The theme this week on the One Minute Retirement Tip podcast is: Ask me anything! I’m answering your listener-submitted questions about what is weighing most on your mind as you prepare for retirement. 

Today, I’m answering the following question: Should I sell my rental properties and use the proceeds to pay off my mortgage?

CS writes: My wife and I are four years from retirement. We own 4 rental properties and we just bought our house that we’re planning to stay in for retirement. The total debt on the rental properties is low and there is not much in the way of expected or expensive maintenance needed anytime soon. 

We are currently using a property management company for the rentals and will continue to do so after we retire, if we keep these properties. 

I could sell 3 of the rentals and pay off the mortgage for our new home, depending on the tax bite. Or I could hang on to the rentals, give the manager his 10%, and let it appreciate and generate a decent check most months. I don’t think liquidity will be an issue (but check back with me in four years).

Any strong feelings on whether I should sell or hold the rentals?

This is a great question and not an easy one to answer. The first question I have for CS is whether or not he and his wife have other assets for retirement. Because if it’s just the rental properties and social security, that makes me nervous. The downside of investing in residential rentals is that there is no guarantee of income and I could give you plenty of examples where income dried up. Even if that happens for a brief period, if that’s all you have, there’s a lot of risk in that. 

CS also mentioned in his email to me that he knows I’m not a fan of carrying a balance on your mortgage in retirement, and selling the rentals would wipe out that mortgage payment on their new retirement home. However, I’m not necessarily a fan of liquidating assets and paying taxes in one fell swoop to pay off a mortgage. Paying off the mortgage with surplus cash or doing it slowly over several years is better. I’m sure that the tax hit on selling those rentals is likely to be substantial and the decrease in rental income probably won’t justify selling to eliminate their mortgage, especially considering they likely have a low interest rate on their new retirement home mortgage. 

This also is challenging because in order to answer what is best, you would need to analyze the net income on the properties (after deducting property management fees, taxes, repairs, etc) over a fairly long period of time to determine if holding or selling makes sense.

The short answer is: I’m hoping CS and his wife have other assets and won’t be relying on these rental properties for most of their income in retirement. If that’s the case, I am more comfortable telling him to hold the rentals rather than selling to pay off their new house. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week and a new theme here on the One Minute Retirement Tip Podcast. I’m your host Ashley Micciche, co-owner of True North Retirement Advisors, an independent financial advisory practice managing $300 million in client assets. I’m a Chartered Retirement Planning Counselor, a frequent speaker, radio and podcast guest, and I love talking to anyone who will listen about making a plan for the retirement you envision. 

The theme this week on the One Minute Retirement Tip podcast is: Ask me anything. A few weeks ago on the podcast, I asked you to submit your questions about retirement to me about what’s weighing most heavily on your mind as you approach retirement. 

I received some pretty amazing questions, I picked my 5 favorites and I’m addressing them here on the podcast this week. 

I'm answering questions about what to do with rental properties in retirement, how do I know if I have enough to retire, how much to invest in the company stock inside my 401k, dealing with the stress and financial burden of caring for aging parents, and taking an early pension offer. 

These were such thoughtful questions that deal with real life conundrums, and I’m honored to be sharing my insights this week. I tried to be thorough, so this week’s episodes are a bit longer than usual as well. 

To protect the confidentiality of those who submitted questions, I have changed all the names - mostly to my favorite celebrities or historical figures - so bonus points if you can figure out which famous person I’m tipping my hat to.

I hope what I have to share will lead you down the right path to making prudent decisions for your retirement, and I hope your fellow listener’s questions will maybe provide some answers to some like-kind problems you might be dealing with in your own life. 

That’s it for today. Thanks for listening! My name is Ashley Micciche...and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

It’s Sunday, which means...It’s recap time! 

The theme this week on the One Minute Retirement Tip podcast was: retirement rules of thumb you should ignore.

Here are the retirement rules of thumb that you might want to ignore: 

• Save 10% of your income for retirement
• Keep 120 minus your age in stocks
• Withdraw 4% of your portfolio for income in retirement
• Spend no more than ⅓ of your income on housing
• Always pay cash for cars

Hopefully after listening to the podcast this week, you can appreciate that while most of these rules of thumb can be helpful for some, it’s often dangerous to blindly follow rule of thumb financial advice, since it can really lead you astray in making some poor decisions with your money.q

If you missed any of these episodes, you can find them on Apple Podcasts or wherever you listen to podcasts by searching for the “One Minute Retirement Tip with Ashley”. 

