's his wife's pension.
That's 6,000 per year.
So by process of elimination,the rental income is 23 thousand
(05:23):
.
But when you look at thecombined number they have 29
thousand dollars of incomecoming in.
But if we compare that 200thousand there's a shortfall,
and so $71 thousand dollars ofthat is what the shortfall is.
So where's that uncoveredamount going to come from?
What do you do in that situation?
Do you live on cash?
Do you invest in stocks thatpay that amount in dividends?
Do you invest in bonds that paythat amount in interest?
(05:45):
Do you do some combination ofthese?
Well, there's quite literallyhundreds of different
alternative options here.
I want to explore just one,though for a second.
I know Peter mentioned thathe's probably going to collect
Social Security at 70.
For the sake of illustration,though, let's just quickly
review or examine an alternativestrategy.
Let's assume that Petercollects his Social Security at
(06:05):
64.
That's when he's going toretire.
I'm going to assume he'llreceive $2,500 per month.
The reality is, I have no ideahow much Peter will earn, but
looking at his income, heprobably has a decent benefit.
And if he's collecting at 64,he's accepting a bit of a
reduction from what he would getat full retirement age, but
still probably a solid benefit.
I have no idea what his wife'sincome is.
(06:26):
If she collects hers at 62,though, which is the assumption
I'm going to make, let's bereally conservative and assume
even just a spousal benefitthat's reduced because of
collecting early, and I'm justgoing to assume that her benefit
is $1,000 per month.
In reality, I would say there'sa pretty good chance that both
of their benefits are higherthan what I'm assuming, but I
want to be fairly conservativefor this walkthrough as we
(06:47):
illustrate this.
So Peter's getting $2,500 permonth.
His wife is getting $1,000 permonth.
So combined that's another$3,500 per month.
That's coming in on top ofpension and rental income.
Now Peter wanted guidance onwhen does it make sense to
collect Social Security.
This may not be the beststrategy, but let's run the
numbers at this rate, because myphilosophy towards this is look
(07:08):
if things work with thisstrategy.
Well, if we can find a strategythat's better, it means things
will work even more.
So let's just use this as astarting point.
So, combined Social Security of$42,000 per year.
Now, when we look at theirincome sources of pension, plus
rent, plus Social Security well,now that's $71,000 per year.
(07:29):
So now, only $29,000 of theirtotal bills or total expenses
are uncovered, but there's stilla gap.
Well, that gap is what yourportfolio is for.
If your portfolio is growingand growing and growing and you
never spend it, it's kind ofgoing to waste.
Think of your portfolio asdeferred spending, deferred
lifestyle income that you havetoday, but you're deferring it
(07:51):
for a future date so that youcan spend it down the road.
So your portfolio is designedto be spent in between cash and
retirement and Roth accounts.
Peter and his wife have about$3.2 million in investments.
So, with that information, whatdoes $29,000 per year look like
from a $3.2 million portfolio?
Well, what it is is itrepresents a withdrawal rate of
(08:13):
a little less than 1% per year.
In other words, peter and hiswife could retire at the end of
2024, both collect SocialSecurity assuming the numbers
I'm assuming are accuratecollect pension, collect rent
and if their expenses are$100,000 per year, pre-tax, they
only need less than 1% of theirportfolio to bridge the gap and
(08:35):
fully allow them to doeverything.
So, going back to his questionam I on track?
Am I going to be okay?
Well, assuming you don't makeany major investment mistakes
and assuming your expenses areaccurate and assuming you plan
for kind of one-off risk eventslong-term care, health events,
death et cetera then yeah, thenumbers here say you're in a
really good position For someperspective.
(08:56):
Depending upon your approachtowards withdrawing money from
your portfolio, you can take 4to 5%, sometimes even a little
bit more, out of your portfoliothat first year of retirement
and be reasonably assured thatyour portfolio is going to last
30 plus years into retirement.
So the fact that Peter and hiswife are taking out less than 1%
means that's a veryconservative withdrawal rate,
which means there's a lot thatwould have to go wrong for them
(09:17):
not to be okay with theirposition.
Now that's where I start and Ialso cannot give advice.
