Author: Jason
The 4 phases of retirement | Dr. Riley Moynes | TEDxSurrey
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Transcriber: Zsófia Herczeg
Reviewer: Peter Van de Ven Everyone says you have to get ready
to retire financially. And of course you do. But what they don’t tell you
is that you also have to get ready psychologically. Who knew? But it’s important
for a couple of reasons. First, 10,000 North Americans
will retire today and every day for the next 10 to 15 years. This is a retirement tsunami.
And when these folks come
crashing onto the beach, a lot of them are going to feel
like fish out of water without a clue as to what to expect. Secondly, it’s important
because there is a very good chance that you will live one third
of your life in retirement. So it’s important that you have
a heads up to the fact that there will be significant
psychological changes and challenges that come with it. I belong to a walking group
that meets early three mornings a week. Our primary goal is to put
10,000 steps on our Fitbits, and then we go for coffee
and cinnamon buns – (Laughter) more important. (Laughter) (Applause) So as we walk, we’ve gotten into the habit
of choosing a topic for discussion. And one day, the topic was, “How do you squeeze
all that juice out of retirement?” How's that for 7:00 in the morning? So we walk and we talk, and the next day,
we go on to the next topic.
But the question stayed with me because I was really having
some challenges with retirement. I was busy enough,
but I really didn’t feel that I was doing very much
that was significant or important. I was really struggling. I thought I had a pretty good idea of what success looked like
in a working career, but when it came to retirement,
it was fuzzier for me. So I decided to dig deeper. And what I discovered was
that much of the material on retirement focuses on the financial
and/or the estate side of things. And of course, they’re both important
but just not what I was looking for. So I interviewed dozens
and dozens of retirees, and I asked them the question, “How do you squeeze
all the juice out of retirement?” What I discovered
was that there is a framework that can help make sense of it all.
And that’s what I want
to share with you today. You see, there are four distinct phases that most of us move through
in retirement. And as you’ll see,
it’s not always a smooth ride. In the next few minutes, you’ll recognize
which phase you’re in if you’re retired, and if you’re not, you’ll have a better idea
of what to expect when that time comes. And best of all, you’ll know
that there is a phase four – the most gratifying,
satisfying of the four phases – and that’s where you can squeeze
all the juice out of retirement.
Phase one is the vacation phase,
and that’s just what it’s like. You wake up when you want,
you do what you want all day. And the best part
is that there is no set routine. For most people, phase one represents
their view of an ideal retirement. Relaxing, fun in the sun – freedom, baby. (Laughter) And for most folks, phase one
lasts for about a year or so, and then, strangely,
it begins to lose its luster. We begin to feel a bit bored. We actually miss our routine. Something in us seems to need one. And we ask ourselves, “Is that all there is to retirement?” Now when these thoughts and feelings
start to bubble up, you have already moved into phase two. Phase two is when we feel loss, and we feel lost. Phase two is when we lose the big five – significant losses
all associated with retirement. We lose that routine. We lose a sense of identity. We lose many of the relationships
that we had established at work. We lose a sense of purpose. And for some people,
there is a loss of power.
Now, we don’t see these things coming. We didn't see these losses coming in
because they happened all at once. It’s like, poof, gone. It’s traumatic. Phase two is also when we come
face to face with the three Ds: divorce, depression and decline – both physical and mental. The result of all of this is that we can feel
like we’ve been hit by a bus. You see, before we can
appreciate and enjoy some of the positive aspects
associated with phase three and four, you are going to, in phase two, feel fear, anxiety
and quite even depression.
That’s just the way it is. So buckle up and get ready. Fortunately, at some point,
most of us say to ourselves, “Hey, I can’t go on like this. I don’t want to spend the rest of my life, perhaps 30 years, feeling like this.” And when we do, we’ve turned the corner to phase three. Phase three is a time of trial and error. In phase three, we ask ourselves, “How can I make my life meaningful again? How can I contribute?” The answer often is to do things
that you love to do and do really well. But phase three can also deliver
some disappointment and failure. For example, I spent a couple of years
serving on a condo board until I finally got tired
of being yelled at.
(Laughter) You see, one year the board decided
that we were going to plant daffodils rather than the traditional daisies. (Laughter) And we got yelled at. Go figure. I thought about law school,
thinking perhaps of becoming a paralegal. And then I completed a program
on dispute resolution. It all went nowhere. I love to write. So I created a program
called “Getting started on your memoirs.” That program has met
with “limited success.” (Laughter) It’s been a rocky road for me too,
and I told you to buckle up. Now, I know all this can sound bad. But it’s really important to keep trying and experimenting
with different activities that’ll make you want
to get up in the morning again because if you don’t, there’s a real good chance
of slipping back into phase two, feeling like you’ve been hit by a bus.
And that is not a happy prospect. Not everyone breaks through to phase four, but those who do
are some of the happiest people I have ever met. Phase four is a time
to reinvent and rewire. But phase four involves
answering some tough questions too, like, “What’s the purpose here?
