There are a lot of misconceptions about retirement, and believing the wrong ones could impact your future. In this episode, we break down five common retirement myths and uncover the truth behind each one to help you plan with confidence.
Episode Transcript
Intro/Closing: 0:03
Welcome to the Real Talk Retirement Show, where we explore the financial side of retirement and beyond. Whether you’re currently retired or planning for the future, we offer real, relatable conversations about money and personal finances. Most importantly, we dive into all these topics using Real Talk. Now, let’s get real about your money and your retirement. Now, let’s get real about your money and your retirement.
Brian Graff: 0:29
Welcome back everyone to another episode of the Real Talk Retirement Show. We are Brian Graff and Tracy Burke, also commonly referred to as the dynamic duo in podcast worlds. Right, maybe I just say that, tracy, I guess. But it’s one of those things if I say it out loud enough times, maybe it’ll catch on, so we’ll go with that, the dynamic duo. Well, we are excited to be back with you today for another episode, and today we are going to be debunking five retirement myths.
Brian Graff: 1:00
Why are we doing this? Well, first of all, I was looking for any reason to add the word debunking to my vocabulary. It’s a great word, right, Tracy? Yeah, so that’s number one. And number two, and probably more importantly, is that you know retirement may be one of the most misunderstood areas of personal finance. So you know, we don’t want all these myths out there or these sometimes false statements being thrown around to confuse people even more on such an important topic. And you know, no matter where you are, what stage of your career you’re at, whether you’re on the verge of retirement, well, into retirement, you know we’ve all heard these different myths or widely held but false ideas about retirement, and we want to cover some of those with you today. So, Tracy, welcome, and if you want to kick things off, that’d be great.
Tracy Burke: 1:50
Yeah, I want to start with a story, Brian, and this is something that happened a few years ago and I remember sitting down with a couple and, for anonymity, we’re going to just call them Jim and Jane right, they were, I would say, in their early 60s at some point and they wanted to meet to talk about retirement planning. I remember they walked in, very well organized, they had a nice little binder, they had their statements, their, you know, social Security information, everything in this, and everything was labeled you know, the pensions, the Social Security, 401k, everything like that, security, 401k, everything like that and they went on to tell me you know that they’ve that and it was evident they were so organized. But they’ve done everything right in their minds up to this point because all along they’ve been following a lot of the common rules of thumb. You know, we hear these rules of thumb and finance and other areas of life, of course but they felt like they were doing everything you know correct and correct. And it’s great to be aware of those rules of thumb, do your research and follow them, but it’s also important for people to think that or know that their situation is unique and just be careful when you’re using these rules of thumb because, again, there can be some misinformation or some perceptions similar to these myths that we’re going to be talking about. That can sometimes derail somebody’s financial future.
Tracy Burke: 3:13
So, with Jim and Jane, one of the things that they read was that by age 60, and I think this is a Fidelity study and we might even reference this before you know certain rules of thumb or benchmarks At age 60, I think, fidelity says you should have about eight times your current income saved at that point Now. So they were excited because they said, hey, we have a little bit more than eight times. We think we’re ready to go. And as weeks and even a couple months evolved of us working together a little bit, it became very evident that they’re very low spenders. Plus, jane had, I think, a pension that contributed a lot of income and all of a sudden, when we did some planning, that eight times number was way overkill, you know. So they didn’t need anywhere near there. So everybody’s situation is different. That’s the point and some of it. So when you’re thinking through some of those rules of thumb, just be aware of that. But yeah, I think we have some good myths to talk through today.
Brian Graff: 4:19
Yeah, and at least a Jim and Jane over saved Right, so that’s a good problem to have compared to a lot of people where the opposite is true.
Brian Graff: 4:25
We hear all the time. You know, a lot of people don’t save too much and we ask why? And they say, well, social security will cover all my expenses in retirement. And you know, the reality is it only covers about a third. So, depending on which side you’re on there, yeah, the myths could really hurt you. So you know, we did, did our retirement communication team got together and we talked about all these different myths that are out there. Probably came up with close to 50, right Tracy.
