What big challenges could a retired couple face in 2020? Based on the research I’ve conducted, the average age of the American retiree is 62. According to the Social Security Administration, 34% of Americans begin to claim their social security benefits at age 62. That doesn’t mean it’s the optimal age to claim it. It even lowers the amount of money you’ll receive monthly. So how should you plan for retirement so that early withdrawals aren’t necessary? 

In this episode of Retirement Made Easy, I share a retirement story based on a hypothetical couple. If you’re planning for retirement, this is a retirement story you NEED to hear. Why? It will change the trajectory of your future. If you want to live a comfortable and sustainable lifestyle in retirement, you need to plan properly. Listen to this episode to learn what retirement planning should look like!

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You will want to hear this episode if you are interested in...

• [1:36] The retirement story everyone needs to hear
• [4:25] Planning for your retirement years
• [5:06] Joint life expectancy for our retirees
• [7:26] The average couple with average healthcare
• [8:33] Key takeaways we can learn from the past
• [16:05] What interest rates looked like in 1990
• [16:51] What can we take away from our couple? 

Statistics about our hypothetical retirees

To better understand our hypothetical couple, here’s some information about them: 

• Our couple was born in 1958 and are turning 62 this year. 
• The couple’s names are Michael and Mary (the most common names in 1958)
• Neither of them are smokers (but did you know 14% of US adults are smokers?)
• Michael and Mary are the “average” couple with “average” healthcare

The life expectancy of the average 62-year-old

When you plan for something as important as retirement, you need to know how long it’s going to last. You need to know how long a vacation will be to pack properly, right? It’s the same for retirement. We don’t know what our expiration date will be, but we have to use the information available to us. So what does the information tell us? 

On average, women outlive men by five years. Statistically speaking, Mary is projected to live another 30 years (until the age of 92). If I was talking to Michael and Mary and told them their joint life expectancy was 30 years, they’d be shocked. It means their retirement income needs to last 30 years. 

Do you think it’s a safe bet to assume that people will continue to live longer in the future because of medical breakthroughs on the horizon? There’s a good chance people will continue to live longer. Have you had access to top-quality healthcare? If you’ve been lucky enough to access above-average healthcare, you may be able to expect to live even longer than 30+ years. 

If history is our guide, what are the key takeaways? 

What can we learn from the past 30 years to gauge the next 30 years? 30 years ago, it was 1990. In 1990:

• A postage stamp was $0.25 (Today, a stamp costs $0.55)
• The national minimum wage was $3.80 (Today, the national minimum wage is $7.25)
• A Big Mac from McDonald’s was $2.20 (In 2020, the average cost is $5.67)
• A base model Ford Mustang was $9,500 (Today, the base model is $26,395)
• Medicare benefits started at $28.60 a month (Medicare part B starts at $144.60 for the lowest income bracket in 2020) That’s a 5.6% annual increase over the last 30 years.

All of these have gone up dramatically. If you retired 30 years ago and had a fixed pension of $2,000 per month you’ve watched everything increase—except your pension. Do you see the big problem? The cost of living went up about 3% a year. In 2020, it takes $2.44 to buy what $1 bought 30 years ago. Things change a lot in 30 years. Social security does increase—but not nearly enough.

The big retirement story takeaway

What can we take away from this? Michael and Mary can expect prices to double—if not triple—during their 30-year retirement. Their goal is to live a comfortable retirement with a lifestyle sustaining income. Can their income keep up with their cost of living? 

What about you? Does this retirement story hit home for you? Are you prepared for a 30+ year retirement? I’d love to have a conversation with you about preparing for your retirement. Don’t hesitate to reach out!

Resources & People Mentioned

• Social Security Administration

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

In this episode of Retirement Made Easy, I answer YOUR pressing questions. Over the last month, a variety of questions have been rolling in about social security, retirement, inheritances, and more. So with their permission, I’m sharing their questions—along with my best answer to them. As always, double-check my answers against whoever it is your family trusts for prudent financial advice before making any decisions.

You will want to hear this episode if you are interested in...

• [0:12] We answer listener questions in this episode!
• [2:15] Question #1: What do I do when I inherit an IRA?
• [8:47] Question #2: Can I gift IRA money to my children?
• [10:34] Question #3: How do Social Security survivor benefits work?
• [12:16] Question #4: Are annuities good or bad?
• [16:03] Question #5: How do social security spousal benefits work?

What do I do when I inherit a non-spousal IRA?

A 57-year-old listener recently inherited an IRA from his father, who passed away in January of 2020. He doesn’t want to pay a 10% penalty for early withdrawal. So what are his options? 

The IRS breaks the rules of inheritance into two different categories: spousal and non-spousal. If your spouse passes away, their IRA can get moved into yours—but that only applies to spouses. You cannot do that if you’re inheriting a non-spousal IRA. 

Your fathers’ IRA has to stay separate as a beneficiary or an inherited IRA. The good news? There is NO 10% early withdrawal penalty. It does not apply. The SECURE Act that was passed in 2019 has more details on a big provision regarding inherited IRAs. New rules regarding required minimum distributions (RMDs) apply if you inherit an IRA from someone who passed away after January 1st, 2020.

The way the rules used to work: You could stretch that IRA out and every year you would take RMDs or you can take them out of a 5-year timespan. Now, the rules are totally different. Now you have up to 10 years to take withdrawals from that account. After the 10 years, all of the money has to be out and the taxes have to be paid. 

