5 Pitfalls in Retirement Planning

Episode Transcript

Speaker 1 (00:00):
We want to wish our pal Drew Prescott a happy
birthday in a happy Father's day. Now enjoy this episode
from this past March, helping you with your financial decisions.

Speaker 2 (00:09):
The hidden world of wealth where secrets of the affluent
become accessible to you. You are listening to Your Money Matters,
the most provocative financial radio show on the airwaves. You
are about to start your educational journey here on Your
Money Matters with your host Drew Prescott, President of Prescott

(00:31):
Private Wealth and Chartered Retirement Planning Counselor. Drew will unlock
the complexities of the financial landscape with straightforward, powerful insights.
Whether you're planning for retirement, managing in a state, or
looking to grow your wealth. Consider this your exclusive invitation.
Turn up the volume, lean in closer. Let's navigate the

(00:54):
hidden paths of prosperity together your financial enlightenmentians now Securities
offered through some Terror Financial Specialists LLC Member FIN the
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TERRA firms are under separate ownership from any other named entity.

(01:14):
Four five to one sixth Street, Troy, New York, one
two one eight zero.

Speaker 1 (01:33):
Will La Jose her.

Speaker 2 (01:36):
The news today.

Speaker 1 (01:40):
Seeves my Life.

Speaker 3 (01:43):
Welcome back, everybody, and you are listening to your money matters.
I'm your host, Drew Prescott, chartered Retirement Planning counselor, accredited
wealth management Advisor and President at Prescott Private Wealth, located
at four point fifty one Who's Ex Street in Troy,
New York.

Speaker 1 (01:59):
The phone.

Speaker 3 (01:59):
We're here five two zero three one nine eight three.
Check us out on our website Prescott PW dot com.
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(02:20):
I think even Instagram now and uh Twitter, you name it,
we're on there. So anyways, uh all, your support is
very appreciated and very excited to be with you this
morning here. And I don't know about you, but has
it not felt very cold? I know that it's actually

(02:41):
been pretty mild, but I feel like we had it
so good for so long that this cold here has
really just kind of gotten to me this time. And
looking forward to having the sun start to break here
a little bit, you know, a little bit later on,
because nothing worse than feeling like you may be able

(03:03):
to do something in the evening, and then you settle
down have your dinner. You have a cuple of coffee
in your hand, thinking maybe I could still go out
and make something entertaining this evening.

Speaker 1 (03:15):
But I look.

Speaker 3 (03:15):
Outside that window after having a cuple of coffee in
my hand, and I think, you know something I don't
think so I think I'm going to just hang right
here and stay warm, but looking forward to getting a
little bit of warmer weather here, getting a little winter fatigue,
maybe a little bit early, But with that in mind,

(03:36):
every time we do that, we try to set up
a little trip to get away if possible. So excited
to get the traveling going here shortly. Hopefully you guys
have some traveling planned here. If you have anything exciting,
reach out, let me know, love to hear about it.

(03:57):
And we have a lot that has had been here
this week, in addition to a lot that's going to
happen next week, including we have Martin Luther King's Day
on Monday, which is also going to be the inauguration
day of President Trump. And very very interested to see

(04:21):
how this all goes. I don't know about you, but
something feels a little bit eerie about this one, and
Lord Willing everyone is safe and nothing weird happens. We've
already had a couple of assassination attempts on him, and

(04:44):
just pray that nothing like that happens again. That being said,
I'm excited to have you join me today as we're
going to discuss of strategies that you really should consider
before you retire and this show, I want to take
a couple of pieces from different episodes that I've done
and kind of bring them together for you because each

(05:04):
and every one of them is very important. So if
it slipped through the cracks, I want to bring it
before you again to get you kin to kind of
chew on that cut a little bit more and see
if we can help you to focus on things that
are very important. So today I'm going to discuss some

(05:26):
of these strategies that you really want to consider before
you retire, because, as we said, retirement is a journey
and it really requires careful planning in addition to avoiding
common pitfalls. So today we're going to cover several topics,
but we'll start off with the five biggest mistakes.

Speaker 1 (05:45):
That could derail your retirement.

Speaker 3 (05:47):
Now, Retirement is something everybody dreams about, something that you
think about as how soon you can retire, while others
focus on making sure that you have enough money saved.
Whether you're just starting your career, you're midway through, or
you're nearing retirement, it's crucial to avoid simple, yet costing mistakes.

