Make It Last – Ep 113 – 5 Key Decisions You Have To Consider in Retirement & Retiring on a Shoestring

How do you retire when you have no money? Learn some tips for retirement on a shoestring budget! Then, Victor discusses The 5 Key Decisions You Have to Consider In Retirement.

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Make It Last with Victor Medina is hosted by Victor J. Medina, an estate planning and Certified Elder Law Attorney (CELA) and Certified Financial Planner professional (CFP). Through his law firm and independent registered investment advisory company, Victor provides 360º Wealth Protection Strategies for individuals in or nearing retirement.

For more information, visit Medina Law Group or Palante Wealth Advisors.

Transcript below – – –

Announcer:  Welcome to “Make it Last,” helping you keep your legal ducks in a row and your nest egg secure. With your host Victor Medina, an estate planning, elder law attorney, and certified financial planner.

Victor J. Medina:  Hi everybody. Welcome back to Make it Last. The only show that brings you on a journey of legal and financial retirement planning hosted by your dual fiduciary debts, me. My name is Victor Medina. I’m so glad you could join us for another fun and exciting episode. I’m really stoked for today’s show.

The first thing that I wanted to get into is, my wife sent me a really cool link about Retirement on a Shoestring. There’s so much said about having plenty of money and having it all be set aside and your setup for retirement. I was intrigued by this because it was how to retire when you have no money or very little money.

I want to walk you through that article before we get into the main topic for today’s show. Just because I think it’s good to have a different perspective.

You might be somebody that is looking to retire on a shoestring budget, and maybe has no choice about that. Maybe you just want the perspectives of knowing what the other side is doing. Maybe you’ve got good planning in place. You’ve got plenty of money. What you really need is just to see how the other side of it might look like. This is actually done by a website called

They’re tracking, first, a couple named Joan and Steve Reid. They are 67 years old, so pretty average retirement age. Maybe a little bit…I don’t want to say the words early. I’m not saying that you should always keep working till you’re 70 or older, but you know, 67 these days, not everyone is thinking about retirement at that age.

In May of 2019, they retired. They moved from a rather affluent New York City suburb to an oceanfront community of Vero Beach, Florida. I actually have some familiarity…I’m aware of Vero Beach. There’s somebody on my team here whose parents were living there for a period of time. Their goal in retiring was to retire on a shoestring budget.

By the way, it’s a goal that many new retirees share, but it’s one that’s kind of tricky to accomplish. In this case, for the Reid family, they were looking to get a slower environment. They want to be near beaches. It turns out that Vero Beach does that for them.

The neighborhoods are quiet. There’s a slower pace. People are friendly. They have careers where it is at least understandable why they didn’t have a lot of money saved.

She worked as a freelance writer and a part‑time public library clerk, so not high‑gaining areas. He is a mixed media artist, which shouldn’t be confused with the mixed martial artist because then that means he could kick your butt if you didn’t like his art. He hasn’t earned any income from his art in the last two years, the article says.

It turns out that their monthly income from two Social Security benefits, by the way, is $2,000, now $1,700 or so after deductions, so really not a lot of money.

These days, when I see people come in for retirement, many times there was one working spouse that might have Social Security benefits at least $2,000 per month, if not a little bit higher. Of course, the spouse can take a spousal benefit of half that amount.

A lot of the clients that we see are at least at around $3,000 of Social Security benefits, but not this family. This family has just about $2,000 gross Social Security income. They also have small pensions.

Although it doesn’t say it in the article, I would imagine that part of the small pension is from her part‑time public library clerk. She may have earned enough time in the public sector to get one, but there’s $257 a month there. All told, their 2018 income was about $30,000. It will stay in and around there.

I would imagine that their pension is not going to get much or if any cost of living adjustment, but their Social Security might. There might be a cost of living adjustment for their Social Security.

Their definition of rich is not about having money. They are rich by their own definition in the friendships that they have, their art, their families. They express themes of gratitude in poetry and using gratitude journals that they might exchange with friends.

What they’re looking to do is retire on a shoestring budget. What they ended up doing is going on a 10‑year old car, which is worth $7,500, which they received as a gift. They have no savings. They have no investments. They’ve got ongoing debt of maybe $4,000. They’ve probably spent about $266 a month on that, so they’re really, really shrinking that down.

What they did is they downsized their belongings, they paid a mover to move just the artwork and their clothes, not any of the real big furnitures, they cut down on that, and they drove 1,100 miles from that New York City suburb down to Florida, and it cost them $380 for that whole trip.

Could you imagine paying for moving your stuff half way across the country, down the eastern seaboard and only paying less than $400? I guess there wasn’t a lot there to move. They may have gotten a deal on a truck that was already on its way down. There was a little extra space for the artwork and the bikes, and whatever else that’s in there.

