Retire Rich: 2023 Ultimate Planning Guide (Step-by-Step)

Jason 0 Comments February 24, 2023 Career after Retirement Retire Wealthy

– What's going on you guys. Welcome back to the channel. So in this video today, we're gonna be going over a ultimate guide to retirement planning in 2021. You already know I got my seltzer here. I gonna go ahead and crack this bad boy open. And we're gonna get this video started shortly. So at the end of the day, most people do not want to spend the rest of their life working. And since your expenses don't just magically disappear, when you turn 60 or 65 or whatever that retirement age is you have to do things in order to plan for your retirement. And so in this video, I'm gonna go through exactly what you need to know to start off this process of planning for retirement. This is going to include a number of different topics. We're gonna talk about, how to tell when you can retire based on your level of income. We're gonna cover three primary ways that people derive income during retirement, when to start saving for retirement, which is as soon as possible obviously, where to save for retirement? And we're also going to cover, how to make your retirement money last? Now real quick here, guys I just want to say thank you to today's video sponsor which is T-Mobile.

We're gonna talk about that more later on guys but I just wanna mention here that T-Mobile offers their Essentials Unlimited 55 and up plan which is going to be offering unlimited talk, text and data on two lines at just $27.50 per line. It is a great option for people who are approaching retirement age, who are looking to minimize those monthly recurring expenses. Compared to Verizon and AT&T you can often save around 50% with T-Mobile. Not to mention guys, T-Mobile is the only wireless company that offers a discount on the 55 and up plans regardless of what state you live in. Other companies like Verizon and AT&T only offer those discounted plans in Florida. So you may wanna check that out. In addition, if you're thinking about upgrading your phone and getting the latest 5G technology, 5G is included at no extra cost with this plan. But more on that later. Now I'm definitely not looking to waste your time here with this video guys. So I wanna go ahead and identify who this video is for.

Well, mainly this video is geared towards people who are approaching retirement age. You're probably not ready to retire but it's something that's on the horizon in the next 5 to 10 years. And you're wondering what things should you be aware of right now, and how can you get your ducks in a row for when you do approach that retirement age. This video is also helpful for those who are just looking to prepare for retirement early on.

Even if you're in your 20s like me or your 30s, there's things you can start doing today that are gonna be relatively painless. And trust me, you're gonna thank yourself later, when you have a lot of money set aside for your golden years. Now, many hours of research did go into this video. So I just have three small favors to ask you here, guys. First of all, if you are sitting there and watching this on your computer, go ahead and put your phone on silence and put it away for a little bit, because you wanna focus all of your attention on this video, and not be distracted with all those social media apps, you can go back to those shortly. Also guys, make sure you pause the video and grab a pen and paper.

And if you need one, go ahead and grab a beverage as well. We are gonna be here for a little bit but I promise to you that I'm gonna answer probably every question you have about retirement planning in this video. So you're not gonna have to jump to like 10 different videos to get all of your questions answered. Lastly guys, if you enjoy this video just go ahead and drop a like, it shows me that this information was helpful and I'm not asking you to like the video now but at some point, if you're watching it and you say, "Hey, this was pretty helpful." That little thumbs up button certainly does help out. Lastly, a few quick disclaimers I have to make here.

I am not a financial advisor. This is not financial advice. You need to do your own research before investing in anything out there. Don't do what some guy on the internet just tells you to do. I'm not here to sell you any products. I'm not selling any courses or anything like that. And lastly, I have been getting a lot of scam comments down below where people are impersonating me. They're trying to get people to send money. That is not me. I wanna put up two comments on the screen here. This is a comment that's from me. And you can see the check mark and the different way that it looks versus this scam comment that doesn't have those things. So if you're communicating with someone down in the comments and it's me, make sure I have that check mark in place otherwise you better bet that is a scammer, and they're trying to take your money.

Hopefully YouTube does a better job at policing this but for the time being, it is utterly out of control. And I don't really know what else to do other than make this disclaimer in every single video. That being said, guys, let's get right into it and start off with when can you retire? And to be honest with you guys, it's a pretty simple answer but the way of figuring this out is a little bit more complicated and we're going to cover that later.