(06:09):
And today I'm going to break down these mistakes and
I'm going to give you some actionable steps to secure
your financial future. So last time that we covered this,
I shared with you a really staggering statistic and it
was a statistic and it came from a study that
was done by Employee Benefits Research Institute, and it was

(06:32):
in twenty twenty four, and it said nearly forty percent
of Americans aged thirty five to sixty four have saved
less than fifty thousand dollars for retirement. Now that's alarming
considering how long retirement can last some of us and
how expensive life can be. So even if you've been
diligently saving, you might still be making some costly mistakes

(06:56):
in your strategy. So let's just put it into this
perspective here. So if we're living longer and often well
into our eighties and beyond. Medical advancements in addition to
healthier lifestyles, have extended our life expectancy. But with that,
it also means that you'll need to make your money

(07:19):
last much longer. And that's not easy when life is
full of unpredictable events like illness, disability, divorce, or even
natural disasters, and all of these can derail the best
laid savings plan. And today I'm going to share some
tips on safeguarding your financial future. And we're going to

(07:40):
answer some crucial questions like is my portfolio balanced? Am
I maximizing my contributions? What age should I claim Social Security?
And is my income protected in the event that I
become ill or disabled? And we're going to go through

(08:01):
and address how to build a retirement plan that not
just only talks about the numbers, but it talks about
your dreams and your goals. Now, the first mistake is
not having a retirement plan. So let's do a little
story time here, Okay, let me introduce.

Speaker 1 (08:21):
You to Jim and Linda. Jim was sixty two years old.

Speaker 3 (08:24):
He is factory worker who had been contributing to his
four oh one K for decades now. Linda his wife.
She managed the household finances and just assumed that their
savings was enough. Well, they had plans to retire and travel,
but they didn't have a written plan. And when Jim
had a health scare at sixty three and he had

(08:44):
to retire early, they realized that they hadn't saved nearly
enough to cover their expenses, let alone travel the world. So, unfortunately,
many Americans make this same mistake, and they assumed that
social Security will cover their needs. So let me ask you,
do you personally think that eighteen hundred and eighty two

(09:05):
dollars per month, which reflects the average Social Security benefit
in twenty twenty four, do you think that that is
enough to live on? Well, for most people it isn't.
And social Security is a great supplement, but it is
not a comprehensive plan. And so to avoid this mistake,
start by writing down your retirement goals. Where do you

(09:28):
see yourself in retirement? Are you gardening? Are you traveling?
Maybe starting a new hobby or a business? Will studies
show that people with written retirement plans have five times
more money saved than those who don't. So writing down
your goals that forces you to think about the costs

(09:48):
that are associated with them, and it allows you to
create a roadmap. Also, you want to take control of
your savings. Now at age fifty nine and a half,
you can be begin withdrawing from your four oh one
K or your IRA without an early withdrawal penalty. But
just because you can do that does not mean that

(10:09):
you should. Now, your retirement savings are like your primary
income source, and early withdrawals could leave your financial picture
short in the later years. So workers that are aged
fifty and older can make catch up contributions to both
their iras and four oh one k's. Now, in twenty

(10:31):
twenty four, they had raised the limits to seventy five
hundred dollars for iras and thirty thousand, five hundred for
four oh one ks. Now, this increased limits are really
a golden opportunity for late savers to close the gap
on the retirement goals, and you want to take advantage
of them if you haven't already. Additionally, in twenty and

(10:55):
twenty five, these numbers have changed, so let me fill
you in on what they are now. So for those
of you who are under the age of fifty, you
can contribute twenty three thousand, five hundred dollars for twenty
twenty five. Now, if your age fifty and over, it
remains at seventy five hundred dollars for Ketchup contribution. Now

(11:21):
here's something that you want to tune your ear to.
If your age is sixty to sixty three, there's a
special Ketchup contribution increasing to eleven thousand, two fifty and
that allows your total contribution into a four toh one

(11:41):
k to be thirty four thousand and seven fifty. So
what does that mean. That means go online or get
to hr and however it is that you change your contributions.
Make sure that you're maxing that out if you have
the ability to do that, so very important. It's the

(12:02):
perfect time to do this. Get at it at the
beginning of the year.

Speaker 1 (12:06):
Okay.

Speaker 3 (12:07):
Now, the second mistake here is not knowing where your
money goes. Now, I know every time I say this,
people say, as a matter of fact, I'll this is
this is actually pretty funny. I have a listener and
a friend of mine that always says, oh, you know,
sometimes Drew, you talk is though you only help people
with lower income. Well that's not the case. You know,

(12:32):
these are basic things, but you'd be shocked. I have
clients that make north of seven hundred and fifty thousand
annually and the amount of debt that they have is frightening.
It is what it is, and we help them get
through that, okay. But just because someone's a high income

(12:53):
earner and just because they have a good amount saved
inside of their retirement, sometimes their immediate financial picture is
not so clean.

Speaker 1 (13:06):
And that's why I talk about these things.