What’s my mission? How can I squeeze
all the juice out of retirement?” You see, it’s important that we find
activities that are meaningful to us and that give us a sense
of accomplishment. And my experience is that it almost always
involves service to others. Maybe it’s helping a charity
that you care about. Maybe you’ll be like the old coots. (Laughter) (Applause) Yeah. These folks took a booth
in the local farmers market and were prepared to give their advice
based on their vast years of experience to anyone who came by.
So one of their first visitors was a kid
who wanted help with his math homework (Laughter) on his tablet. (Laughter) They did the best they could. Or maybe you’ll be like my friend Bill. I met Bill a few years ago
in a 55 plus activity group. In the summer, we golf together
and walk together and bicycle together. And in the winter, we curl. But Bill had this idea that we should exercise
our brains as well. He believed that there was
a tremendous pool of expertise and experience in our group, and so he approached a number of folks and asked if they would volunteer to teach some of the things
that they love to do to others.
And almost invariably, they agreed. Bill himself taught two sessions, one on iPads and one on iPhones, because we were smart enough to know
that a number of our members had been given these things
as gifts at Christmas (Laughter) by their children, and that they barely knew
how to turn them on. The first year, we offered nine programs,
and there were 200 folks signed up. The next year, that number
expanded to 45 programs with over 700 folks participating. And the following year,
we offered over 90 programs and had 2100 registrations. Amazing. (Applause) That was Bill. Our members taught us
to play bridge and mahjong. They taught us to paint. They taught us to repair our bicycles. We tutored and mentored local school kids.
We set up English-as-a-second-language
programs for newcomers. We had book clubs. We had film clubs. We even had a few golf clubs. Exhausting but exhilarating. That’s what’s possible in phase four. And do you remember the five losses
that we talked about in phase two? The loss of our routine and identity and relationships and purpose and power? In phase four, these are all recovered. It is magic to see, magic. So, I urge you to enjoy
your vacation in phase one. (Laughter) Be prepared for the losses in phase two.
Experiment and try as many different
things as you can in phase three, and squeeze all the juice
out of retirement in phase four. (Applause).
5 Best Fidelity Funds to Buy & Hold Forever
Jason 0 Comments Retire Wealthy Retirement Planning
today we're going to talk about the five best fidelity funds to buy and hold forever hi if you're new to the channel my name is tay from financial tortoise where we learn to grow our wealth slow and steady in order to guide our conversation i'm going to use the three fund portfolio strategy to frame the fidelity funds i'm going to recommend in this video the three fund portfolio is one of the most popular do-it-yourself investment strategies and as the name implies it's made up of three simple funds most often an equities fund an international fund and a bond fund so all the funds i'm going to recommend today will fit into at least one of these slots the first fidelity fund you want to buy and hold forever is fidelity's u.s bond index fund fxnax it tracks the bloomberg barclays u.s aggregate bond index which is composed of investment-grade government bonds corporate bonds and mortgage-backed securities it holds approximately 8 400 bonds the top issuers are the u.s treasury or issuers of mortgage-backed securities like fannie mae and freddie mac it has an expense ratio of 0.025 percent which means if you have 10 000 invested in fidelity us bond index fund you're essentially paying 2 dollars and 50 cents for fidelity to manage this fund for you the fund started in 1990 and since then its average annual total return has been 5.33 percent so what are bonds and why do you need them in the simplest term bonds or loans when you buy bonds you're essentially loaning money to someone in this case to a company or a government agency and they're a very important addition to a well-constructed investment portfolio because of how different they are from stocks a good analogy i like to use to frame stocks versus bonds is this think of stocks as your core wealth building engine without it you aren't really going anywhere and bonds are like your brakes without it you could drive yourself off the road when you have bonds in your portfolio it helps to smooth out your investment ride because though they have lower returns they have less volatility during times of market crash where your stock investments can dip by 20 to 30 percent your bond investments will hold steady and ensure your right is so rocky so in order to help you smooth out your investment right you want to start adding them to your portfolio as you get closer to retirement age and if you're invested in fidelity consider fidelity u.s bond index fund as your core bond holding in your portfolio the second fidelity fund you want to buy and hold forever is fidelity total international index fund ftihx the fund tracks the msci all-country world index excluding the united states it represents approximately 5 000 international companies the top companies in this fund are made up of companies like taiwan semiconductor nestle and asml holdings it has an expense ratio of 0.06 percent which means that if you have 10 000 invested in ftihx you're essentially paying six dollars for fidelity to manage this fund for you the fund started in 2016 and since then its average annual total returns has been 5.99 what the fidelity total international index fund will do for you is provide you exposure to the international market outside the united states exposure to different countries sectors and even currencies and we can look at what happened to the japanese stock market as a lesson on why we might want to hold an international fund at the end of 1989 the japanese stock market's capitalized value was considered the largest in the world the nikkei 225 index the index of 225 largest publicly owned companies in japan reached an all-time high of close to 40 000.