So, peter, I will not say Irecommend you retire and you're
absolutely in a good position.
But, as we illustrate that, allI will say is, generally
speaking, standard withdrawalrates are higher than what Peter
and his wife could take out inthis scenario and still be just
fine.
So today, peter's firstquestion are we going to be okay
(09:40):
?
Can't give specific advice, butthe numbers would say you're
probably in a pretty good spot.
But here's the thing there's adifference between the numbers
looking good and you being okayand optimizing every single
aspect of what you're doing.
So I'll tell clients all thetime.
People aren't coming to us justto say am I going to be okay?
You can save your way to justbeing okay, you can invest your
(10:01):
way to just being okay.
But to optimize everythingtakes some pretty serious
planning and intentionality tomake sure that everything you've
worked so hard for everythingyou've sacrificed for how do we
make sure that's working as hardfor you as it possibly can?
So there is a better way thanjust being okay, and that's one
that looks at optimizingeverything.
So here's the general frameworkwe look at at root when we go
(10:23):
through this.
So we call this system Sequoiasystem in terms of how do we
look at every single core aspect, every single pillar of a good,
strong foundation to yourretirement.
What would that look like as wego through Peter's situation?
Well, the first thing we lookedat is optimizing what I wouldn't
even consider the financialplan, but the life plan.
What I mean by that is are youreally living?
(10:45):
Are you really doing everythingthat you want to possibly do in
retirement?
And the hardest part for thatfor most people is, it's very
difficult to move from thesaving mindset.
So it's mindset you've had forthe last 40 years of your career
putting money into retirement,putting money into a Roth's,
putting money into property.
It's really hard to shift fromthat mindset to a spending
mindset, to actually being ableto enjoy the fruits of your
(11:07):
labor and do everything that youwant to do.
So, peter, the thing I would askyourself, or anyone listening
to this, the thing I would askmyself, is why do you want to
live on 80 to $90,000 per year?
Does that truly allow you to doeverything you want to do,
whether that's experiences, orliving comfortably, or charity,
or gifting to family or just allthe things that you could do
with money?
Or is that simply because youfeel that's a responsible number
(11:30):
to live on?
So I think, in looking at thosedraw rates, going back to what
we talked about, if you'rewithdrawing less than 1% per
year of your portfolio to fullymeet your needs, what that means
is there's potentially quite abit of room for you to enhance
lifestyle, enhance spending andstill be okay for the duration
of your lifetime.
So what does that look like?
(11:51):
Well, check out podcast episodenumber 182, just a couple of
weeks back where I talk aboutthis of how do you go from a
savings mindset to a spendingmindset, and not just spending
flippantly, not just spendingfoolishly, just to spend money
because you have it, butspending money in a way that
aligns with what's most valuableto you.
That's the crucial componenthere.
So the first step in anyplanning process we go through
(12:14):
is set the finances aside.
What do you actually want to doin retirement?
What would have to happen forthis to be one of the best
seasons of your life in terms ofthe things you're able to do,
the things you're able toexperience, the people you're
able to be with, the sitesyou're able to see?
Start there and then workbackwards into saying is this
truly enough income?
Is this the right amount ofincome for us to fully support
(12:34):
that and if not, what is thatamount so we can optimize
everything that we worked for?
Hey, everyone, it's me againfor the Disclaimer.
Please be smart about this.
Before doing anything, pleasebe sure to consult with your tax
planner or financial planner.
Nothing in this podcast shouldbe construed as investment, tax,
legal or other financial advice.
It is for informationalpurposes only.
(12:55):
The next thing is how do wemaximize income?
Well, right now, if we go backto the example I generated, or I
just assumed there's only$29,000 of income needed from
this $3.2 million portfolio thatPeter and his wife have.
If you look at that, aportfolio of $3.2 million could
generate somewhere between$125,000 and $160,000 or more
(13:17):
per year of income before taxes.
Those numbers come from simplyapplying standard withdrawal
rates.
They're assuming you'reinvested a certain way and
they're assuming you followcertain rules as you take money
out of your portfolio.
But just use that as an anchorpoint or as a starting point.