Speaker 3 (13:08):
So the second mistake is not knowing where your money
goes now budgeting, As I said, it may be simple,
but it is critical. So if you don't have a
good understanding of how much you're spending, how can you
actually ensure that your savings will last well. This mistake

(13:28):
often sneaks up on people because expenses in retirement they
can change dramatically. For instance, healthcare costs tend to rise,
something that people don't pay a whole lot of attention to.
You may travel more frequently in your earlier retirement years,
and new hobbies and leisure activities can increase spending as well.
So if we look at numbers, and we look at

(13:50):
a study that was done by Fidelity Investments in twenty
twenty four, the average sixty five year old couple will
need about three hundred and fifteen thousand simply to cover
healthcare costs throughout their retirement. Now that's just healthcare. So
if you add in living expenses, travel, and inflation, you

(14:11):
can see how easy it is to outspend your savings.
So here's a little pro tip for you. Create a
detailed budget for your retirement, be realistic about your needs
and wants, and also account for inflation. Now, if you
have a financial advisor that is always trying to get

(14:31):
you to do a financial plan, slow down and do it.
Let them help you analyze your spending patterns and make
adjustments to ensure that your money lasts. This is something
I'm very passionate about. I like all of my clients
to have a financial plan in place so that when
they log in to view their accounts, they see their

(14:51):
scorecard right there and it's in real time. So let's
move on to the next mistake. Next mistake would be
on under estimating longevity. So here's a question for you,
how long do you expect to live? Now to take
this into account. Okay, now, the easy answer here is
in when you're talking about retirement, is that if you

(15:13):
feel a little bit insecure on what you've saved. I
tend to see that people say, well, I'm not going
to live that long. I don't expect to live that long.
I won't go into a nursing care facility. I'll take
care of business before that, and YadA YadA.

Speaker 1 (15:26):
Okay.

Speaker 3 (15:27):
Now that's typically like a defensive reaction.

Speaker 1 (15:30):
But look around.

Speaker 3 (15:32):
How long did mom last, how long did dad last?

Speaker 1 (15:35):
Right?

Speaker 3 (15:36):
And what type of family history did they have? Did
people have heart disease in your family? Did they have Alzheimer's,
did they have cancer? What type of things has your
family dealt with medically? And that's important to review because
maybe you're thinking, hey, I'm going to live into my nineties, okay,

(15:58):
but the reality is your family history doesn't show that.

Speaker 1 (16:03):
Now.

Speaker 3 (16:03):
Again, medicine's gotten better, right, but your genes still play
a factor into this. So this longevity is really a blessing,
but it could also mean that your retirement savings must
last longer than ever before. So when considering this, consider

(16:28):
this piece here a balanced portfolio that has a mix
of stocks and bonds. It historically provides better long term
growth than keeping your money in cash or low yield investments,
and it's important to review your portfolio regularly and have
it adjusted based upon your risk tolerance, your time horizon,

(16:50):
and your financial goals. Now, mistake number four is failing
to plan for unexpected events. Now, as you know, life
is unpredictable. You might face a serious illness, need some
long term care, or deal with a natural disaster, and really,
how prepared are you for these possibilities. Let me just

(17:11):
share a story about a friend of mine, a good
friend of mine, and he's currently in the hospital receiving treatment.
Young man thirty six years old and has a beautiful family. Now,
back in twenty twenty, had an event. I was having
a hard time swallowing, felt that his words just weren't

(17:36):
seeming to come out right, and the doctor put him
on some steroids. Over the next five years, he kept
on saying from time to time that I don't feel right,
you know, I know my body, something's wrong, And the
doctors just kept on poop pooing it, and so he thought, well,
maybe nothing's wrong. Well up until about two months ago,

(17:57):
and he all of a sudden is having a hard
time swallowing, has a hard time talking, and goes to
the local hospital here, they do a scan, they find
out that he's got a tumor on the base of
his brain, and thankfully we made a couple of calls,

(18:19):
we were able to get him lined up with Dana
Farber and then he was able to then get into Sloan. So, thankfully,
by the grace of God, he met the right surgeon.
Very rare cancer that he has, only about three hundred
people per year get diagnosed with this, and they removed

(18:42):
a tumor from the base of his brain about the
size of a cigar. Now the scan shows that he
the surgeon was able to get about ninety percent of
the tumor out, thank God. And then he's going to
have to go through some proton therapy for five to
six weeks while living down in the city by Columbia.

Speaker 1 (19:12):
And getting this treatment.

Speaker 3 (19:14):
So as you can see, thirty six years old, that's
a tough spot to be in, not only emotionally of course, physically,
but financially. And thankfully he has some income protection for himself,

(19:39):
what we call disability insurance. And he's in my industry,
and when you're a profession, when you have a profession,
you really need the proper disability insurance policy. And we've
talked about this before. There's only a few companies that
offer these, and you need one that actually covers your

(20:04):
specific day to day activities as your profession, because what
makes a welder considered disabled according to his job or
her job is very different than what would be considered disabled.

Speaker 1 (20:25):
When doing my job, which could be cognitive a loss
of speech.

Speaker 3 (20:30):
So I share that just to say that it was
really remarkable. I mean, I've seen a lot of people
go through health challenges, but at thirty six years old,
here I am with my friend sending them some messages,
some funny reels on Instagram, and he replies back, Hey man,
I'm going to have to get a pretty serious surgery done,

(20:52):
and I'm concerned that they may have to fuse my
skull to my neck. And he's an active young man,
and that's a that's a scary thing to hear from
a friend.

Speaker 1 (21:06):
So why do I share that with you? Well?

