This faith and finance podcast is underwritten in part by Soundmind Investing. For more than 30 years, do it yourself investors have relied on SMI for proven strategies and trustworthy guidance. SMI helps people build wealth so they can provide for their families, prepare for the future and give generously. Learn more at soundmindinvesting.org. Is your retirement savings headed in the right direction? Have you checked lately? Hi, I'm Rob West.
Pilots always perform pre-flight checks before taking off. That's one place you don't want surprises. Your retirement is another. Mark Biller joins us today to go over your pre-retirement checklist. And then it's on to your calls at 800-525-7000.
That's 800-525-7000. This is faith and finance, biblical wisdom. It's biblical wisdom for your financial journey. Well, it's no secret that Mark Biller is one of our favorite guests here at FaithFi.
He's executive editor at Soundmind Investing, a longtime underwriter of this program. And Mark, it's great to have you back. Thanks, Rob. Good to be with you today. Mark, you folks at SMI have a great article on your site right now called Your Retirement Planning Checklist, where you compare it to doing a pre-flight check, which by the way, is a great analogy. Thank you.
It really is. It's helpful. You know, before takeoff, airline pilots will always go through a checklist. They're trying to make sure the flaps are in the right position.
There's enough fuel in the plane, basically that everything is, you know, as it should be for a safe flight. And while our retirement planning may not be exactly the same level of life or death, you know, before someone wraps up their career, they really owe it to their family to make sure everything is as it should be for retirement, that they're prepared as much as possible, at least for a safe transition to post paycheck living. So especially if you're within, say, 10 years of when you plan to retire. Great idea to go through this checklist to see if any items need your attention so that you can land safely in retirement.
Yeah, it's great. And I know our listeners are going to really want to get their hands on this. It's soundmindinvesting.org.
But let's dive in today, Mark, what's first on the list? Well, that would be setting your intended retirement age. So the natural starting point for retirement planning is choosing a target date. And while that sounds pretty simple, it's not always, you know, some people really like their work, they want to keep the income flowing, or maybe they need to keep the income flowing. Some people might prefer to keep their workplace health insurance instead of transitioning to Medicare. So there are a lot of issues that can come into this. And, you know, it's worth remembering that retirement is a relatively modern invention.
The typical retirement age of 65 is really pretty arbitrary. That said, you know, whether it's for health reasons, or family reasons, most people do eventually step away from their full time career. So this is definitely something to pray about. Ask the Lord how he would have you spend your later years. And of course, if you're married, you want to talk and pray about this together. Yeah, that's great advice. You want to make sure you retire to something and not from something. And I'm glad you brought up the fact that you and your spouse need to be on the same page.
I remember Ron Blue saying his wife, Judy, told him, I married you for better or for worse, but not for lunch. We need to make sure we always have a plan there. But all right, what happens once you then agree on that retirement date? Yeah, well, once you've kind of landed on that date, that intended retirement age, then it's time to really look and see how realistic that is. You know, for many years now, a group called the Employee Benefit Research Institute, has been tracking this notable disconnect between the age at which today's current workers intend to retire, versus the age when today's actual retirement is.
And there's a gap there. And according to this latest study that they did, 45% of current workers expect to retire after age 65, later than 65. Yeah, but less than 20% of today's retirees actually waited that long. So that just gives us an idea of this expectations gap versus what's been reality for current retirees. And the reality is, is that today's current workers expect to retire after age 65, later than 65. And the reason for that is for a lot of people, it's either they're deteriorating health or that of a loved one required them to stop working earlier than they had planned on. So the takeaway for us, Rob, with all this is, even if you're hoping to work past age 65, it might be wise to plan on an earlier retirement age and build that into your planning. So if you'd like to work to say 70, maybe you build your plan around an age 67 retirement, because it's always easy to adjust to making money for longer. It's hard to adjust to making money for shorter time.
Yeah, that's well said. Our guest today is Mark Biller, executive editor at Soundmind Investing. You can learn more at soundmindinvesting.org. Back with more after this. Stick around. Are you searching for a way to become a better, faithful steward of the resources that God has given you? Well, download the Faithfi app and join the 37,000 others who are already using our app. The Faithfi app will provide you with wisdom, community, and support. And simply help you stay on track with your finances. We have three money management options to choose from.
