My Smart Retirement

How often do you think about retirement? People who are not approaching retirement or who are not in retirement, rarely spend a lot of time thinking about it. But at the same time, 6/10 of retirees wish they had thought about this phase of life more often.  More and more people are visualizing retirement as a brand-new chapter in life. Retirees in the U.S. are reporting higher levels of happiness due to their newfound freedom. Maybe you have more time to focus on the things you love: spending time with family, hobbies, or travel. Thinking about the values you want your retirement to reflect can enhance these years of your life. On today’s episode, we are breaking down the four pillars of retirement: health, family, purpose, and finances. How do each of these play into our plan and into our future? Pillar #1: Health  Having mental, physical, and spiritual health are all important for your well-being. Yet, 80% of Americans have a chronic condition. Sometimes we find our health spans don’t match our life spans.

When it comes to understanding our finances, it may be easier to use comparisons when grasping new concepts. Financial literacy has become a lot more important as retirement has become more complex. Instead of relying solely on a pension or Social Security, you probably have various retirement tools to keep track of now.  On today’s episode, we are going to help you expand your financial literacy by breaking down some comparisons between a healthy lifestyle and a healthy retirement plan. A lot of us struggle with assessing risk and uncertainty. Understanding is crucial to making wise decisions that will positively impact your future. With a steady bull market for the past decade, it’s no wonder investors are confused about the appropriate amount of risk they should be taking on. To understand this better, let’s compare it to your health. We all know the basics to be healthier: avoiding empty calories, working out, eating healthy foods, etc.  Empty calories come from things like donuts and soda. They taste goo

As you approach retirement you may notice some milestone birthdays coming up. What important ages do you need to mark on your calendar? On today’s show, we’ll break down some key birthdays that will impact your retirement plan. Age 50 Once you turn the big 5-0 you are eligible to start saving through catch-up contributions. This valuable tool is important if you feel behind on your retirement plan. You’re entering the final stretch of retirement and being able to save a bit more is always helpful. Age 55 If you have a retirement account with your employer and decide to leave that position you can withdraw early from that account without penalty. Keep in mind though, it’s only the 401(k) with that employer that's eligible and it will be taxed. Age 59 ½ At this age, you can start taking from any retirement account without penalty. You can do a lot of planning during this time and move money around or start taking that money out to live on. Age 62 Many people watch this age closely as it is the earliest you can

We all go through chapters in life, especially as we approach and enter retirement. On today’s episode, we are going to discuss some age-related questions many pre-retirees and retirees have. Which ages are most important when it comes to your retirement plan? Peg and Paul have already started Social Security, but regulations ended up changing their original Social Security strategy. So, Peg started taking this benefit at 62, which made for a reduced benefit. She ended up taking this lower benefit for the rest of her life despite this not being their original plan.  A lot of these regulatory changes don’t get reported on and this couple was doing their planning on their own. What they had set in place accidentally became set in stone. That’s why we encourage planning early and with an advisor that can keep track of regulatory changes for you.  Larry’s been working for the same company for 32 years. He wants to retire but is not 59 ½ yet, the age you must be to take out money from your retirement accounts. Is

What are some signs you are in good financial health? When it comes to planning for retirement, we don’t want to rely on beginner’s luck. On today’s episode, we are going to discuss how to recognize when you are on the right track and how you can stay on the pathway to financial freedom. You spend less than you make. If you’re working and spending less than you make and putting money away for the future, that’s great. Even in retirement, a good sign of financial health and longevity is spending less than what you’re bringing in. You understand the future tax implications of your savings. Inevitably, we are all probably going to be faced with some kind of tax surprise in our lifetime. But we can better prepare ourselves for our tax bill in retirement if we understand these implications ahead of time on our retirement accounts. If you’re married, both you and your spouse know enough about the retirement plan to be able to manage it if something were to happen to one partner. This might be an obvious one to some

What similarities do baseball and retirement planning share? On today’s episode, Nancy and her husband Brian will compare some basic baseball principles to retirement planning, which are surprisingly similar endeavors.   When you go to a baseball game you are probably hoping to see a home run or two. As we know though, the way to win a game has a lot more to do with the little steps and strategies baseball players take than the big glory shots. The single and double hits matter too. A strong retirement plan is built the same way. It’s not always the biggest score that matters the most. The more people try to hit a home run, the more they tend to strikeout. In baseball, it’s not always about appearances. A lot of the time new players come in looking great for a few years but they tend to not last as long as some more reliable players. Similarly, there might be flashy investments out there but will they have those reliable returns? Coaches and managers often look for 5 tool players. These are the most skilled a

Our world is full of myths. We use them to make sense of things. The financial world is no different. On today’s episode, we are going to explore some common financial myths and deconstruct the valuable information we can learn from each. Myth #1: Shifting from stocks to bonds removes the volatility from your portfolio. On a basic level, bonds are going to be less volatile than most stocks. But we have to remember that bonds don’t have principal protection so they depend on interest rates. If you bought a bond and interest rates went up and you sell your bond you may end up with less money. The volatility with bonds just looks different than the risk associated with investing in stocks. Myth #2: Once you are retired life insurance is no longer necessary. This certainly isn’t true for everyone. Do you still have people who are depending on you financially? This might be children or a spouse. Life insurance can also be a form of protection against long-term care costs. Myth #3: You will need less income when yo