Sadly 22 years later the nikkei was under 8 500 and to this day has yet to reach its all-time high again but satur is a japanese investor who failed to invest in international stocks outside of japan the us-based companies are currently the world leader in market capitalization and revenue but who can confidently say that will stay like that in the future it would be unfortunate but the same thing could happen to the u.s stock investors i personally still have strong confidence the u.s economy and u.s based companies as a whole but i also have to continuously check my assumptions financial writer larry swegel had a saying never treat the highly likely as certain and the highly unlikely as impossible as you get more comfortable with the international market you can start adding them to your portfolio and the fidelity total international index fund is a great option to represent your international holdings the third fidelity fund you want to buy and hold forever is fidelity zero total market index fund fzrox the fund tracks fidelity's in-house fidelity u.s total investable market index it represents approximately 2 700 u.s based companies the top holdings in this fund are apple microsoft and amazon it has an expense ratio of zero percent yes you heard me right zero dollars to invest in fidelity zero total market index fund thus the zero in its name the fund started in 2018 and since then its average annual total returns has been 11.82 the fidelity zero total market index fund is a total market index fund which means it tracks the total u.s stock market so this will be a great option as your core equities holding in your three fund portfolio however there are a couple things i do want to note with this fund especially in comparison to the two other equities options i'll cover here in a bit one is the fact that the index it is tracking is fidelity's in-house index fidelity u.s total investment market index this necessarily isn't a bad thing but there are actually more than 2 700 publicly traded companies in the united states than what this fund represents what this fund has done is exclude really small companies from its index in a big scheme of things this doesn't make that much of a difference in performance since the representation is based on market capitalization so the excluded companies would only represent maybe one percent or even less than that of the total fund but this is still something to note the total market here isn't quite the total market a second item to note with the fidelity zero total market index fund is the fact that you can't transfer your shares to another firm without selling your holdings and when you sell your holdings you have to pay taxes on your capital gains the fidelity zero total market index fund was designed with zero percent expense ratio in order to gain more customers so fidelity doesn't want you to move your money to a different firm and this limitation creates that barrier paying zero percent is nice but you won't understand that free comes with some strings attached but if you're planning to stay with fidelity for life fidelity zero total market index fund is a great equities fund to hold the fourth fidelity fund you want to buy and hold forever is fidelity total market index fund fskax the fund tracks the dow jones u.s total stock market index it represents approximately 4 000 u.s based companies the top holdings in the fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund it has an expense ratio of 0.015 percent which means that if you had 10 000 invested in fidelity total market index fund you're essentially paying 1.50 for fidelity to manage this fund for you the fund started in 1997 and since then its average and annual total return has been 8.29 it's fidelity's original total market index fund prior to the introduction of fidelity zero total market index fund and fidelity total market index fund does exactly what his name implies invest in the total u.s stock market essentially every u.s based companies out there when it comes to investing in the stock market the key principle you want to abide by is diversification many people tend to think the only way to make money in the market is to beat the market by either selecting good stocks or good actively managed mutual funds unless you're a professional investor with hundreds of analysts working for you around the clock analysts who are constantly interviewing and researching companies and industries we can't win in the stock picking or fun picking game the odds are just stacked too high against the individual investor so the best strategy to beat wall street is to just track the market and at the lowest cost and fidelity total market index fund is a great fun to hold as your core equity is holding in your portfolio if you want more flexibility from the fidelity zero total market index fund the fifth fidelity fund you want to buy and hold forever is fidelity 500 index fund the fund tracks the s p 500 index which represents the 500 largest publicly traded companies in the united states at the time of this video there are exactly 508 publicly traded companies in this fund the top holdings in this fund are apple microsoft and amazon essentially the same as fidelity zero total market index fund and fidelity total market index fund not a surprise given the company representation is based on market capitalization and these big companies represent a good percentage of the market as a whole it has an expense ratio of 0.015 percent same as fidelity total market index fund so if you have ten thousand dollars invested in fidelity 500 index fund you're essentially paying dollar fifty for fidelity to manage the fund for you the fund is the oldest of the bunch it started in 1988 and since then its average annual total returns has been 10.66 percent when most people talk about the stock market they're most often referring to the standard and poor 500 not the total market index and the reason is because it's so much older it was created in 1926 when it began tracking 90 stocks and in 1957 the list expanded to 500 and for the past century it has been the go-to index to represent the stock market when you turn on any financial news reporters are always discussing how the s p 500 is up 50 points or down 100 points it essentially represents the 500 largest u.s corporations weighed by the value of the market capitalization and because it's weighted by market cap though there are approximately 4 000 publicly traded companies in the united states total these 500 stocks represent about 80 to 85 percent of market value of all u.s stocks and the weight within the index automatically adjusts based upon the changing stock prices to this day the s p 500 remains a standard to which professional mutual fund managers and investment firms compare their returns against so if you want your equities holding to match the performance the largest u.s stocks since they're essentially what moves the market hold fidelity 500 index fund as your core equities holding but i do want to say this whether you choose the fidelity 500 index fund the fidelity total market index fund or the fidelity zero total market index fund as your core equities holding you really can't go wrong with any one of them they're all great funds you just want to understand exactly what you're buying that's it guys i know i normally advocate for vanguard funds but sometimes you may not have the ability to choose the investment firm that you want because maybe your employer doesn't offer it that was the case for me and therefore most of my 401k is actually invested in fidelity fidelity is a great investment firm if you're looking to invest with them pick any of the five that i mentioned here and you can't go wrong if you'd like to learn more about the three fund portfolio and why you might want to consider it as your strategy check out my video here thank you guys for watching until next time all the best
Read MoreWealth Transfer Prophecy Part 2. (The Wealth of the Wicked will be Given to the Righteous)
Jason 0 Comments Retire Wealthy
The Wealth of the Wicked will
be Given to the Righteous Wealth Transfer Prophecy, Part 2. This is the second part of the wealth transfer
prophecy, as we mentioned in the first video, God will use certain cryptocurrencies as
instruments to transfer wealth to his people. The first currencies that will be used in this phase
are Luna Classic, Shiba Inu, and Bitcoin. LUNC will rise first, and then SHIB, during the process
BTC will fall and rise a couple of times as well. This will allow God's people to place limit
orders, to buy BTC when the price falls to almost $1 per Bitcoin. LUNC, SHIB, and BTC will
be the first ones to provide opportunities, due to the rises and falls these coins
will have.