Brian Graff: 4:49
But you know right To respect everybody’s time, of course, and, you know, just make sure we kept this efficient. We narrowed it down to five. Now. There may be another podcast in the future, which is, you know, the next 10 or 20, you know retirement myths but for today, we, today, we are going to keep it to just five. So, tracy, I’m going to let you kind of kick things off with uh, we’re going to do a countdown, so we’re going to start with number five work, work down to number one. Feel free to do your best Dave Letterman impression right now, if you’d like, Tracy, and get us started.
Tracy Burke: 5:19
I was going to say and I’m sure many of our listeners are familiar with David Letterman and Brian I was thinking, man, you look really good in one of those Paul Schaefer style suits. You know the sparkles and those type of things, but just like you said we’ll start with number five and work backwards.
Tracy Burke: 5:36
So the fifth one is you need $1 million to retire. That’s the myth and you know $1 million it’s a nice round number, right, and to some people that can sound like a heck of a lot of money and some people it might not sound like a whole heck of a lot, and you know it varies on spending and some other components there. But you know the $1 million number is one that we hear a lot as that’s the magic number. Now, many people also probably remember that game show who Wants to Be a Millionaire as something that was put on TV for some time. But you need to figure out what your own number is right and everybody needs to have your unique number, meaning how much money do you need to retire?
Tracy Burke: 6:26
And that was, I think, maybe our very first episode of this podcast that was really centered around that very theme. So, as I mentioned, brian, it’s not one size fits all, right, some people will need much more and some people will certainly need less. But, Brian, you know, as we think about that, what are some of those considerations in really figuring out is a million dollars that right number for you?
Brian Graff: 6:51
Yeah, yeah. So I think the first thing you need to look at is you know, in trying to envision your desired retirement lifestyle, what are your goals? And another way to say that is how much do you think you’re going to spend? You know you very well may have lower expenses in retirement. For example, no mortgage, right? Hopefully we got that paid off, got those kids out of the house, right. But for some people you may actually have higher expenses. You have really expensive hobbies. You want to travel the world, you want to spoil the grandkids like crazy, right? So it’s important to have that vision of your desired retirement lifestyle and think about what that means in terms of spending. You also want to look at your other income sources, not just what you have maybe in your workplace 401k plan, but what’s social security going to look like for you? What age will you start taking it? What’s that dollar amount? Do you have maybe another pension out there? Most, a lot of us these days, pensions kind of went away, but depending what sector you work in, you know you may have a pension plan, some benefits there that guarantee you a monthly stream of income and retirement. And finally, you know when you retire is that it? Or do you plan on staying active and busy with some part-time work, maybe not working as long or hard as you were during your career, but you know enough to stay active, keep your mind engaged, keep the body going and, you know, just bring in a little extra spending money to make you feel good about things.
Brian Graff: 8:15
So look at your spending, look at your other income sources, and one that might not be as fun is your longevity. You know how long do you think you’ll live, and we obviously don’t know for sure and we don’t really want to know either. Right, but you know. Look at your, look at your genes. You know your mom and dad still living, or what age did they pass away. How is your current health? And I think kind of knowing that, or at least having a general idea of how many years of retirement you’re going to live, will help you certainly with your goals.
Brian Graff: 8:45
Another one is you know where will you live in retirement? Do you plan on living in some high-cost city or maybe a lower-cost country living? Is that going to be your lifestyle? So where you live will also have a huge impact on how much you need to have saved for retirement as well. And finally, you know, look at health care costs, which can often be an unknown. Remember, Medicare doesn’t kick in till age 65 for those of you who are thinking about retiring early, and even those of you that do retire at 65 and you have Medicare right away. You remember, it’s not going to cover everything. It typically only covers a portion of your health care costs in retirement. So you know, knowing this Tracy, what can we do now?
Tracy Burke: 9:26
Yeah, and, of course, lots of variables to determine what is that number? And is one million enough? Is it too much, too little? Who really knows? But the key and this is going to be a theme that we’re going to continue to talk about today and we’ve talked about in the past and not a surprise to our listeners but it’s important to plan right, Plan in advance, do that planning for it and, in this area in particular, really understanding what you’re likely spending is going to be. Brian, you just talked about what some lower, higher expenses, sometimes in retirement and income sources and some other really good things but really planning and figuring out what’s your fixed expenses, what’s the variable ones, or sometimes referred to as discretionary how will those income sources work together to provide what you need? So again, it’s just planning in advance is what’s going to get you there? So let’s move along, Brian. What’s number four on the list?