The old saying goes “This Isn’t My First Rodeo.” We've seen similar rising gas prices in the 70s and 80s. It feels like it’s going up almost every day or so now. Adding this to inflation in the grocery store we are faced with more and more uncertainly in the market. A lot of people are rethinking traveling and employees that have to commute are feeling the pinch in their wallets. Because of this turbulent time, we are going to take some time to answer some of your questions when it comes to retirement planning.  Doug in Clean Creek says his company is not allowing him to move his 401(k) into an outside account. He’s heard of a lot of people doing so, but how does this work?  401(k)s have some broad rules, many of which are put in place by your employer. As far as the government is concerned there is no regulation on when you can do a rollover. What you have to be aware of then is what rules your employer has in place.  Commonly, people are eligible to roll over their own contributions at 59 ½. Others can’t ro

On today’s episode, we are going to have some fun and answer a potpourri of financial and retirement-related questions. We will explore some of the questions sent in to the show and how they relate to your financial future.  Pat asks “I have two old 401(k)s, is now a bad time to roll them over?”  We are going to assume your 401(k) is inside of mutual funds. If you are immediately going to sell and put it somewhere else, there won’t be much of a big-time gap. In that case, it probably isn’t a big problem.  But if you were thinking about waiting for the market to recover before putting it into a Roth you want to be careful and discuss this with your advisor.  Lucy says, “As part of my divorce settlement I am receiving a portion of my ex-husband's pension for as long as he is alive. Should I take a life insurance policy out on him in case he dies before I die?”  If Lucy’s ex-husband dies before her, she could lose a big portion of her retirement income. If he is insurable and can afford it a life insurance polic

The FIRE Movement started back in 1992 after the book Your Money or Your Life detailed the steps to financial independence in a new light. FIRE stands for financial independence, retire early. This lifestyle was characterized by saving 50% or more of your income. Now that seems like a lot! But followers of this movement highlight the importance of optimizing their money to achieve happiness and leveraging their assets to achieve financial independence as early in life as possible. While much of this philosophy may seem extreme, there are some valuable things we can learn from the FIRE model. Many retirees save their entire life for retirement but are content not spending all of it down to the last dollar. Similar to a budget, with FIRE you track every dollar you spend. With this mindset you buy what you need and nothing else. With less to buy or maintain, you save a lot of money.   While the FIRE movement may not fit everyone’s lifestyle there are valuable money lessons to learn from this mindset. Some people

You may not realize it, but most of us hold an engrained bias about money. On today’s episode, we’ll break down a recent study by Morning Star, that details why people make the decisions they make when it comes to their finances. How much could a money bias be costing you? Everyone has their own attitudes about money. Those with a present bias focus on living today rather than contemplating long-term outcomes.  People with low a low level of present bias were three times more likely to spend less than their monthly income and seven times more likely to plan for the future. If your goal is instant gratification, you may be losing out on money. Another common bias is base rate neglect. This is where you are judging the probability of something happening based on new information while ignoring the original assumption. We see this with over-selling and buying in investing. Those with a high level of base rate neglect generally have lower savings.  With overconfidence, we see people put too much weight into making

This time of year is filled with hearts, flowers and candy as we show our love for those closest to us on Valentine’s Day. It’s one of our favorite days of the year, but it can also be a reminder of negative feelings for others. As we approach another Valentine’s Day, we wanted to spend some time talking about marriage and money. As most people are aware, money is often one of the top contributors to issues within a relationship. On this episode of the podcast, we want to talk about the primary problems that we see and how we help our clients improve their relationships with money.   The first issue that comes with money in a relationship is power. This power can emerge due to a few different dynamics. The first is when one spouse works and the other doesn’t. Another time this happens is when one spouse makes much more than their partner. And the other most common scenario where power plays come in is when one spouse’s family has much more money than the other. When power plays into the relationship, it often

Any sports fan that enjoys football knows how important the red zone is for their team’s success. If the team is able to execute and limit their mistakes, they’ll have a better chance at scoring a touchdown and maximizing their chances to win. That same idea can be applied to your retirement as well. We call it the financial red zone and it’s the final 5-10 years before retirement and the first 5-10 years in retirement. This 20-year period is crucial for your financial health and long-term success, but it’s also a time where mistakes are magnified. The truth is that time is no longer on your side when it comes to money. The investing strategies you used when you were in your 20s and 30s don’t apply anymore because there’s less time to make up for missteps. And that’s why we work diligently with our clients when they enter the financial red zone. We want to ensure that we aren’t making the same mistakes that retirees before us made, and we can take lessons from 2000 and 2008 and apply them to our own finances