So find an option that fits your unique needs. It's available on desktop or mobile. Simply go to faithfi.com and click app to get started. Great to have you with us today on faith and finance. You know, before a pilot takes off, they go through a checklist to make sure everything is in place, the flaps, the fuel to be sure there's going to be a safe flight. And in the same way you need to prepare for and perhaps even run through a pre-retirement checklist. We're doing that today with our good friend Mark Biller. He's executive editor at Soundmind Investing and their new article at soundmindinvesting.org is entitled your retirement planning checklist.
You can check it out today. Mark, before the break, we talked about things like determining your intended retirement age, making sure you and your spouse are on the same page about that. The next item on the list gets into this area of your retirement budget. Tell us about that.
Yeah. So after we've set the retirement date, we've got that in mind. Now we need to move to the financial stuff and that's estimating what your budget's going to look like in retirement. How much will you need to live on once you're retired? Fundamental question.
It's not always easy to answer. And part of that is because some of the expenses from your working years are likely to disappear. Like you don't need to save for retirement once you're actually retired.
You know, other costs like commuting costs, that kind of stuff can often go away. But at the same time, some other categories of spending may actually go up, like your entertainment or travel budget. So you also want to look at how is your retirement budget likely to change as you move through retirement? It's likely to look a little different in the early years than it will later on in retirement. You know, some writers have talked about three phases of retirement. You've got the go-go years early on when you're spending probably more on entertainment and travel related expenses. Then you move into the slow-go years when your health starts to maybe slow you down a bit and perhaps even getting to the no-go years at the very end when you're spending a lot less on golf and sightseeing and that kind of stuff. Now, of course, as your health declines, your healthcare spending is likely to grow. I think for our purposes today, Rob, probably the best somebody can do is really focus on their initial retirement budget.
And then as they get into retirement, re-evaluate that each year and hopefully they'll have a better view of what things are going to look like from there. Yeah, that's really a key starting point as you look at that budget. And obviously, Mark, a big factor in making that retirement budget work has to do with whether or not you're debt-free, right? Yeah, absolutely.
That's the next item on the list. So paying off all of your debt, including your mortgage, by the time you retire is a huge help to retirement cash flow. So I would ask yourself, you know, if you're currently on a 15 or 30-year mortgage, if you keep making your scheduled payments, will it be paid off by your intended retirement date? And if not, then it might be smart to start making accelerated payments now.
There are some online calculators that can help you figure out exactly how much you need to prepay each month to pay off your house by the time you retire. And it's really a similar exercise with vehicle debt, student loan debt, credit card debt, any other type of debt that you have. If you've got a lot of debt, you know, it can be overwhelming to think about trying to pay all of that off. So as always, you know, we would recommend start where you can, you know, maybe implement a debt snowball or similar type approach.
The bottom line here is the less debt that you bring with you into retirement, the better. Yeah, that's really great advice, Mark. All right, let's look at the next item on the list. Okay. So to this point, we've really focused on the when and the how.
Now it's time to look at the where. So the next item on the list is figuring out your living arrangements and getting those determined. Are you already in your forever home where you plan to retire or do you think you're going to live somewhere else in retirement? You know, if you're staying put, you probably have a pretty good handle already on costs for taxes, insurance, utilities, maintenance, all those types of home ownership type things.
But what about any remodeling you've been putting off that you'd like to do? Do you need to budget for that? On the other hand, if you're planning to move once you retire, then, you know, ideally you'll be able to take proceeds from your current home to buy your new place with cash. But it's still worth looking now at other expenses where you're planning to move things like taxes and insurance.
Are those costs different where you would be landing in retirement? Last point on this one, Rob, is if there is a time where you can't live on your own anymore, you know, what's your plan then? Do you have adult children that could help out potentially? Have you talked with them about that?
Should you consider moving closer to them? Is an assisted living facility an option? These are the types of questions that may not seem that relevant today if you're in good health, but it's really better to start considering them now than wait until there's a sudden need somewhere down the road.
Yeah. Mark, you mentioned obviously the rising cost of health care. Do you and the team at SMI recommend that someone look at long term care insurance for these needs? Yeah, it's always a good idea to look at it, but it can be a little bit of a detailed process to figure out if the cost of that makes sense. We write on that from time to time, Rob. Probably best bet would be to go to our Soundmind Investing website and type that in our search box and find articles about that that can go a little deeper. Yeah, that's really helpful. Alright, now one of the keys to this retirement budget is obviously what we call guaranteed income, and I know this is next on the list.