Brian Graff: 10:31
Number four I’ll spend less in retirement, all right. So mentioned just a little bit earlier this concept. But some retirees do spend as much, if not more, in retirement than they do during their working years, especially in early retirement. Tracy we often refer to them as what? The go-go years right? When you’re still pretty healthy, you’re active and you’re traveling, going on some, maybe some exotic vacations, so you may be inclined to spend more during those go-go years, maybe some exotic vacations, so you may be inclined to spend more during those go-go years. And then eventually, in later retirement you know it’s not as pretty of a term, but we call it the no-go years right, when maybe your health has started to diminish a little bit, you’re not moving quite, as you know, sprightly as you used to, we do call them the no-go years and at that stage your healthcare costs can really go up. So you might not expect this to be the case, but again, sometimes retirees spend as much, if not more, once they’re in retirement.
Brian Graff: 11:25
Now, it is true that a lot of your work-related expenses will diminish once you retire, for example, your commuting costs, perhaps your wardrobe costs although those that are actually watch the podcast and don’t listen you’ll probably know I’ve been wearing the same blue Conrad Siegel shirt for the last six episodes.
Brain Graff: 11:43
So wardrobe is not a concern of mine. But you know a lot of people do dress professionally and have their suits dry clean and things like that, but you know I’m not one of those people. But again, the expenses you might see diminish Commuting costs, wardrobe People eat lunch out all the time when they drive to work, right? So that’s kind of a big cost five days a week times maybe $20. That’s $100 a week. You could be saving just in lunch. So just remember a general rule of thumb and we go by rules of thumb quite a bit is that often retirees will need about 80% of their pre-retirement income to kind of navigate through retirement. We typically think people need about 80% and that includes the removal of things like money you were putting into your retirement plan. Obviously that’s no longer an expense. Payroll taxes you were paying. You’re not getting a paycheck, so that goes away as well.
Tracy Burke: 12:32
Yeah, Brian, and I just want to emphasize you mentioned about spending can increase right, and again, that really depends on what you’ll be doing, and you mentioned healthcare. That can be a big one Travel and hobbies, again, and just like you can save money maybe from not eating out of lunch when you’re working if that’s something that you do. But on the flip side, a lot of retirees will go out to eat for dinner more often, or a night or two or more a week.
Brian Graff: 13:07
As they should, right as they should.
Tracy Burke: 13:09
Yep, absolutely. And entertainment costs, that’s another one. So obviously some costs increase. Some other things that we often see people do Some retirees end up with a second home and if you have a second home those expenses were not there prior to you getting that second home. So again some increased expenses there. That’s going to be carrying costs there. And then the one thing I don’t think we’ve mentioned yet so far today, but inflation. We always have to think about that, because a million dollars today isn’t what a million dollars was 10 or 15 years ago, nor what it will be in another 10 or 15 years in front of us. So those higher costs during retirement sometimes can start to catch up to us and sometimes those income sources might not keep up. So on this topic, brian, what can we do? You know, if the myth is you’ll spend less in retirement, and maybe that’s true for some and maybe it’s not true for others but what can we do about it?
Brian Graff: 14:17
Well, I think we can sum it up pretty easily in one word, Tracy, which is budget Right now. I know a lot of us don’t have time, we don’t like the idea of budgeting, we’re afraid that maybe you know the things we’re enjoying spending money on we won’t be able to do if we budget too closely. But you know, even if you didn’t budget a lot during your working years and you were a good saver regardless, when you get into retirement, then you really need to have a budget right. Figure out what all those real expenses will be. Tracy just gave you a bunch of examples. But yeah, I think it’s easy to sum it up by saying budget, budget, budget. Right, I said budget three times because we are now on myth number three, Tracy. See what I did there.
Brian Graff: 14:56
So I’m going to pass it along to you for our third retirement myth.
Tracy Burke: 15:05
Yeah. So we’re going to change gears a little bit. We talked about how much really you need. Is a million dollars enough? We talked about the spending component of it, so now let’s talking about sort of the investment side and what you’re going to do with that nest egg that you’ve accumulated.
