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2021 EP0123 Planning Matters Radio - 10 STEPS W Kim King

Planning Matters Radio / Peter Richon
The Truth Network Radio
March 30, 2021 2:42 pm

2021 EP0123 Planning Matters Radio - 10 STEPS W Kim King

Planning Matters Radio / Peter Richon

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March 30, 2021 2:42 pm

On this episode Peter Richon discusses the 10 steps in moving from your working career to feeling fully prepared to make the transition to retirement. Some of these steps are taken along the way, some are absolutely necessary to be prepared. Download the full list by visiting


Content is intended to provide accurate information, however, is not intended as financial, tax or legal advice. Please consult a financial, legal, or tax professional for specific information regarding your individual situation. Opinions expressed and provided are for general informational purposes only and should not be considered a solicitation for the purchase or sale of any security you fail to plan, plan to fail. We want you to plan for success planning matters radio information that will be discussed on today's show will help plan and discuss topics, strategies and secrets that you can use your progress and get the salt you want from life how you want your future.

It's not always easy to get to your goal planning and empowerment. Let's learn what it takes from them will give you the power to make it easier to plan to work plan to achieve your success.

Planning matters radio here with Peter Sean, founder and master register financial advisor were here today speaking with him about the 10 steps to have her retirement what they could see again can hear and see you and so you know, everybody. Eventually, hopefully, will tire and there's things you need to do before you get there and prepare for yourself. Yes, we hopefully save money all these years you been working and now year. Looking towards the end and want to go golf or whatever. So what are some of the staff will you have you ever you have your play hide and seek. Know what you know you know what you say when when you get ready to go find him is a ready or not here. Here I that's retirement right or not, here, here comes so hopefully you prepared and now you need. Well, you see, like I said, you have to prepare and citizens steps. Do that and still be talking about today so you know what's the first step well so we we have this handy report. If you want to know what the steps are clear, concise, consolidated checklist of what do I need to do in order to be ready to retire and it doesn't matter if it's next week that you're planning on this or 20 years in the future. I think this list will help kind of get your bearings of where you are in in the process. Okay so we got the 10 steps to prepare for retirement checklist and if you'd like a copy of that just get in touch with us or Sean planning 919-300-5886 but number one is define your budget okay and you know what I seek him is that people who have been lucky enough or worked hard enough to earn a substantial amount of income and do a significant amount of savings they tend to pay less attention to their budget, they they they don't have to pinch every penny they don't have to stretch every dollar. And so the budget sort of slips by the wayside without a whole lot of thought and attention because they have enough to meet all their expenses plus do the savings they feel like they're in good shape. Guess what, the day after you retire from those same individuals. It's an even more significant change in the amount of income that they have coming in so understanding your expenses is pretty important.

That is step one. Whether you are 25 just starting out or 65 wanting to retire.

Understanding your budget really is paramount. Knowing where your money is going yet where it's coming, and a lot of people yes you make more during your working years than you do when you're going to be retired have to bring it down depending on how much you have saved that needs the last several many years. Decades of years for some people yeah yeah the retirement can easily be 35 years. These days I write longer than a lot of people have in their career. Yeah, my mom was a single parent teacher household. She didn't make a whole lot of money during her career, but when she retired. She had a pension and Social Security and it made up almost what she was used to making during her career, so you know when she understood what her spending limits were when she was earning a paycheck and was able to replace that income in retirement, life didn't really change a whole lot for her as far as what the lifestyle cost but for some folks they're going to go from making $200,000 a year to now the only guaranteed source of income you have a Social Security. Maybe that's replacing 35,000 and you really got understand how much life is change Hazel named and so one thing to find their budget or some people call it a spending plan what the next step.

So then you want to define your guaranteed sources of income and when I'm talking about this.

There's some language out there where people talk about how you you guarantee your your own income I'm talking about Social Security and pensions okay I'm talking about the sources of income that you don't have to generate from your personal assets so define what those are and strategize around them.

How can you maximize your Social Security can you maximize your pension and you make well thought through and informed decisions with those two things because typically Kim, those are lifelong decisions right and we probably all had decisions that we made where the implications. The impact stuck with us for life. Asking my wife out for a first date that was a good good decision right some good ones. And yes, and then there are some that you don't want Social Security or your pension to be a bad right right you one you want to think that one through, because the decision that you make it 62 or 65. Ultimately that's going to have its impact at 85 or 92 or even beyond your own lifetime on your spouse and you don't want to leave them in that situation right but you leave behind or if you want him to leave anything behind to your legacy to them.