Speaker 3 (21:09):
Number one, to ask that you'd pray for them when
you think of them. Okay, Number two, that you realize,
you know, sometimes we live in a bubble and we
see these things happen around us, and you know, we
don't really want to internalize them because it's so much
easier to not look under the bed at night. But

(21:29):
life can change just like that, and we need to
be prepared financially in the event that that happened. Okay,
So I digressed a little bit, but it's an important
thing to share with you to illustrate this need. So,
as I was saying, mistake number four is failing to

(21:51):
plan for that unexpected event. And like I just shared
with you about my friend, it could be a serious illness,
a long term care event, or to deal with a
natural disaster like we're seeing in California. I mean, how
prepared are you for these possibilities?

Speaker 1 (22:07):
Now?

Speaker 3 (22:07):
Each and every one of them seems like it is
irrelevant to our own personal lives. Now it is until
it's not right. And the one thing that is a
vital part to your retirement plan is insurance. It's life insurance,

(22:29):
it's long term care insurance, it's disability insurance. And insurance
is one of those things that if you look forward
to buying it, you may need to talk to somebody.

Speaker 1 (22:45):
Okay, you may not be right.

Speaker 3 (22:48):
Nobody wants to pay for insurance of any type, Okay,
but it's one of those things that you don't need
it until you need it, and long term care insurance
for example, can help cover the cost of nursing home
in home care or assisted living facilities, and with life

(23:10):
insurance that can come back in and backfill for the
income that is going to be swooped away from your
family and not come in in the event that you're there.
And then on the disability side of things, if you're
a business owner, there's an insurance that's called disability overhead insurance,

(23:31):
so that if you cannot work, let's say that you're
going through something like my friend, it would step in
and pay for your overhead of your business so that
it can continue on and your employees don't start jumping ship. Additionally,
in the household side, you should have your own individual
disability income protection policy as well that is specifically designed

(23:57):
for you and your profession. Okay, now let's move on
to mistake number five, which is ignoring estate planning. So
let's talk about something here that most people avoid, and
that is a state planning. Now, without a valid will,
your assets may be subject to state probate laws, which

(24:19):
can be time consuming and very expensive for your loved ones.
And estate planning is not.

Speaker 1 (24:26):
Just about wills.

Speaker 3 (24:27):
It's also about designating beneficiaries on your accounts and creating
a power of attorney for medical and financial decisions. And
this ensures that your wishes are honored even if you
become incapacitated.

Speaker 1 (24:42):
So Stacey and I have this.

Speaker 3 (24:44):
She has a full authority for a power of attorney
and vice versa. She also we have our healthcare proxies
in place our will, and we also have trusts. So
everyone's different. Depending upon what you own and the type
of assets that you have, there may or may not

(25:07):
even be a need for a trust. And that's why
we would want to get you partnered up with a
proper estate planning attorney. Now, typically there's a lot of
people that will stand in line as attorneys to say
that they can do this type of work. Now, if
you have an attorney that is out moonlighting for tickets

(25:32):
at night, they may not be the.

Speaker 1 (25:34):
Best candidate.

Speaker 3 (25:37):
To do your estate planning or if they are closing
your real estate transaction, they may not be the best
the best person to do this type.

Speaker 1 (25:51):
Of work for you.

Speaker 3 (25:52):
Typically, what we like to see is somebody that actually
hangs their shingle as an estate planning attorney, okay, because
documents are one thing, but an understanding of the documents
is far more valuable. And that's what we want you
to have, is an attorney that has an understanding of

(26:12):
the documents and how they work, and which ones are
necessary and which ones are not. So planning for retirement
it does not need to be overwhelming, but whether you're
thirty five or sixty five, the thing to understand is
that the best time to start is right now. And
to help you avoid these common mistakes, I've created a

(26:36):
free guide titled the Five Things that Can Derail Your Retirement.
So if you want to get your copy today, give
us a call at five point eight two zero three
one nine eight three or visit us online at Prescott
PW dot com. This guide will give you actionable steps
to secure your financial future, and in our next segment,

(26:59):
we're gonna dive deeper into the importance of knowing where
your money goes, budgeting and understanding your expenses and why
it's so critical. So don't go any place you're listening
to your money matters. I'm Drew Prescott, President and wealth
Advisor at Prescott Private Wealth, located at.

Speaker 1 (27:16):
Four fifty one who's extreet in Troy, New York.