Tracy Burke: 15:17
So the third myth is you should shift everything to conservative investments. A lot of times when we sit down with people getting into retirement we hear people say, well, shouldn’t I put everything not under the mattress but put in bank CDs or something that’s much more conservative? Or put it all in bonds? I should get out of the stock market, right those type of things?
Tracy Burke: 15:45
And while for some folks reducing risk can certainly be a wise move, being too conservative and going too far can actually really be harmful and hurt your long-term financial health. Can actually really be harmful and hurt your long-term financial health. So if we think generationally and we go back years, previous generations often had retirees keep much of those liquid assets meaning stuff that’s not in your home, non-real estate stuff in bank savings vehicles, so CDs. If we rewind 7,500 years ago, that’s what most money people’s portfolio were in CDs or savings accounts or savings bonds the paper bonds that we still occasionally see that people took out. So as generations have sort of come and gone, in the more recent period of time, I would say especially past 50 years or even 100 years, equity markets have really evolved and a lot more people are investing in equities. So 100 years ago you would find that most retirees are going to be just super safe and secure, and maybe because there wasn’t as many options at that point as there is now.
Brian Graff: 17:07
Yeah, and regardless of your age, I mean, I think we both can acknowledge, Tracy, that the fear of loss is a real feeling, even somebody like me I’m a good 15 or more years away from retirement. I don’t like to get a couple statements in the mail showing negative returns. It’s not fun for everybody and it’s a little bit disconcerting. So, especially when you get closer to retirement, that fear of loss becomes more and more real. And it’s a human nature to worry a little bit about that. And you know, during our working careers we always have that feeling about. You know, I can always earn more, the market’s going to recover, but once you’re in retirement, you know you feel like, oh boy, if I’m too aggressive and I lose all this money, maybe I’ll even have to go back to work, right, and I think the fear of maybe having to return to the workplace does make people a little bit too conservative. And again, I take a lot of these calls in my day-to-day job and you know, especially when you see a couple of days in a row the market hasn’t behaved really well, you know people do want to back out and you really try and do your best to talk them out of it and, you know, help them make small little tweaks that might make them feel better. But the last thing we want to do again is to see them get just too conservative and not give themselves a chance to keep up with inflation.
Brian Graff: 18:17
And one of the rules of thumb we’ll go back to another rule of thumb that’s been used over the years is that if you take the number 100, or more frequently and probably more common now, 110 minus your age, that number is what you should maybe have saved up in the equity portion or the stock portion of your portfolio. So quick example I’m in my 50s but I’m going to round down to the age of 50 to make me feel better, because it’s an easier number. If I use that 110 starting point, 110 minus 50 equals 60,. A rule of thumb would say maybe I should be about 60% in the stock market right now in my portfolio and about 40% in bonds. So it’s one of those rolls of thumbs, but, as we’ve alluded to a few times already, it’s not one size fits all, and make sure that you’re investing appropriately for your own personal goals and risk tolerance.
Tracy Burke: 19:08
Yeah, and again, that can be a good starting point and then adjust for what you just mentioned. Now, since we’re talking about investing too conservatively, there’s really two items, and both of these we have hit on in the first two myths that we were talking through that become concerns if we are too conservative. Inflation we already talked about. Inflation can dig away Equities, and everybody’s heard this before. Equities are the best inflation hedge. Equities and everybody’s heard this before equities are the best inflation hedge. That’s because equities in the stock market we receive higher expected returns than bonds or cash or money market, because those instruments typically don’t keep pace.
Tracy Burke: 19:55
And then the second one is longevity. If you’re too conservative and your retirement’s 10 years, you might be okay, but many, many people these days spend 25, 30 years or so in retirement and are living longer. So you need your portfolio to last longer. So being too conservative just doesn’t cut it, perhaps, anymore. So again, action items on this. You know what are ways to you know to really sort of prevent from being too conservative with your investments when you’re in your retirement? Brian.
Brian Graff: 20:29
Yeah, you really have to nail down your own personal risk tolerance and, again, the easiest way to think about that is how much stock should I have in my portfolio versus how much bonds and cash, based on the way I feel about risk. So you definitely want to at some point, you know, get in tune with your own risk tolerance and your time horizon how long you have to go till retirement or how long you think you’ll live in retirement and then figure out that best mix of stocks and bonds and cash for you Now. To help you with that to determine your risk tolerance we did put a risk quiz in our show notes, so feel free to use that link. We have a real quick, easy online calculator that will try and match you up with your appropriate risk style, whether it’s conservative, moderate, balanced or growth-oriented, and we even give you what a sample portfolio might look like what percent stocks versus what percent bonds. So, again, get in tune with your own personal risk tolerance.