Once you find what your guaranteed income is then you've got to say okay now it's math now. It's now okay so here's the math process of figuring out am I ready to retire. So we've defined our expenses what it will result what does our our budget. What is life cost us and then we subtract from that are guaranteed sources of income. So, if life cost me. On average $5000 a month and I've got $2000 a month of Social Security, and $1000 a month from a pension. Now I know that my personal assets need to generate the other $2000 a month. That's called your income gap okay and with the income gap knowing what that is. We can really answer a lot of questions about how should I invest how much do I need to have in order to retire confidently like what is my retirement number that used to be a commercial where these big green numbers floated over people's heads never.

They never told you how they solved for that question. Well, this is the math process to figure out what that number is and also I know you hear in the news that some people you can you can retire and collect social security at a certain age, how do you decide when to start bringing in it you get in because you don't have to take it right away. You can delay it and get more money later in life.

If you are able to delay how do you make that decision. So first off, the folks down at the Social Security Administration office. Do not give proactive advice on this. I want to make that clear that they are not advisors. Their job is to file the paperwork on the day that you show up not tell you if that's the best day to be there.

Okay it is on you is on your shoulders to get educated on optimizing your Social Security and this can mean the difference in several hundreds of thousands of dollars over your lifetime. Poor choice. Verse optimizing so it was Sean planning we got some advanced software and we can run all the numbers and we can arrive at some pretty good conclusions about when is best to take your Social Security to claim and collect and what strategy between a married couple.

There's over 81 different potential combinations for for how to claim and collect Social Security without getting into any of the advanced strategies and that's just claiming whole year interval really so there's there's a lot that goes into that decision again several hundreds of thousands of dollars kind of average over over the course of a couples lifetime. That's the difference that this can make here. That's money that you either have, to have saved personally for yourself or that's going to come from Social Security. You need to make a good decision. With that, but we we strategize on Social Security and that ultimately helps that income gap that we talked about last step right right and then we formulate that the income plan.

So now we know what the income gap is we've maximize Social Security. Now we formulate a specific plan.

Step 54 when to tap into what account and what asset first you go to your 401(k). First you go to your Roth IRA first. Do you go to your your savings account in cash. First we map out that income plan to be as efficient as possible over the lifetime of retirement and as everybody's hearing. There's a lot that goes into planning for your retirement and if you need some help.

That's where Peter comes in we can reach him at 919, 305 86 or online at that's spelled Rich on planning and there like we said there's a lot that goes into strategizing and formulating your income plan and it's hard to do on your own so talking to somebody like Peter may be the way to go here. What else you know that we went over the first five verse that's really all that's that's kinda math right in the first five is really math and and after that after you saw for the math problem.

Now we get into some of the more complex aspects of planning, understanding your risk exposure.

Okay so I five set the baseline for my income and and made sure that I meet in living expenses. But now, what risks are there to my lifestyle and to my assets you know and and when barred by mental health that I don't want to be too risky and or you have any risk at all. You know that's that's that's a big one and that's different for every person between two spouses in the household.

Usually the acceptance of risk.

The mental aspect, the emotional, psychological, what risks am I taking that's going to weigh on individuals differently. I often find that you know there's one spouse is very comfortable going going for home runs and their comfortable managing the risk of the market and that's what we usually think of Jos risk we a lot of times we think of the market.

There's so much more to it because the other person might be scared to death of losing a few dollars in the market so we really got to understand your risk exposure and and this is inflation risk. This is tax risk.

This is political risk.

This is longevity.

That's the risk multiplier living a long life, something we all hope for, but it also increases the likelihood that all of those other risks end up affecting us. Not maybe one market cycle, but we see several market downturns. We see inflation really have an impact. So you gotta understand your risk exposure. And that's where we help people quantify that we really put it in writing. Here's the risks that you are exposed to and what you need to address so that the not blindsided. I I I feel like Murphy right Murphy's Law the bad things happen at the wrong time expect that I make the bad things happened during the planning process.

These are the conversations so that people are prepared for them if they happen in real life, and everybody's risk tolerance is different and I guess why somebody like Peter can help you decide where your risk tolerance is and what cometh your own individual plan because not everybody's plan is going to be the same safety figured out your risk. Whether it's high or low. What's next what's next look at the taxes okay is not what you make. It's what you keep well taxes is the thing that stands in the middle.

