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Welcome to How to Retire on Time, a show that answers your questions about all things retirement, including income, taxes, Social Security, healthcare, 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.howtoretireontime.com.
This show is intended for those within 10 years of their target retirement date or for those are are currently retired and are concerned about their ability to stay retired.
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 you can go 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 adviser, insurance agent, and tax professional, which means when it comes to financial topics, we can pretty much discuss whatever's on your mind. 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 by going to www.yourwealthanalysis.com. With me in the studio today is my esteemed colleague, mister David Fransen. David, thanks for being here today.
David:Happy to be here. Thank you.
Mike:David's gonna be reading your questions that you've submitted, and I'll do my best to answer them. You can send those questions in right now or anytime during the week to, and save this number, 913-363-1234. That's 913363 1234, or email them at hey mike at how to retire on time. That's hey mike at how to retire on time.com. Let's begin.
David:Hey, Mike. How do you plan for retirement if you have a lifetime pension?
Mike:Yeah. That might seem like a weird question to ask, but it's actually a very insightful question. And the reason is many pensions today don't have a cost of living adjustment. Does yours? Some do.
Mike:Some don't. So do you need to plan for inflationary risk or not? Kind of a big deal. Right? Because fixed income today will have less potency or less comfort associated with it 10, 20, 30 years ago.
Mike:It's inflated away. Right? Cost of living goes up. Your income stays the same. Could be a problem.
Mike:The other thing too is if taxes go up, this is often missed. If taxes go up, you're gonna get less from your pension. Pensions are taxed, most pensions are taxed as an income stream, a taxable income stream. Now there are some exceptions, you know, the disability from military and so on. But but overall, yeah, it's this is something to to plan for.
Mike:So does your pension have a cost of living adjustment? Does it not? How will you keep up with inflation? So this is important. Let's say that all you need is your pension today.
Mike:Run your plan with the income that you're currently getting, and then watch how inflation slowly erodes and how much more you'll need from your portfolio over the next 20 to 30 years. It's it's quite stark. And then you gotta ask yourself too, what else is out there that could be a problem? Do you have other assets and pretax accounts? How are you gonna address those?
Mike:Are you gonna just let them sit in there for a while, let them grow, and then let RMDs kinda disrupt you? Or are you gonna be proactive and slowly minimize them over time? All these questions are are actually pretty important. And then the other thing too is, I mean, if you're doing IRA to Roth conversions, do you file your pension now? Do you have flexibility of filing your pension now or filing it later?
Mike:So all of this stuff actually can make a huge difference. Now let's say you've already filed your pension. You've already filed for Social Security. Okay. You can slowly do some some IRA to Roth conversions, but how do you prepare to hedge against inflation?
Mike:How do you prepare to hedge against other risks? How do you prepare for health care costs? It's about 300 or so 1,000 potentially in today's dollars that you could spend in health care. And that those are just ambiguous averages that are touted out by news sources. So everyone's gonna be obviously different.
Mike:But, yeah, planning for a pension isn't necessarily planning for the pension itself. It's planning around the pension. Now you could do a pension lump sum analysis. You're gonna take more risk with that, but you have more control over your taxes, and you have you could have more potential for legacy purposes, but everyone's gonna be different. And then the last thing I'll say is, how much could taxes affect your quality of life?
Mike:So if you do have some extra assets, let's say nonqualified accounts, and you're concerned about taxes and you're young enough and healthy enough, you can do some very advanced tax planning and survivability planning if you're married, and gifting planning by going down the route of index universal life insurance policies. And, basically, what I'm suggesting here is for those that would qualify, for those that it makes sense, you can not pay taxes on your pension, but just pay them off of your IUL, your index universal life insurance policy. You borrow against it, and because of how they're structured, if the policy grows greater than the loan percentage, the loan rate against you, you can actually, over time, get your taxes back. It's a way to absorb taxes from pensions. This is advanced tax and insurance planning around lifestyle planning, but it can make a big difference overall in how much you're able to enjoy not only your your quality of life, but how you're gonna structure your gifting, how you're structuring survivability.
Mike:Let's say your pension has a 100% survivability, then you may not need a large death benefit. But let's say you're not gonna have any survivability. It just wasn't allowed. Do you want to plan around that? So this is where it gets very detailed into the into the lifestyle and legacy planning, specifically the risk planning, the the tax planning, and so on.
Mike:The problem though, and I've I've given different strategies here to try and get you going. This is an informational show. I wanna get you started on your research. Look me up in Kiplinger. Mike Decker, Kiplinger, and you'll you'll see some insurance articles I wrote on how to do this to kind of get you started there.
Mike:But if you want to see what it could look like in person, if you want just someone to show you how it's done, just text analysis to 913-363-1234. The efficiencies can be staggering. It can be incredible. So text analysis right now to 913-363-1234 or go to yourwealthanalysis.com to learn more and get started, but see how much more you can get out of your pension. There are things you can do.
Mike:It's an often misnomer in this industry that you can't optimize a pension. You absolutely can optimize around a pension. Go to your wealth analysis.com or text analysis to 913-363-1234. 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.