Their rent is $800 a month, about 20 percent less than the $1,000 that they were paying in that suburb. They expect their utility bills would be about the same.

They’ll pay a little bit less in car insurance and they are looking for ways to reduce, I guess, their living expenses. The husband’s going to continue his art, but he says he’s going to be visiting scrap yards for materials, and purchase paint only when it’s on sale.

What ended up happening was, the article then goes on to creating a plan with a certified financial planner, and an RICP, retirement income certified professional out of Cincinnati. Now those happens to be the two designations that I also have. They are the designations that I think are important for somebody that is doing retirement planning.

The reason why those two are important, is, the certified financial planner is that base level introduction to, just credentials to know that you know what you’re doing. If you were looking for a lawyer, you would look to make sure that they in fact graduated law school, and they were admitted somewhere.

That would give them that general knowledge. Same thing as the CFP. The retirement income certified professional, well that’s a designation that is for specialization. That’s when you focus on retirement planning. In the same way that I have a credential on the legal side called a certified elder law attorney, or CELA.

That meant that I went above and beyond a normal education of being a lawyer, to specialize in elder law. This would be the same way I’ve specialized in retirement planning with the RICP, and these were the designations that the person in the article had to help them create their plan. They went through exactly what I think you should go through any time you create a retirement plan.

You want to list out your spending. You want to create a budget. Now, in this case, the budget had to be very, very exact, because there is no way to create more money, or borrow from investments, in order to continue to live. If they were wrong on the budget, it would have some serious implications, because they don’t have anything to take from.

They would quickly, I suppose, fall into a really terrible habit of using credit cards or debt. Remember, this family wanted to stay away from that. So the first thing that you do is find those things that are non‑negotiables. Some non‑negotiables by the way, are not things that you desire, but things that you have to have, just as a normal course of living.

Your rent is a non‑negotiable. You’re going to have to pay a housing expense. Now, if it turns out that living along the beach at $200 a month more than living a few blocks away is a non‑negotiable for you, you’re going to have to incorporate that, because at the end of the day, it’s a zero sum game for people with no savings and no investments to draw on.

If you only have a fixed income, the world and the universe of what you have to live on is already predetermined. You can’t dip into any funds. When the money’s gone at the end of the month, the money is gone. Similarly, food’s going to be a non‑negotiable item, but it’s going to have a line item number that has to remain consistent in the budget.

So instead of going to lunch at a restaurant, you might have to grab a sandwich and fruit and eat in the park if you want to eat out. You’re going to have to eat probably the majority of the time. Now, there are other things that you can do if you’re the frugal sort. I’ll tell you something. In all candor, the clients that we meet are conscientious about what they spend on, but they don’t drive themselves crazy trying to live the most frugal life that they can.

When you’re on a shoestring budget, when all you have is your fixed income to live on, you’re going to have things that you have to do in terms of your shopping and things like that.

For instance, you’re going to have to do your banking at the cheapest bank. You don’t have $15 a month to waste in needless fees. If you’ve got a TV that you want to watch, you might have to invest in an HD antenna and watch over‑the‑air programming and no cable, if you have a TV at all.

Doing exercise outside that’s free ‑‑ hiking, walking, that kind of thing, swimming. No kayak. You can’t afford one, but you can go into the water. You’re going to do those things instead of joining a gym or playing golf.

Then there are intangible and non‑financial aspects in your life. If you really get to the core of your values and what makes you happy in retirement, many times that doesn’t take a lot of money. You can define your happiness, I suppose, in ways that aren’t linked to money necessarily. You have a lot of control about how you frame that.

For instance, I’ve been a big proponent of saying that what you contribute in life is the best definition of whether or not you will be successful. If you’re looking for ways to derive joy and value in retirement, you should be looking for those areas that you can contribute.

Volunteer. Invest in the community. Not with your money. Not being a benefactor but with your time, your effort, and those other skills that you bring to the table. I think that there are other things that you can do.

This one is near and dear to my heart. It’s in the article, but I’ll tell you, it’s right up my alley. You can cut your own hair. Look, those of you that have not had a chance to see a picture of me will not know that I actually don’t have much hair. I couldn’t see doing anything like [laughs] paying for a haircut.

I bought a pair of buzz clippers about once a week. Much to my wife’s chagrin because of the mess that it makes ‑‑ I try to keep it in the tub and clean ‑‑ but I cut my own hair.

Buzz cut it and we’re ready to go for the week. It’s got no style to it whatsoever. I figure, at this point in time, who am I fooling? It’s time for the hair to go. Cutting your own hair.