Elyse, the first thing that stands in the middle and so we got understand where does our income fall in in our current tax bracket and what are our expectations for taxes in the future. Are there ways to keep more of our money and right now is an opportunity mean taxes are on sale today. Ed slot is America's leading IRA expertise. Gotta show on on PBS the roadmap to retirement and and he he says that taxes are on sale today. We got a limited window of opportunity here for folks that that have been taught to save in your 401(k) and defer your taxes for later. You did a good job in saving you built up a good account value, but you know that that account value. Whatever you think it is it part of it. You include a debt to the IRS because you have not yet paid off that tax bill. So you had $1 million in your 401(k) know you don't, you got 650 to 750,000.

We've got to calculate out what that is. We gotta figure out what that is and strategize do we pay it now.

Do we pay it later duly paid as we go.

What's the best way to keep as much of that as possible. When that feels overwhelming that you come in some numbers for this is what we do find that's what you do so would it be a great chance to really figure that out again. It's more math and stuff you don't like math you might need some help with figuring that's all I am a big fan of spreadsheet I like when people come in they bring me their spreadsheets and we talk through okay what what what did you do here what is this showing.

I love that.

But I know that not everybody likes spreadsheets. There are some people who don't like him at all.

Don't don't want to see a spreadsheet we can break it down and show you in your language right if if you want to talk it through and and look at big picture. 30,000 foot if you'd like to see illustrations in endograft form or in in in written language or just have a conversation about how to do these things. Or if you'd like a broken down in the spreadsheet you were happy to do it. However, make sense to you, and I've got lots of different software that can show these things in number of different ways, but at the end of the day if you got that plan. If you got something you can refer to and understand like this simple easy 10 step checklist then then you're better off in knowing what the next step is. And Peter shone here with Sean planning and he does he offers the exclusive which I'm planning optimize retirement plan reach out give him a call at 919-300-5886 or look up online and we Sean and that is spelled Rich on planning okay so we've understood.

You know I risk exposure. We've calculated our taxes. Now what what we do next consolidate like type accounts. So this is more a housecleaning thing. There's nothing that says that you have to do this but life seems easier for a lot of folks that I have seen moving through retirement when they have taken the time just to do a little house housecleaning and consolidate like qualified accounts and what I mean by like qualified, there's essentially three different buckets that you can put money into their is the I've already paid tax once bucket but I'm not your marketing for retirement exclusively there is the tax-deferred bucket. I earned the money and put it away before paying taxes that your 401(k) that's your IRA.

The floor plans of the 457 the 403B, the 401(k) SP anything where you have not paid tax on it yet that can all be consolidated at the end of the day into an IRA and then there is the tax free bucket I've already paid tax on it once I'm done with taxes forever. The Roth and that can be Roth 401(k) or Roth IRA. And that's my favorite.

We consolidate the types of money into those three buckets you might have five different types of accounts in one. There's no reason to have five different types of accounts, and one doesn't help with diversity. In fact, a lot of times it works against diversity so we we consolidate them and then we begin a process of trying to move money from one to the next to the next and eventually get it and that tax free forever but that sounds a great plan and does that also affect your required minimum distributions are people of probably heard the RMD's that a certain age you required. It takes much money out of these account gifts can help. It can help is yeah a lot of people they know. Well I'll say a lot of people don't know that the government eventually requires you to begin taking money out of your retirement accounts. They do they are in control.

They have the managing ownership stake in your account. They set the rules you're in business with the IRS and at a certain age they want their share of that business, equity, and they tell you take money out of this so that I can get my share, well consolidated accounts. Helps with that process because you can more easily calculate how much you owe them how much you have to take out and better control it. Recently the secure act passed.

It was at the end of 2019 January 1, 2020. It went into effect.

It actually pushed back the age for that required minimum distribution was 70 1/2 now at 72.

They gave us an extra year and 1/2, but at the same time where the government gives you something. On one hand they take something away. On the other they did away with generational tax deferral used to be able to do the stretch IRA you can no longer do that. So they took. They took away a whole lot more than they gave us but consolidating like title accounts will help us better plan and strategize and hopefully achieve the goals that people once had with that stretch IRA and like you said a lot of people don't know these laws and rule changes. And yeah, you know that I IRS is going to get their money. Someway somehow, so it's good having somebody on your side of partner to help you plan for all these situations that could happen and decide when to start taking distributions to and from which accounts the first thing I think the plan something to refer to something tangible in your hand but you can understand it's good to have that and it's good to have a professional perspective to disable this plan yeah was good a year ago but is it still good right does everything right in different situations happen in life and in retirement to sell yet it's good to have somebody you could call and ask this happen to me. What I do now look at it like a Peter could do for you anytime. So we've consolidated our accounts now. What else do we have to consider there were in the home stretch here right, however, things get more expensive over time and I see a lot of people who say you have got a retirement plan is okay will how much how much is it generating for you for income and they say, however much $5000 a month. Whatever the case is okay will in 10 years. How much is it generating for you $5000 a month will you know things get more expensive right now you view if you haven't been shopping this year.