But the truth is when you're able to retire is when you no longer need to rely on active income to pay for your expenses. So most people out there have a mortgage, they have car payments, they have different monthly expenses. And so in order to retire, you have to make sure that all of those expenses added up, and even those unforeseen expenses that you can plan for. Well, your level of income derived from your different investments needs to be enough to cover those expenses. Otherwise you may have to go out there and get a different job to supplement your retirement income. And so for most people that may not be the ideal retirement scenario. So short answer here, guys, you can retire when your passive investment income exceeds your expenses, but the longer answer is there's a calculation we're gonna use to figure this out, that we'll discuss later in the video.

So next up, what are your different options for retirement income? Well, this pretty much comes down to anything out there that can make you money, but there's pretty much three main areas where people derive retirement income. The first one is your personal savings and your personal investments. So maybe you're somebody who's worked a job for your entire life and you've been slowly contributing to that 401(k). And then maybe you also have some IRA accounts. Maybe you have a Roth IRA or a traditional IRA.

And then beyond that, you might have a nest egg with your savings. Maybe you have the taxable brokerage account as well. And the goal is for eventually all these things to be able to provide income for you to not have to work in order to pay for your bills. Now, the second area where people derive income for retirement is social security. However, we've certainly heard a lot about this in recent years, and I don't think it's such a safe thing especially for young people to be reliant on that in the future because social security is kind of in shambles right now where we don't know how long it's going to last. However, if you are approaching retirement age, that may be something you can count on for the time being is deriving income from social security. However, social security alone, 90% of the time is not going to be enough money to pay for your expenses unless you're living in like the smallest apartment in your entire city and you pinch every penny. And at least for me that's not my idea of a good retirement.

And just a couple of statistics I wanna share with you guys here about social security, 40% of those who are 60 and above are 100% reliant on social security as a means of income. And so, like we said, here, there's three different ways people typically derive income, but most people are just fully reliant on social security which is something to be worried about. And if you're a younger person watching this video, you don't want to put yourself in that situation. Another surprising statistic here is that the social security trust fund based on the current rates is likely going to run out around 2035.

Now, are they gonna let it run out entirely? Probably not. What they're gonna do is probably decrease payouts over time, which means that those who are reliant on that as income are gonna start making less and less money if they have to decrease those payouts. So that is why you really don't wanna be in the situation where your reliant on this social security income as a means to sustain yourself. And then lastly, the third source of retirement income for most people that's becoming less and less common is something called a pension.

Now pensions vary from company to company. In the past, it was typically a percentage of your highest earning year basically paid to you in perpetuity until you are passed away. But what they found is that these things are not very profitable for companies. And it's very rare to find any companies today that still offer this pension. But if you're an older person watching this nearing retirement age, you may still have a pension plan to derive income during retirement.

So your best case scenario here for retirement is that you're deriving income from these three different sources. Number one, personal savings and personal investments. Number two, social security, number three, your pension. That's like the perfect scenario for retirement. However, unfortunately only about 6.8% of people over age 60 are deriving retirement income from all three of those sources. So the vast majority of people probably don't have pensions and some unfortunately don't have any personal savings or personal investments. So that's the big picture right now. And that's why it's very important to have your ducks in a row and start thinking about this early on and planning that way. You can try to have a a three-legged stool here where you're able to derive income from multiple sources.

You don't want to be fully reliant on social security or fully reliant on pension income or personal investments, personal savings. You wanna have different things that are able to generate income for you that way you're diversified. Because basically people who are deriving income from one source are balancing on a one-legged stool. It's not very stable. You wanna have multiple legs to that stool, ideally three. And of course in that personal investments and personal savings category, there's a lot of different things that fit under this category. For most people, it's stocks and bonds but a lot of people also invest in things like real estate or precious metals. And there's a lot of people who literally will just put all their money in real estate, build up, you know a portfolio of 30 or 40 units. And then they live off of that rental income cashflow. So there's many different ways to skin a cat here, guys but just understand that your goal here should be to derive money from multiple different sources and have three legs to that stool. So next up here, guys, let's answer the question of, when should you start saving for retirement? Well, short answer as soon as humanly possible.

