My Smart Retirement

To understand how retirement planning has changed in recent years, you have to look no further than the demographics of today’s retirees.

It’s a topic that you’ve probably read about or discussed in some form, but how much have you noticed it impacting your retirement plan? On this episode of the podcast, we want to share some statistics with you to provide a clearer picture of what this means for planning.

Let’s start with the idea that overpopulation in this country is a problem. When you look at the birth rate, it’s not too different than what it’s been for previous generations? So why are we noticing it so much now? Well, that answer lies in the longevity we’re enjoying now.

The population of people over 65 is expected to climb to 20% in the near future, which is about a 50% increase from where it is now. It’s not that people are being born at a faster rate, it’s that they’re living longer. That’s great, right? Well, yes and no.

We love that our clients can enjoy more of their life and spend more years in retirement doing what they love, but it also means that more people are underprepared for potentially living into their 90s. What used to be a 10-15 year retirement could now be 25-30 years so making your money last becomes much more important.

That’s why you build an income plan that identifies your expenses and ensures that you have money coming in throughout retirement to cover those things. It’s the baseline for any plan and it’s essential for success in retirement. So we’ll dive into how we build that plan and what income sources most people rely on during this show.

If there’s something you’d like to learn more about, please reach out and let’s talk.

Check out the full episode or use the timestamps below to hear a specific segment.

0:20 – Overpopulation

1:11 – Population over 65 is growing

2:31 – Planning into your 90s  

5:01 – Where does income come from?  

7:41 – Income is the baseline for any plan  

For more, visit us online at http://flemingfinancialservices.com 

The idea of retirement planning is one that comes to fruition over the course of many, many years, and it’s always a wonderful thing to see.

That’s why we wanted to share the story of someone we know, who we’ll call Beth on this episode. She’s someone that we spoke to recently about the life her and her husband built through planning and thoughtful execution, but it all began when she created a vision for retirement at a very young age.

On this episode, we’ll share Beth’s story and use it to show you how a proper plan can take care of your family throughout retirement. As we go through it, you’ll hear about the three steps she took.

First, Beth laid out goals early on to not repeat the lifestyle she had growing up. But it wasn’t just a focus on her working years but also life in retirement. That’s where the vision is created. Then she determined how much income she would need and identified the sources for that income. And then she selected a lifestyle that she wanted to live in retirement so that she could create a plan to get her there.

It’s a great story and one that we hope will both inform and inspire.

Check out the full episode or use the timestamps below to hear a specific segment.

1:24 – Story about Beth

4:15 – Reflection

7:20 – Features of a retirement plan

10:04 – Let’s outline what Beth did

12:16 – Desire for retirement income

14:30 – Selecting a retirement style

For more, visit us online at http://flemingfinancialservices.com 

We’d all love to be able to go back in time and apply the lessons we’ve learned through experience, but of course that’s not possible. What we can do, however, is use the information we’ve gained and apply that to our decision-making moving forward. This is very true of financial planning as well.

The reason we bring this up today is because a recent question came into the office about how much a person needs in savings. The general rule you often hear is 15-20x your annual salary. The expectation is that will cover you throughout retirement. Then you can apply the long-accepted 4% rule that says withdrawing 4% of your account each year will leave you with enough to last.

But many of these guidelines were put in place 20-30 years ago and a lot has changed. Just think back through the past two decades and you see how tumultuous it’s been for investors. Imagine retiring in 2000 and going through the devastation of 9/11 and then the collapse of 2008.

We have to be able to adjust a plan as life changes. The two main instruments pre-retirees utilize today are stocks and bonds. Even though stock prices might not be too different, the bonds are much more expensive. So you can’t do what’s always been done, which is what we talk about in-depth on the show today.

So to get back to the question that got us on this subject. Everyone’s savings number will be different and that depends on a variety of factors. But you have to start with a nest egg, whatever that number is for you personally, and then you have to lay out a plan to make sure that will help you meet your goal and enjoy a comfortable retirement.

Check out the full episode or use the timestamps below to hear a specific segment.

1:31 – Inspiration for today

2:37 – The 4% rule

5:06 – Record-low bond yields

6:03 – Someone that retired 20 years ago and relied on 4% rule

8:05 – Recent study findings

10:04 – Doing the math today

12:07 – ‘If You Can Dream It’

16:32 – First two decades of this century

17:32 – The dangers right now

19:38 – How we solve the problem

For more, visit us online at http://flemingfinancialservices.com 

Today, we’re sharing some financial proverbs that you’ve probably heard before. We’ll explain how they can help your financial situation.

A bird in the hand is worth two in the bush

It’s better to have the thing you know you have, versus the potential of what you might get. People often think about this in terms of investing and being more conservative.

We know of a couple that was forced to retire sooner than they wanted. They took money from their 401k plan and bought a business that they we’re familiar with. It was extremely difficult, and they worked around the clock.

