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Welcome to How to Retire on Time, a show that answers your retirement questions. Say goodbye to the oversimplified advice you've heard hundreds of times. This show is about getting into the nitty-gritty so you can make better decisions as you prepare for retirement. Text your questions to 913-363-1234 and we'll feature them on the show. Don't forget to grab a copy of the book, How to Retire on Time, or check out our resources by going to www.retireontime.com.
How in the world would you say, I'm gonna retire on this date, and then you end up and you have no idea what you what you're gonna do, but you're gonna get your cash flow that you want? That is such a disservice. Welcome to the Retire On Time podcast. I'm Mac Deckard alongside David Franson from Kedrick Wealth. As always, text your questions to (913) 363-1234 so instead of giving oversimplified guidance, we can get into the nitty gritty.
Mike:Remember, this is not financial advice, though. We're not making recommendations to you. This is for educational purposes only. David, what do we got today?
David:Hey, Mike. How do you coordinate the financial part of retirement with everything else?
Mike:Yeah. So in my opinion, the financial services space does everyone a disservice by saying how much income do you need or how much income you're currently having. Great. Here's how much you need to save. Buy this product.
Mike:Implement the single strategy or whatever it is, and you're good to retire. Mhmm. Sounds easy. Yeah. Now you're forced to take a portfolio and an income stream based on that portfolio and all of the risks that may have been glossed over, all of the inefficiencies that are inherently built in, and say, build your life around this rigid strategy.
Mike:Life's dynamic. It's extremely dynamic. So your needs may change. You may end up sad, lonely, depressed two years into retirement, but you have to make it around this fixed income stream or this fixed strategy. That seems problematic to me.
Mike:So in my mind, let's talk about the great picture and and and how I see things.
David:Alright.
Mike:What do you do with your time? And I'm not saying, you know, what's gonna give you purpose, you know, whatever. Let's not get existential here. How are you going to spend your time in retirement? For some people, that might be hobbies.
Mike:It might be additional pursuit, hopefully, of nutrition and exercise, family, spouse, meaningful relationships. Hopefully, there's an intellectual pursuit of sorts, whether it's learning a new language, learning an instrument. Maybe you're pursuing humanities, and that you're studying vigorously for a trip you're about to take, and then you go to Rome or somewhere else, and you're really like, I mean, can you imagine if you spent three months researching the history and all of the stories of, I don't know, the the Catholic church and all the art, you know, that's in there, the painting of Michelangelo or whatever. Mhmm. And you you learned all of this, the backstory, and the context, and the struggle, and then you go there, how much more meaningful is that gonna be?
David:Yeah. That'd be huge.
Mike:How much more meaningful So you have to have a lifestyle design not based around a cash flow amount, but what's going to have that meaning, that that sense of I'm gonna get up in the morning. I'm gonna get up, get up excited for the morning. Okay? Now, the way I look at lifestyle planning, it's really built around three endorphins. And this is glossed over the financial services space completely, which is why I believe around, if I remember right, around thirty percent of retirees become depressed in the first year.
Mike:That's a wild stat. So your work life or if you were a spouse that was staying at home, your lifestyle design as the other spouse was off to work or, you know, whatever your your family structure was, you were getting, if you were happy, endorphins called oxytocin, serotonin, and dopamine. These endorphins allow you to feel real good in a good way, a healthy way. Okay? If those endorphins aren't felt for a while, you may adjust your behavior so that you're trying to compensate for the lack of, and then you get too much of it.
Mike:So overwhelming amounts of dopamine, for example. Oh. And then you go to feast or famine mode of happiness, which isn't happiness at all, and now you're you're you're ending up with less. You feel less, and now you go down this ladder of despair, basically. I'm getting a little bit on the psychology form for a second, but hear me out on this.
David:Alright. Yeah.
Mike:At that point, what do you do? You open the door for addiction. That's a terrible way to enter retirement. I mean, really. And I'm not talking just about alcohol abuse.
Mike:I'm not talking about pornography abuse. I'm not talking about drugs or whatever. Mhmm. Because I think for retirees, a lot of the abuse or the addictions are gonna be behavior based. You need the fight to feel validated.
Mike:You need to express the anger. You need to express the manipulation or the control over someone because that's a fabricated way of filling these endorphins. And so you see the invisible divorced families, the ones where the spouses both worked, and then they retired, and then they felt empty, and then they were just at each other, and then they end up divorced and worse off in retirement. Or one spouse was working, one house spouse was at home, and then they come together, and they're feeling left with less. It's a lot of it is these three endorphins that they're feeling less of, and now this is feast and famine situation.
Mike:Here's another psychological framework that you need to understand. It's called BLAST. If you are in retirement, bored, lonely let's see BLAST. Bored, lonely, angry, stressed, or tired Okay. You're leaving the door open for some sort of addiction.
Mike:Who can maladaptive behaviors? Psychologists. Psychologists. Yeah. That's so interesting.
Mike:So the last thing you want is to feel bored, lonely, angry, stressed, or tired in retirement. Yeah. And it is possible to feel tired in retirement. Yeah. So my point being is how in the world would you say, I'm gonna retire on this date, and then you end up and you have no idea what you what you're gonna do, but you're gonna get your cash flow that you want?
