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Retirement Answers is a podcast built to help you succeed in retirement. The thought of retirement can be overwhelming and downright scary for many... but it doesn't have to be!
The goal of this podcast is to provide thoughtful insights and strategies to give you the confidence you need to retire successfully. At the end of the day, my ultimate goal for my clients and podcast listeners is to live a fulfilling retirement.
Follow along as I publish a new episode each week covering everything from retirement income planning, tax planning, Social Security, insurance planning, investing, and much more.
Here's to learning everything you need to know to live out your dream retirement!
Friends. Welcome back to another Friday Q and A where I answer your real life questions about retirement so that hopefully you can get some context and some ideas around different solutions that might can apply to your specific situation. All right. Today's question comes in and it says, why am I so nervous about retiring soon? This is a big one for a lot of people actually pulling the trigger and going into retirement is so hard because it's something brand new.
Jacob:You've never done it. It's the first time you'll ever do it, hopefully. And it's just kind of nerve wracking. So that's what this question's about. Let's see what they've got to say.
Jacob:It says, I'm 60, turning 61 soon, financially I think we, his wife is 60, are in solid shape, but I'm a nervous wreck about telling my boss I'm retiring. We've got 1,500,000 in our IRAs, we've got 1,700,000 in our after tax investments, which is really awesome by the way. Got a fully, they fully own their house, which is worth $2,000,000 and they have a $110,000 per year pension and retirement health coverage. So a lot of stuff's going on there that they have going for them. And so he goes on to say, I've grown to despise my extremely high pressure job over the last year, but I've been working forever, it seems.
Jacob:I was a paper boy back to age 12. So he's been working for a long time. I basically never stopped working since then. Am I nuts to be this nervous about this or is this a common feeling? I've always been a worrywart about money.
Jacob:Okay. So if you're watching this and you don't have this much money, or you don't have a $2,000,000 paid for house, you're like, what could he be worried about? What is the problem? Well, here's the thing that I've discovered working with clients in my business and helping them retire successfully is that everything around money is relative to what we are used to. So if you have $500,000 to your name, you're used to $500,000 If you've got $4,000,000 to your name, you're used to $4,000,000 And the fact that it could be lost or go down or get devalued in some way, it's relative to how much you're used to having.
Jacob:So, it feels the same emotionally and psychologically to every person, regardless of how much they have. That's why having enough money is never gonna be enough for you because the feelings and the emotions are always the same around money. So that's what this gentleman's feeling. It's not that he doesn't have enough money because you might be saying absolutely he's got enough money, but to him it feels really weird to say, I'm gonna stop earning, I'm gonna stop saving, I'm gonna stop investing at least in the same way, and I'm going to change everything. Everything I've ever done since he said, I've been working since age 12, everything's gonna change.
Jacob:And that's really hard psychologically to get over. So here's what I have to say about this. Number one is, it seems as if he's gonna have enough money to retire. They're not gonna have any issues because the key is no debt, right? A $2,000,000 house that's paid for, they could easily downsize if they ever wanted to buy a million dollar house perhaps, depends on where they live obviously, but they could do that if they wanted to create more liquidity, but they don't need to because they don't have any debt.
Jacob:They've also got 1,500,000 in IRAs, and then the key in my opinion is that 1.7 in the after tax brokerage accounts, which frees them up because he's 60, about to be 61. He won't have social security to turn on yet at 62, he likely wouldn't want to because he doesn't have to. Also, they're going to have $110,000 per year pension and their retirement health coverage is going to be taken care of as well. So until 65, they're gonna have health insurance covered, it seems like by his work there, and they're gonna have $110,000 of fixed income before social security ever turns on. So why is he nervous?
Jacob:That's his question, why is he nervous? The big thing here is that, it's a psychological or mindset shift. Everything is changing. What happens is, is people just like this, they grow their wealth over time, they work really hard, they save, they invest their money, and then they get used to that's just what they do. So they have to the hard part is changing your mindset from a saver and an investor mentality to a spender mentality.
Jacob:We've got to change from I'm gonna accumulate and then technically what you're gonna do in retirement is you're supposed to be de cumulating. You're signing up to spend all of your money and that is hard. So I don't know how much they spend a month. I don't know what their other financial picture looks like. So I can't necessarily speak to it exactly, but based on what I know, this seems like a very fortunate situation to be in and one that will be successful, but the emotional part is the hard part for him.
Jacob:So why is he so nervous? It's because it's a mindset shift, it's a change of lifestyle. Here's what I would say, He's been in a high pressure job. It sounds like he's probably someone who enjoys work or has at least enjoyed work previously. And it's something where he feels accomplished to go do something or have a mission.
Jacob:So my recommendation would be this, number one, probably get with a financial advisor, someone that you trust, someone that's really looking out for you, build a plan. He probably has some sort of plan already. Build a plan that you can understand and trust and say, because of all of these inputs, I know that I'm never gonna run out of money, which might be part of nervous thing here is he might think he might run out of money, build that out, project that forward, and then also find something else to do. Whether you go work again for less money or find a hobby or find something to do, find something that's next. So a lot of people think retirement is retiring from something.
Jacob:I like to view it and preach it as retiring to something. So it's a mindset shift. That's what he's nervous about. It's something brand new. He's never done it before.
Jacob:And so that would be my encouragement to him and to you is to say, hey, what is the next thing for you as you get close to retirement? You don't have to be nervous about it. Obviously it is nerve wracking a little bit, but there is a lot to be accomplished. There's a lot to look forward to. And if it's not, it seems like he's not worried about the money.
Jacob:It seems like he's worried about everything else, the non financial side. So hopefully this helps you and just know, hey, you're not alone if you are nervous about retirement and kind of what's to come. There's a lot of people with a lot of money that are nervous as well. And also having a community around you, having an advisor support system, somebody to help guide you through a lot of these decisions can be that much more beneficial. So hopefully this helps you as you analyze your situation and just know you're not alone.
Jacob:Thanks for tuning in. We'll see you next time.