Taking advantage of free things like free concerts in the park, free events at libraries. My wife and I, we’ve got money. We have money to do things to have fun in life, but there is just as much fun that we will have going to a concert in the park and perhaps bringing our own tumblers and food.

We don’t have to go and spend money to do that. I think that that’s an important lesson that even if you have the money to spend, you might benefit from taking advantage of stuff like this.

There are a couple of things that here probably wouldn’t sit well with me. I’d probably go back to work to be able to afford some of this stuff, rather than go this direction.

They’re making advice to shop for clothes at Goodwill and Salvation Army, eat a mostly plant‑based diet, eating red meat about once a month, and making your chicken last four meals.

That, to me, I think probably is not where I would go. I’d rather take a part‑time job and get a pork chop when I want a pork chop. Same thing with alcohol. I like my wine and I like my bourbon. I’d probably get a part‑time job to afford that, rather than live on the shoestring budget for it.

There are other things you can do to continue to stretch your mind. There are so many opportunities for seniors to enroll in free college courses that will give them an opportunity to learn. In several states, adults 60 and over can attend public colleges’ tuition free. That’s definitely something that you can take advantage of on your own.

What are the struggles here? I think the struggles are pretty clear. If you don’t have savings put aside, then you will end up needing to live to a fixed budget that will have no opportunity to expand. You literally don’t have it. You can’t get into debt, because you can’t make the extra money to cure the debt, and it will drown you.

Not having those savings is really the difference between having a budget that has flexibility in it and can expand over time to one that is fixed. That fixed approach really, I get it if people aren’t there, that they’re not in a position where they’ve got savings.

You have my sympathies, because I know the road that you have ahead. We’ve done planning for people like that. It’s a difficult conversation to let them know that they clearly can’t afford to do things that they were expecting to do in retirement.

If you at all have the opportunity to save or if you’re nearing retirement and trying to figure out how to get through retirement, delaying your retirement a little while, working a little bit extra, increasing your savings rate is only going to benefit you in the long haul.

You’re going to need the flexibility to navigate what life is going to throw in your direction. There’s just simply no way to predict whether or not you will have a long‑term care expense in the future. There’s no way to predict whether or not you’re going to have an emergency with respect to your housing.

Other health‑related things that aren’t long‑term care‑related, but they may be related to something episodic. It might be the difference between bankrupting you and not, if you had supplemental insurance or if you had extra savings.

I’m a big believer in being slightly pessimistic about how life is going to treat you and then planning around that. If it doesn’t happen that way, if you don’t encounter any of the negative things that you would otherwise encounter in life, then kudos. That means that you are ahead. If life is as terrible, [laughs] I don’t mean that seriously.

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Victor:  If you planned in a pessimistic fashion, and life has dealt you the negative things that you were planning for, you’re ready for them. I just think that it’s a better approach to go towards life or into life thinking about some of those things that could happen and then having the resources to plan around it.

Listen, we’ll be right back after this quick break on Make It Last. We’ll continue with today’s show. Stick with us.

Announcer:  Life is better when you have your legal ducks in a row, and one area attorney can help you get your financial ducks in a row, as well. Victor J. Medina fills dual, fiduciary roles. An estate planning and Certified Elder Law Attorney, and also a credentialed Certified Financial Planner professional.

Through his law practice at Independent Registered Investment Advisory Company, Mr. Medina serves high‑wealth individuals, seeking conservative advice, and a professionally managed approach to retirement wealth management. Learn more about Victor’s 360‑degree wealth protection strategies. Call 609‑818‑0068. That’s 609‑818‑0068.

Or listen to the newest episode of Make It Last Radio. Wednesday mornings at 11:00 on 1450 Talk Radio. Investment Advisory Services offered through Palante Wealth Advisors LLC, a New Jersey and Pennsylvania‑registered investment advisor.

[background music]

Victor:  Hey, everybody. Welcome back to Make It Last. We talked about how to retire on a shoestring, but really what I want to cover today, is those five key decisions that you have to consider in retirement. The way that I like to explain it is, if you were preparing for retirement like you bought groceries. You pretty much know what you needed.

You would know what you’d need to spend while you’re there. You would know which brands you like. If you feel like trying something new, it’s not that big gamble or a risk, even if you didn’t end up liking the product. You’ve probably been to the grocery store before, and you know the lay of the land. You’re familiar with the store.

For me, I am think that ShopRite, is designed and laid out by somebody with a mental disorder because I can’t find anything there. My wife can get in and out of that store super‑fast. I have to go to Stop and Shop. Stop and Shop gets me. I get it. When I go, I know everything that I’m going to be doing. What if preparing for retirement was like that?