Now, what I mean by this is when you're younger and your expenses are lower. Let's say you're in your 20s and early 30s. Maybe you don't have kids yet. Maybe you're still living with your parents. This is your prime opportunity to put as much money as you can into your 401(k), maxing out Roth IRA contributions, and basically holding onto as much money as you can and putting it in something that grows value. Because the main factor in how much money you have in retirement isn't based on how much money that you invest.

It's how much time you allow that money to grow. So even if you're in your 20s or 30s watching this, and you're thinking, "I don't really have a ton that I could set aside right now." It doesn't matter how much you put aside, the main factor is the amount of time that you allow that money to grow. So just for an example here, guys if you're looking to have $1 million in your retirement let's say your 401(k) for example you could invest just $300 per month, over a 40 year period earning the average return from the stock market. Or if you wanted to do it in 20 years, you would have to invest $1,750 per month. That's almost six times more money to get you to the same result. So you can either invest a smaller amount of money for a much longer time or you're going to have to invest a lot of money for a shorter window of time. So the sooner you start, the better off you are. And I highly encourage you to check out a compound interest calculator and play around with some of those numbers if you are a young person watching this video.

If you're already close to retirement age and you didn't do these things, don't worry. I still have more options for you that we're going to discuss in a little bit. And again, it's important to understand that truly it's never too late to start saving and investing for retirement. So even if you are in your 50 and you have no assets, you should still do something. You know, doing something is better than doing nothing. It's gonna be a lot harder because you don't have that much time to let your money grow, but it's never too late.

It's just important to understand the sooner you start the better off you are. So now, let's talk about where you should be saving money for retirement. And there's a pretty simple process to follow here that most financial experts agree on and I'm going to teach it to you right now. So the very first thing you should do before investing your money in the stock market and opening up different investment accounts is to set up an emergency fund. And this is just simply a liquid account. It sits there in a online savings account or a savings account at your bank or maybe a certificate of deposit. And so what you want here is a rainy day fund. So what most experts recommend is setting aside three to six months of all of your expenses. So what you wanna do is sit down on a piece of paper write down every one of your expenses, your car payment, your mortgage, groceries, utility bills and come up with that figure. Let's say for most people maybe it's $3,000 per month is their monthly expenses.

Well, I would encourage you to save up six times that expense in a liquid emergency fund. So your very first step is to have let's say anywhere from 10,000 to $20,000 parked in a savings account where it just sits there in case of emergency. And then you're not going to invest that money. You just leave it sitting there. And if you end up taking money out for an emergency like a car repair or a medical expense, you replenish that fund and you keep that amount there. And of course, if your monthly expenses are going up over time, you're going to want to adjust your emergency fund accordingly to make sure you keep enough money in there. So that's your very first step is, begin saving up money for an emergency fund and aim have three to six months of expenses sitting in a liquid account. The very next thing you should do after you have your emergency fund in place is to take advantage of any employer match with the 401(k).

So if you're not familiar, the 401(k) is an employer sponsored retirement plan which allows you to take money pre-tax and put it away for retirement. And it also gives you a pretty nice write-off on your tax return, which is something else to consider. Now, I don't recommend putting all of your money into the 401(k) because it's hard to access it and you'd have to pay taxes and penalties to get that money out. However, if your employer is offering a company match, you should maximize whatever they're offering you because that's literally free money. So back before I was a full-time YouTuber guys, I used to work for a utility company and they didn't have a pension or anything like that, but they did have a employer match. So every dollar I would put in, they would match me with an additional 50 cents up to 6%. So what I would do is I put 6% of my paycheck into my 401(k) and then they matched me 50%. So I got another 3% for free. So, effectively 9% of my total pay was going into my 401(k) every single week automatically.

So after you have your emergency fund established, or at least started. You don't have to have all that money there before you move to step two. You just want to kind of start that and begin putting a little bit over there every single week to build up that fund. The next thing is to take advantage of those employer 401(k) matches. After that, if you have any high-interest debt, you know like personal loans, credit card debt, things like that. You wanna pay that debt off next, because the average return you're gonna see from the stock market is somewhere around 8 to 10% per year. And so if you have high-interest debt, like let's say you have a credit card with 25% interest, the most wise move you can make financially is to pay off that debt because you're paying way more in interest than you're gonna earn as a return. If you had $1000 invested and you're gonna make 10% in one year, you're going to make $100.

