July 29, 2025 • 11 mins
Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.
Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.
This is for education only.It is not tax, legal, or investment advice. Before acting on any information consult your tax, legal, or investment advisor.
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Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
George Jameson (00:00):
Hi.
I am George Jameson, certifiedfinancial planner and founder of
Capital Wealth Group, located inColumbia, South Carolina.
Today, we're diving into aquestion I hear all the time.
How do you know how much you'regonna spend in retirement each
year before you actually retire,if you underestimate your
spending, you can put the safetyof your retirement plan at risk.
(00:22):
However, if you overestimate,you might be working longer than
you actually need to be.
In this episode, I'm going towalk you through seven simple
steps to help you accuratelypredict your retirement spending
so you can retire withconfidence.
So step one, find your baseline.
(00:43):
Before you plan for retirementspending, you need to understand
what you spend today.
Ideally you have a detailedbudget where every transaction
is categorized from groceries,utility bills, and
entertainment.
You name it.
If you already do this,fantastic.
(01:04):
However, for most of us, weprobably don't keep that
detailed of a budget.
So if this is not you, grab yourbank and credit card statements
for the past 12 to 36 monthstotal up all outflows.
Just be careful not to doublecount your credit card payments
when they hit your checkingaccount.
(01:25):
This gives you a solid baselineof your current lifestyle's
cost.
Think of this as your startingline in your retirement budget.
So step two, subtract outretirement savings and any other
expenses you'll not have inretirement.
You want to remove the moneyyou're currently saving those
(01:46):
401k contributions.
Roth IRA deposits, taxablebrokerage account investments.
None of these will continue onceyou retire.
So if you saved$20,000 inretirement account last year,
deduct that from your baseline.
You also may have other expensesthat you'll not have in
retirement.
For instance, if your house willbe paid off, you won't have a
(02:08):
mortgage payment.
Maybe you still have dependentsat the house or kids in college.
You may not have those expensesin retirement.
So subtract those as well.
Now you have a clear view ofwhat you actually need to live
on once you stop working.
Now, step three, estimatehealthcare costs.
(02:29):
Healthcare is one of the biggestunknowns for retirees.
So let's break it down.
If you're already 65 or older,you'll obviously enroll in
Medicare.
Part A is typically premiumfree, but parts B and D carry
annual cost, roughly 2200 perperson for part B, and about 666
for Part D.
(02:50):
Today.
If you're married, that's about$5,775 a year for just the
premiums alone.
Then you add a Medigap policypremium to cover deductibles and
co-insurance.
Depending on your plan thatcould be anywhere from 1500 to
4,000 per person annually.
(03:10):
If you're retiring before 65.
You'll need to estimate yourAffordable Care Act marketplace
Premium instead until you hitage 65.
I did a whole podcast last weekon the ACA and the changes that
are going forward starting in2025 so please check it out.
(03:32):
You can also visithealthcare.gov and enter in your
details and choose a middle ofthe road silver plan as a
benchmark.
Then add those projectedpremiums to your baseline
budget.
So step four, define yourdiscretionary fun budget.
Discretionary spending is whatmakes retirement enjoyable.
(03:52):
Travel, dining out, hobbies,charitable giving, but your
baseline likely already includessome of these.
That's why it helps tocategorize your budget.
Which expenses do you consideressential and which are
discretionary?
Remember, essential here is verysubjective.
Internet might be non-essentialin theory.
(04:14):
But if you love streamingmovies, it's essential for you.
Once you've tagged currentexpenses as either essential or
discretionary, sit down withyour partner and think about how
these categories will change.
Maybe you've only taken oneannual trip, but want to double
that in retirement or perhapsyou love culinary experiences.
(04:37):
Identify the money dials, thethings you derive the most joy
from, and decide where to dialit up or dial back the spending.
And then step five, create threespending levels rather than one
single spending target.
Think in terms of three.
(04:57):
First you have your minimumtarget.
Your bare bones, essentialspending.
This is the level you need tocover necessities such as
housing, food, basic healthcareand so on.
And then number two would bewhat I call goal target.
Your ideal realistic budgetbased on the discretionary
(05:20):
spending you identified, this isthe number you've been building
toward.
Then number three I like tocall, dream, target, and upper
limit budget, representing themost you'd want to spend.
Even if you could spend more,there's usually a point of
diminishing returns.
Spending beyond this wouldn'tmeaningfully increase your
(05:44):
happiness.
Having these three targets helpsyou see how close you are to
your dream lifestyle, andwhether you should work a few
more years for that extracushion, or if you're already
safe to retire now, Step six,factor in taxes.
Now let's consider taxes beforeand after Social security.
(06:07):
You'll need a tool or softwarethat can model tax liability on
withdrawals I use a financialplanning software called Right
Capital, that includes taxplanning.
Also use another one calledHolistic Plan that goes into
more detail.
If you're doing this yourself,there are a couple good ones
online as well.