Easy, familiar, straightforward, OK. If only that were true. Unfortunately, retiring and making decisions regarding your money and how it should be positioned for retirement, and everything else that goes along with it, of course, is much more complicated. Today, I’m going to give you five important decisions you should consider.

If you choose to focus on these five things, I believe you’ll be more confident about your retirement readiness. Before I go into that, I’ve created a special report for you that will help you along the way. It is similar to what we’re going to be discussing today but it’s in a checklist format. The way that you get that is to text the word “checklist” to 609‑554‑5936.

Just take out your mobile phone. Go to the texting app, wherever that is, and put in the numbers 609‑554‑5936, then just put the word “checklist” in. Hit the send button. It will ask you for your email address and we’ll send off a special report that we’ve created, that is a retirement checklist for you.

Let’s face it, making financial decisions regarding your retirement can be tough. If you think it’s going to be easy, you just might be surprised. You’re going to go from having a paycheck to the lifestyle of the “permanently employed” at least for the most part anyway.

With this lifestyle transition comes a whole philosophy change that when it comes to financial planning and investing, there are many decisions that you’re going to have to make. It can get overwhelming in a hurry. My goal as a financial advisor for my clients is to always attempt to make things straightforward and less stressful.

I want to guide you to the decisions that I think you need to focus on. In today’s show, I’ve identified five specific questions that I think you should ask yourself and find the answers to. I’m going to cover all five.

I want you to pay attention because these five questions and the answers to these questions that you need to find, can help you to form a blueprint of a plan that fits your goals and objectives. Not just a financial plan, not about investing and risk tolerance, all that stuff although that’s embedded in there, but a whole retirement plan.

In fact, when somebody comes in to sit down with me and discuss their personal situation, the process that I walk people through touches on the five questions at large.

What I want you to do today is to take some notes. Make sure that you also jot down our phone numbers. The first thing that you might want to write on the top of the notepad is this, 609‑818‑0068. You may want to schedule an appointment to come in and get a second opinion on your retirement plan.

I’ll help you answer the five important questions that in my eyes, I think that you need to consider. Again, call us now to schedule your appointment or after this show at 609‑818‑0068. Real quick, let me lay out the five questions that I need you to answer. We’re going to go into depth about all of them.

Question number one is, how much income will you need to live every month? Question two is, what are your core pursuits? Question three is, what’s your target retirement date? Question four is, will you work with a financial professional in retirement? Question five is, where does your personal risk tolerance lie?

You’ll notice that none of these focus on specific financial products or where to invest your money. You need to be thinking bigger picture than that. To create the foundation of full retirement plan that is going to be designed to ‑‑ are you ready for this? This is where I dropped the name of the show ‑‑ Make It Last and hold strong.

Your blueprint has to be built first. You can’t build a home without the plans. That’s what we’re going to be starting with here today. Make no mistake about it. There are selections about specific products that go into that. You’re going to have to make selections about the kind of width that you’re going to use for your framing and what you’re going to finish the walls with.

Is it going to be drywall? Is it going to be plaster? What kind of electrical wiring are you going to have? Where are you going to put the light switches? What kind of plumbing are you going to be? Are you going to get central AC? There are specific decisions that you’re going to make.

Those are analogous to buying investment products or making decisions about your investments. At this level, and certainly all that we can cover in an hour’s show, we’re just talking about the high‑level decisions. If in discussing this, you realize that you want a second opinion on the blueprint that you’ve created, that’s the time to come in and speak with us.

Again, you can call us at 609‑818‑0068. Let’s dive in to the first question which is figuring out how much monthly income you need. I know that I’m going to end up sounding like a broken record to you at some point if you’ve been listening to this show but here’s the thing, I don’t care. I can’t pound this point home hard enough.

Way too many people are focusing on the wrong things when it comes to planning for retirement. Most people are talking about rates of return. I just had a meeting with somebody yesterday who came in guns‑prepared to say, “If I can get a three‑and‑a‑half percent rate of return, I can retire.” I said, “What are you basing that on?”

He said, “Well, I need this, that, and the other thing to happen.” I said, “OK, but have you considered all of the income needs that you’re going to have?” Here’s the joke part about the story. He actually did. [laughs] He had it all planned out. That was delightful to me because he had actually thought about his income needs.

I just got to sit in as a counselor letting him know about the propriety of those decisions and then we could agree about what he needed. Anyway, too many people are just thinking about the rate of return, their asset allocation, diversification, and all that stuff.

It’s important but at this stage, I just want you to think about income because transitioning from the working to the retired can be tough because it changes your pay. I have to be simplistic about that. Most people become accustomed to the lifestyle they live and support it by the paycheck that they net out and take home every other week or twice a month.