Brain Graff: 21:24
Something else you might want to do, Tracy, is considering a bucket strategy or a bucket approach, where the way you invest money that you think you’re going to need in the next one or two years you’re very conservative, with perhaps kind of going with a cash type option with that money. And then you have a second bucket of money which you may need to access in, let’s say, three to five years or three to 10 years, and put that money more in bonds or you know just something that’s going to get a little bit more than you might get at your bank or in a CD, but still stay relatively conservative with that money. And then, finally, money that you don’t plan on touching for the long term, 10 plus years from now. There you can be a little bit more aggressive in that bucket, put more in stocks, and that type of plan, that bucket strategy, having those three different buckets, can be very effective. But I will warn you, it does need to be very carefully planned out.
Brian Graff: 22:15
And that is one of those examples of where working with an advisor, having them help you kind of carefully craft those buckets, would be a very effective long-term strategy. Okay, and then, once you’ve kind of done all that, you’ll continue to monitor your allocation and your spending needs. This is not a set it and forget it strategy. Things will change over time. So revisit this Tracy, I think we’d say, at least annually, with your advisor. Would you agree with that?
Tracy Burke: 22:41
Yeah for sure, and that’s such a key part of this when you’re planning or doing any financial planning, retirement planning it’s never a set it and forget it and you don’t need to come back with it. So as we continue to move along here, we’re going to go down to our second common retirement myth here, and this one is titled taxes will be lower in retirement. And sometimes we hear that you know, hey, when you retire your tax, your taxes are going to go down, and in a lot of cases that that is true, and but there’s cases where it’s not. So it depends on a variety of factors. But I think the key to think about here is that tax planning or that tax element within retirement, if you’re really diligent about it, it can make a pretty big difference, something we’ve talked about before in this show.
Tracy Burke: 23:38
Brian, at Conrad Siegel, we spend a lot of time and energy with our clients, I would say on the wealth management side in particular, to really figure out what. There’s two parts of tax creativity, or whatever the terminology would be. One’s having the tax-efficient investment portfolio, the investment side and I’ll come back to that in a second and the second one is just being the tax-efficient of an income stream during your retirement. And again, as I’ve shared before, we’ve helped lots of folks with lots of money get into the lowest possible tax bracket in some stage of retirement and I want to be clear that we’ve done this very legally. There is a legal way to do it. So that’s an important caveat there. But there’s, like I said, two components to it. The first one, your investment portfolio, the tax efficiency of it Retirement accounts really, we’re not talking about your retirement accounts because they’re tax deferred and you don’t have to pay taxes on an annual basis unless you’re taking money out. We’re really talking about those brokerage or non-retirement accounts, right, Brian? Whether that’s using tax-free bonds, that depends on your tax bracket. It might be warranted, your tax bracket it might be warranted, it might not when you’re taking money out or making sales or making sure you’re getting long-term gains versus short-term gains, or frequent trading which is taxed at higher rates. There’s many more strategies. When we think about it, that’s sort of a topic on its own, so we’re not going to dig any deeper into that. But tax-efficient investment portfolio, the income stream is the other component that I mentioned.
Tracy Burke: 25:28
How much do you have really in the multiple buckets? Really, there are three different types of buckets. You have your tax-deferred bucket, your retirement account, so that’s 401ks and IRAs, right, and some of these we’ve talked about these three buckets before you got your Roth bucket and some people don’t have their Roth bucket, right. That might be a Roth 401k or a Roth IRA. Those are non-taxable or tax-free accumulation. And then the third bucket is the non-retirement assets, so that’s like your brokerage accounts, and those are partially taxable from that standpoint. So it all depends where you’re taking the money from. Not everybody has three buckets. Some people might only have one, a lot of people might have two and some people are fortunate to have all three buckets. But figuring out when you’re taking money out of your portfolio, where that could come from, can really help to maybe overcome or to meet that myth of taxes being low in retirement.