Peter and his wife are taking$29,000, at least based upon the
way that I assumed they takeSocial Security but they could
(13:39):
be taking five to six times asmuch from their portfolio and
still be in a position wherethat portfolio could last for
the rest of their lives.
That's before we even considerany of the equity value they
have in their primary home,their second home or the office
building.
How do you maximize income?
Not just how do you maximize it, but how do you now coordinate
that on top of pension income orrental income or Social
(14:01):
Security income?
That would be something thatyou want to dive deep on to see
what's the right combination ofall these different income
sources to maximize the lifetimeincome you can create Within
that is, when does it make senseto collect Social Security?
Peter, you mentioned you'regoing to defer until 70.
That may be the best option,but at the same time, there's
many reasons.
(14:21):
I can think that it might notbe.
The typical person thinks and Idon't mean this in any
disrespect, peter but thetypical even advisor I would say
thinks oh, the breakeven agefor Social Security is age 80 or
81.
If you're going to live pastthat, then wait to collect your
benefit at age 70.
What they're not taking intoaccount is that you waiting
until 70 to collect SocialSecurity means you're drawing
(14:44):
down your portfolio assets alongthe way.
What they're not factoring iswhat's the opportunity cost on
those extra dollars that you hadto draw down?
Not just extra dollars, butextra tens of thousands of
dollars, maybe even hundreds ofthousands of dollars that you
drew out of your portfolio thatare no longer going to continue
compounding for you like theyotherwise would have.
You have to factor in the bigpicture when you're looking at
(15:05):
this.
So, peter, does it make sensefor you to collect at 70 or 64?
Should your wife collect at 62or wait?
Well, that's part of anintegrated plan and looking at
the big picture, that'ssomething that you'd be able to
determine.
Then other things, like Imentioned will you keep your
office building forever?
What about the second home?
Do you turn those into incomeproperties?
It sounds like one maybealready is.
(15:26):
Do you sell and investincome-generating assets?
All these types of things needto be considered as you're
looking at maximizing yourincome.
The next thing I'd want to lookat, after determining your
income strategy, is now look atyour investments.
How do your investments fitwithin your income strategy?
Because the strategies that youhad when you were accumulating
(15:46):
and growing your assets are notthe same strategies you should
have on the back end or when youstart retiring from it and you
begin decimulating your assets.
Here's what I mean by that.
Peter mentioned he has a 70-30portfolio, so 70% stocks, 30%
bonds, and his wife has an 80-20portfolio.
I don't ask why.
Where does that allocation comefrom?
(16:07):
It could be a great allocation,it could be the right
allocation or it could not be,but I'd like to know why that
allocation?
Specifically because what I seeis all too often people start
shifting their allocations basedpurely on their stage in life.
I'm young.
I need a more aggressiveallocation.
I'm getting close to retirement, I need a moderate growth
(16:27):
allocation.
I'm in retirement.
I need a moderate or even abalanced allocation.
That's the cookie cutter way ofthinking about it, but it's the
wrong way of thinking about itin my perspective.
Here's what I would do instead.
What I would start with is I'dstart by looking at the overall
portfolio to see how much ofthat portfolio is in cash or
(16:47):
conservative investments.
Well, what we know is 600,000is in cash, in CDs.
What we also know is that Peteris 30% of his $2.1 million in
bonds and his wife has 20% ofher $400,000 retirement account
in bonds.
So if you do the math on that,that's $710,000 in bonds.
(17:08):
So, between cash and bondsinside of their portfolio, Peter
and his wife have $1.31 milliontotal in what I might consider
the conservative bucket of theirportfolio.
Now keep this in mind the roleof that portion of your
portfolio, the conservativebucket, it's not to grow.
Yes, ideally it grows a littlebit, but that's not its primary
(17:29):
objective.
Its primary objective is toprotect, provide stability and
provide some income as well.
Here's how I think about that.
If Peter's living expenses are$100,000 per year, then he and
his wife having $1.31 milliontotal dollars in cash and bonds
is the equivalent of having 13years of safety.
It's like a 13 year emergencyfund in the event the stock
(17:52):
market drops and doesn't recoverfor a very long time.
That's a lot of years.
Well, let's take that a stepfurther.