Mike:That is such a disservice. So how do you coordinate all of this? Yeah. First off, if you can and your work allows it, take mini retirements. Figure out the activities, whether it's physical, intellectual, or religious, whatever it is, that you're able to do activities and it gives you that that good feeling.
Mike:Mhmm. Structure your retirement with the day to day activities that you've got responsibilities. So you've got your travel years and all that. That's fine. The travel years are going to get boring at some point.
Mike:So when that happens, you can't opt in to be your kid's full time babysitter. That's not gonna work well for anyone.
David:Except for maybe the parents. No. No? Not the parents of the of the grandkids.
Mike:Then you get tired of your folks always coming over, and then they're intruding on your life, and then it's you have no privacy at that point, and then it's just now you've got a codependent relationship on both sides. And then the parents, not the the retirees, but the parents of the kids Yeah. Now have probably accidentally adjusted their lifestyle to this, and
David:now they're getting tired of too much time together.
Mike:And so now they can't afford because they're they had lifestyle creep. Now they can't afford to get rid of the parents unless they give us some these are unintended consequences. Right. You've got to structure your lifestyle first. Once you have that, then you need to do a lot of due diligence on yourself about your health.
Mike:Are you going to be healthy, work out, and eat well in retirement, or are you gonna be gluttonous? If you're gonna be gluttonous, fine. Just make sure you've got a lot more savings for health care costs if they should arise. Right? So but do you see how you've gotta structure things?
Mike:You gotta have the right expectations. Gotta look at longevity. Gotta look at family risks. You you have to be able to say, okay, the healthcare industry is evolving in this way and that way. So once you have that lifestyle defined and you understand the health risks that you're gonna have to deal with, when you understand your I wouldn't even say behavioral risks, your own tendencies because you're gonna deal with people still, then you look at your legacy intentions.
Mike:If you have legacy intentions, the last thing you wanna do is put all of your assets into an annuity that's not gonna give you any sort of legacy.
David:Because they won't grow enough to leave anything?
Mike:It pays you lifetime cash flow. Yeah. But and you could argue, well, we're gonna get lifetime cash flow. We're gonna take some of the money and then save it. I want you to just put less than the annuity or whatever your income strategy is and then try and grow it.
Mike:That sounds like a better idea for me. Right. So so you have to define first the lifestyle, then you define the legacy goals, then you bring it together and just run a simple plan. Does one plus one equal two? You've gotta back in the cost, and these are these are these are fun examples of like, download all of your this is a fun exercise, by the way.
Mike:Download all of your your transactions, all of your spending for the whole last twelve months, put it into an Excel sheet, and then see what you really spend your money on and how much you're actually spending.
David:Right.
Mike:And don't say, oh, well, that was a one off here. That was a one off there. A lot of one offs in life. Uh-huh. How much is flowing in?
Mike:How much is flowing out? Yeah. Once you understand these aspects, then you can start to put the plan together. Maybe you're a high income earner but will end up spending less in retirement. Maybe you're a low income earner but you were disciplined about retirement, and you're trying to comfortable with this idea that you've saved too much and you could spend more, but you have to figure out how to spend it.
Mike:Spending more isn't a guarantee of more happiness. Too, you to understand, if I spent more, will it bring me more happiness? Everyone has this threshold. That research was done years ago. When they say money can't buy you happiness, what they're really saying is if you're a miserable person, more money isn't gonna solve that.
Mike:You just have to solve it yourself. You have to look inward for that one.
David:Alright.
Mike:So these are a lot there's many dynamics that have to be addressed before you can go to step two. Step two is okay. You've got all that figured out. You've got a plan together. Now you have to implement the strategies that still help you with the market risks, help you with the inflation risk, help you with sequence of return risk, is kind of like market risk, help you with tax risk, but also allows you to be flexible enough along the way that as your life dynamically evolves, so can your plan evolve with it.
David:Okay. That makes sense. Yeah. And then you listed a lot of risks there though. I wonder if any
Mike:There's over 60 risks in our Retire On Time Workbook. Wow. Over 60 risks, most people can name five Right. That I've found. Yeah.
Mike:And they kind of know the other ones, they might not be able to articulate it as well, but that's fine. But it's there's a lot of risks people don't know exist.
David:And you have to have a plan that at least that takes into account some of those risks are all of Yeah.
Mike:But notice how we did the the lifestyle planning first.
David:Mhmm.
Mike:The financial planning was done second.
David:So define what you want and then and then let the
Mike:Then back in the numbers. Yeah. Don't say, what what can my financial plan offer? I'm gonna then work within these constraints.
David:Yeah.
Mike:It you may be already able to retire. You may need to work two or three more years to get the life that you want. But in my mind, it's better to work two or three more years to get the life that you want than to retire now and have a compromised lifestyle for the rest of your life. Right. For decades potentially.
Mike:And everyone is different. That's all the time we've got for today's show. If you enjoyed the show and hopefully you did, don't forget to like, subscribe, wherever you get your podcasts and or on YouTube. If you want help putting your lifestyle and legacy goals together, a plan, and so on, you can always go to retire on time for our tools, resources, and or you can schedule a call with one of our advisers to walk you through what what could be done. As always, thank you for spending your time, your most precious asset with us today.
Mike:We'll see you in the next show.