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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. The show is an extension of the book, How to Retire on Time, which you can grab exclusively 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 cover it all. Now that said, please remember this is just a show.
Mike:Everything you hear should be considered informational as a 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 mister David Fransen. David, thanks for being here.
David:Yes. Hello.
Mike:David's gonna be reading your questions that you've submitted, and I'm gonna do my best to answer them. You can send your questions in anytime this week by texting them to 913-363-1234. Again, that's 913-363-1234, or you can email them to hey mike@howtorettime.com. Let's begin.
David:Hey, Mike. I'm 50 years old and haven't been able to retire. Is there anything I can do to accelerate my retirement preparation?
Mike:Absolutely. There's always something to do. I I love what Jim Rohn talks about, the the guy before Tony Robbins.
David:Okay.
Mike:He basically says, you don't wanna focus on the problems. You wanna focus on the solutions.
David:Makes sense.
Mike:And when we can be in as is person. So this is as things are. We're not comparing our current situation to the utopic ideology. Oh, if only things were this way, We don't wanna go down that rabbit hole of, oh, I wish it was this way or I wish I did that. Forget that.
Mike:What are we dealing with now, and how do we move forward? So to answer this question, which by the way, happens more often than people will admit, whether they just didn't save. And it could be for a number of reasons. Maybe they just didn't know. Maybe they didn't have excess income.
Mike:Maybe they got trapped by consumerism. Maybe they got divorced and lost it all. Go down the list. Thing is you don't wanna have shame or embarrassment overwhelm you. You wanna be solution focused.
Mike:So the first thing that you need to do is first figure out how much do you need to be able to retire with the life that you want. Done. Put the number. Net of tax, after taxes are paid, all of that. How much do you wanna be able to spend each month?
Mike:And you don't wanna say, well, I wanna sail around the world in my yacht. Okay. Let's be realistic here. I think everyone listening can be realistic. Right?
Mike:But how much would allow you to be fulfilled and not stress about paying the bills? K? So you wanna have a little bit of a buffer. Maybe your average expenses are $5,000 a month. So maybe it's 6 or $7,000 or 8 thou I mean, start to figure that out.
Mike:And if you don't know, look at the last 12 months of your bank statements and start pulling apart. Okay. What are you spending? Would you keep spending on that thing or that activity and and so on? But you can gather some context here.
Mike:Now once you figure out how much you want, start to work backwards. Okay. So I want x amount of money. Let's just say, gosh, let's say $7,000 a month just for arbitrary number.
David:Okay.
Mike:I want $7,000 a month, and I wanna retire in 10 years. I wanna retire at 60 years old. Okay. Maybe that's possible. Maybe it's not.
Mike:Maybe it's 65 that you're able to retire. But you can start to work backwards. So if you put in x amount of money, what would that get you based on average return? Our software specifically does this for you but then you can start asking your questions. Okay.
Mike:Are you saving enough? If the answer is yes, then great. You're on track. You can rest easy at night. Even though you have nothing saved, you can rest easy at night.
Mike:The next question I want to say is, where are you saving? So there's a difference between your Roth in your within your 4 one k or the after tax side of the 4 zero one k versus the pretax or the traditional IRA side of the 401 k, you know, in 4 0403 b or whatever. If you're saving, that's gonna be a better way to put money is into a qualified account because it can grow without capital gains issues. So in theory, you you could have better growth potential there. But you don't wanna create a tax issue later on.
Mike:So if the income you want in retirement is the same as what you're getting today okay? You follow me, David?
David:I'm getting that. Yep.
Mike:So if it's if it's kind of the same thing, then you may want to focus on funding the Roth. Just pay the taxes as they are today.
David:Alright.
Mike:If your income is expected to go down significantly, maybe you're in the pretax category. So think of, like, a pilot or an engineer or a plumber. They're in your the latter years. They've had a great career. They're the highest earning years.