It’s really normal to live that way. We have become increasingly reliant, as a society, on that check to live the way that we live. So much is based on subscriptions and monthly expenses. I did a show a couple of weeks ago about how to evaluate all of the things that you’re paying for on a monthly basis or on a subscription basis.

We’ve come to expect, we’ve been trained to live for lack of a better term paycheck‑to‑paycheck. Some of us live below our means. We save the extra. That’s fantastic but the way that we’ve structured it has materially changed. It has nothing to do with your generation.

If you’re somebody 55 or 60 years old, you’ve already been converted to the monthly living model because that’s the model that the entire world operates on ‑‑ your cable bill, your Netflix bill, your phone ‑‑ paying for your phone is not an upfront thing. It’s inside of your cell phone bill.

Everything around this has revolved around this idea that we are now converting into living on a month‑to‑month basis. When you have a dedicated paycheck for that, it’s easy to do, but when you get to retirement and, all of a sudden, especially for people that don’t have a pension that covers 100 percent of their pay, the paycheck stops coming in, it can be a stressful thing.

When creating a plan for retirement, I’m asking that you sit down and consider your income as a function of your monthly needs. Do you know what your expenses are? In the previous segment, we talked about retirement on a shoestring budget, and the idea that when you’re on a fixed budget, you’re going to know your budget number.

You’re going to have to fit all of the blocks into that number, but you’re going to know exactly what it is coming in. In this case, if you’re not, you have more investments in there, do you know what your expenses are, both as a basic and a discretionary expense?

The idea of what those things are necessary, and the stuff that you want to spend money on. Two different categories. How much money are you going to spend every month? What is that number need to look like for you to be able to live the lifestyle that you envisioned during your retirement years?

There’s some easy steps for you to take to get the ball rolling. You can use a budget calculator, and truly determine how much money you’re spending every month. You can type budget calculator in a Google. There is four pages of returns on that. It will help you quantify what it is you’re spending money on.

Once you have your number, for those of you who are not retired, anyway, you need to think about how certain expenses may change.

Earmark, specifically, to those expenses that are going to change for things like tuition expense for kids, or mortgage payments going away, or less gas money because you won’t be commuting, or more fund money because you’re going to have time to golf, and every day is going to be Saturday.

Take that updated number and subtract any entitlement income from that. What is entitlement income? That’s income that you’re entitled to, and you don’t have to do anything to generate it. We might look at things like Social Security, pensions, part‑time income, maybe deferred compensation in the form of continued salary on retirement.

Now that you have determined your monthly shortfall, which is the difference between what you want to spend to have the life, and the stuff that’s the money that you know that you’re coming in, you can develop a plan.

Make sure that you can position your retirement assets in a way that helps you create that additional paycheck. There are couple of options that you could talk to a financial advisor about. You could delay Social Security. You could buy an annuity, which is a fixed lifetime income product.

You could use bonds to create income. You could use good dividend paying stocks for income. You could invest in a real estate situation where you have fixed income coming in. These are all things that you can do. They answer that first question, figuring out how much monthly income you need.

The second is to develop core pursuits before you retire. For most people, retirement should be the time of your life, your golden years. You’re no longer a slave to the job that compelled you to work, to do all of the things, to meet all of your obligations in life.

It was once explained to me that retirement should be about doing more of the things you want to do, and a whole lot less of the things that you have to do. What I’ve learned is that retirement means different things to different people.

I want you to think about these things that I’m going to call core pursuit. Core pursuits are an activity that are intrinsically rewarding. I gave you some ideas on the last segment about how to find value in stuff that don’t cost money.

At this stage, if you’re doing retirement planning, and you’re not on a shoestring budget, it can be things that cost money. I’ll give you some ideas that many of my retired clients have given me when I’ve asked about these things.

They might be into gardening, coaching, reading, spending time with family, golfing. You get the idea? We all have hobbies. It’s just that in our working career and as our life progresses, time is short.

I know I have personally found it much harder to do the things that I would claim to be my pursuits, simply because of the amount of time that I have to spend in the office, and my family outside of the office.

Yes, luckily, for me, spending time with my family is a core pursuit. We’ve taken a few trips this summer. There are road trips. We spend time in the car together. It’s fantastic for me because I’ve got the kids in a confined space.

They aren’t spread to all corners of the house, and we’re not running around as we do during the school year all week dropping you off all over the place. We are confined, and together. That, for me, is intrinsically rewarding but time is short.

I haven’t swung a golf club all season, and that’s that I enjoy playing golf. I’m not bad at it. I would do it more if I had the time, but I’m not ready for that because I’m not in retirement. What, in fact, drives you? What will you spend time doing that would make you happy in retirement?