Brain Graff: 26:37
Yeah, and Tracy, speaking of which I’m sorry, with these fully taxable retirement accounts, I hear people ask all the time well, what about these required minimum distributions that you have to take at a certain age from those accounts? How does that come into play?
Tracy Burke: 26:49
And tax law and RMD ages have changed many times over the past five to seven years. Right now, the current generation, for those who have not started the required minimum distributions from IRAs or 401ks, can be as early as age 73 or as late as age 75. That’s again for the people that have not taken as late as age 75. That’s again for the people that have not taken and sort of your point it can be helpful to you know it’s often helpful to do to defer, uh, taking RMDs as long into the future as possible If you don’t need the income.
Tracy Burke: 27:35
You know that that’s obviously a big part of it, um, but you know, once you get to RMD age you have to obviously start taking it out. So if you don’t need it before you have to start taking out, there can be an advantage to defer it. But on the other side of the coin, it could be prudent to take some income from that bucket, your IRAs or 401k bucket, before you’re required to and fill in lower tax brackets. So it gets pretty complicated pretty quickly and it’s a strategy I know we use with a lot of our clients and it’s not for the weak hearted or the folks that don’t really know what you’re doing, but it’s you know, find somebody you trust that can help be very tax efficient with your retirement income.
Brian Graff: 28:24
Right, and it’s uh, there’s ages you threw out there 73 or 75 as those RMD start ages. You know, 25 years ago when I was working here it was age 70 and a half, so I guess that’s testimony that we are living longer and the.
Brian Graff: 28:37
IRS isn’t going to force us to, you know, pay taxes and to a little bit later in life with the expectation that we’ll live longer. So hey, in my mind that’s a good thing. Something else to consider as far as taxes. You know tax rates change over time and the reality is that many people believe that tax rates will rise over time and the tax rates we’re looking at right now are probably as low as they’re going to be. And Tracy and I can’t say for sure one way or the other. But you know, even if you’ve done all the appropriate planning and you feel like you know your own personal tax situation, you know the government can step in and that could all change, you know, at the drop of a hat. So just remember that tax rates will change over time and they may certainly rise.
Brian Graff: 29:19
Also, the state that you’re living in in retirement can have an impact. Some states do tax retirement income while others don’t, so just be aware of that if you are considering moving to a different state in retirement. So just a quick example, because I know a lot of people love traveling down south and retiring in Florida. Florida, as an example, does not tax your retirement income. Tracy and I are doing this podcast from the state of Pennsylvania. We have state income taxes here but, similar to Florida, we do not tax on retirement income as well. So it may not be a deal breaker for you and where you end up living in retirement, but just make sure you are aware of your state of residence’s tax laws in retirement, okay.
Brian Graff: 30:03
And taxes are certainly going to probably become more complicated perhaps, and you may end up spending quite a bit of time working through it again, determining which buckets to draw from first. So I know I probably sound like a broken record, but working with a good, trusted advisor will certainly help you with that planning and could make a big difference in how much taxes you end up paying at the end. So remember I think that’s everybody’s goal is to minimize their tax burden as much as possible throughout their lifetime. So definitely work with an advisor. What else can you do, tracy, here?
Tracy Burke: 30:40
Yeah, so we talked about the tax diversification. If you can, if it’s not too late, try to get three buckets the, the pre-tax, the Roth bucket and the brokerage taxable, brokerage account buckets. You know, figure out what. What does your retirement income look like? Whether you’re already in retirement, can you become more tax efficient? Or if you’re pre-retirement, how can that look? And do some planning in advance. Again, try to look ahead, if you can, down the road, just to make sure you’re not creating a bigger tax problem down the road. We talked a little bit about that with the required minimum distribution situation, but just a little bit of planning there. So those are a couple thoughts on that one. So, Brian, we’re going to come down the home stretch here, and this last one is shorter than the others, so this one’s the number one retirement myth on our list. So drum roll here and, Brian, take us home. What’s this last one?
Brian Graff: 31:40
Number one I don’t need financial help. Retirement planning is simple, right? Well, you know, Tracy, some situations may be simple, but some are rather complex and all of them are certainly unique, right? So don’t just assume you can do all this on your own. You don’t need any help. Feel free to put your hand up and get help where needed, and following some of these common myths and rules of thumb that we’ve been talking about today may be beneficial for you, but some may certainly cause financial harm, which we’ve been alluding to already. It really just depends on your situation.