Speaker 3 (27:18):
And I hope you even find a value in our
discussion about the five things that could derail your retirement.
These pitfalls that we're talking about are more common than
you think, but with the right strategies, they're also completely avoidable.
And again, if you would like to get a copy
of our guide the five things that can Derail your retirement,

(27:39):
simply call us at five one eight two zero three
one nine A three or Prescott PW dot com and
we'll send it to you immediately. So, the biggest pre
retirement mistake is putting your savings in the wrong places.
So let's dive into this. So if you're placing your
hard earned safe in the wrong places, retirement planning isn't

(28:03):
just about saving money. It's about growing that money and
doing it in the right way. And let me share
a cautionary tale with you. I'll share this story about Sarah. Now,
Sarah inherited seventy five thousand dollars from her mother, and
like many people, she wanted to keep that money safe,
so she put it in her bank's standard savings account

(28:24):
and it sat there for years untouched. Now here's the question,
do you know that the average interest rate on a
bank account in two thousand and twenty four was only
about zero point four percent, So that means that her
seventy five thousand dollars grew by less than three hundred

(28:48):
dollars per year, barely keeping up with inflation. Now, imagine instead,
if Sarah had taken this money and invested it in
a money market fund or a raw thiray or even
a high yield savings account over the years, the difference
could have been tens of thousands of dollars. And this
is a mistake that I see far too often because

(29:08):
people are so concerned about keeping their money safe that
they don't let it grow. But what they don't realize
is that by being overly cautious can actually cost them.
So what you want to do is strike the balance
between risk and growth. Because traditionally, when we look at

(29:30):
these things, financial advisors recommend that you approach retirement your
portfolio here should really become more conservative to minimize risk
as you get closer to retirement. Now, while the advice
makes sense on the surface, today's economy is definitely telling
us a different story. Now we're living longer than ever before,

(29:53):
as we talked about, and according to Social Security Administration,
the average retirement lasts about twenty years. Nearly half of
women who are sixty five today will live to the
age of ninety. And now that's a long time to
make your money last. That's twenty five years. So here's

(30:13):
where being overly conservative can be just as dangerous as
not taking much risk. So let's say that you move
all of your money into bonds or a CD and
you want to play it safe. Now, these options are
less validile than stocks, that's for sure, but they also
provide lower returns. And if inflation rises, which is currently

(30:36):
hovering around three to four percent annually in the US,
your purchasing power could shrink significantly over time. So, to
put in another way, your retirement savings must not only
last longer, but they also need to work harder. So
the roll of stocks in a retirement portfolio is very

(31:00):
important because stocks often get a bad reputation for being
too risky, especially for retirees. But here's the reality. Over
the long term, stocks have consistently provided higher average returns
than bonds or cash. Yes, of course they are more volatile,
we're not arguing about that. That's in the short term,

(31:23):
but when held in a diversified portfolio, they can help
you outpace inflation and grow your wealth.

Speaker 1 (31:30):
So think about it this way.

Speaker 3 (31:31):
If you're sixty five years old today, you could easily
live another twenty five to thirty years. Now, that's long
enough for your portfolio to weather the ups and downs
of the market and still come out ahead. So here's
another common mistake. People think that they're diversified because they
own several mutual funds. Okay, don't get me started on

(31:53):
mutual funds. Height not a fan of mutual funds at all,
But often those funds hold the same stocks, which means
that they're not truly spreading your risk. So true diversification
means spreading your investments across small cap and large cap stocks,
international funds, bonds, reates which are real estate investment trusts,

(32:17):
and alternative investments such as commodities or private equities. Now,
the goal here is to create a portfolio that isn't
overly dependent on the success of any one sector of market. So,
for example, if the US stocks take a hit, the
international investments or bonds could help cushion that blow. Now,

(32:37):
what I like to say is that diversification. It's like
having an umbrella, sunglasses, and a raincoat in your bag,
so you're prepared for whatever the weather is or whatever
the market throws at you. Now, another challenge here that
we should pay attention to that retirees are facing is

(32:58):
an overestimation returns. So if you're expecting eight to ten
percent annual growth but your portfolio only delivers four to six,
you could run out of money much faster than planned.
So this is where working with a financial advisor becomes critical.
And advisors can help you set realistic expectations based on

(33:23):
your risk tolerance, your time horizon, and your retirement goals.

Speaker 1 (33:27):
They can also help you adjust.

Speaker 3 (33:28):
Your plans as needed, ensuring that just stay on track.
So let's shift gears for one moment, and let's go
back to budgeting for a second.

Speaker 1 (33:38):
Okay, do you know how much you spend each month? Now?

Speaker 3 (33:43):
Many people estimate their expenses, especially in retirement. Now, it's
a myth that retirement automatically means that you're spending less.
In fact, you spend more in your early years. And
I always tell people this when I have new clients
that come in and they say, and the first thing
we talk about is have you put together a financial plan?

(34:06):
I would say eight times out of ten new clients
do not have Ah, I mean, I'll say eight out
of ten don't. It may very well be nine out
of ten to be frank, but eight out of ten
do not have a financial plan.

Speaker 1 (34:22):
Okay.

Speaker 3 (34:23):
So what we do is we find that these individuals
are just simply used to talking about rate of return. Now,
why is that even important if you don't have a plan, right,
If you don't have a plan, the only thing that

(34:43):
you can anchor to in your mind is rate of return. Well,
when we put together a financial plan and we understand
what the needs are and the wants and the travel
and the healthcare, that helps us know what we actually
need for a rate of return. Now, sometimes by making

(35:04):
the proper moves, we can reduce the stress that the
portfolio needs to take on for risk and also alleviate
the need for having a higher rate of return. So
we need to have that financial plan in place. I
had a lady come in that was working with a

(35:25):
financial advisor for about fifteen years, and that advisor.