The prices to sell the coins in the sell limit orders, are the prophetic
prices made known by God through His prophets, as well as by His people who received visions
and dreams, granted by the outpouring of His Holy Spirit. Once the first phase is
finished, and after receiving profits, the prophecies point to buy the XRP and XLM
coins, which will definitely be one of the best investments to make, this is because
in the future XRP will be backed by gold, and XLM by silver. We should also point out, that
the prophetic word emphasizes the need to invest in real estate, agricultural land, goods,
properties, houses, buildings, facilities, etc, because in the future there will come
a time known as crypto winter, a period in which the entire global financial system,
including cryptocurrencies, will be down. In other words, prices will fall to the
ground, whose values will be too low, to be able to buy the necessary food,
which will be extremely expensive. Once the crypto winter time is over, God will
cause a large group of cryptocurrencies to rise in price greatly, and they will reach a very high
value in the future.
This is why God reveals to his children that when the cryptocurrencies
fall in value, whose prices will be very low during the crypto winter time, then, it will be
the right time to buy certain cryptocurrencies, whose values will be multiplied greatly in
the future. At the moment, we do not know yet, how many weeks, or months the coming future crypto
winter period will last. For this reason, it is essential to acquire agricultural fields and real
estate, one to produce food, and the other as a means to preserve profits. We remind you that all
the links you will need to learn, key information, prophetic prices, details, etc, will be in
the description of the video.
God bless you..
Read MoreDo Withdrawal Rates Make Sense for Retirement?
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
As you plan your retirement, one of the biggest questions that comes up is how much can I afford to spend each year, and how can I be sure that I won't run out of money if I spend at a certain rate? And a lot of people look to a withdrawal rate to help them figure that out, in other words, they might say, Maybe I can spend 4% or 3%, and that way I would have enough money to last for the rest of my life, but I think there are a lot better ways to go about that, so I wanted to review those with you and point out some of the issues, and hopefully this way you see what you might be missing out on if you use a withdrawal rate and you don't have to waste any time obsessing over what exactly is the perfect rate…
I should mention that when I work with clients, we don't really even look at The withdrawal rate, it's something we can find after the fact, after we've done some more robust planning, but we don't start with a withdraw rate, it's just something we might check out of curiosity. As a quick refresher, a withdrawal rate is a way of looking at how much you're pulling out of your savings and investments that are earmarked for retirement. Perhaps. The most famous and the most notorious is the so called 4% rule, which is really more of a research finding, so it's not a rule that you would necessarily follow, although some people talk about it that way. It's based on some research that was done by Bill Bengen where he looked at how much could you withdraw from a portfolio over a typical 30 year retirement horizon, and let's say you have a 50 50 stock and bond portfolio.
Well, what it turned out was in his research at the time, you could take out 4% of your starting portfolio and adjust it for inflation and not run out of money in any of those worst case scenario historical periods that lasted 30 years. Now, since then, the rule has been debated and criticized and refined, and people talk about things like, what about the current environment? Or what if I diversify more? How might that look? And a lot of people just love or hate the 4% rule. Either way, I don't think it's the best way to go about it, but it's important to understand how it works. So just for simplicity's sake, let's use round numbers that are easy to multiply in our head, and we'll say, let's say you have 100,000, or for each 100,000 of savings that you have at retirement, we would say You can pull 4% of that out per year, and we start with your first year, 4% of 100,000 is 4,000. So that's your Year One withdrawal, now you're going to adjust this for inflation each year, so in the subsequent here, If inflation is anything above zero, you're going to pull out more than that initial 4000 and with each passing here, you're going to adjust your withdrawals, you continue to take those inflation adjusted withdrawals each year, regardless of what happens with the markets or how high inflation is for at least that's how it worked in the original research, so that's a basic overview of a withdrawal strategy like the 4% rule, but just as one example of something that might be missing in that analysis because it's pretty over simplified is taxes.
