Retirement Answer Man

Welcome back to the Retirement Answer Man show. This month we have stepped away from our typical monthly themes, and instead, we are tackling your listener questions regarding retirement. Make sure to listen in July as we discuss retirement withdrawal...

Show Notes

Welcome back to the Retirement Answer Man show. This month we have stepped away from our typical monthly themes, and instead, we are tackling your listener questions regarding retirement. Make sure to listen in July as we discuss retirement withdrawal strategies and join Tanya Nichols and me in August to discuss women in retirement. 

Check out this episode to hear how you can create your retirement lifestyle framework, how to source your retirement paycheck, and whether it is best to keep the cash or pay down the mortgage. 

Finding a retirement lifestyle framework

A big part of beginning your retirement planning is finding a retirement lifestyle framework that you agree with. Many are drawn to the simplicity of the 4% withdrawal rule, but it doesn’t take into account your retirement lifestyle. 

One member of the RRC explained that he was looking to maximize his lifestyle given his assets. This is what we are all looking to do, but it’s not as easy as you think. Many people think that you can simply come up with a base number that you can spend each year, but this is based on the assumption that your lifestyle will not change over time. 

How to design your retirement lifestyle framework

Without a framework in place, people tend to grab onto any random retirement planning strategy and that will drive all of their retirement decision-making. 

Instead of asking yourself, how much do I need? A better way to design your retirement framework is to ask yourself how much do I need for this lifestyle?

To define this you’ll need to ask yourself more questions. Where do you want to live? Define the location where you will be the happiest. What activities do you want to do in retirement?

Asking yourself these questions will help you to create a plan of record. This is a more organized way of considering your life after work. You won’t get it perfect, but it will put you in a much better position to be able to iterate and change your course as needed.

How to source your retirement paycheck 

One listener wants to know how to source her retirement paycheck. Traditional retirement planning dictates that you drain your after-tax assets first, then move to Roth, and lastly, tax-deferred assets. 

I don’t think this is a very efficient way to source your paycheck. First, determine how much you need from your financial assets over the next 5-10 years. Then, estimate what your required minimum distributions will be. (Check out the 6-Shot Saturday newsletter for a handy RMD calculator. Next, look at your 5-year income estimate. What kind of income will you have each year? You’ll always want to consider multi-year tax planning in retirement.

Keep the cash or pay down the mortgage?

Another listener wonders whether he should keep the $100,000 in cash that he has or should he pay down his mortgage. It is common to think of these decisions by themselves, however, you should build your retirement framework first. This will help you create a feasible plan for retirement. After creating your retirement framework, then you can create a what-if scenario. Creating the process first will allow you to be able to see the question from a big picture perspective. Listen in to hear why you may not want to zap all of your liquidity. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN RANDOM THOUGHTS
  • [2:30] Find a retirement lifestyle framework that you agree with
  • [8:02] Questions to ask yourself
LISTENER QUESTIONS
  • [12:33] Sourcing your retirement paycheck
  • [16:27] Keep the cash or pay down the mortgage?
  • [21:22] Is 3% average return on investment a good conservative average?
TODAY’S SMART SPRINT SEGMENT
  • [23:45] Go take a purposeful walk to think about what you want out of life over the next 3-5 years
Resources Mentioned In This Episode

Cal Newport

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

What is Retirement Answer Man?

A top retirement podcast. Roger Whitney, CFP®, CIMA®, CPWA®, RMA, guides you on how to actually do retirement well financially and personally. This retirement podcast isn't afraid to talk about the softer side of retirement. It will teach you how to retire with confidence. Two-time PLUTUS winner for best retirement podcast / blog and the 2019 winner for best financial planner blog. This retirement podcast covers how to create a paycheck, medicare, healthcare, Social Security, tax management in retirement as well as retirement travel and other non-financial issues you'll need to address to rock retirement. Retirement isn’t an age OR a financial number. It’s finding that balance between living well today and feeling confident about your retirement. It’s about gaining more freedom to pursue the life you want. Join the rock retirement community at www.rogerwhitney.com