Mike:They don't need all this. They're just trying to, you know, like a squirrel, gather all the nuts at the end before the season. If your income is significantly higher now than compared to when you wanna retire, you may go to the pretax. But if it's the same, go to the Roth.
David:Okay.
Mike:There's an expression that says the IRS tax code is written in pencil. Yeah. As in they could change it anytime that they want. Uh-huh. But if you get into the Roth, then you have less risk, less legislative risk in the
David:future. Yeah. That does make sense.
Mike:So we know debts an issue. We know that spending is an issue. Fine. There's a chance that taxes could go up or go down. But you know what you're working within today.
Mike:And so if you're okay with that, then you proceed. Then you start looking into okay. Are you funding the after tax side of your 4 one k? Maybe you do additional contributions to your Roth. Maybe you're exploring other options, like maybe you decide to do some life insurance, because you need a death benefit.
Mike:Life insurance, it's not an investment. So if if you're a single, saving for retirement, maybe life insurance doesn't make sense. But if there's a spousal risk, so you 2 are married, you don't have anything saved, You're trying to save. But if one spouse were to die in the next 10 years, it would be detrimental to the surviving spouse and their retirement. Maybe you do incorporate some life insurance that you can grow a cash value and have that death benefit just in case.
Mike:These are things you have to plan for. I wanna reiterate that again. Life insurance is not an investment. It's often posed as an investment. It's not.
Mike:It's insurance. That's okay. It's a tool, but it should be defined as such. Now you also need to be figuring out, okay, once I retire, how am I gonna take the income out? Those things matter.
Mike:It's all about working backwards. Define what you want. Look at the timelines of if you save x amount of money, when could you afford to retire and what would that look like? And then start working backwards with the strategies to get you there and then what to do once you retire and go along. By the way, this is all outlined in my book, how to retire on time.
Mike:So I I I talk in great detail about it, but here's the the poignant part of, I think, this conversation. You can either be disciplined and by your future. So it's not, oh, you're saving for a rainy day. You're saving for your retirement. No.
Mike:You're literally buying your future. Because when you put money into investments, you're going to spend that money later on when you can't keep generating income when you've retired from work. So if you think about it as 10%, 15%, 20% of your income this year is intended to buy your future, to buy your freedom. It's just a different way. We like to buy things.
David:Yeah. I was just gonna say, yeah, we're we're we're buying something.
Mike:So if you don't buy your future, then you have no future. I mean, that's that's the most simple way to put it.
David:That's true.
Mike:But I wanna be very sensitive to many people listening to right now that maybe don't have extra money to just save. Right. So if that's you, here's a couple of things that I want you to consider. You're a human. You have infinite power to affect positive change.
Mike:Your current career, your current income is not set in stone. So if you're 50 years old or or somewhere around there, and you're not saving for retirement, don't fret. Think about your career. What skill could you develop that makes you more valuable for a corporation to pay you by the hour? There's really 2 skills.
Mike:There are technical skills. So think of plumbers, electricians, pilots, engineers, software developers. Those are all very technical skills. You're not gonna go to the library and learn that skill in a couple of days. K?
Mike:And then there are scalable skills, in leadership. Could you get yourself into a position, maybe play a little office politics to then go into a managerial role, inherit some more responsibility? I mean, yes, you're going to inherit more stress in your life. Yes. You're going to have to work a little bit harder.
Mike:But as you make your time more valuable, other people will be more willing to pay it. People weren't intended, at least the way I see it, to live off of minimum wage for life. We were supposed to grow in either a technical skill or in a scalable skill. So if you're not earning enough to save, consider your career planning for the next couple of years and what can you do to increase one of those other skills. It's never over.
Mike:You have infinite power to affect positive change. Start affecting that positive change now. Start putting together your plan, your strategy to increase income, to increase your savings, and then to create an investment system that can help you grow your your assets over the next 10 years or so. 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.
Mike: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. 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.
Mike:Go to www.yourwealthanalysis.com today to learn more and get started.