A lot has changed since last year. On today’s episode, we’ll be discussing the current state of the economy and how we can protect our plan as we look forward into 2022.  Taxes Taxes are the big elephant in the room. We see politicians changing tax rules quite a bit. The advantage we have this year comes with the midterm elections. We probably won’t see tax hikes before the election.  Spending  If we look at the economy, a large percentage comes from spending. As a way to stimulate the economy last year, stimulus checks went out to Americans. Going forward, it doesn’t look like spending will slow down. Consumer net worth has actually increased. Power has also shifted back to employees through the Great Resignation. However, inflation is still going to have a big impact, especially when compared to wage growth.  Inflation  Inflation has hit historic highs of over 7%. Inflation may be peaking soon, but we have to remember that doesn’t necessarily mean we’ll see prices go back down. They could stay where they ar

Have you ever said something you’ve come to regret? There are a lot of statements about retirement we may make and look back on with second thoughts. Let’s take a look at some of these statements today and discuss some better ways to think about these topics.  “I said I would get out of the market if I recovered my losses. But now that I have, I think I will continue doing what I’m doing.” A lot of people probably told themselves they’d get out of the market if they ever recovered what they lost in 2008. Now that the money they’ve lost has been recovered they may have second thoughts on this approach.  When it comes to the market, people tend to have short memories. In 2000, a lot of people took this approach. They regained their lost money, but then 2008 hit. We don’t know when the market will dip again. We must act in a disciplined manner.  “Pigs get fed and hogs get slaughtered.” When it comes to our decision to pull out of the market. Look at your accounts and ask yourself whether the money you have will

With the new year comes fresh starts. Maybe you are thinking of changing careers or retiring early. A recent Forbes article names the rise in people quitting their jobs the “The Great Resignation.”  On today’s episode, we’ll explain this term and what it can mean for your retirement.  4.2 million people quit their jobs in October of 2021 alone. A lot of workers were able to re-evaluate their working lives these past few years. Many don’t want to commute back to the office. People are starting to value new priorities when it comes to working. If they are forced with the choice, many are choosing to retire early rather than return to the office.  Social Security Impacts  Whether you are changing jobs or retiring early you should think about how it will impact your Social Security. If you spend time unemployed that’s money you are not putting into Social Security. This can impact how they calculate your payments later on. Develop a plan to cover this income loss if you need to.  401(k) Impacts A significant amou

Do you have your 2022 goals and resolutions ready? Even if you can’t keep up with all of these throughout the year, try revisiting them and see how you can implement them within your life and financial plan.   Reduce Your Debt – This one is different for everyone. Whether you have student loan debt, consumer debt, or another type of debt it’s always a good idea to pay down debt.  Increase Your Savings – Once debt is out of the way this is much easier and can be done in a variety of ways. You’ll need both emergency and long-term savings. You can also save more in your retirement accounts.  Prepare for the Unexpected – If 2020 and 2021 taught us anything, prepare for the unexpected. Do you have a strong emergency savings?  Establish a Spending Program – Not everyone likes the word budget. So, let’s call it a spending program instead. What are your spending goals for different parts of your life?  Check Your Spending – Try to do this once or twice a year. Assess where your money is going and whether it aligns wi

Christmas is just around the corner! On today’s episode, we’ll be discussing some of the things we can do as a gift to ourselves when it comes to retirement planning and our finances.  Don’t Overreact to the Headlines  Headlines come in a variety of forms. Make sure you aren’t overreacting to what you hear or read on the news. Particularly if it’s political or financial. Stay calm within yourself and make sure you are looking at things from a clear perspective. A lot of financial news is designed to get an emotional response from you.  Look for More Donation Opportunities  If you are charitably inclined, donating can be a tax-efficient opportunity. There are a lot of chances to help the poor, to help foster care, and more. No one is ever hurt by giving to a qualified charity. If you have a giving heart this is a great way to give back to the world.  Share Your Knowledge and Listen to More Episodes If you are working with a financial advisor or if you’ve learned some helpful tips about planning for retirement

After paying into the system throughout your working career, many people believe that their Social Security benefits will be tax-free income in retirement. But the truth is you could end up owing quite a bit more depending on what other income you are generating. We recently received a question from a couple that was trying to decide when to claim their Social Security if the other spouse wants to continue working. It’s a great question and one that needs time and attention so we’re glad this came into the show. So the question is essentially this: will a spouse’s income impact the Social Security benefits for the other partner? Throughout this episode, we will dive into the different considerations and help you understand how the taxes are calculated. There are many different factors and it can get pretty complex. One thing we want to make sure you know about is provisional income. It’s a word you’ll be using quite often once you start receiving Social Security so you’ll become more familiar with this. Nancy

We all have some sort of understanding when it comes to personal finance. If you’re reading this or listening to the podcast, you’re probably above average when it comes to taking care of your money. But there’s more to it than most people assume. Personal finance refers to how you manage your money and how you plan for the future. It’s not just the budgeting side of things. And when you take care of your personal finances, you’re setting yourself up for retirement success. We’ve had a number of clients come in recently and tell us they want to retire early. Things have been going better than anticipated and they wanted to find out if that early retirement would actually be within reach. As we go through someone’s personal finance, we can see how much they’re spending and whether any adjustments need to be made in retirement. That’s one of the reasons we wanted to talk about it on the podcast. This show will discuss what personal finance means to the planning process with our clients and how we help them get