They were barely keeping the business afloat and decided to sell the business. They lost the growth of their 401k.

We sometimes see people have a retirement date and decided to be more aggressive, but as you’re reaching the last few years before you retire, you don’t want to incur for yourself retirement date risk. We saw this when the 2008-09 crash occurred, and people who wanted to retire then had to work longer.

A rising tide lifts all boats

If the market is going up and you’re invested, you’re going to make money. The same applies if the market is going down.

Don’t put all your eggs in one basket

In this case, a lowering tide will sink all boats. You need to be diversified.

Check out the full episode or use the timestamps below to hear a specific segment.

0:41 – Bird in the hand

3:39 – Stock market

7:33 – Rising tide

8:22 – Eggs in basket

8:56 – Trash and treasure

As we head into this Father’s Day weekend, we wanted to first stop and appreciate all of the dads out there. It takes a lot of work to play that important role in a child’s life and Nancy has a story she’ll share about her wonderful dad.

Now, let’s talk about financial planning. This conversation takes on an important question that we all have to evaluate in different aspects of life: Is the risk worth the reward?

We have to go back about 400 years to what might be the first instance of someone truly analyzing outcomes. That man was Pascal, a brilliant seventeenth-century philosopher that developed the idea that belief in God would provide an infinite upside but if you don’t believe it would only provide a finite upside. Although the term hadn’t been created yet, Pascal had complete a cost-benefit analysis to determine that there’s much to gain by believing than not.

This became known as Pascal’s wager over time and created the framework that’s used in all facets of life as we weigh potential outcomes from our decisions.

So how does this tie into planning? Well assume that you’ve accumulated enough wealth after several decades of savings and investing. Should keep trying to grow the nest egg with risk or shift to safer investments to protect your capital. Using the Pascal’s wager, we’ll run through potential scenarios that could play out with each option on the table.

We’ll also use a couple famous quotes from notable financial professionals tie into this idea of Pascal’s wager.

Check out the full episode or use the timestamps below to hear a specific segment.

1:56 – Pascal’s wager

4:27 – Applying this to retirement planning

7:53 – If you can dream it…

8:55 – Warren Buffet famous quote

10:29 – Risk

12:12 – Summarizing the discussion

For more, visit us online at http://flemingfinancialservices.com 

Today we’re answering your questions about all things retirement and financial planning. Let’s jump into it.

Jim retired last month and wants to do part-time work, but he heard this can mess up his Social Security. Is that true?

This is a common question we get. If you retire prior to your full retirement age and you get earned income, then for every $2 you earn above the income limit, $1 is withheld from your Social Security benefit. This year, the earned income limit is $18,960.

In the year that you reach your full retirement age, you’ll have $1 withheld for every $3 you earn above the limit, which is $50,520.

Cathy has been separated from her husband for three years. They still file a joint tax return. Should they keep the status quo instead of divorcing to save on taxes?

If you are getting along great and you can file joint taxes, there are some advantages to that. If you’re married filing jointly, you have twice the income limit before changing tax brackets.

Jean is going through a divorce and is worried about what retirement will look like. Can she overcome a divorce financially in her late 50s?

Losing out on two Social Security checks and losing half of your assets, that is a real blow. You need to see where you stand financially. Since this happens quite often, we see people who are able to pull it together. Maybe you can’t retire as early as you wanted, but where there’s a will there’s a way.

Check out the full episode or use the timestamps below to hear a specific segment.

1:46 – Part-time work

4:59 – Divorce and taxes

6:35 – Divorce and retirement

8:26 – If you can dream it

13:05 – Husband doesn’t want to plan

16:14 – Variable annuity

For more, visit us online at http://flemingfinancialservices.com

Today, we’re focusing on financial decisions people made in the past that they regret. One of the biggest mistakes people regret is that they start living up to the amount of money that they made. It’s known as lifestyle creep. As your income increases, you spend more instead of saving more.

You need to ask yourself, “Can I afford it?” Don’t ask, “Can I afford the payment?” You can’t afford it if you can’t buy it outright. Save up for the things you want, and then buy them. You learn patience and delayed gratification. Frugality is a virtue that is often overlooked until we’re forced into it.

With retirement accounts, you know you’re not supposed to touch that money until you’re ready to retire. But some people like to dip into it early, which is a mistake.

If you have credit card debt or car payments, they will eventually go away. But you need to learn to be frugal to get rid of them faster.

With finances, it’s important to have goals. Some people want to pay for their children’s college so they have one leg up on life. But sometimes it hurts people’s retirement by helping their children. It seems like a worthwhile sacrifice, but you and your children may regret it if your children are helping you financially later in life.

Check out the full episode or use the timestamps below to hear a specific segment.