Speaker 1 (35:33):
Kept on telling her that.

Speaker 3 (35:36):
She was going to have plenty of money based upon
some overfunded life insurance policy that he had sold her,
and we reviewed the plan and it was clear that
she was not going to have enough.

Speaker 1 (35:56):
But what we did was we use the.

Speaker 3 (35:58):
Same amount of money that she was saving. We redirected
it into the proper allocation through individual savings and using
her four oh one K effectively and using a company

(36:18):
stock options, and we were able to change her entire
plan dramatically and it became much more efficient. Additionally, it
also showed that if she stayed on the same path,
not only would she be running short, but it wouldn't

(36:38):
address a lot of her goals that she had which
she had shared with the other advisor or let me
just say financial representative, and she was going to miss
the market.

Speaker 1 (36:52):
In a big way.

Speaker 3 (36:54):
So simply by reallocating her discipline savings approach, it made
a tremendous difference in her financial picture in addition to
her legacy for what she could leave to her children.
So make sure that you have a financial plan in place.
Don't just go based off of a piece of paper

(37:15):
that someone's drawing on or some illustration from an insurance company.
You need a financial plan, okay. Additionally, make sure that
while you're doing these plans that you take into account
these healthcare costs that we talked about three hundred and
fifteen thousand dollars for the average sixty five year old

(37:36):
couple to cover healthcare expenses alone in retirement. So again,
create that detailed retirement budget. All right, now, I keep
on beating this drum, and I'm sure it's annoying, but
that's okay.

Speaker 1 (37:51):
That's my job.

Speaker 3 (37:52):
This is my contribution to society, which is one of
many of them. May I add, and but today my
goal is to tell you that retirement is not time
to guess. It's the time to plan strategically. Now there

(38:13):
are no dress rehearsals for retirement, So get yourself a
comprehensive budget, make sure that your portfolio is diversified, properly,
maximize those retirement contributions, and also have a plan for
unexpected expenses, whether that's helping a child of yours in

(38:35):
need as a young adult, an illness inside of your family,
losing a job, any of these things. These are all
things that you should have a plan for. And we
can help you navigate these complex decisions, and we can
help you determine when to claim your Social Security or

(38:58):
how to minimize taxes on your withdrawals. So if you're
unsure about your current financial picture and your retirement plan,
or you want to avoid these common mistakes, let me
help you. I'm Drew Prescott, a chartered retirement planning counselor
accredited wealth management advisor at Prescott Private Wealth, and I

(39:22):
specialize in guiding individuals, families, and businesses through every stage
of retirement planning. And if you want to receive our
free guide the five Things that Can Derail your retirement,
give us a call five one eight, two zero three
one nine eighty three and you could visit our website
PRESCOTTPW dot com. Now, this guide is really packed with

(39:45):
actionable tips that can help you build a secure and
fulfilling retirement. So I'd love to get this into your possession.
Now let's move on to another piece here, with which
is understanding longevity. We've touched on this a little bit,

(40:05):
but what people don't think about too often.

Speaker 1 (40:09):
They may, but they may not dive.

Speaker 3 (40:11):
In deep enough in this thought as they're sitting there,
is that your retirement spending is going to be very different.
I think I started to dive into this a little bit,
and I think I might have gone down another path.

Speaker 1 (40:25):
But let me just tell you again.

Speaker 3 (40:27):
So let's say that you're sixty five years old and
you're going to retire, and you say, you know, I
don't think I need as much money today. Well, if
you've got a budget to verify that, fantastic and we
build off of that. What I also tell people is that, hey,
in the beginning, what you're going to learn is that

(40:49):
every day's a Saturday. So your free time when you're
working is limited to evenings and weekends, but that goes
away once you retire. So what I find in doing
financial planning and seeing people through their retirement is that
in the beginning, from like sixty five to seventy five,

(41:12):
you're still young, you're still moving quickly, and.

Speaker 1 (41:17):
You have the ability to travel. You've got good health
in those years.

Speaker 3 (41:24):
And at minimum, from sixty five to seventy you know
you're going to be moving about. You're going to be
pretty good spender typically, but you need to do that
inside of the confines of your budget. Now, when you
get to seventy five, you slow down a step.

Speaker 1 (41:42):
Now.

Speaker 3 (41:42):
I know a lot of I've got a couple of
clients that are eighty five years old ninety years old,
and they're awfully sharp, and they still get around quite
a bit, and they travel and everything. I've got an
eighty five year old client that plays golf five days
a week, God bless them, and sharp, just sharp as
a tech and just such a fantastic guy. But so

(42:04):
he even still doesn't spend nearly what he spent when
he was in his seventies. Then I have a lady
who's ninety one, and she goes down to Florida in
the winter with her children and then comes back up
here for the rest of the year. But she's really

(42:26):
just kind of hanging out in her apartment, so she
has her rent and other than that, she spends about
two thousand dollars a month, not a lot of money
that she has to spend, but she has a lot saved.