Tomorrow, come on back, because we’re starting a brand new theme: Ask me anything. I put out a request for your input and to tell me what’s weighing most on your mind as you approach retirement. I received some really great, thoughtful questions that I think will apply to many of you. You asked and so next week I’m answering your questions - everything from buying company stock in your 401k, to paying for your parent’s care, to whether or not you have enough money to retire at 62. 

I’m really looking forward to answering your listener questions next week.

Thank you so much for listening this week! My name is Ashley Micciche and I hope you have a blessed Sunday.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules of Thumb You Should Ignore 

Yesterday, I talked about how much I hate the rule of thumb about spending no more than ⅓ of your income on housing. It should be much lower than ⅓, especially as you approach retirement. 

Generally, if you can have less debt or no debt in retirement, it will free you up for a more active and less stressed retirement. Which brings me to today’s rule of thumb: always pay cash for cars. 

I don’t like this rule of thumb because I can think of plenty of exceptions to this rule. 

About 10 years ago, when we were emerging from the financial crisis and car companies were really struggling, I had a handful of clients with 0% car loans. If these clients would have followed this advice of always paying cash for cars, he would have paid $40m out of his precious savings to buy a car that he could have financed for free. 

If you like to buy a used Toyota Camry every 8-10 years, then always paying cash for cars makes a lot of sense, but the applicability of this rule depends a lot on your car-buying habits. 

Are you into cars? My husband is really REALLY into cars. He would rather walk around with a sharp stick in his eye than drive a 3 year old Toyota Camry every day. But I wouldn’t mind it and if I had my way, I’d probably still be driving my first car - a forest green Nissan Pathfinder. I called it her Pathy, and she and I spent many miles and many memories together in the early 2000s. 

Car loan rates are pretty low right...you can get a car loan in the 3-4% range if you have good credit. So why would you want to withdraw an extra chunk of change from your retirement portfolio, when you can make more manageable payments on a low interest car loan instead. 

Although I’m a big advocate of paying your house off before retirement, I’m not as big of a fan of withdrawing $40-50k every 8-10 years from your retirement accounts to buy a new car that will be worth ½ of it’s value in 3 years. But again, it all goes back to your car buying habits and what kind of dent a larger withdrawal will put on your portfolio. Sometimes a loan makes sense. Sometimes paying cash makes sense. 

The other consideration that most people don’t think of is something I commonly see among my clients, which is you’re not as comfortable with buying a used car at age 70 compared to say, age 40. You don’t want to be dealing with reliability issues or expensive repairs for cars out of warranty when you’re in your 70s so most of my retired clients are happy to pay a premium for a newer car, so they don’t risk being stranded by the road in snow and ice or 100 degree temperatures. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules of Thumb You Should Ignore 

Today, I’m debunking the common rule of thumb that you should spend no more than ⅓ of your income on housing. Of all the personal finance rules of thumb, I hate this one the most. I think it leads too many people astray, with buying houses they really can’t afford. 

If you look under the hood of most affluent and wealthy Americans, you almost always will see much less than ⅓ of their income devoted to their mortgage, taxes, and insurance for their house. Spending ⅓ of your income towards housing leaves too little for everything else. 

As you approach retirement, this rule of thumb becomes even more problematic. If you’re using your social security income and withdrawing money from your IRA every year just to pay your mortgage and maintain that ⅓ ratio, you’re depleting your retirement accounts and you’re sacrificing your flexibility and freedom to travel, eating out, enjoy hobbies, help pay for your grandkids education, give to the causes and charities you care about. Whatever matters most to you, you don’t want to be cut off from doing that because too much of your income is going toward housing in retirement. 

Alternatively, if you can enter into retirement with a paid-off mortgage, that’s one of the best things you can do to set yourself up for a financially secure, and less stressed retirement. You’ll have more discretionary income, and be able to really live an active retirement. 

If you’re not able to pay off your mortgage before retirement, it’s a great time to downsize. In many housing markets today, you can get top dollar for your home, downside to a smaller and less expensive home, potentially with no mortgage. With interest rates low and housing at its historical peak, it’s an ideal time to sell and buy something smaller and less expensive for retirement. 