So for example, are you pulling money out of pre tax accounts that you're going to go income tags on like a traditional IRA, or are you pulling from taxable brokerage account or Roth accounts? They wouldn't necessarily have as much tax, so depending on where the money comes from, that 4000 or 40000, if you have a million dollars is going to offer you more spending money or less…
Now again, at a 40000 income, the taxes might not be too burdensome, but you need to know that there are probably some taxes due, so that's going to affect your budget, another issue with withdrawal rates or the 4% rule, for example, is that you might not spend as much as you could, and that might mean you're missing out on opportunities, making memories or doing things you want to do, or retiring at a later date then you need it to… Historically, there were quite a few runs where you ended up with a lot more money than you started out with, so we assume you started with 1 million dollars, you did a 4% withdrawal rate, and you had more than 2 million at the end of your life, 45% of the time, your money doubled over your retirement years, or in some cases, you might have died with more than 5 million.
That's great if your goal is to give money away at death, but if your goal is to maximize your enjoyment of your assets during life, then a simplified withdraw rate might not let you do that. This would be a perfect time to mention that past performance does not guarantee future results, and this is just a short video, so friendly reminder, please do a lot more research before you make any decisions, decide to take any action or not, because this stuff is really important. So please read that carefully, and by the way, I'm Justin Pritchard and I help people plan for retirement and invest for the future, so in the description below, you're going to find more resources on this topic, some discussions about withdrawal rates and some calculators that help you work with withdrawal rates, if you want to go that route and look at some alternatives, I think you'll find all of that helpful.
When you make a more robust income plan, you might have a withdrawal rate that varies over time, so it might start relatively high, perhaps you're withdrawing at a relatively high rate in the early years of retirement and spending down some assets, and that might be something you do as you wait for Social Security benefits to start, perhaps you're going to delay Social Security, maybe you want that time to make a little bit of room so that you can do Roth conversions or fill up some tax brackets, or maybe you're just trying to maximize what your Social Security benefit is, there's some really good reasons for doing this, for example, maybe there's going to be a survivor involved, and you want to make sure that that benefit is as high as possible because once one spouse dies, for example, the surviving spouse would be left with just one Social Security income, so perhaps it's important to have that be as high as possible, and here's an example of how that could look, so we can just check somebody's withdrawal rate.
And in this case, they aren't going to start Social Security until age 70, so they have started out with a relatively high rate here, then it drops off as other income sources kick in, they're in the low threes here for a while, and then when Long term care expenses come up, you're back to a high withdrawal. We can also see how it looks kind of visually with the asset levels, so again, at retirement here, maybe they're going to wait until 70, they're going to spend down some assets for a while, and then that curve… And by the way, this can be kind of nerve racking to watch your assets decrease over time, but if you have a plan in place and you've got those retirement income sources that can perhaps help you have the confidence they, again, here spending down assets until the Social Security and pension sources kick in, and then the withdrawal rate decreases dramatically, now, not everybody has a pension plus Social Security, that's actually going to help them increase their assets once those income sources kick in, but some people are fortunate, and that's what retirement looks like for them.
One other issue with withdrawal rates is that your spending can change over time, so as just one example, maybe you're going to buy a car periodically, and so that spikes your withdrawal rate every couple of years, so how do you deal with that? Or if we look at research on retiree spending, not everybody spends a flat inflation adjusted amount each year, in fact, for some retirees, you might have them spending at roughly inflation minus 1%, of course, that ignores those healthcare expenses which continue to increase at a pretty fast rate, probably faster than general inflation is a good way to model that, but other expenses might not increase, so if you own your home and you don't drive too much, for example, you might not be experiencing a lot of inflation. In fact, David Blanchett's research called the retirement spending smile actually shows retirees spending at roughly inflation minus 1%.
Or another way to look at this is your retirement spending stages. Sometimes people call this the go go, the slow go and the no go years. So right after you retire, you might be spending at a relatively high rate, these are your go go years, you've just finished working, you've saved all your life, you want to travel and have fun, and so you're going to do that while you're still young and healthy, but then you get into the slow go years, your spending might slow down a little bit, you've done a lot of the travel, you're spending more time just with friends or family or whatever the case may be, and then we get into the no go years where a lot of your leisure and entertainment recreation spending are going to decrease, but that healthcare spending ramps back up in the no go years, so if we're thinking of that in terms of withdrawal rates in the go go years, you're at a relatively high rate, slow go years, not quite as high, and the no go years, you're back into a relatively high rate, so I hope now you have a richer understanding of withdrawal rates.
If that helped, please leave a quick thumbs up. Thanks, and Take Care..
Read MoreZERO Savings at 50? Plan for Retirement NOW 💰
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
What are we doing here? What's going on?