This is where distribution orwithdrawal tax strategies comes
(06:30):
into play Should you take moneyfrom your pre-tax account, your
taxable account, or your taxfree account?
When and in what order?
This is very important, andusing some type of financial
planning software thatincorporates taxes will help you
decide where to start takingdistributions from, and how
(06:51):
it'll affect your taxes overtime.
You will want to run thisthrough your tax tool to
estimate your annual taxliability each year in
retirement.
Add that to your pre-taxspending targets to get an
accurate view of how much grossincome you'll need.
So let's move on to step seven.
Step seven, project income intothe future.
(07:15):
Finally, retirement spendingdoesn't always stay flat while
inflation does push cost up.
Research shows that retireesreal spending is more like what
we call the retirement spendingsmile.
Most people tend to spend morein the early years of
retirement, less during themiddle phase, and then more
(07:35):
again later in retirement due tohealth related expenses.
Projecting your spending likethis can give you a more
nuanced, realistic picture ofyour financial needs over a 30
year retirement horizon.
But everyone's retirementjourney is unique.
Take my parents for example,they're 76 and 79, and they're
(07:58):
spending as much or more ontravel now than they ever did
before.
My mom just returned from a twoweek mission trip to Uganda.
Then they joined my family for amountain getaway.
And spend a week at the beach,and now they're on the way to
Mexico for another week longmission trip.
So let's now wrap it up.
(08:19):
So there you have it.
Seven steps to craft apersonalized retirement spending
plan that goes well beyond thegeneric 80% rule of thumb.
So let's recap First, find yourbaseline.
Think of this as your startingline in your retirement planning
budget.
Step two, subtract outretirement savings or any other
(08:44):
expenses you'll not have inretirement.
Step three, estimate healthcarecosts.
Step four.
To find your discretionary funbudget, the discretionary
spending that makes retirementenjoyable.
And then step five, createthree.
(09:04):
Spending levels, having thesethree targets helps you see how
close you are to your dreamlifestyle and whether you should
work a few more years for thatextra cushion, or if it's
already safe for you to retirenow.
And then step six, factor intaxes and step seven project
(09:26):
income into the future.
If you follow these steps,you'll have a detailed,
realistic estimate of what youneed each year in retirement,
and it'll give you a peace ofmind.
Knowing your plan is built onsolid data, not just a rule of
thumb.
If you found this episodehelpful, please share it with a
(09:48):
friend, leave a comment or reachout to me directly.
I'm George Jameson of CapitalWealth Group, and remember, you
may not need more money, you mayjust need a better plan.
Thanks for listening and I'llcatch you in the next episode.
Have a great day.
Hi.
I am George Jameson, certifiedfinancial planner and founder of
Capital Wealth Group, located inColumbia, South Carolina.
Today, we're diving into aquestion I hear all the time.
How do you know how much you'regonna spend in retirement each
year before you actually retire,if you underestimate your
spending, you can put the safetyof your retirement plan at risk.
(00:22):
However, if you overestimate,you might be working longer than
you actually need to be.
In this episode, I'm going towalk you through seven simple
steps to help you accuratelypredict your retirement spending
so you can retire withconfidence.
So step one, find your baseline.
(00:43):
Before you plan for retirementspending, you need to understand
what you spend today.
Ideally you have a detailedbudget where every transaction
is categorized from groceries,utility bills, and
entertainment.
You name it.
If you already do this,fantastic.
(01:04):
However, for most of us, weprobably don't keep that
detailed of a budget.
So if this is not you, grab yourbank and credit card statements
for the past 12 to 36 monthstotal up all outflows.
Just be careful not to doublecount your credit card payments
when they hit your checkingaccount.
(01:25):
This gives you a solid baselineof your current lifestyle's
cost.
Think of this as your startingline in your retirement budget.
So step two, subtract outretirement savings and any other
expenses you'll not have inretirement.
You want to remove the moneyyou're currently saving those
(01:46):
401k contributions.
Roth IRA deposits, taxablebrokerage account investments.
None of these will continue onceyou retire.
So if you saved$20,000 inretirement account last year,
deduct that from your baseline.
You also may have other expensesthat you'll not have in
retirement.
For instance, if your house willbe paid off, you won't have a
(02:08):
mortgage payment.
Maybe you still have dependentsat the house or kids in college.
You may not have those expensesin retirement.
So subtract those as well.
Now you have a clear view ofwhat you actually need to live
on once you stop working.
Now, step three, estimatehealthcare costs.
(02:29):
Healthcare is one of the biggestunknowns for retirees.
So let's break it down.
If you're already 65 or older,you'll obviously enroll in
Medicare.
Part A is typically premiumfree, but parts B and D carry
annual cost, roughly 2200 perperson for part B, and about 666
for Part D.
(02:50):
Today.
If you're married, that's about$5,775 a year for just the
premiums alone.
Then you add a Medigap policypremium to cover deductibles and
co-insurance.
Depending on your plan thatcould be anywhere from 1500 to
4,000 per person annually.