I found it interesting that the experience shows that people that were not as well off, but had a lot of core pursuits would rank their retirement as happier than people that were wealthy with few core pursuits.

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Victor:  In this case, it shows that maybe money isn’t everything. Maybe those people on the shoestring budget have something to share, and teach all of us. I would argue that having money that you’ve saved for retirement and a solid plan on how to spend it does help.

Talk to an advisor. In doing so, make sure they understand what your core pursuits are, but don’t retire without having core pursuits. Stick with us. We’ll be right back after this.

[commercial break]

Announcer:  Imagine if the attorney you trust to protect your legal interests could also be trusted to protect your retirement wealth. One trusted advisor, dual fiduciary roles, Victor J Medina. Mr. Medina is an estate planning and certified elder law attorney with a national reputation. He is also a certified financial planner professional.

Through his law firm and independent registered investment advisory company, Mr. Medina provides 360‑degree wealth protection strategies for individuals in or nearing retirement. His unique approach offers advantages to high‑wealth individuals seeking conservative advice and a professionally managed approach to their retirement wealth.

Learn more. Call (609) 818‑0068. That’s (609) 818‑0068. Or, listen to the newest episode of Make It Last Radio, Wednesday mornings at 11:00 on 1450 Talk Radio. Investment advisory services offered through Palante Wealth Advisors, LLC, a New Jersey and Pennsylvania registered investment advisor.

[background music]

Victor:  Hi, everybody. Welcome back to Make It Last. We’re talking today about five important or key retirement decisions that you have to make. We started with the first two, figuring out how much monthly income you need, and developing your core pursuits before you retire.

The next thing I want you to do is set a target date, and plan for it. This one is not usually that hard for people. I suppose I would be overlooking a very important thing if I didn’t list it as one of the five things that I ask my clients when discussing their retirement picture. Which is, what’s your target date? When do you want to retire?

By the way, I get all kinds of answers. January 2nd, 2019 at 12:31 PM, I have teachers that tell me, “The last day of school is in June, and we get out at 3:00 PM. That’s my retirement date.” Someone who has got the exact date down is probably the easiest person to plan for.

People might come in and say, “Listen, I probably am going to retire before the end of the year.” Now, that’s not too bad either because at least you can have a worst‑case date when defining the plan. If you work longer, then it doesn’t negatively impact the plan, but we can plan around this idea that at earliest, it’s going to be at the end of the year.

“Oh, I don’t know. Sometime within the next two years, but the sooner the better.” Even this answer still allows me a window of time to use when defining the plan and its start date, which isn’t terrible.

Here’s the one that is the toughest, which is, “I’m not really sure. It could be two years. It could be five. I haven’t made a decision yet. I just know I need to plan for it.” Wow, it’s tough. I’ll give these folks an A for effort as they’re coming in to discuss this with me and being proactive, but a D for specificity.

Think about it this way, even if you have no intention of retiring in six months to a year, you’re always in control of your destiny. I can’t tell you how many times I meet somebody who is suddenly out of a job unexpectedly. Companies are changing, and so this is the economic landscape. They are no longer loyal to you in the way that they once were.

When it comes to a corporation deciding to eliminate a defined benefit plan, i.e., a pension, you might be impacted simply because your years of service and the new direction of a company. You’re not captured by the old plan and you’ve got to go through the new plan, or the company sells. The new ownership comes in. Look, nothing is certain.

I remember a client that I had to meet with. They just wanted to know when retirement was possible. For them, it’s not about having a target date so much as saying, “Is it even possible to do?” What we were able to define for them is what the earliest date could be and they could plan around that.

If it turns out that they wanted to go later than that, no problem. It wasn’t going to be an issue for them because they had already done the planning to know when, in fact, it was possible to plan.

The idea here is that even if you don’t know for sure, coming in and working around some form of a date is important to do because it will give you the framework to know whether or not you’re working towards a reasonable goal. When you come in to see me to talk about your retirement path, be prepared to set a target date, even if it’s tentative or a full worst‑case scenario.

I assume that you would be doing it because it’s the right thing to do, but the fourth question is deciding whether or not you are going to be working with a financial professional. When it comes to working with a financial professional, I always say to decide on whether or not you’re going to work with somebody. Remember, it’s absolutely a choice.

You’re not required to work with a professional or even hire someone. Many people go at it alone. Many people handle their own investment decisions and their money on their own. I’ve met some people who are quite good. I’ve also met plenty of people who are not‑so‑good and they know it. I have met people who are not good but they don’t know it. They think that they’re great.

You know yourself well enough now to know whether or not you should have a financial advisor. If you think that you should, then it’s time to understand your options. There are different types of financial professionals that are out there that would love to have your business.