>>What are we doing here? >>This is a super-simple game. We're fishing for advice. Give me that.
>>See, I chose the right outfit today.
Yeah. [Fishing for Advice With Financial Advisers] I know you guys are probably thinking
I'm a professional fisherman, but I'm not. I'm a financial coach. You are 50 years old and have not started
saving for retirement. What is the first thing you do? Panic! No, I'm just kidding. So, at 50 years old, that is a big
wake-up call for a lot of people, and the very first thing you do is take stock of where your money is going today, because
you are gonna need to seriously amp up your saving. So, not everybody needs to
have some giant savings.
You need to have enough to replace the amount of income
you're gonna spend in retirement. I'm gonna just cheat a little, because I'm
really embarrassed. So I would just take a minute to assess my full
financial picture and actually sit down with the numbers to take financial
inventory. So I think step 1 is just going through what are all the
accounts I have, what is everything I own, what's the value of everything I own, and
then making another list of everything that I owe. And then from there you can
be like, "OK, well, this is the money that I actually do have, and so maybe there's a
better way for me to maximize this for my retirement." I feel like 50 is the new 20 or
30, you know, still not too late. Yeah, don't think that it's over.
Consider it like a halftime. This is where you go
into the locker room and you look at what you did in the first half and what
can be done better for the second half.
You come up with a new strategy, a new game plan, and then you go out into the second half,
and you prepare to win the game. [Cheering] I have to say this is the weirdest game
I've ever played at a FinCon. You're 50 years old — I am 50 years old — and
have not started saving for retirement. What's the first thing you do? You breathe, and you don't panic, and you start now. What you should not do is
think, "Well, it's too late now, so let's just see what happens in the next 20, 30
years." Because that is going to lead to disaster.
You still have time to turn this around,
but you have to get serious about this now. So you would talk to a
financial planner, come up with a game plan of how you can reduce your spending,
how you could put extra money into savings, and how you can kind of catch up. Once you've found the money, you are gonna automate the flows into those IRAs and 401(k)s, because if you don't automate it, you're gonna force
yourself to go through this exercise again and again, but if you set it and
forget it, you will continue to make headway.
All right, here we go. It’s why I got this net, man. The first thing I want you to do, I want you to take positive action. I want you to look around this minute, right now, and make a decision on some things you're gonna change. And it might be your attitude, it might be
the way that you're spending money, it might be the way that you're even looking at money. Be positive.
You know, it's not over till it's over. You can do it, you just have to start
doing it right now. Whoops! All right, everyone, listen. Gaining
information is absolutely imperative. It keeps you aware and it keeps you motivated. So be sure to subscribe to AARP's YouTube channel. OK, come on. All right. I'm just gonna pick these
fish up. OK! [Laughter].
#Q&A1 – How did Wealth Inequality Improve after World War 2?
Jason 0 Comments Retire Wealthy
I'm what's given me hope previously is when
you mentioned things can change and I think you pointed to post World War II as a time where
there was change and just now you've mentioned that 100 years ago housing was just an inheritable
asset, was it just that post World War II period that changed that? how did we go
from that to post world war 2? I'm an economist I'm not like a super expert
in history but you know this is obviously my particular area of interest is um what I find
what is quite interesting is after the World War II you saw a big increase in tax rates on the
very reach not just in the UK but really globally um and you'd seen that just before World
War II happen in the US with uh FDR Franklin Roosevelt with the New Deal deciding
we're going to push money to ordinary people um so I think what happened was you know and you
know different people can disagree with this but you know second order obviously we didn't do the
second world but second world war was a period where basically the whole of Europe devoted its
entire economy to building tanks and planes and bombs and destroying everything and killing
everyone and just [ __ ] the country up right [ __ ] the whole of Europe up right yeah at the
same time if you were in the England in World War II or Germany I'm not at all saying these are
perfect places to live they still made sure that everyone had housing education and Healthcare
right and food all right that was so people saw during World War II that okay we can devote
our entire economy to killing each other and yet still make sure everyone has housing education
Healthcare and food and I think people sort of it opened people's eyes a little bit to sort
of number one what is possible in our economy and number two how awful things can be if you
don't manage it you know what I mean like it's what I say you know I know it's not popular to
be political but if you're a student of History you see what happens to poor people when they're
not political you know it wasn't the rich guys you know sending their kids out to die you know it
was poor people you know and I think they sort of I think once you've you know I've never obviously
fought in a war right but I think once you've done that you start realizing [ __ ] me we need
to change the way we run our society right and then people came back from that and they
said no we we're not going to accept this this [ __ ] you know we want we want [ __ ] housing
food Healthcare education for everyone and we know you can afford it we know we can afford
that as a society so they so you saw basically every country in Europe simultaneously
basically politically demand those things um and we moved to a space where the top rate of
income tax was 95 and the top rate of inheritance tax was 90 and you know we moved into an
economy where people like my dad who didn't go to university worked with the post office
goodbye a home and raise a family and have food you know not be rich but you could have that
level of stability um and I think what it shows is the power of political Unity amongst poorer
people and this is this is what I keep saying right if you demand it if you absolutely demand
it that inequality gets better and wealth flows to ordinary families then you will get it and the
reason we don't get it is because you know we have media and politics which is very heavily
influenced by extremely wealthy people that tell you stories like oh no if we text rich
people the economy will collapse the rich people will leave it will be a disaster you know