Brian Graff: 32:18
So, especially younger folks, you know you may be okay following some general rules of thumb. You know you may be okay following some general rules of thumb. You know, save 15% of your income towards retirement. Diversify between, you know, traditional 401k contributions and Roth. Put your money in a nice diversified portfolio appropriate for your age in terms of risk. That’s all great, but the closer we get to retirement, the more likely it becomes that we should work with a professional. Yeah, and the closer we get to retirement, the more likely it becomes that we should work with a professional.
Tracy Burke: 32:44
Yeah, and something else that comes to mind, brian, is there’s tons of resources out there. You know. Retirement calculators and Google can be helpful at times, but also may not be so relevant. So just be careful when you’re using some of those resources Because, if you think about it, when you have a health issue, do you really want to rely on Google or do you want to rely on a professional who knows your situation and can focus on what that is? So that’s just one word of caution, because it’s really not as simple as it may seem. Right. We talked about the impact of taxes, whether it’s now or in the future. We talked about longevity, health care costs, inflation, all kinds of other things that can make an impact. So on this topic, Brian, about the concept that retirement planning is simple and you don’t need health or help, what else can we do?
Brian Graff: 33:45
Well, just remember we’ve said it before, we’ll say it again retirement itself is not a set it and forget it deal. Most people should Tracy work with a professional to optimize their situation. Those professionals can kind of help you build a plan. You won’t be doing it alone and they’ll stress test it for you, for the unexpected right, which I think is a big thing. You want to kind of create all these different scenarios to make sure your money will last and be able to weather the storm regardless of what happens in the market. So they will help with that. They will create those tax-efficient withdrawal strategies we talked about. And the other great thing with working with a professional is it’s not just about finances. They’re going to help you coordinate other things like estate planning, insurances and things that are important to you other than just how your portfolio is invested and whether or not your money will last. So, to summarize, the bottom line is that working with a professional can help you make some smart, informed decisions about your financial future. I think it’s as simple as that.
Tracy Burke: 34:44
Yeah for sure. So, as we wrap up, let’s talk about some action items, as we always do, and these are key themes that were intertwined, really throughout those five items, and again you’re going to hear some of the same stuff we’ve been referring to, but planning yeah, plan in advance, whether that’s budget, figuring out what your spending is going to be. Good news is that we have a tool, and in the show notes of the podcast, there’s a resource called the Retirement Roadmap that can help to figure out what is your number and how do you get there. The second part is also figuring out what is your risk tolerance. You know you mentioned that earlier, Brian and we do have a risk quiz Again, it’s an online-based risk quiz that you can find that information, that link in the show notes, and we encourage you to do that. That really gives you a sense of what should your asset allocation be, or generally should be there. What else, Brian? What are other action items?
Brian Graff: 35:46
And then, of course, remember, try and determine what your most efficient income strategy, your tax-efficient income strategy, is in retirement, and to do that, among other things. I think I might have said this once or twice, Tracy, but work with a professional. You are not alone and I think you’ll find that incredibly, incredibly helpful and will allow you to focus on what’s more important to you and things you feel more comfortable doing day to day. So work with a professional everybody. So okay, Tracy, wrapping up, I know we talked at length here. Hopefully people enjoyed some of these tidbits, but remember this doesn’t end today. Reach out to us anytime with questions or comments. Reach us at podcast at conradsegalcom. We are only too happy to help you. And if you like what you heard today or other podcast episodes, please share them with friends, family members, co-workers and, if you’re so inclined, give us a five-star rating and subscribe if you haven’t already. Take care everybody. Tracy, we’ll see you next time. Have a wonderful day and good luck, Thanks.
Intro/Closing: 36:35
Thank you for tuning into today’s show. The Real Talk Retirement Show is created and produced by Conrad Siegel, an advisory firm that specializes in helping people prepare for retirement and beyond. If you want to learn more about our work or meet the team, you can visit conradsegel.com. Information on this show is for educational purposes only and should not be considered personalized investment tax or legal advice. Before making decisions, you should consult with the appropriate professionals for advice that is specific to your situation.