(03:10):
If you're retiring before 65.
You'll need to estimate yourAffordable Care Act marketplace
Premium instead until you hitage 65.
I did a whole podcast last weekon the ACA and the changes that
are going forward starting in2025 so please check it out.
(03:32):
You can also visithealthcare.gov and enter in your
details and choose a middle ofthe road silver plan as a
benchmark.
Then add those projectedpremiums to your baseline
budget.
So step four, define yourdiscretionary fun budget.
Discretionary spending is whatmakes retirement enjoyable.
(03:52):
Travel, dining out, hobbies,charitable giving, but your
baseline likely already includessome of these.
That's why it helps tocategorize your budget.
Which expenses do you consideressential and which are
discretionary?
Remember, essential here is verysubjective.
Internet might be non-essentialin theory.
(04:14):
But if you love streamingmovies, it's essential for you.
Once you've tagged currentexpenses as either essential or
discretionary, sit down withyour partner and think about how
these categories will change.
Maybe you've only taken oneannual trip, but want to double
that in retirement or perhapsyou love culinary experiences.
(04:37):
Identify the money dials, thethings you derive the most joy
from, and decide where to dialit up or dial back the spending.
And then step five, create threespending levels rather than one
single spending target.
Think in terms of three.
(04:57):
First you have your minimumtarget.
Your bare bones, essentialspending.
This is the level you need tocover necessities such as
housing, food, basic healthcareand so on.
And then number two would bewhat I call goal target.
Your ideal realistic budgetbased on the discretionary
(05:20):
spending you identified, this isthe number you've been building
toward.
Then number three I like tocall, dream, target, and upper
limit budget, representing themost you'd want to spend.
Even if you could spend more,there's usually a point of
diminishing returns.
Spending beyond this wouldn'tmeaningfully increase your
(05:44):
happiness.
Having these three targets helpsyou see how close you are to
your dream lifestyle, andwhether you should work a few
more years for that extracushion, or if you're already
safe to retire now, Step six,factor in taxes.
Now let's consider taxes beforeand after Social security.
(06:07):
You'll need a tool or softwarethat can model tax liability on
withdrawals I use a financialplanning software called Right
Capital, that includes taxplanning.
Also use another one calledHolistic Plan that goes into
more detail.
If you're doing this yourself,there are a couple good ones
online as well.
This is where distribution orwithdrawal tax strategies comes
(06:30):
into play Should you take moneyfrom your pre-tax account, your
taxable account, or your taxfree account?
When and in what order?
This is very important, andusing some type of financial
planning software thatincorporates taxes will help you
decide where to start takingdistributions from, and how
(06:51):
it'll affect your taxes overtime.
You will want to run thisthrough your tax tool to
estimate your annual taxliability each year in
retirement.
Add that to your pre-taxspending targets to get an
accurate view of how much grossincome you'll need.
So let's move on to step seven.
Step seven, project income intothe future.
(07:15):
Finally, retirement spendingdoesn't always stay flat while
inflation does push cost up.
Research shows that retireesreal spending is more like what
we call the retirement spendingsmile.
Most people tend to spend morein the early years of
retirement, less during themiddle phase, and then more
(07:35):
again later in retirement due tohealth related expenses.
Projecting your spending likethis can give you a more
nuanced, realistic picture ofyour financial needs over a 30
year retirement horizon.
But everyone's retirementjourney is unique.
Take my parents for example,they're 76 and 79, and they're
(07:58):
spending as much or more ontravel now than they ever did
before.
My mom just returned from a twoweek mission trip to Uganda.
Then they joined my family for amountain getaway.
And spend a week at the beach,and now they're on the way to
Mexico for another week longmission trip.
So let's now wrap it up.
(08:19):
So there you have it.
Seven steps to craft apersonalized retirement spending
plan that goes well beyond thegeneric 80% rule of thumb.
So let's recap First, find yourbaseline.
Think of this as your startingline in your retirement planning
budget.
Step two, subtract outretirement savings or any other
(08:44):
expenses you'll not have inretirement.
Step three, estimate healthcarecosts.
Step four.
To find your discretionary funbudget, the discretionary
spending that makes retirementenjoyable.
And then step five, createthree.
(09:04):
Spending levels, having thesethree targets helps you see how
close you are to your dreamlifestyle and whether you should
work a few more years for thatextra cushion, or if it's
already safe for you to retirenow.
And then step six, factor intaxes and step seven project
(09:26):
income into the future.
If you follow these steps,you'll have a detailed,
realistic estimate of what youneed each year in retirement,
and it'll give you a peace ofmind.
Knowing your plan is built onsolid data, not just a rule of
thumb.
If you found this episodehelpful, please share it with a
(09:48):
friend, leave a comment or reachout to me directly.
I'm George Jameson of CapitalWealth Group, and remember, you
may not need more money, you mayjust need a better plan.
Thanks for listening and I'llcatch you in the next episode.
Have a great day.
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