Just this one year. Things have gotten that much more expensive gallon of milk used to cost me $0.50 for several years. It may well is ago. I've got a buddy and and he's got an old ears catalog and it's like from the early 80 a set of four tires in that Sears catalog is about what you pay for one tire today and and you know I just II have seen a lot of things get much more expensive over time.

One being healthcare. That's one that affects retirees more than almost any other demographic group. So you gotta consider inflation and even it even historical average inflation of around 3%.

The need for income.

What that means is that expenses double every 24 years.

Again we talked about inflating our retirement can be 35 years long these days. Inflation is going to be a factor. You got a plan for that. Not just on the day that you retire. How do you afford life, 25, 30 years down the road and then the Joe took around home here on our list on earth are 10 steps to prepare for retirement a lot of people moving to retirement and they have no legal documents in place and leave here about that a lot in the entertainment world yet been several celebrities celebrities that have passed away recently and I mean I know they have a lot more money than I did that day. I can't believe that they didn't have their legal documents and their wills and their their note, this is just another plant. What to do with your money when you pass away that the they didn't have this in place.

Well, what do you get of this year 10 step. Now you're ready to retire. Let's get these documents done and taking care of so we know that actually it'll help your loved ones yet. I'll absolutely mean if you if you want to see an example of like circle the wagons and fire in word pass away with no estate documents in your family, your loved ones will be fighting with each other and I just I've seen it way too many times, but but yet having those legal documents in place, especially as you're making the transition to retire right because at a younger age you got you got kids right the you you were single. You didn't really feel like you needed this thing and then you got married and he felt like okay will we need to do some things and then he bought a house and okay we need to change some things and then you have kids gotta change it again and then the kids hit 18 okay will we gotta change things again at retirement. Pretty much, you know, the kids are up there. Of the age of majority there there out. You can probably do it at retirement and that might be the longest period of time where these legal documents don't really need to be redone again as frequently.

So, at least as you're making that transition.

This deserve some time to dust off those old documents make sure they are still appropriate. Update them where they're not look at all of your accounts, the beneficiary designations that you got on, take stock, take inventory and make sure that okay weave the first nine steps here, that's about providing for your lifetime.

Something happens with the wealth.

After you're done with it right right I don't like stresses this happen after someone passes away, and also just like you said Peter that beneficiaries people change their wills and not change their beneficiaries and there's things that have happened through your life that may have changed to you really want that money to go to go absolutely and so you need to not and not just look at your well but look at every account you have to make sure that those beneficiaries are up to date. My dad said he was going ounces last check right is a fantastic plan. Just make sure it's the last check you need to write exactly that's a real hard thing to time exactly yeah that be hard yeah it's pretty difficult. So whether your concern is I've got so much money that I need to pass it on efficiently. These first nine steps still will help you be more efficient with your money while you're here and then we can talk about how to leverage what you're leaving behind or you're on the other side of this. I need to make sure I've got enough money to last my lifetime and that's all I'm concerned about fine these first nine steps will help you with that. And by the way, because you've done that more than likely that you probably also leave something behind, but but a legacy is left regardless positive or negative money or no money. There is always a legacy that's left behind and planning will help lead that positive legacy behind and that's what you would hope to do for your loved ones yes were here today with Peter Bashaw at the 10 steps to prepare for retirement, withdrawal, thought content pretty good, but these are great steps to you and just take them one by one and maybe that's your New Year's resolution or your your goal for 2021 is to get these done so that year, you're ready for retirement for like what you hear and need is somebody in your corner to help you plan for retirement and figure it out help you figure that causes lots of numbers the you have to work with me at the Pierre Peter Bashaw, and he's also written a book called understanding your investment options so you can always get a free book from him as well. When you reach out for free consultation and you can reach him at 919-300-5886 or look them up online Sean that is rich on thank you for thank you for saving him.

Planning matters, the content of this radio show is provided for informational is not a solicitation or recommendation of any investment strategy you are encouraged to think investment tax or legal advice from an independent professional advisor in any investment and/or investment strategies mentioned involve risk and possible loss of principal binary services offered through Brookfield capital management, a registered investment advisor. Fiduciary duty extends only to investment advisory advice does not extend to other activities such as insurance or broker-dealers or advisory clients are charged a quarterly fever as a belligerent product pay a commission which may result in a conflict of interest regarding

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