If you’re somebody with retirement assets and a picture towards retirement, you could throw a stone and hit 14 people that want to work with you. I want to use a concept that I had talked about in the previous show called “The Three Worlds of Money” to help you understand the world that exists. The first world is the bank world.

Bank world includes bank products such as certificates of deposit or CDs, money market accounts, savings accounts, and typically provide consumers with conservative rates on return on their deposits. Consumers generally regard the money in the bank to be secured from the risks associated with the stock market.

They’re reassured by things like the fact that the bank deposits are FDIC insured up to certain limits. This is one of the reasons why investors concerned with the preservation of capital may invest in bank products. Now, using bank products could create income using the interests that they generate.

The idea here is that if we’re in one of the lowest interest rates environments in our country ‑‑ by the way, we just had a very recent interest rate cut on it ‑‑ you know that you’re not going to be getting a lot of return on it. Some people will meet with somebody from the banking world because they believe that the bank representative continues with the conservative approach that the bank itself has with its security‑related bank products.

Here, I’ve got to open your eyes a little bit. The banks who are offering financial services and their services of a financial advisor ‑‑ I’ll use the term loosely ‑‑ typically have a separate company to do that. That separate company is one that is brokerage house, very similar to the Wall Street world and how that interacts, just to your options, your investment options there.

They are also not anyone who is a fiduciary. They don’t have to put your best interest ahead of their own.

What you’ll find once you start to peel away the layers of this onion, is that the products themselves that are being offered are really not any different than the products that you might get from the next world I’m going to talk about which is the Wall Street world, and advisors that work solely the Wall Street world.

That’s important for you to know because I don’t want you giving the overlay of the conservative and safe bank world to way bank sponsored advisor because they don’t deserve it. That’s not who they are.

In that role, they work for the brokerage division of the bank and that’s really no different than the Wall Street world. The Wall Street world is for investors that are looking for at stocks, bonds, mutual funds, real‑estate investments. They want all of that incorporate into a portfolio. These investments can offer far more upside than interest that we’re talking about in the banking world.

The investing involves risk and that involves the potential loss of principles…principal, excuse me. I don’t think you should have to compromise your principles when you’re investing to a Wall Street. In fact, there’s a whole rush investments now called SRIs, which is Socially Responsible Investing.

We’ve had clients come in. I don’t want to get on tension here. We’ve had clients come in asking for that and we’ve been able to service that, which is really exciting that there are choices of investments that we can use that will help people…it continue to invest in a socially responsible way.

Anyway, when we’re thinking about the investing world, realize that the advisors that work in that world are looking for people to agree with their thinking, that putting all your money at risk is the wise thing to do in retirement.

Again, it’s difficult to distinguish the advisors in that world who are fiduciaries from those that are not. The fiduciaries are going to be people that work for a registered investment advisor firm or an IRA. Those are the ones that buy their…by the law, have to put your best interest above their own in the investment recommendations they make.

It’s very different than the large brokerage houses. The ones that start with all the Ms that are out there, the ones that are household names, UBS, Edward Jones, Merrill Lynch, Morgan Stanley, those are all brokerage houses.

Those brokerage houses, brokerage dealers are all about providing you an advisor who does not have to put you in products that are in your best interest. It’s important to know that. Look, the truth of the matter is that you’re going to have to involve yourself in the Wall Street world in order for you to keep pace with inflation have money grow.

If you want money to be left behind as a form of an inheritance, you may want that money in an investment portfolio that allows it to grow. You’re going to have to involve yourself with somebody that knows about that and it can provide those services.

Again, you want to make sure that they are a fiduciary. Finally, there is the insurance world. The insurance products are things like fixed and fixed index annuities. They provide guarantees, by the way, against loss due to market risk. They are backed by the financial strength and claims paying ability of the issuing insurance carrier.

There’s no FDIC insurance with that, but you’d have to take a look at the financial strength of the company in making that decision.

By the way with annuities ‑‑ and we should probably have a whole show on this ‑‑ you pay a premium and you receive certain interest crediting options that allows that interest to compound tax deferred until you withdraw it.

When you’re ready to receive income through a process called annuitization or by triggering something called an income writer, they offer a variety of guaranteed payout options. Now these products are meant to be long term.

They’re designed to provide a supplemental source of income in retirement. They’re subject to limitations including things like surrender charges and penalties for early withdrawals.

When you choose a financial…By the way they come with their own issues too because somebody that is solely an insurance agent definitely will never have to put your best interests ahead of their own.

There are all kinds of insurance professionals with no business being your financial adviser because the only thing they can do is sell products that pay them a commission. They’re going to recommend those products over anything else.

