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 today on Amazon or by going to www.howtoretireontime.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.

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 mister David Fransen. Thanks for being here.

Yes. Hello. Thank you.

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 heymike@howtoretireontime.com. Let's begin.

Hey, Mike. What's the best withdrawal strategy in retirement?

Whatever one fits you the best.

Mhmm. So it depends?

Is that what you're saying?

Yeah. I don't think this one's as much it depends as in what's your preference.

Okay.

So I'm just thinking off the cuff here, but, like, do you know the difference between Tylenol and Ibuprofen?

For different active ingredient? I don't know. I really thought about it.

What what does it do for you? It relieves pain. Right? Yeah.

It relieves pain, reduces fever. Right? They both kinda do.

They both are supposed to help the same thing. Yeah. But they actually operate in your body very differently. Now I'm not a doctor.

Yeah.

Not medical advice.

Okay.

Right? But they approach it in very different ways, but they help you have a the similar result. Okay. Ibuprofen, though, there's kind of a limit of how much you should take. It's a blood thinner, if I understand it right.

Layton, would you check on this, by the way? Difference between ibuprofen

and Tylenol. I don't wanna Yeah. Tylenol is

methion. Right? Tylenol, you can take a lot more of to reduce pain. If you take too much, you can really screw it up. Yeah.

Yeah.

Tylenol, you can take a lot more of.

Okay.

And so now you have different approaches to solve the same thing, which is kind of, you know, fevers, headaches, pain, things like that. The reason why I explain it that way is what are you trying to accomplish in retirement? How do you wanna take your income? Dividend investors, they're comfortable with getting the dividend that they're receiving. They know that they're maybe not getting the highest quality of life, the highest income, but they're okay with that because they like their dividend stocks.

They get the income that they need and want to support the life that they want. And it's a great play when it comes to legacy planning because you can gift basically upon death. Your kids get a step up in basis of these dividend stocks. And then maybe they keep it and they reinvest the dividends. That assumes it's, you know, in a brokerage account, nonqualified.

And if it's in an IRA, that's a whole another story because your kids would have to take it out. There's a ten year rule with that, but I'm getting ahead of myself. Dividends. It could be a great thing for certain people. So but, Lane, do you have the, the results on that real quick?

Tylenol. Tylenol doesn't reduce inflammation, but it does help with pain and fever and other things. So ibuprofen is the one that does reduces pain, fever, and inflammation. It's easier to take too much ibuprofen. They're they're slightly different.

So anyway, not medical advice.

Yeah.

Talk to your doctor today. Yeah. Not brought to you by any pharmaceutical company. No one owns this show. We say what we want.

Yeah. Tylenol and who I don't even know who owns those companies, but they did not tell us to sponsor them in any way. No. But I'm trying to illustrate a point here. Those who like the 4% rule, wanna grow their assets, that's a wonderful thing.

And they understand that the growth of those positions are gonna go up and down, but they're trying to grow their net worth instead of preserve their net worth, and they wanna take income off of the growth. Totally fine. Real estate investors, oh my goodness, they love being a landlord until they don't love being a landlord. But it gives them purpose, and they understand it. What I have found is that many retirement plans aren't necessarily built on what is right, as in what's financially, objectively in your best interest to get what you want.

It's oftentimes what is right based on what you know, what you're familiar with. We like to operate within a familiar territory, a comfort zone. Yeah. And there are so many ways that you could structure a retirement plan to generate income in a way that has a high probability of success because no one can guarantee absolutely the future in any way, but it's within their comfort level. Now, many people branch out and say, okay, well, we can do this or we could do that.

No, it's fine. People make changes, but we like to operate within our comfort level. The one caveat though, is that every retirement income strategy has a risk. Stocks, if you're focused on growth, can crash. Yep.

Dividends can stop paying dividends. Tenants can destroy your houses.

Right.

Or, maybe you just don't get a tenant for an extended period of time. Real estate has its own set of risks. Covered calls. If markets fluctuate too much one way or the other and you you cross that strike price, it can just go away. Every strategy has risks.

Okay.

And that is why I don't care what strategy you do. We can build a plan that's beautiful and efficient specifically for you, but you've got to have the reservoir associated with it. And the reason is when you have a reservoir, whenever crap hits the fan and the strategy you wanna implement doesn't really work out, maybe it's going through the hard time, that's fine. That's when you draw from the reservoir. Mhmm.

So your reservoir would be funded differently if it's a dividend strategy versus a growth strategy. If you're a landlord, there are all different ways to structure it, but the concept is still the same. You need to have, in my opinion, principal protected accounts, and there's a number of them that would qualify, that allow you to draw income from those sources while your other accounts recover. One of the worst things you can do I'll I'm picking on the dividend portfolio for a second. But if you're a dividend investor and you need income and the dividend's all dried up because it's an economically difficult time, What do you do?

Sell your dividend at a loss? Mhmm. You're limping for the rest of your life now.

Right.

And that's a tough situation. So that's what you don't wanna do is end up between a rock and a hard place. That's why I wrote the book How to Retire on Time is to teach the reservoir strategy as a complement to whatever strategy you're implementing in retirement. 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.

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