don't worry about your kids they'll stop buying cappuccinos and they'll be fine you know media
tells you this story that everything is okay and you don't need to do anything at the same time
ordinary families get poorer and poorer and the guys who own the media I get richer and richer
right so it's the power of stories you know and you know I know that the story that I sell is very
negative because I say if you don't do anything and we're not doing anything we're not doing
enough we're not United enough life will get worse that's not a very palatable message right whereas
you know Rupert Murdoch is going to tell you in the times that don't worry your kids will be fine
as long as they stop buying avocado on toast right which is a lie but it's much nicer to believe that
than the truth of the situation which is that your kids aren't going to be up to four 12 grandkids
you know what I mean so I think history shows us you know in general when Ordinary People are not
politicized they get screwed over over time you know because the rich are politicized because they
have the money and the power and the time to do it um but eventually when things get bad enough
people realize [ __ ] me we need to be politicized because otherwise this is what happens you know
you know both my granddads went and fought in the War and probably [ __ ] killed people you know
what I mean I've got no idea what that is like you know but that is hell right I think you witnessed
that that makes you realize [ __ ] me we need to change things and that is you know obviously we're
not at that point now but you know things are getting worse and things are getting serious and
that that is an example of how bad things can get if ordinary working people are not politicized to
defend themselves and I think one thing that we saw in the last couple of weeks with the back down
and the 45 tax for the riches that created a risk to the mortgages to people's mortgages and it's
wealthier people that have big mortgages poorest people can't get mortgages at all right and a lot
of them work in the media and a lot of them work in politics and you see these people turn around
and said [ __ ] this we're not accepting it and you see this conservative party switch like that
and that is because you know that upper middle class have political power and they use it you
know they work they might not own the newspapers but they work in the newspapers you know they
might not own the TV stations but they work in the TV stations whereas this sort of poorer 70 percent
they do have political power but they often don't use it and that is I'm not blaming them for
that because I'll come from that background and I know what it's like you just want to make
sure you're taken care of and it's difficult but it's like I say you know there's a political
game being played here for wealth for power for assets and if you don't play it you're going to
lose it and you know the bottom 70 they don't have a lot of money they don't have a lot of assets but
they have a lot of people so the only Power they have is their voting power their power to tell
stories their power to build community but if they don't use that they'll lose their assets then like
it's worth so I think um history shows up shows us it's possible but it's only possible why people
coming together and sometimes it takes extremely bad situations for people to do that I don't want
it to get to that this time I want us to prevent those extremely bad situations from happening
but if we if we don't that's where we'll end up
Retirement Planning for Singles
Jason 0 Comments Retire Wealthy Retirement Planning Tips for Retiree's
Retirement is a big deal for anybody, and that's especially true for single people who may be retiring with just one income and who may have built up a nest egg solely off their own savings. So, we know that single people can and do retire comfortably. In fact, one quarter of people over age 60 are living alone in their household, and that number is slightly higher for women, and that's, of course, due to women's longevity. So what we're going to talk about here is retirement for single people. First, we'll go over some averages to give you a rough idea of what the landscape looks like for single people, then we'll get into how much money you might need as you go into retirement, then we'll talk about some tips that can help improve the chances of retiring comfortably.
Let's start with the average retirement income for single people. So it's $42,000 on average for an individual in retirement, and that comes from the US Census Bureau. The median is a little bit lower at $27,000. So a friendly reminder of how this works: The median is the middle, so if you line up all of the survey results, people telling you what their income is, for example, that arrow points at the middle observation, which would give us the median down at the bottom. But if we go to the average, that is going to get skewed by, in this case, wealthy people, for example, they have a very high income. When it comes to Social Security, the average is about $1,500 a month or $18,000 per year.Your level depends, of course on your earnings, if you had higher earnings during your working years, then you tend to potentially have a bigger benefit than that, and it could be lower, and then of course, your claiming age is also an important thing.
If you claim early at age 62, you get a reduced benefit. That's likely to bring down the amount you get. Next, we have pensions, some people get an income from a job they worked at. That might be in the public sector as a teacher, a firefighter, that sort of thing, or even in the private sector, you could have a pension from your job, and those incomes just are all over the board, it could be high, it could be low, but these are different sources of income that people might have in retirement.
This is just a friendly reminder that this is just one video and it may cover some interesting information, but it's not specific to you so I hope you'll do a lot more research, hopefully check with some professionals and get some individualized advice, and that way you can improve the chances of things going well for you. So now let's talk about how much you might need as you go into retirement. Unfortunately, there's no single answer on what you need because it depends. So the first step is to figure out what sort of income you're going to need, and I've got other videos on that, I'll put links in the description to get you some more information, but you can look at replacing a portion of your income, or you can just say, I want X amount of dollars per year, or you can go with other approaches, but first we need to know how much income you are hoping for. Next, we tally up your income sources, so that might be some guaranteed income that comes in from Social Security, for example, or from your pension at your workplace, but that forms a base of income and that might or might not cover what you need.