So what are the listener’s options for withdrawals? What can he do with the inheritance? Listen to find out!

Can you gift IRA money to your children?

Another listener is wondering if he can give part of an IRA to his children. Here’s my answer:

IRAs and Roth IRAs are retirement accounts, more specifically, “Individual Retirement Accounts.” They’re based on your social security number, which is why you can’t have a joint account with a spouse. You cannot gift retirement accounts to your children while you’re still alive. If you want to give them money now, you’d have to withdraw it from your Roth IRA tax-free assuming two things: that it’s been open 5 years or more, and that you’re older than 59 ½. There are gift-tax rules and the annual exclusion in 2020 is $15,000

I answer a question about social security benefits and weigh in on whether or not annuities are good or bad—so keep listening!

How do social security spousal benefits work?

Another listener (who is 72) started taking his RMD of social security at age 70. When the benefits kicked in, he received $3,000 per month. His wife is 64 and her social security benefit is very low. How do spousal social security benefits work?

When you turn full retirement age (age 66) you can get your full retirement benefit OR up to half of your spouses—whichever is greater. A spousal benefit will max out at full retirement age. So it’s not half of what he got at age 70—she’ll get half of what his benefit was when he hit 66 (approximately $1,136 a month). There’s no advantage to waiting until she’s 70 to start taking her RMDs. Instead, look into taking advantage of her spousal benefit as soon as she reaches full retirement age. 

Resources & People Mentioned

• What is an annuity?
• The SECURE Act

Connect With Gregg Gonzalez

• Email at: [email protected]
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts

Who’s the better investor: men or women? What is the difference between men and women? What makes one gender the better investor? In this episode of Retirement Made Easy, I share three different studies that all come to the same conclusion. You’ll get my answer to this dangerous question: Are women better investors than men?  

You will want to hear this episode if you are interested in...

• [1:45] Setting the record straight: who’s the better investor?
• [2:52] Study #1: The Cal-Berkeley “Boys will be Boys” Study
• [4:28] Study #2: The Warwick Business School Study
• [5:24] Study #3: The Fidelity Survey of 8 Million Investment Accounts
• [8:25] The bottom line: What makes women better investors?
• [12:50] What can we learn from these three studies?
• [11:25] Men were 35% more likely to change their portfolio
• [12:50] What can we learn from these studies?

Resources & People Mentioned

• Boys will be Boys: Gender, Overconfidence, and Common Stock Investment
• Warwick Business School Study: Are Women Better Investors Than Men?
• Fidelity Survey of 8 Million Investment Accounts

 

“How should I be Investing in retirement?” This is one of the most popular questions that I get from listeners. What should you invest in? How do your investments help you reach your goals? What does your portfolio need to do for you in retirement? In this episode of Retirement Made Easy, I share my opinion on these questions and give you the 3 keys to successful investing in retirement. 

You will want to hear this episode if you are interested in...

• [1:07] How you should be investing in retirement
• [3:01] Key #1: Understand how your investments will help you reach your goals
• [6:35] Key #2: Make sure your investments are flexible and liquid
• [9:24] Key #3: Keep your portfolio diversified

What does a $15 minimum wage have to do with retirees? Why would they be upset about it? Is it that big of an issue? Illinois recently enacted a plan to increase their minimum wage by $1 each year until 2025—at which time they’ll have fully implemented a $15 minimum wage. In this episode of Retirement Made Easy, I use some hypothetical scenarios to explain the impact of the minimum wage increase and what pre-retirees need to prepare for.  

You will want to hear this episode if you are interested in...

• [1:24] Why are retirees pissed off about the $15 minimum wage?
• [2:26] A Hypothetical example of a retiree in Illinois
• [5:14] How the minimum wage increase will impact grocery stores
• [7:63] WHY the minimum wage increase is terrible news for retirees
• [9:59] Check to see what your local state has in place for minimum wage increases
• [14:11] Understand the retirees perspective and how it impacts retirement planning
• [14:45] A brief discussion on the impact to small business owners
• [15:34] How to plan and prepare for a successful retirement 

 

There are a lot of myths being perpetuated about retirement that are simply NOT true. These myths may leave the average personed discouraged and disheartened about their future and wondering if they’ll ever retire. How much money do you need? How much will you spend? Will social security still be around? Will taxes be lower? In this debut episode of Retirement Made Easy, I dispel some of the myths around retirement to help you breathe easier—and prepare for your future. 

You will want to hear this episode if you are interested in…

• [1:01] Myth #1: You will spend 70–80% of your pre-retirement income
• [5:04] Myth #2: Your taxes will be lower in retirement
• [11:36] Myth #3: You should take social security at age 62
• [15:33] Myth #4: you need $1 million saved for retirement to retire
• [19:07] Myth #5: Retirement is the end

Resources & People Mentioned

• Social Security Administration

Connect With Gregg Gonzalez

• Email at: [email protected] 
• Podcast: https://RetirementMadeEasyPodcast.com
• Website: https://StLouisFinancialAdvisor.com
• Follow Gregg on LinkedIn
• Follow Gregg on Facebook
• Follow Gregg on YouTube

Subscribe to Retirement Made EasyOn Apple Podcasts, Spotify, Google Podcasts