Subscribe
Share
Share
Embed
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.
You retire 50 years old, you've just given an extra ten years potentially based on the the standard, you know, sixty years or sixty five years. You retire 50 years old, if you're retiring Yeah. You've now got maybe two extra market crashes you've got to endure. You've got extra time. So it's you've you've really got to understand that time is your friend and your enemy.
Mike:A frenemy. A frenemy.
Mike:Welcome
Mike:to How to Retire on Time, a show that answers your retirement questions. We're here to move past that oversimplified advice you've heard hundreds of times. Instead, we do want to dive into the nitty gritty because, well, it matters. There's no such thing as a perfect investment product or strategy. Heck, there's no such thing as a perfect or riskless retirement.
Mike:That's why these details matter. Text your questions to (913) 363-1234, and we'll feature them on the show. David, what do we got today?
David:Hey, Mike. How does the planning change if you expect to live longer or shorter than average?
Mike:Great question. Typically, we'll do the plans to age 100 or so, and the reason is life expectancy may be in the mid eighties right now, but it just takes one medical invention to extend our life. What if that happens? What if, you know, we all have little robots that keep us alive, that just follow us along? Mean, we don't really know what's gonna happen in ten years, twenty years, or even thirty years.
Mike:There are We are living longer than ever before. So I think that is something to consider. Now, some people just have poor health. Some people just, whether it's diabetes, whether there's a lot of dementia or Alzheimer's in the family, whatever it might be, there there are some people that just know they're not gonna live maybe past 80, and that's that's okay. It's good to acknowledge these things.
Mike:We don't want to focus on our date of death. But we want to acknowledge the reality so you can assign purpose to your money. For those situations, you're really gonna take a hard look at then when do you file for Social Security and how does it affect your your portfolio, your your overall assets in five years from now, ten years from now, fifteen years, and twenty years or so. And the reason is, if you delay Social Security, you might dip into your assets a little bit more than you would otherwise. If you file earlier, you might preserve your assets a little bit better than otherwise.
Mike:If you're gonna if you expect to pass mid seventies or eighties, RMDs may not be that big of a deal. If you live a longer life, RMDs may actually end up being a really big deal. So you have to kind of weigh these different metrics of what you expect, knowing that no one knows the future. Hopefully, you live a long and healthy life. But you've really gotta build the plan and and kind of track in in our plans, it's to the right, the more right column.
Mike:It's the portfolio, projected portfolio value.
Mike:Okay.
Mike:And where when you expect to pass, what do you want that value to be? Do you want it to be higher? Do you want it to be lower? Are you trying to maximize it? If you live past, what's the contingency plan?
Mike:And so on. And even I'll I'll go as far as other conversations that typically happen with income. So Social Security, and when you take Social Security, if you have a pension, have the option to take pensions at different times. These are matters that that they're they're gonna make a difference. Survivability on the pensions will be a part of this conversation.
Mike:Some people will come in and they'll say, hey, we want income, but we want a certain amount guaranteed. And we'll say, okay, here's, you know, the benefits. It's guaranteed, the Dutchman's is inflation risk and tax risk, and they say, well, we're not gonna be around for a long time. We just just wanna know that if we did, it'd still be there, but we wanna front load it. And in those situations, you might do like a flat income stream.
Mike:Flat income gives you more income upfront, but it won't keep up with inflation. It's almost like we're we're making inflation risk worse, but because they're not concerned about longevity or inflation, it's not as much of a concern for them. That's why we do this risk analysis.
Mike:Okay.
Mike:We wanna understand the risks they're willing to take and the risks they're not willing to take. So when you kinda put together this combination, this mocktail, if you will, or cocktail Yeah. That blends together of what is right for you, then then, yeah, someone who's gonna live less will probably have a completely different plan, optimized with different metrics, with different goals, than someone who might live a longer time. That's gotta be treated completely differently. And inflation is one of the biggest parts of longevity.
Mike:It's inflation, it's understanding that you might have more market crashes to endure, and it's understanding that what your life will be like in twenty or thirty years will probably be significantly different than today. I mean, what's twenty years from today? Or February. Uh-huh. Twenty years ago.