But it gives us a base and then if we need to fill that in, we can supplement withdrawals from your retirement savings, so that might be out of your IRA, your 401, 403, these accounts that you have built up over time can provide supplemental income to help fill the gap between that guaranteed income you get and the amount you actually want to spend. There are a number of ways to figure out how much to withdraw and to set up different strategies, there might be bucking strategies, there might be withdrawal strategies like the 4% rule. Or if you don't like that, make it the 3% rule to be safer, or take out more if you think that's not enough and you're selling yourself short. Ultimately, there are a number of ways to approach this, so you just pick one that works well for you, and again, I can point you to some resources on figuring that out. And finally, you will want to look at taxes and inflation, so during your retirement years, it's reasonable to assume that prices may increase on many of the things you buy, so we want your income to be able to increase as well, Social Security typically does rise, but maybe not at the same rate as the things you're buying, so your withdrawals may need to account for that.
Plus we've got taxes. You typically will owe taxes if you're taking distributions or you're taking withdrawals from pre tax retirement accounts. If you have a pension that might be taxable as well. We just want to look at all of these things and figure out what your ultimate money left over to spend each month is going to be. For an over simplified example, let's just look at Jane Doe. She's 60 years old, she's single, she wants to retire in about five years, she makes about 80,000 a year and has 700,000. A lot of people retire with less than that, a lot of people retire with more. I'm going to bring up my financial planning software that I use with clients, and we'll just go over kind of why there's no single answer on how much you need. Now, if you can tell me exactly how long you'll live and what the markets will do and what inflation will look like, we can tell you exactly what you'll need.
But there are a lot of unknowns, so a lot of times we start with a probability of success and I'll go over what that means, and then we look at little tweaks and how different changes might affect that probability of success, so working an extra year might bring her from… Let's say 75% to 84% likely to succeed. Now, success and failure are pretty complicated. They don't necessarily mean that you go completely broke, but you may need to make some adjustments, so let's talk about what does the success mean? We, again, cannot predict the future, so we say, Let's look back and say, You get dealt 1,000 hands.
You're playing a game of cards and you get 1,000 hands. Some of those are good and some of those are bad, so the very good ones tend to be up here, near the top. And you actually end up with a lot of money left over. Some of them are not as good and you end up running out of money early. The median is, again, that one that's right in the middle when we line them up in order for best to worst. And so you might say, you're probably not going to get the best, you're probably not going to get the worst, although anything is possible. So that's how we go with this likelihood of success. Now, maybe she doesn't want to work an extra year, so we can look at different ways of accomplishing things here. By the way, we've built in some long term care in case she does get sick and needs that at the end of life.
She's looking to spend about 4,000 a month, that's after some health care costs that are going to inflate each year, and she's saving a decent amount in some 401K and taxable accounts. Let's say she goes ahead and maxes out that Roth, is it going to make a big difference? Not really, 'cause she only has five years left. So what we do here is we start looking at all of these different variables and playing with the pieces and figuring out what does it take to make her successful at her retirement, or at least successful enough that she's comfortable making that transition. So here are some tips to improve your chances. The first is to plan for long term care. If you're living on your own, you don't have somebody in the house who can help you do things, and it's arguable if even a couple is capable of managing this on their own…
I mean, if you think about a couple, is one of the people physically able to move the other person around and do they have the skills to provide health care, and the time and the energy, frankly, to provide all that type of care? So it's important for everybody, but it's especially important for single people to plan for this care. So you can look at getting insurance, you can look at budgeting for some costs, like we showed you in the software, you might want to budget for a much bigger number if you go into memory care or something like that with 24 hour supervision, it can get really expensive quickly. And you can explore different living arrangements, maybe doing things with friends or certain communities that might be a good fit for you. Next is to avoid leaving money on the table so if you were previously married and your spouse passed away or you've been divorced, you may be eligible for benefits. That's maybe from Social Security, you can potentially get a survivor's benefit, or if you were married for at least 10 years and you've been divorced, you can potentially get spousal benefits on your ex spouse's work record.
It's just important to explore all of these to see if there are any resources available for you. Next is to make a plan, and I am of course biased as a financial planner, but I think it is really helpful to go through the process, and the main goal isn't to get a big document that tells you what your financial plan is. Instead, really, the benefit is going through that process and learning a lot about your finances as you do it, and in that process, you get an idea of what the risks are, how you're doing, you might get confidence and clarity on whether or not you can go ahead and retire, if you should do certain things or not. It's just a very valuable process for a lot of people, but I'll leave that for you to decide.
If you found this video helpful, please leave a quick thumbs up. That gives me feedback that this is something you might enjoy more of, so thanks for watching and take care..
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