Speaker 1 (42:40):
Now the key here is.

Speaker 3 (42:45):
That you know what you will need to spend in
every stage of life. Now you can use kind of
like a you know, almost like a laddering strategy if
you would, of income for those different timeframes, and you
can put things in place so that you know that
you have that guaranteed income for those certain periods of time.

(43:07):
Or we can build out portfolios that really stress the
income component of it and hit those mile markers at
different times as well. But the point here is that
you plan accordingly for each stage of life, and in
order to do that, you need to have a financial plan. Okay,

(43:30):
so let's get you squared away. Let's talk about what
your goals are. Maybe you want to be heavy in
real estate and you need a plan to start saving
some money to become strong on your balance sheet for
the ability to borrow money from a bank to purchase

(43:54):
some real estate.

Speaker 1 (43:56):
Well, we have some.

Speaker 3 (43:58):
Experience in that area, and we can help you develop
a plan in non retirement assets for saving. Sometimes people
even choose to pledge those as collateral and get some
favorable lending rates. Also, you may want to purchase a

(44:20):
lake house for your grandchildren to come to every weekend.
Maybe you have very specific goals that you want to
help a family member, or you don't have your emergency
savings separated from other assets. Whatever it is, We're going
to see everything and we're going to help you get

(44:42):
these pieces in place. And what is the end result
of that. Well, the end result of that is really
peace of mind to know that when these things come
up that what you have is fully liquid and you've
planned properly and you would not be in a bad spot.

(45:05):
So by having these designated accounts, the proper insurances, the
proper legal documents, we can really help you move towards
a place that you may feel as though your financial
plan is bulletproof. And that's our goal, is to help
you get to where you want to be. Everyone's different,

(45:28):
everyone's spending habits are different, everyone's income is different, everyone's
family is different. But I want to be able to
help you set this up so that this is a
custom made financial plan for you and your family, not
to be like anyone else's, because you're not like anyone else.

(45:48):
And we want to help you create a realistic budget.
We want to increase your savings if needed, plan for
health care costs, help you diversify your investments, and update
your plan regularly. So it's important that you partner with

(46:09):
a financial advisor, and that one that can help you
navigate the complexities of retirement expenses because it can feel overwhelming,
and that's where a trusted financial advisor comes in. Advisors
help you create and manage a comprehensive budget, strategically allocate
your investments and account for rising healthcare costs and long

(46:31):
term care costs. They are also there to help you
stay disciplined and focused on your long term care goals
because retirement is one of the most significant financial transitions
that you will ever make, and you need to have
the proper guidance so that you can avoid these pitfalls
and create secure, fulfilling retirement. Now you're listening to your

(46:53):
money matters, I'm your host, Drew Prescott, President at Prescott
Private Wealth. The phone number here is five to one
eight to zero three one nine eight three, or visit
us online Prescott PW dot com and you can request
our free white paper, the five Things that Can Derail
your retirement. And as I said before, this guide is
really packed with actionable tips to help you avoid mistakes

(47:15):
and take control of your financial future. Now, I want
to go into a little bit of what we talked
about last week, which is not maximizing social Security. So
in this segment, what I would like to do is
talk about taking Social Security benefits too early. Now, what

(47:36):
I've seen is that many retirees leave tens of thousands
of dollars on the table by claiming benefits at the
wrong time, So stay tuned to learn how to make
the right decisions and maximize your lifetime income. Again, you're
listening to your money matters. I'm Drew Prescott, chartered retirement
Planning counselor and accredited Wealth Management Advisor, President and wealth

(47:59):
Advisor here at Prescott Private Wealth located at four fifty one,
who's extreet in Troy, New York. And we're talking about
five things that could derail your retirement. Now we've already
covered some big topics and now we're going to jump
into Social Security, which is a crucial part of retirement planning.
So again, before we continue, I want to remind you

(48:21):
if you'd like your very own copy of these steps,
reach out to us at PRESCOTTPW dot com and will
send you that guide right away.

Speaker 1 (48:28):
Okay.

Speaker 3 (48:29):
Now, social Security is often misunderstood and it's often underestimated
because it's not just a government paycheck. It's a key
component to your retirement income strategy. And by making the
wrong decisions about when and how to claim your benefits,
that can leave tens of thousands of dollars on the table.

(48:51):
And here's the thing. Remember this, Social Security was never
meant to be your sole source of income. It's designed
to replace about forty percent of your pre retirement income.
Yet for many Americans it is the primary or it's
the only source of retirement funds, and this makes it

(49:13):
all more important to get this right. So let me
share a story about my friend Bill. I shared this
with you guys before, But Bill, he absolutely hated his
job and for years he endured long hours, a difficult boss,
and he was daily frustrated. So he made it his

(49:33):
mission to retire as soon as he could at age
sixty two. Well, on his birthday, he walked out of
the office for the last time, and he felt like
he was triumphant.

