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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.
Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, health care, and more. This show is an extension of the book, How to Retire on Time, which you can grab today on Amazon, or by going to www.how to retire on time.com. My name is Mike Decker. I'm the author of the book, How to Retire on Time, but I'm also a licensed financial advisor, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much discuss it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational as in not financial advice. If you want personalized financial advice, then request Your Wealth Analysis from my team today by going to www.yourwealthanalysis.com. With me in the studio today is my colleague, mister David Fransen. David, thanks for being here.
David:Yes. Happy to be here. Thank you.
Mike:So David's gonna be reading your questions, and I'm gonna do my best to answer them. You can send your questions in by either texting us to 913-363-1234. That's 913-363-1234, or email them to hey mike@howtoretyme.com. Let's begin.
David:Hey, Mike. How does someone figure out how much income they need in retirement?
Mike:Yeah. So this is a cash flow question.
David:Uh-huh.
Mike:And cash flow is is really just the understanding of how money moves. So the last couple of years of your working life, I say working, like your employment life.
David:Okay. Yeah.
Mike:You're working for a paycheck. Your income is probably greater than what you need in retirement. Why is that? You've got x amount of your cash flow going to basic expenses. Some amount of your cash flow is going to your discretionary, your fund expenses.
Mike:And then you've got a certain amount of your money that's going to savings. But once you retire, you don't need to save anymore. Mhmm. So your cash flow fundamentally shifts. And so when we understand that, the question really is, how much does it cost to be you?
Mike:What are your basic expenses? K. So, like, if you still have a mortgage going into retirement, I can guarantee you that the bank is going to request that money Yeah. As long as you still have a mortgage.
David:Yeah. That's right.
Mike:If they don't miss Yeah. Your utility bills, they're going to come. There's some basic expenses that I call them committed expenses that you're going to pay regardless.
David:Yeah.
Mike:K. Then you have your flexible expenses. That's the kind of the fun money. Yeah. Your discretionary expenses and all that.
Mike:When you can boil it down to understanding your expenses, then you can get a clearer picture of what's going on. K. I think you need, like, 12 months of kind of running through that to understand what you would might need a retirement. Yeah. And then a little bit more of whatever that number is.
Mike:Because when you have more time, you're not working anymore. You gotta have something to do. If you have more time, you'll probably spend more money.
David:If I had more time, yeah, I'd I'd go maybe out to eat more. I'd travel somewhere. I'd go to a museum. I'd Well, you
Mike:you'd bike more.
David:I would.
Mike:Avid cyclist.
David:Yeah. I am. How much would
Mike:that cost you more? I mean, you have your bike.
David:Yeah. Well, I'd probably wanna get a better bike, so I thought I'll I'll lay out some cash for for something made out of carbon fiber. Right?
Mike:Yeah. But, I mean, there's still, like, Airbnb cost if you do a long a
David:long road
Mike:or if you're riding somewhere or if you're driving to, like, Moab or something like that to do some biking. There's some costs
David:That's right.
Mike:In these expenses. So, yeah, would you do more rails or more road?
David:Oh, and can I say both?
Mike:Yeah. Sure. I'll let you get away with that.
David:Yeah. Yeah. So, yeah, I did. I would have I would travel to somewhere, maybe in the mountains or somewhere else. And then you're so you got travel expense lodging to go experience, you know, trails somewhere else besides here.
Mike:Yeah. Now to understand your cash flow, specifically your expenses, because you're not making income anymore, you're now paying yourself through your assets. It is so important to be in touch with them. So right now, there's all these budgeting apps out there that people use to automate everything. You lose touch of what your expenses are.
Mike:And so people have a lot of anxiety about, well, how much do I need to retire? Because they don't really know what they're spending. They know that they make more than they spend, but they don't know where the money is going. And then you've got these other apps which require everything to be done manually, or a lot of people, I'm sure, are listening use an Excel sheet.
David:Mhmm.
Mike:K. Very frustrating because it takes a lot of extra time and effort to do that, but that gets you in touch with it. But you you gotta you gotta kinda keep your finger on the pulse of how much does it cost to be you. So one thing that I recommend, is and granted there's a conflict of interest in
David:here. Mhmm.
Mike:We created an app called Cash Flow and Capital specifically to help people develop a healthier relationship with their money, to better understand what's going on with their with their cash flow, with their income, with their committed expenses, the ones that you're gonna be paying regardless of market conditions, and then your more discretionary flexible expenses. The thing you've got some wiggle room on. We created the app because we just found there wasn't really one that was that gave us smooth experience. I mean, here's how it works. I mean, you've been using it for some time now.
Mike:I love it myself. My wife and I use it every day, but we automate. So anytime you spend a transaction, it goes into a queue. Now you might think, well, great. It's in the queue.
Mike:What now what? You manually sort it into your custom budget. So if you you know, whatever budget system you follow, envelopes or the 50, 20, 30 plan, or whatever it is, you can organize all those. It's totally customizable. But you manually sort every transaction.
Mike:And the the reaction I always get after this is, great. So once I know where it's going, I don't have to do that anymore. Right? No. Every month, you are moving that mortgage into your the part of your budget or your spending plan where the mortgage goes.
Mike:Because you need to always be aware. You need to have that kind of that pain that you're spending your money. That money is leaving you. When you feel the loss, you're more in touch with, is the loss of this money that I'm spending, that I'm giving up worth what I'm receiving? Mhmm.
Mike:So usually for a house, people are okay with it. People like to live in a home. But sometimes people start spending too much in certain categories, and they don't really realize it. But because they're manually sorting it, they're more in tune with it. They're more in touch with it.
Mike:There's so many other features that are a part of it, but cash flow and capital, if you have an iPhone, you can get it right now. If you have an Android, it's coming out soon. But we built the app for a couple of reasons. 1, for younger people to be more in touch with their finances and be better stewards over their cash flow, but also for retirees to dial in how much does it cost to be you. We wanna help people get there faster and to be more aware so that they can better prepare for when they retire.
Mike:So, you know, if you got an iPhone, look it up, cash flow and capital. Go to cashflowandcapital.com. That's where they're super cheap. It's, like, $10 a month for the subscription that pays for all the the connections and stuff, but can make a huge difference in your relationship with money, how you spend, how you save, where your income comes from, and so on. It's quite remarkable.
Mike:But you can check that out cashflowandcapital.com. That's all the time we've got for the show today. If you enjoyed the show, consider subscribing to it wherever you get your podcast. Just search for how to retire on time. Discover if your portfolio is built to weather flat market cycles or if you're missing tax minimization opportunities that you may not even know exist.
Mike:Explore strategies that may be able to help you lower your overall risk while potentially increasing your overall growth and lifestyle flexibility. This is not your ordinary financial analysis. Learn more about Your Wealth Analysis and what it could do for you regardless of your age, asset, or target retirement date. Go to www.yourwealthanalysis.com today to learn more and get started.