Tell us about that. Yeah, so here we're talking about Social Security. If you're fortunate enough to be someone who still has a defined benefit pension coming, that would fall into this guaranteed income. Also, if you happen to have any type of annuity or that type of investment, that would also fall in here. And while it sounds like a little bit of an oxymoron to say we're going to estimate what our guaranteed income is going to be, that's really the best you can do until you're right up on the retirement date. And that's largely because Social Security benefits are going to be based on your age when you start receiving them, and how much you earn in your last years of employment will also impact that to some degree. But this is where we start estimating that income piece.
Yeah, that's really helpful. Alright, Mark, we have about a minute left. What's next on that pre-retirement checklist? Yeah, so from there, Rob, really we're getting to the point where we can take our retirement budget, see what we need, see what that guaranteed income is likely to be, and then we can see is there a gap between those? And for most people there is, and that's where we start looking to the investment portfolio to fill in that gap. But obviously you've got to have the budget idea, you've got to know what the guaranteed income is going to be to really get a good idea of what that income from your investments is going to need to be. And that's where we would start transitioning into all the other stuff that we always talk about on this program of setting up an appropriate portfolio to get you to that nest egg amount that will cover that retirement income gap. Yeah, and Mark, just quickly, I know you have for your Soundmind Investing premium members a really robust planning tool that can help with retirement planning, right?
Yeah, we do. It's one that actually has been the best rated tool by financial advisors many, many years, and we've got a program available where our premium members can get access to that, so if you want to dig deep into this, that's an excellent way to do it. Excellent. Mark, always appreciate your insights.
Thanks for stopping by. Thanks, Rob. That's Mark Bill, our executive editor at Soundmind Investing.
You can learn more at soundmindinvesting.org. All right, we're back with your questions after this. 800-525-7000. That's 800-525-7000. This is Faith and Finance.
We'll be right back. We are grateful for support from Soundmind Investing and the Faith and Finance Program. For more than 30 years, they've been helping Christians reach their financial goals with step-by-step guidance for investors at every stage, from those just getting started to those getting ready for retirement. Through scriptural principles and practical suggestions, SMI offers financial wisdom for living well.
More information, including the short video webinar on profit and peace of mind, no matter what's happening in the market, is available at soundmindinvesting.org. Because of my past health history, finding affordable healthcare was nearly impossible. But then I found CHM, where costs are not adjusted based on medical history. Christian Healthcare Ministries even provides the freedom to choose my own providers.
And the best part? CHM members pray for me. Too good to be true?
It's not. I'm a proud member of Christian Healthcare Ministries, and if you think it could be right for you, learn more at chministries.org. Welcome back to Faith and Finance. I'm Rob West, and this is the program where we answer your financial questions, help you apply biblical wisdom to what you're considering in your financial life. So the only thing left is for your phone call, 800-525-7000. We've got, let me count them up, five lines remaining, 800-525-7000. We'd love to hear from you today. All right, I'm ready to dive in, and we're going to begin in North Port, Florida.
Walter, go ahead, sir. Yes, thank you for having me. So I am 31 years old. I started my career for assisted living community. Then I had another job at heating and cooling. And then I married my wife and moved to Florida, worked at a hospital.
Now I'm at a different hospital. Every job I've had a 401k or some kind of benefit, which I haven't done so good in keeping up with. And my question is, because I'm thinking to get a financial advisor or someone to help me out, but how do I really wrap my head about keeping track of all my money? Yeah, and specifically, just a financial plan, Walter, or an investment strategy or all the above? Yeah, all the above.
Okay, yeah. Well, I think you're in a great spot to go ahead and engage with a financial advisor. You know, a lot of times we think that, well, we need, you know, 500, a million dollars, you know, in order to be able to engage an advisor, and that's just not true. You know, there's planning functions that a financial advisor can offer early, even while you're still building wealth, and then at some point, they can step in and help you manage it.
Either just giving you some counsel if it's in a 401k, or actually through direct management if, you know, you have enough assets outside of a 401k that, you know, you meet their minimums and so forth. But I think you're in a great spot to do some planning just to look at, okay, where are we at in our financial life in terms of, you know, are we offsetting the risks that exist with the proper amounts of in types of insurance? You know, what are we doing toward retirement? What's our ultimate finish line? And are we on track for that? What vehicles are we saving in? What about lifestyle and cash flow?