Mike:Yeah. February, 02/2005. Yeah. Yeah. Facebook wasn't even a thing.
Mike:Social media never existed. Right. Cell phones were the Nokia little brick phone. Yeah. Remember those?
Mike:Uh-huh. Had a You played snake on it or whatever? Right. What else was going on in 02/2005? I mean
Mike:We didn't we didn't have any streaming services. We we listened to, like, physical CD.
Mike:Blockbuster was a big deal.
Mike:We went to Blockbuster to find movies to rent. Yeah.
Mike:We dialed up American Online. We did. And now we're paying Google Fiber, much higher costs. Yeah. We're paying a thousand dollars at least for our smartphones.
Mike:Right.
Mike:We all have a laptop we carry around instead of the gateway, whatever computer thing that you bought in the cow box Yeah. That would you'd stick on the you know, on there. Yeah. This big old, bunky, clunky thing
Mike:Right.
Mike:That you'd spend maybe two hours on a week.
Mike:Yeah. Yeah. Yeah.
Mike:Now we're like four hours a day on the computer.
Mike:So that illustrates, yeah, that it could be a lot different. We don't know.
Mike:Well, even like surgeries back then. Let's talk medically, for example. Then, doctors were old school in that they were doing all the surgeries. Yeah. Today, walk in and a robot can do procedures for you.
Mike:Isn't that wild? You know, and there's less risk every single year with the surgeries, there's better outpatient experiences, medical science is advancing, we've got this thing called AI that's even more advanced in things. We're talking about rockets to the moon. Maybe you're an 80 year old that wants to do a lap around the moon. Maybe that's a possibility in ten years or so.
Mike:We just don't know. Yeah. And so, having the flexibility to pay for the things you don't even know you want to pay for is important. But you've also got to maintain and keep up with inflation, and you've gotta maintain the flexibility, and you've gotta be able to endure the multiple market crashes you'll experience along the way. Mhmm.
Mike:So do you see how they're very different situations?
Mike:Yeah. Yeah, do. And it sounds like maybe, and you can tell me if I'm wrong, if you expect to live longer or shorter, that might play a big factor in when you should file for Social Security.
Mike:Yep. Big factor. Yep. Real important. And especially the longer your life, the more risk you're taking, so the better your plan is managed the more important that your plan is managed well.
Mike:Mhmm. If you retire at 50 years old, you've just given an extra ten years, potentially, based on the the standard, you know, sixty years or sixty five years, you retire. 50 years old, if you're retiring Yeah. You've now got maybe two extra market crashes you've got to endure. You've got extra time, so it's you've you've really got to understand that time is your friend and your enemy.
Mike:A frenemy. A frenemy.
Mike:Yeah. But in the end, I mean, if there's one big takeaway I want to put in here, it's time's your most precious commodity. We wanna treasure it. If you can afford to retire and there's purpose in the time and how you would spend your life, then something to consider.
Mike:Mhmm.
Mike:You've just gotta understand the longevity risk and the lifetime income stream from annuity is not guaranteed comfortable income. It's just a guaranteed paycheck that will never change.
Mike:Yeah. Because our paychecks in February, like we were talking about earlier, if we had that same paycheck now
Mike:It wouldn't work. No. So you've gotta be very careful about how you hedge against inflation for longevity risk. And if you're not gonna last as long, kind of sorry. Gruesome way to say it, but Yeah.
Mike:Then you just plan differently. That's why it's important to have customized plans built around your lifestyle and legacy goals and expectations. That's all the time we've got for today's show. If you enjoyed the show, consider telling a friend, leaving a rating, and most importantly, that you are subscribed to it so that you don't miss a thing. For more resources, including a copy of my book, on demand courses, and so much more, just go to www.retireontime.com.
Mike:If you want help putting your retirement plan together, go to retireontime.com and click the button that says get started. But seriously, from all of us here at Kedrick Wealth, we wanna thank you for spending your time, your most precious asset with us today. We'll see you in the next episode.