When it comes to selecting a financial adviser, my suggestion is to always work with somebody that’s held to a fiduciary standard, who has access to as many options as possible and who will work with you to create a comprehensive plan as opposed to buying investment products.

If somebody walks in and said, “This is what you need to buy for a retirement” without walking you through the process of showing you how those products work within your plan, you got to run.

You got to run the other direction. If they come in and they don’t have a menu of options from you to select from that are amongst the best and healthiest things for you, then you should also run as well.

If you have to go to a place that can only serve you fried food and doesn’t have a healthy option and they can’t recommend from the healthy option, that’s not going to be in your best interest.

What you want is you want to work with somebody that can choose from just about everything that’s out there on the market for you to create these comprehensive plans. You want to work with somebody who’s independent and isn’t captive to any company for what it is that they’re recommending.

Then finally, you want to dial in your risk tolerance to your specific comfort level including the comfort level that is necessary to accomplishing your goals. I want you to be prepared to talk about your personal risk tolerance.

There’s a heightened importance at the current time simply because of the fact we haven’t had a bear market since the one that ended in March of 2009. As sure as snow is in Alaska every year, we’re going to have another bear market eventually.

I can’t time the market nor am I going to try to predict for you here when it might occur, how long it could last, how bad it can be. I have no idea and neither does anybody else. What I can do is draw a line in the sand and determine where you stand with your current risk exposure for your investment portfolio right here and right now.

When you come in to meet with us, we want to help you understand how your current asset allocation or your portfolio mixture, these specific amounts that you’re investing in money right now how those accounts could react to a bear market should we have one.

Or, how much money you could lose should we have another scenario similar to the one we saw in 2007, 2008, 2009. Using the standard deviation, modern portfolio theory, historical data and so on so forth, I can help you define where you stand.

I also want to help you define where you should be based not only on your personal risk tolerance but also on the risk tolerance that your plan requires for you to be successful.

If those two places are not close enough, I can help you map a new strategy to close that gap. The market’s up right now. This has been a fantastic year. I’ve come out with clients when we review their portfolio, they are up 12 percent. It’s been going up nicely. I don’t want you to wait until the market corrects to check into your strategy.

You’ve got to be proactive. Every one of my clients that has a plan in place, has a plan that hedges against market correction because we know that one is coming that is historical. That we are very, very comfortable with that is going to happen.

We just don’t know when. Now is the time to do planning around that because we’re not going to have an opportunity to do it after it’s already done. We will have missed that. Everyone that comes in has a mixture of investment products.

Some of them are cutting off the upside for what they’re doing clearly as a function of trying to make sure that their downside is in fact protected. I think that it’s important that you do the same. That you have a plan that matches your risk tolerance and the risk tolerance that your goals are requiring for that.

That also incorporate the flexibility that will be demanded by market conditions changing over time. It is just a fact and you got to do it that way. Again, to go over the five questions, I want you to determine what your income need is.

I want you to develop corporate suits before you retire. I want you to set a target retirement date and then plan for that. I want you to decide whether or not you’re working with a financial professional.

Then I want you to dial your risk tolerance into your comfort as well as your plan needs. If you do those five things, you will be in a good position to develop a great blueprint for retirement. If you want your own checklist, text the word, “checklist” to 609‑554‑5936. That’s “checklist” to 609‑554‑5936.

If you want a second opinion on your retirement plan, certainly call us and ask about it. We can make sure that your plan is comprehensive not only as to retirement financial decisions, but also legal planning as well.

You can do that by calling the office 609‑818‑0068. Listen, quick station programming note. Those of you that are listening to me by podcast are not going to see a new podcast for a couple of weeks.

I’ve got some vacation coming up, but worry not. You can always go to Apple Podcast or you can go to Spotify or anywhere you can listen to a podcast and dial into prior shows. Get caught up. I’m sure there’s one or two that you have missed.

If you listen to me on the radio, we’re going to have a couple of encore presentations, prior shows so don’t miss those because those are going to be our most heavily listened to, our most well regarded.

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Victor:  The things that people love the most and downloaded the most. Clearly there’s something you’re going to want to listen to too. Don’t miss this in the next couple weeks. That’s been it for, Make it Last. This is where we help you keep your legal ducks in a row and your financial nest eggs secure. Catch you next week. Bye‑bye


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It is not intended to be used as the sole basis for financial decisions, nor should it be construed as advice designed to meet the particular needs of an individual situation. The host of this show is not affiliated with or endorsed by the US government or any governmental agency.

The information and opinions contained herein provided by third parties have been obtained from sources believed to be reliable, but accuracy and completeness cannot be guaranteed.