Speaker 1 (49:43):
He's like, finally.

Speaker 3 (49:44):
Free and excited about everything. I can't wait to go
into retirement. And then all of a sudden reality set in.
Bill quickly discovered that the monthly Social Security check that
he had been counting on was much smaller than he expected. Well,
why is that Because when he was reading his statement,

(50:05):
he continued to look at full the full retirement age,
which for him is sixty seven. But at sixty two
that comes with a twenty five percent reduction in your
monthly payment compared to your full retirement age. So he
also didn't know about the earnings limit. In twenty twenty four,

(50:30):
if you claim Social Security before your full retirement age,
you can only earn up to twenty one thousand, two
hundred and forty dollars per year before a penalty kicks in.
Now the penalty is for every two dollars that you
earn above that limit, Social Security withholds one dollar from
your benefits.

Speaker 1 (50:51):
So this had been really hard.

Speaker 3 (50:53):
He realized that if he had only waited until his
full retirement age, or better yet until age seventy, his
monthly benefit could have been up to seventy five percent higher.
And that's a tough lesson, but it's one that we
can all learn from. So let's look at the numbers
to understand the impact of you and your claiming decision. So,

(51:17):
if you claim it sixty two, your benefits are reduced
by twenty five percent compared to your full retirement age.
If you're claiming it eighty, those benefits increase by eight
percent per year beyond the full retirement age, for a
total boost of seventy six percent. So here's an example

(51:39):
of what I'm talking about. So, if your monthly benefit
at full retirement age age sixty seven for this example,
would have been two thousand dollars a month. And what
that means is at age sixty two, if you take
it early, you'd receive just fifteen hundred dollars a month. Now, now,

(52:00):
if you were to stick in there and let this
thing grow to full maturity at age seventy, you would
receive twenty six hundred and forty dollars per month. So
that's eleven hundred and forty dollars more per month at
age seventy than sixty two. It's only eight years. Sounds

(52:22):
like an eternity to some people, and depending upon your situation,
it may be.

Speaker 1 (52:27):
Now not saying that nobody.

Speaker 3 (52:29):
Should do age sixty two, but what I'm saying is
that make sure that you get your fanny in here.
Let's run this report and find out what is the
right option for you and your family. Because that difference
of eleven hundred and forty dollars per month at age
seventy compared to sixty two, if you look at that

(52:50):
over a twenty year retirement, the extra benefits could total
more than one hundred and twenty five thousand dollars.

Speaker 1 (52:58):
That's a lot of money.

Speaker 3 (52:59):
So let us find a winning strategy for you between
longevity and social security. Now, according to the Social Security Administration,
a sixty five year old couple in twenty twenty four
has a fifty percent chance that at least one of
the spouses will live to be age eighty nine, and

(53:20):
a third of the couples will have at least one
partner live to age ninety five. So what we're talking
about are big numbers here, all right.

Speaker 1 (53:30):
So make sure.

Speaker 3 (53:34):
Here's what I want you to do, and you give
you some easy, actionable steps. Number one, get a copy
of your most recent Social Security statement, okay. Number two,
get a copy of your four to oh one K
statement or your iras any investment accounts that you have.

(53:58):
Get a copy of your bank's statement. Gather your legal documents,
and gather your insurance policies. Then I want you to
email me and ask me to send you a spreadsheet
that has all the columns for planning for a proper budget. Okay,

(54:26):
want you to fill that out. And then I want
you to schedule a time for me. I'm Prescott PW
dot com. In the upper right hand corner, click schedule time.
Let's get you into the office. We're gonna review everything
and let's do a financial plan together.

Speaker 1 (54:43):
All right.

Speaker 3 (54:45):
Now, our financial plan the baseline. Now, if you have
a complex picture, it changes all. My pricing is right
on the website.

Speaker 1 (54:55):
Okay.

Speaker 3 (54:57):
Now, let's get you in here and do a financial plan.
I'm going to charge you fifteen hundred dollars for a
financial plan, which is a more than fair price for
doing such a thing. And what you're going to end
up with is a pathway for retirement. This is going
to show you how you're invested if it's proper. We'll

(55:20):
also talk about changes to your portfolio that you can make.
We'll also review how you're saving money, where you're saving it,
and if it's the proper place for you to save it.
One of the most rewarding things about my job is
to help somebody review their financial picture and show them
what areas it could be improved on. And I know

(55:42):
that you would find tremendous value in that. So again
you're listening to your money matters. I'm your host. Drew Prescott,
chartered retirement Planning counselor, a credited wealth management advisor and
president at Prescott Private Wealth, located at four to fifty
one who's extreet in Troy, New York, and I would
love to have the opportunity to meet with you. So

(56:02):
if you have a portfolio of over two hundred and
fifty thousand dollars and you do not have a financial
plan in place, please reach out. Let's get you squared
away here. Thank you for listening today, and I hope
you have a wonderful weekend.

Speaker 1 (56:18):
God bless you, and God bless the USA.