When you look at Peter and hiswife's expenses, yes, it's
$100,000, but only $29,000 ofthat is actually coming from
their portfolio, assuming theycollect Social Security early.
So when you look at yourportfolio, it's not up to the
entire portfolio to generate all$100,000 per year.
(18:14):
Your portfolio only needs togenerate a portion of it because
another amount is coming fromSocial Security, pension and
rent.
So if $29,000 is coming fromtheir portfolio, then that $1.3
million actually representsabout 45 years of living
expenses.
Meaning the stock market coulddrop and fall off a cliff and
(18:34):
take 45 years to recover, andPeter and his wife would still
have enough money and cash andbonds to fully fund everything
without having to sell stocks.
So is that excessive?
Well, maybe it looks at onepart of the equation.
When you're looking at the rightinvestment mix for you high
level, there's two things youshould look at.
There's what's called your riskcapacity and there's your risk
(18:57):
tolerance.
Risk capacity is what we justlooked at.
How much risk can you afford totake based upon your various
income sources, based upon howmuch you want to spend, based
upon your high level plan?
That's more of a mathematicaldetermination.
Your risk capacity says what,financially speaking, can your
plan afford?
Risk tolerance is more of theemotional component.
(19:18):
Theoretically, many people couldhave 100% stock portfolio in
retirement, but they would behorrified to actually have that.
They just wouldn't be able tostomach the ups and downs and
the craziness of the market byhaving all their portfolio in
stock.
So even if their risk capacitysays you could be all stocks,
their risk tolerance might be inthe opposite end of that
spectrum.
So when I'm looking at Peter'splan, this is why I would say
(19:41):
why do you have 70, 30, and 80,20 allocations for your
portfolio?
It could be a very good reason.
I would just be curious whatthat is.
His risk capacity, based onthis preliminary analysis, would
be higher in my opinion.
But what I don't know is hisrisk tolerance, his comfort
level with investing, hiscomfort level with any of the
experiences that a wild marketmight have on you in retirement.
(20:04):
But that's where I'd start withthat.
The next piece is in the taxstrategy?
So Roth conversions first andforemost do you have the ability
to keep income very low thosefirst few years of retirement
while you simultaneously movemoney from pre-tax retirement
accounts to Roth accounts?
Peter's already alluding to thefact, I think, that they're
going to do this.
If they have that much money incash, they're going to live on
(20:25):
that cash Because that cash hasalready been taxed.
It's not going to put them in ahigh income tax bracket.
They will pay taxes on theinterest that cash generates,
but actually living on that cashwill not put them into a higher
tax bracket.
So for 2023, just for some basicnumbers here, if you make
$117,150 of adjusted grossincome these are 2023 numbers
(20:47):
then what you've done is you'vefilled up the 0%, 10% and 12%
tax bracket.
After that it jumps to 22%.
Now there's not technically a0% tax bracket, but what that is
is that's the amount of yourstandard deduction or your
itemized deduction, if youitemize.
So if your itemized deduction,for example, in 2023, is $27,700
(21:10):
, which is what it is if you'remarried finally and jointly,
then what that means is youcould earn up to $27,700 and pay
$0 in federal taxes, becauseyour standard deduction and this
is married, finally jointlycompletely wipes it out.
The standard deduction forsingle is $13,850, so exactly
one half of that.
So that's an important numberfor many retirees to keep in
(21:31):
mind, because there's a big jumpfrom the 12% bracket to the 22%
bracket.
So if you can prioritizefilling out the 10% and the 12%
bracket not for everybody, butfor many people that becomes a
priority early in retirement.
So what I would want to look atfor Peter is what's the adjusted
gross income that they have?
Well, his wife has a pension,so that's going to contribute.
(21:52):
They have rental income, butit's not the gross income from
rent that you're going toinclude in your adjusted gross
income.
It's the net income.
So you have rental income, butthen there's some property taxes
, then there's some maintenanceand there's some depreciation,
then there's some other expenses.
So once you deduct all of those, the remaining amount is what's
actually taxable income andthat's included in your adjusted
(22:13):
gross income.
So look at all that and thenany gaps.
Let's assume, for example,peter and his wife want to
convert up to the 12% bracket.