What we discuss on this episode: 

1:46 – Two ways of thinking

4:04 – Regret

7:33 – Goals

10:33 – Responsibility of children

12:21 – Sandwich generation

For more, visit us online: http://flemingfinancialservices.com 

If you’re a grandparent, have you ever tried talking to your grandchildren about money? It’s a great topic to share your knowledge and see what they know. Today, I’m interviewing two of my grandchildren to see what they think about money and what they’ve learned.

Calvin, just finished 5th grade

Calvin knows the difference between a want and a need. He says needs are food and water and toys are a want. 

“Instead of getting a toy, you could save that money and use it on food storage or something,” said Calvin.

He also knows about gas prices and said the price depends on the state.

“When we were filling up on gas I looked, and I just added it up and the average was above $4,” said Calvin.

Kids are a lot more astute and a lot more aware of what’s going on around them then often we give them credit for.

Rosie, just finished 7th grade

Rose is in middle school and knows what taxes are.

“Taxes are when the government takes a certain percentage of the money you make a year, and they put it in to different things like building roads or paying for other stuff,” said Rosie.

She also knows how to have fun with friends and family without spending money. When it comes to shopping, Rosie likes a lot of different stores, including Hot Topic. She chooses clothes that are comfortable and look good instead of just popular brand names.

“I don’t usually spend my own money to buy clothes, but I know that my mom doesn’t always like to spend a ton of money buying clothes,” said Rosie.

Check out the full episode or use the timestamps below to hear a specific segment.

2:48 – Calvin

4:49 – Gas prices

5:55 – Wanting something

6:48 – Trading time for items

8:13 – Rosie

12:07 – Shopping

13:10 – Buying on sale

15:20 – Best thing she bought

16:42 – Friends

17:28 – Raising money

17:56 – Saving

18:46 – Setting goals

If you’re 10 years away from retiring, there are some critical things you should do to prepare for retirement.

First, you need to decide what’s important to you. Some people want to retire early. Maybe they want to spend more time with their children or grandchildren. Some want to pursue their hobbies or spend time on philanthropy. Some people live very simply and say they don’t need much money.

Others want to continue working. The most common reasons are they want more money to spend and a bigger financial blanket to feel more secure.

Once you know you have enough money, there’s always the legacy question that comes up. What will we do with what’s left over? How should we set it up? It depends on what’s important to you.

You need to know that, at age 72, you will be required to start taking required minimum distributions. If you don’t take the money out, the financial consequences will be severe. You need to create a retirement income plan to determine what income streams you have and how much money you’ll need.

Will there be changes in your retirement lifestyle that will change the amount of money you need? You often spend the most money in the first few years of retirement.

Check out the full episode or use the timestamps below to hear a specific segment.

1:27 – What’s important

3:02 – Legacy question

6:02 – Higher income in retirement

9:19 – Retirement lifestyle

15:03 – Medicare

16:58 – Your needs will change

18:19 – Inflation

For more, visit us online at http://flemingfinancialservices.com 

Have you ever stopped and taken the time to think about what you want life to look like after your career is over? Many of us get too busy with life to think that far ahead and truly envision what we want tour futures to look like, but it’s an important thing to do.

The reason this came up now is because we saw a recent survey that asked people how they’d describe retirement. They surveyed multiple age groups and genders and the results were really interesting. The tone seemed to change throughout the different stages of life and work and women seemed to have a much more emotional attachment to retirement.

What we’ve seen from people that work with Fleming Financial is that those first few years of retirement are always fun. There’s a new zest for life as you have the opportunity to utilize time in ways you’ve always wanted. People seem to have extra pep in their step as they plan for that extra time, and that’s what gets us excited as well.

But what’s ultimately important is that you have a good grasp on what you want from retirement. Sure, that can always change, but this preference and perspective is what helps us build a comprehensive financial retirement plan for our clients. Once we know how you view retirement and what you expect that chapter of life to look like, then we can put a plan in place that works towards those goals.

And this is what Nancy will talk about on this episode of My Smart Retirement. Let’s look at what preferences and perspectives are common for people and how being honest with yourself is the best way to be successful financially.

We all tell ourselves lies about retirement, whether we truly believe them or not, that help us justify a lack of saving or investing. We’re going to run through the most common lies we hear and explain why they get people in trouble with retirement.

Check out the full episode or use the timestamps below to hear a specific segment.

0:39 – An interesting study on how we view retirement

2:21 – Words men and women used

3:25 – Words older people used

4:13 – What do our clients say about retirement?

6:40 – Preference and perspective

8:20 – I really can’t afford to put away for retirement right now.

10:23 – I’m counting on Social Security so I don’t need to save as much.

11:28 – I deserve to have fun with my money today.

14:19 – I have a big inheritance coming my way so I don’t need to save.

16:35 – Get my kids through college and then I’ll worry about retirement.

17:47 – I’ll start saving when the market improves.

19:57 – I plan to keep working during retirement.