Retirement Compass

Most baby boomers don't have access to pensions, and with the longer lifespans of today, chances have grown that they may run out of money. Health care and inflation are huge concerns. The Retirement Compass process takes inflation into account, as well as health care, growth, legacy planning and, of course, income.

Takeaways

• Tim also answers listener questions concerning free time in retirement, rebalancing assets as retirement approaches
• Organizing accounts and statements before getting a plan put together with an advisor
• Tim also announced the birth of his second daughter June 21st. Hattie Jo weighed in at just under seven pounds. Mother and baby are doing fine

In this episode Tim and Jeff talk about the biggest concerns retirees have going into retirement.

Takeaways

• Running out of money is the biggest concern of retirees. One of the big reasons for this is the possibility of going into long term care, which is expensive and rising in cost faster than regular inflation
• Longevity risk - the possibility of living a longer life than you might expect - is also a big concern
• Market risk concerns people because for those still working, most of their money is in 401K accounts, which have only market investment choices. When the markets are down, such as in 2022, this lowers the amount of savings available

Along with financial planning for retirement, it's important to also plan for what to do with their time to avoid boredom and the possibility of depression.

Takeaways

• The recent pandemic put many people into a situation where they couldn't see family or friends. Finding a way to help ground oneself to stay mentally and emotionally level is an important aspect of post-working life
• Ways to fill one’s time could include some volunteer work, hobbies, or part-time employment. These and other activities help keep a person engaged and mentally active
• Some people identify themselves by their job, and retirement takes that identifier away. Finding a new way to relate to life can be a great way for these people to transition into a post-working lifestyle

In this episode Jeff looks at various stages of people's lives and how they relate to saving for retirement.

Takeaways

• In the younger years when first starting a career, needs include covering any future financial obligations with insurance, especially life and home. Then starting to save for retirement is the next priority
• Pre-retirement starts to get serious when people get to around age 50. Some people want to retire sooner, and health insurance is the biggest concern for them
• Getting too closer to retirement age brings other priorities, including whether or not to pay off a mortgage, long term care insurance, and other possible needs

Inflation is going to impact retirement. In fact it is the biggest concern retirees have, according to a recent study.

Takeaways

•  With inflation running high compared to recent years, retirement portfolios need to grow but also have a safety component so basic needs are met. A solid retirement plan balances these areas
• With interest rates low, safe investments don't have the growth potential they had in the 80's when rates were higher
•  Longevity also plays a factor, especially in regard to taking Social Security 

Today Tim goes solo to discuss four areas that help retirees enjoy a more comfortable life after their working years are over.

Takeaways

• Having little or no debt, especially high interest credit card debt. Stonebridge uses the Dave Ramsey program to help retirees pay off what debts they have
• A written income plan is needed to determine what is needed for regular expenses. 
• Having employer sponsored assistance, which in most cases is a 401K savings program but can also be a pension, as well as guaranteed monthly income

People are not getting much growth to so-called safe money investments such as savings accounts or money markets, leaving much riskier ways to try and achieve growth. But buffered ETFs are an off-the-beaten path tool that could work in some portfolios. In this episode, Bennett Thayer of Innovator ETFs joins Tim and Jeff to discuss this investment vehicle.

Takeaways

• The buffered ETF was formed in 2018. It gives the holder upside exposure to a degree against indexes like the S & P 500 or Russell 2000, and built in buffers at 9, 15 or 30 percent on the down side
• They are designed to help people in preservation mode such as retirees by providing them a way to still be invested in the stock market with its earnings potential way above what banks offer, and also limit the losses in case of a market correction
• It also provides liquidity, where money can be made available quickly for when it may be needed, as opposed to an annuity-type investment where liquidity can be limited

These are the most popular vehicles for savings in retirement. Tim and Jeff discuss what they are and positives and negatives concerning each.

Takeaways

• Traditional and Roth IRAs have different types of tax advantages. The traditional is tax deferred so the savings come up front, while the Roth brings you tax free growth and withdrawals but you pay taxes on what you put in
• 401Ks are provided by employers and have a limited number of choices to invest your savings. IRAs have much more flexibility in the kinds of things money is invested in, not just stocks and bonds
• 401K money can be placed into an IRA, but there are specific ways to do it to make it tax efficient. These are discussed so you can be sure that you are not paying a bunch of taxes when it may not be necessary

Small business owners have numerous challenges in running their business. But they also face challenges when it comes to retiring. A recent survey showed over a third of small business owners don’t have a retirement plan.

Takeaways

• There are IRA options available, including a SEP
• Simple IRA for businesses with under 100 employees
• Self-employed 401K for people who work for themselves with no employees

Life insurance has obvious advantages when you are younger and need to protect a family in case of a tragedy. But in retirement, life insurance can have other advantages in the right plan.

Takeaways

• It is the most tax efficient way to transfer wealth
• Proceeds from a policy are tax free
• Some policies can also be used to pay for long term care by allowing holders to use the death benefit for that purpose