Well then, any gaps betweenwhere their adjusted gross
income is in $117,150, theymight want to consider shifting
that amount from IRAs orretirement accounts into Roth
IRAs to fully fill up the 10%and 12% bracket.
(22:36):
Once again, that's not aspecific recommendation to Peter
or to anyone, that's just acommon tactic.
Most people take is to say look,the 10% to 12% bracket, that's
relatively low.
The next bracket jumps to 22%and that's a fairly big jump.
So what can we do to staybeneath that?
I don't want to know from Peterare you charitable inclined at
all?
Do you give to charity?
(22:56):
Do you have specific donationsyou give?
If so, do qualified charitabledistributions make sense?
I also want to take a look atdo you use cash to do large Roth
conversions, like we justmentioned, or do you do more of
a balance strategy where youtake some from cash each year
and some from pre-tax retirementaccounts each year to maintain
your living expenses, all whilestaying under certain thresholds
?
So various tax things I want toconsider.
(23:18):
And then the finalconsideration, at least the
final big picture considerationis just protection.
Okay, so you have the life planin place, you have the income
strategy in place, you have theinvestment strategy in place,
you have the tax strategy inplace.
Now how do we protect it?
Protection falls in two maincategories.
The first is insurance.
So do we have the rightinsurances?
(23:39):
This is health insurance orMedicare.
This could also be long-termcare insurance.
It's going to be property andcasualty insurance.
So liability protection on yourautomobile, your home?
What about umbrella coverage?
So what are all the types ofinsurances you may need, and do
you have the appropriatecoverage to protect what you
have?
The second form of protection isyour estate plan.
(23:59):
So do you have the right estatedocuments in order?
This is a trust, this is a will, this is your advance
directives.
This is making sure that youhave all the right things in
place, and it's oftentimes notincredibly complicated, but a
lot of people never get aroundto doing it or they never get
around to updating it.
So how do we make sure thatassets are properly titled?
How do we make sure thebeneficiaries are properly
(24:23):
registered?
How do we make sure that youhave all of your necessary
documents so that you havecontrol both over what happens
while you're living as well asonce you've passed?
So making things easy on youand your family, and that's one
way in which you protect theplan.
Now, after that, there's allkinds of details and little
questions and ongoing review ofthis that comes into play, but
(24:44):
the general strategy.
Going back to Peter's question,it's number one are we going to
be okay?
It's nice to have a back of thenapkin assessment of are we
going to be okay or not, andgenerally you can get to a good
answer pretty quickly.
But how do you not just do okay, but make the best of
everything?
That's a more thorough process.
How do we identify your purposeand what you want life to look
(25:04):
like in retirement?
How do we then filter everysingle thing that you're doing
from a financial standpointthrough that lens so you can
optimize income, investments,taxes and security to make sure
that you're living awell-aligned and optimized life
in using your financialresources as a tool to support
that, as opposed to viewing yourfinances something separate but
(25:25):
not fully integrated with therest of your life?
So that is it for today'sepisode.
Peter, thank you very much forthat question.
Thank you to all of you who haveleft questions and thank you
especially to those of you whohave left reviews.
It really helps more people findthis podcast.
If you haven't left a review,please go ahead and do so.
If you have someone that youthink could benefit from this
episode or any of the contentwe've put out there.
(25:45):
Please share it with them.
It's fun to hear feedback fromall of you of how much this has
helped as you've explored yourown retirement plans and,
ultimately, the goals to helpyou get the most out of life
with your money.
So thank you, as always, forlistening and I'll see you all
next time.
Thank you for listening toanother episode of the Ready for
Retirement podcast.
If you want to see how RootFinancial can help you implement
(26:06):
the techniques I discussed inthis podcast, then go to
rootfinancialpartnerscom andclick Start here, where you can
schedule a call to one of ouradvisors.
We work with clients all overthe country and we love the
opportunity to speak with youabout your goals and how we
might be able to help.
And please remember, nothing wediscuss in this podcast is
intended to serve as advice.
You should always consult afinancial, legal or tax
(26:27):
professional who's familiar withyour unique circumstances
before making any financialdecisions.
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