So I think the ⅓ rule of thumb for housing costs is the absolute worst, especially when you’re retired. If no more than 10% of your income is going toward housing in retirement - incl. taxes and insurance - you’ll be in a better financial position, and have a lot more discretionary income to actually enjoy retirement. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules of Thumb You Should Ignore 

Today, I’m talking about the 4% rule. The 4% Rule is a short-hand rule of thumb that helps you calculate how much of your portfolio you can safely withdraw in retirement without running out of money.

If you apply the 4% rule to your retirement savings, you would take your portfolio value and multiply that amount by 4%...so if you get to retirement with $1 million saved, and multiply that $1million by 4%, you get $40,000. So according to the 4% rule, you can withdraw $40,000 from your portfolio in year 1 of retirement, then increase that withdrawal amount for inflation each year without worrying too much about running out of money.

4% is considered a safe withdrawal rate that is backed by some well-documented research. But it’s actually a pretty flawed rule of thumb that doesn’t take into account the complexities of retirement circumstances that change, an investment portfolio that’s changing, and the complexity of adjusting that 4% withdrawal rate years into retirement. 

The short answer is that it does work well...sometimes. The long answer is that retirement is too  complex to rely on a rule of thumb - taxes, inflation, your returns in retirement vary widely from year to year, and you may be unlucky enough to retire in the midst of a big stock market downturn - these are all circumstances that will make the 4% rule less useful or blow it out of the water all together. 

The 4% rule is useful to help you plan for how much you’re going to need saved at retirement, but when you’re 2-5 years out from retirement, it’s time to leave the 4% rule behind and opt for a more sophisticated calculation that takes into account the thousands of different scenarios and circumstances you could face in retirement.

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

---------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules of Thumb You Should Ignore 

Today, I’m talking about a common investing rule of thumb: Keep 100 (or 120) minus your age in stocks. It used to be 100 minus your age, but over the last several years I see 120 being used more often. Using this formula...if you’re 65 years old, you take 120 minus your age. 120-65 = 55. That’s the % you should have in stocks: 55%. 

Now there is some truth in this rule of thumb, and that is your asset allocation (or your % in stocks) should be based 1st and foremost on your age. This is where we always start with our clients. But it does need to be customized for your risk tolerance, your goals, and to what extent you’ll be relying on your portfolio for income in retirement. 

Some people just cannot stomach the ups and downs of the stock market. They’re the ones who panic and sell in March 2020 at the height of the Covid crash. Having too much in stocks can be problematic for these people, so if that’s you, then you’ll want to have less in stocks than you might otherwise have at your age. 

On the other hand, I had a client who passed away about 3 years ago. She was in her 90s when she died, watched CNBC every day, and had over $1 million dollars in the stock market. I could have talked her into going skydiving before I would have talked her into buying a bond. She loved stocks and didn’t blink if the stock market took a dive. She wasn’t worried at all when her portfolio dropped in the financial crisis, and even though she was less than 5 feet tall, she had ice water running through her veins. 

The other factor that is worth considering now with maintaining a higher % in stocks is inflation. Inflation is a big risk for your retirement. You can plan to spend as much as 30 or more years in retirement. Iis it really a good idea for a 70 year old who has potentially 20 more years to live to be only 30% in stocks if you follow the 100 minus age rule? If you follow the 120 minus age rule, you’re 50% in stocks at age 70, which for most people, I think is probably too high, considering that allocation can result in a drop in your portfolio of 20-30% or more in a down stock market. 

So the rule of thumb is flawed I think and I use a different baseline based on age to determine the ideal allocation for my clients. If you want to get your copy of our asset allocation cheat sheet and see the custom formulas we use to determine asset allocation for various ages, just send me an email - [email protected]. That’s [email protected]. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules of Thumb You Should Ignore 

Today, I’m talking about the most common personal finance rule that I see, which is save 10% of your income for retirement. 

The assumption that’s baked into this advice is that you start saving early in your career - usually your 20s or 30s. Many people don’t save that early, and it’s rare that I see someone saving 10% of their income at that age. People in their 20s and 30s usually have student loans to pay off, and even if they don’t their incomes are going disproportionately toward car payments, rent, and usually savings to buy a house. 

You may only need to save 5% of your income for a comfortable retirement, or it could be 20% or more. If you plan to live a frugal retirement like many retirees today, even if you started saving later in life, you may still need to save less than 10% of your income.

The other reason why this rule of thumb isn’t really that useful for most people is that saving more when you’re close to retirement isn’t as important as working longer. If you’re close to retirement and not yet where you need to be financially to retire, then in almost all cases you’ll benefit much more by working a little longer than saving more. 

