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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.
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 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 adviser, insurance agent, and tax professional, which means when it comes to discussing financial topics, we can cover it all. 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 today from my team by going to www.yourwealthanalysis.com. With me in the studio today is David Transon. David, thanks for being here.
David:Yes. Glad to be here.
Mike:David's job is gonna be reading your questions, and I'm going to do my best to answer them. You can submit your questions in by either texting them to (913) 363-1234. That's (913) 363-1234, or you can email them to hey, Mike@howtoretireontime.com. Let's begin.
David:Hey, Mike. Do lower to middle income earners have a chance at retirement?
Mike:Yeah. I'd say so.
David:Yeah. Tell us how that works. Some for some people, it probably doesn't feel like it, like they're they're grinding away and
Mike:The secret to preparing for retirement is managing your cash flow and living within your means. It's not about being a brilliant investor. So for example, I talked about this a couple of weeks ago, but like you could be a 16 year old, for example, and work make like $7.08, $9,000 in a year. You know, you're you're working hard during summer months, maybe a little bit part time in the school months, and you stock away 7,000 in your Roth for three years, and then just put it into a large cap fund. So think of like the S and P 500.
David:Okay.
Mike:Most of your retirement's probably paid for.
David:Wow.
Mike:Now if if you've graduated college, you've got student debt and all these other things, then you're just doing your best to pay down debt first. Mhmm. You wanna get rid of the any debt that in my opinion is slightly higher than the ten year treasury, and why is that? Because is it high yield debt? Is it predatory debt?
Mike:Or is it reasonable debt? Like, most mortgages are pretty reasonable. And so you might not pay it down as fast, but like a car loan, student loans, they might be a higher interest rate, so you wanna kinda wanna get rid of those things. So once you get rid of that, then you wanna focus on really, like, 10% of your income, net income, so after taxes, is not saving for the future. You're buying future time.
Mike:And if you can think about the buying mentality, you're buying your future, it helps, I think, from a psychological level. And if you could do that and live within your means, there's a good chance that you saving 10% and investing in the market is enough to afford the life that you're already used to.
David:Right.
Mike:Think about this for example. Do you think someone that's earning 60 k a year is going to expect millions of dollars in income in retirement? Like, no.
David:Yeah. Especially if they have a few kids. Right? No.
Mike:We become accustomed to a certain lifestyle.
David:Okay. Yeah.
Mike:We're comfortable with those expectations. And so it's not about winning the lottery or having some fantastical TikToker lifestyle or whatever. It's really about can you maintain a certain lifestyle that you've become accustomed to and that you're comfortable with.
David:Okay.
Mike:Now some people may be struggling financially, and they they may need to make some career changes to increase their income earning potential. I get that.
David:Mhmm.
Mike:But on the flip side, some people in their last five or six years before they wanna retire are making significantly more money than they actually need, and they're just stalking it away. So we don't wanna assume that what you're earning as income is what you need in retirement.
David:Oh, right.
Mike:It's what brings you happiness. Did you ever read that study or heard the the expression money can't buy you happiness? I've heard that expression. Yeah. So the study comes from gosh, was years ago, where they found that once your financial needs were being met, more money wouldn't necessarily give you more happiness.
Mike:Now it's been misquoted, and the reality is, I'm gonna say this a bit tongue in cheek, but once your basic financial needs are being met, if you're just grumpy, more money is not gonna fix your grumpiness. You're just gonna be miserable regardless. Right. If more money allowed you to serve more people, allowed you to have more purpose in life, then maybe more more money would be better for you.
David:Mhmm.
Mike:Money is nothing more than just a reflection of who you are as a person. Money can corrupt people, but money also can elevate people to do very good things in the community. So we need to stop associating that money is the root of all evil. That's not true. It's that the core of man and the seven deadly sins, if I'm gonna get a little religious here, that people become corrupt, and they use money as an evil source to do their bidding or whatever.
Mike:But my point being in that little tangent is that if you're used to a certain lifestyle and your basic needs are being met and you can find purpose in retirement, that you're able to connect with the community, that you're able to enjoy time with your spouse if you're married, that you're able to maintain a certain expectation, then really all you're doing is just doing a nice transition kinda like that track event. What's the one where they pass the baton?
David:Oh, yes. The relay. Relay race? Some kind of relay.
Mike:Yeah. You're just passing the baton from your work self life to your retirement life, and it should be a pretty smooth transition. It should be a continuation of that lifestyle expectation.
David:People
Mike:might feel uncomfortable if they all of a sudden were, you know, pinching pennies, and then now they can spend a lot more money. That's not a normal transition.
David:Right.
Mike:It's not an ideal transition to live a lavish life, retire, and then pinch pennies and pinch pennies. Yeah. We're used to a familiarity, a certain lifestyle. So that's that's kinda my my take on the matter. For all those listening, one book I I just highly recommend everyone reads is The Richest Man in Babylon.
David:Okay.
Mike:Have you read that? I don't think we've that ever. No. For book club here at work.
David:I've heard you mention it, but yeah, but our Kedrick book club. Yeah. Yeah. We need to get that going.
Mike:So you could read it probably in an hour. Oh. It's open license, so anyone can buy it for free.
David:Oh, okay.
Mike:Buy it for free. You can download it for free. It's public domain. Right. But it's a very wonderful read when it comes to just understanding basic principles of personal finance.
Mike:And if people who maybe are earning less income, or middle class, and are just struggling, get rid of the things in your life that you're maybe purchasing that you don't really need. Make these sort of adjustments and just follow that simple framework. Great read, simple read, but I feel like, and I'm kind of pontificating here, A lot of our woes are due to us trying to keep up with the Joneses Mhmm. Comparing this expectation that we're supposed to have certain things.
David:Or we're supposed to do certain things in retirement?
Mike:Yeah. Or when we're working or whenever.
David:Oh, sure. Yeah.
Mike:It's just like, no. Stop comparing yourself to other people. How was your life a year ago? How was it yesterday? And where are you going tomorrow?
Mike:Be on your own journey. That's my answer. 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 podcasts. Just search for how to retire on time.
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