And do we have a plan to handle that? If you have kids, what about college savings? And, you know, then you've got your estate plan and making sure that you've got a valid will. And you've thought through some of those decisions, even in your 30s, you need that.
So there's a host of things that can be covered, as well as minimizing taxes. And that's where a financial planner would often do what they call a comprehensive financial plan that would really look at all of these things that they would, you know, deliver to you. And then over time, they can serve a valuable role for accountability, because, you know, they can ask you hard questions, and they can, you know, keep you all accountable to your goals. You know, it's a great person to be able to ask your spouse questions to and, you know, allow you all to kind of work through, you know, your goals and plans and make sure that there's somebody there walking alongside you. So where I would go next, Walter, if you don't have somebody in mind is to our website at faithfi.com. That's faithfi.com. And it right there at the top of the page, you can click the button that says find a CKA and do a zip code search for a certified kingdom advisor. I'd interview two or three, make sure you're a good fit for their practice.
And then I think that'll give you what you're looking for. Thanks for calling today. We appreciate you being on the program. All right, let's head back to the phones and to net in Chicago.
How can I help? Yes, I have a question. I have different properties. I mean, multiple properties in one state and then another one in a different state. But my question is, in order for me to leave it to my children, what do you recommend is the best way to go is a will and a live in trust or what would be my options?
Yeah, yeah, it's a great question. And when you have the key, I think to your question here and tonight is multiple properties, especially in separate states, I think a living trust or what's also called a revocable trust could be a great option for you. revocable meaning you can change it at any time. And it's a great way to pass property outside of probate, and to you know, have somebody a trustee step in and manage those properties until they're sold. You know, through the the trust itself if you're incapacitated or unable to do that. So I would talk to your real estate or excuse me, your estate planning attorney about this, whoever drafted your will, I still would have a valid will you always want to will that's going to cover anything not in the trust, including your personal effects and furniture and things like that.
But with multiple properties, a revocable trust can make a lot of sense, probably run you somewhere to $3,000 to put into place and then you'd have to retitle the homes, the properties in the name of the trust, but it can create for some really efficient and effective wealth transfer at death. Okay, so revocable trust and definitely good to have a will. Absolutely. Yes, ma'am.
Okay. And then if they will with them when they have to be distributed, how would that work after that? Yeah, it would be according to the trust documents. So you would give instructions in the trust as to what's to happen.
Normally, it would just be liquidated. So the trustee that's named in the trust, remember all this with the trust is happening outside of the probate court. So it's not subject to the probate process, the trustee would then be charged with the responsibility of if this is what the trust said, you know, distributing the assets, including, you know, selling the properties, if that was the plan, and then distributing the proceeds to whoever is named in the trust as the beneficiaries. So all of that would be spelled out in the trust. Now, if you wanted to keep the properties beyond your life, and that was the plan, they could continue to stay on in the trust, so long as you had a plan to maintain them and, you know, cover the expenses associated with them. And, you know, there would need to be assets in the trust to, to maintain the properties. But typically, they'd be sold and the trustee would take care of that for you. And then, so my children then would have to pay the once this, let's say liquidated sold, then each individual, whatever percentage they get, they have to pay the taxes, correct?
Yes, it is. Although I would check with the attorney in your state to draft it, because state laws do apply. And because these properties are under the control of the state, they would have to pay the same amount of taxes as the trustee. So I would check with the attorney in your state to draft it because state laws do apply. And because these properties are in multiple states, your attorney will be able to make sure that the language is such that it's appropriate to cover the laws of the state.
But yes, that revocable trust can hold properties from multiple states. Okay, thank you. All right. Thanks for your call today. Dee, I'm so sorry we didn't get to your call. I'd love to get you on the program tomorrow.
Stay on the line. Our team will try to get you scheduled for that broadcast. Thanks for attempting to join us today. We'll hope to talk to you real soon. That's going to do it for us today, folks. We're so thankful for our team.
I certainly couldn't do this without them. Thanks for joining us today. I look forward to talking with you again next time on Faith and Finance. Faith and Finance is provided by Faithfi and listeners like you.