Why? The benefits of working longer are multi-faceted. You’ll be able to delay social security. You’ll spend less time overall  in retirement so your portfolio doesn’t have to provide income for as many years. You’ll often spend more time working in your peak earning years. There’s also health benefits to working longer. People who work longer, especially if you enjoy your work, tend to live longer as well and tend to be happier overall. 

That’s it for today. Thanks for listening! My name is Ashley Micciche and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

Welcome to a new week and a new theme here on the One Minute Retirement Tip Podcast. I’m your host Ashley Micciche, CEO and co-owner of True North Retirement Advisors, an independent advisory firm managing $300 million in client assets. I’m a Chartered Retirement Planning Counselor, a frequent speaker, radio and podcast guest, and I love talking to anyone who will listen about making a plan for the retirement you envision. 

The theme this week on the One Minute Retirement Tip podcast is: Retirement Rules Of Thumb You Should Ignore. I’m going to dive into several commonly peddled rules of thumb about retirement. Sometimes the advice is right. Sometimes these rules of thumb are wrong. 

According to wikipedia, a rule of thumb refers to a principle with broad application that is not intended to be strictly accurate or reliable for every situation. The downside of rules of thumb is that they are inherently flawed. 

The upside is that they are easy to remember and apply, which is particularly important in managing your finances. I think that’s why rules of thumb seem to be exceptionally common in personal finance and investing. 

Phrases like “buy low and sell high”, “pay yourself first”, and “save 3-6 months living expenses for emergencies” are so common, if I read one more personal finance article that mentions these rules of thumb, I think my head might explode. On the one hand I understand why rules of thumb are so common in personal finance. Most people are terrible with money, we’re not taught this stuff in school, and navigating your financial affairs without some helpful and easy-to-remember rules of thumb to assist would be impossible for too many of us.

On the other hand, rules of thumb in finance aren’t always helpful and aren’t always good advice. So this week, I’ll talk about a handful of rules of thumb, especially for those of you who are close to retirement that you might be better off ignoring, or at least adjusting to better suit your individual situation. 

I look forward to spending this week with you, diving deeper into some common bits of advice about retirement, explaining the nuances and exceptions that are important to understand with these rules of thumb. 

Come on back tomorrow where I’m going to discuss the most common retirement rule of thumb: Save 10% of your income for a comfortable retirement. 

That’s it for today. Thanks for listening! My name is Ashley Micciche...and this is the One Minute Retirement Tip. 

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance

It’s Sunday, which means...It’s recap time! 

The theme this week on the One Minute Retirement Tip podcast was: grandparent-owned 529 college savings plans.

Hopefully after listening to the podcast this week, you understand how much of an impact you can have in the financial lives of your grandchildren by being thoughtful and intentional about how you might support them financially with college.  One of the best vehicles for doing that with big benefits for both you and your grandchild is the grandparent-owned 529 college savings plan. 

Here’s what we covered in each episode this week: 

• First we started with the basics of 529 plans and I explained why these are such a powerful tool for setting your grandchildren up on the right financial path as they enter adulthood
• Then we talked about the differences between parent-owned and grandparent owned 529 accounts and 6 big benefits of 529 accounts
• Finally over the last couple days, we discussed the latest rule changes with 529 plans owned by grandparents that made these a lot more attractive, especially for students' financial aid packages. 

If you missed any of these episodes, you can find them on Apple Podcasts or wherever you listen to podcasts by searching for the “One Minute Retirement Tip with Ashley”. 

Tomorrow, come on back, because we’re starting a brand new theme: Retirement Rules Of Thumb You Should Ignore. I’ll talk about retirement rules of thumb you may have heard about or are using that you’re probably getting wrong. Even though on the surface it may seem like it’s making planning for retirement simpler and easier, using rules of thumb isn’t always a good idea. I’ll share with you which ones you’ll want to avoid next week. 

Thank you so much for listening this week! My name is Ashley Micciche and I hope you have a blessed Sunday.

----------

>>> Subscribe on Apple Podcasts: https://apple.co/2DI2LSP

>>> Subscribe on Amazon Alexa: https://amzn.to/2xRKrCs

>>> Visit the podcast page: https://truenorthra.com/podcast/ 

----------

Tags: retirement, investing, money, finance, financial planning, retirement planning, saving money, personal finance