If you have a $1000 on a credit card at 25% interest over the course of one year you'd pay like 250 in interest. So even though you could invest that $1,000 and make $100 you're still paying 250 in interest. So overall it's a net loss. So if you have high-interest debt, you got to get that paid down first before you begin investing in other stuff, just because that's your wisest move financially. So after you have your emergency fund in place and after you maximize your employer match and then you pay off your high-interest debt, if applicable the next thing to consider is an IRA.

And in particular, I like the Roth IRA. Assuming you're able to contribute to this based on your level of income. Now I'm not gonna get into a whole thing here guys on Roth IRA versus traditional IRA. I could probably spend 30 minutes on an entire video talking about that. So for now, we're just gonna cover some very basic stuff about the Roth IRA. With your 401(k) as mentioned, you're contributing pre-tax income and you get the write-off. However, down the line when you draw out of that account that is when you pay taxes. With the Roth IRA, you're actually contributing post tax income. So you've already paid taxes on it, meaning you don't get any write-off. However, if you follow the rules and you know you start drawing from that by a certain age you don't actually have to pay taxes on the growth of your money.

So it's a very powerful account and it allows you to grow your wealth tax free. The other advantage of the Roth IRA is you can pull out your contributions at any time. So if you were putting a $2,000 per year of contributions into that Roth IRA, every single year, you can pull out those contributions at any time, tax free, penalty free. You just can't touch the earnings or the growth of your money. So let's say you're putting money into a Roth IRA. And then 10 years later, you decide that you want to invest in a business or something. You can pull that money out and pull your contributions out and not have to worry about penalties and taxes.

So I liked the Roth because it's flexible, you can choose where you put that money. You can put it in stocks, bonds, precious metals there's all kinds of different Roth IRAs. And you have access to that money where you can take out your contributions, if you do need to access it. So now assuming that you have the emergency fund in place, you're maxing out your 401(k), you've paid off high-interest debt, you've maxed out Roth IRA contributions for the year. After that, that's when I would put that money into a taxable brokerage account where you're able to invest that money, you're able to touch it you're able to access it.

The only thing is you pay taxes on your dividends and taxes on those capital gains. But for the most part, that is the generally agreed upon plan for where you should save money for retirement, is in these different things that you have control of. And this is all within that category of your personal savings and personal investments. As far as your pension goes that's all based on your employer, most of them are not offering any pensions today. However, if they offer it and it's something you have to contribute towards, if you expect to stay with that employer for a long time and make a career out of it, that is definitely a wise move.

And then you automatically pay into social security if you are a W2 employee. So that's not really something you have any choice over. So now let's go ahead and cover how much money that you're going to need in order to retire. Well, it's kind of a moving target and it's going to change based on your lifestyle. I mean, are you looking to live in a one bedroom apartment and drive a ten-year-old vehicle and you know, eat canned beans for a living? Or do you want to retire on a beach in Miami? So it all depends based on your lifestyle.

But there is again, another generally accepted calculation that financial experts use, to calculate necessary retirement income. And it's something called the 4% rule that I'm gonna teach you right now. Also guys, just a quick reminder, I know I mentioned this earlier, but if you have found any value in this video so far, a like would certainly be appreciated. It helps this video to be shared with more people. And if you have any thoughts or questions leave me a comment down below. But anyways let's talk about this 4% rule now.

Now, as far as the math behind this goes, I'm not going to get into it. If you wanna watch, there's plenty of videos about the 4% rule that we'll go into a lot more detail but essentially it's a very simple calculation. What you're going to do, is you're going to multiply your desired retirement income by 25. So let's say for example you wanna have $40,000 per year of income in retirement. If that's how much money you want, you want to multiply that by 25. And that will tell you a rough idea of how much money you should have in your savings and your investments in your personal investment and savings accounts. So for example, if you wanted $40,000 per year, you would multiply that by 25 and you would come to the conclusion that you're going to want to have $1 million saved and invested in these different accounts in order to sustainably derive $40,000 per year from that account without running out of money.

Now, if you wanna be a little bit more conservative, there is the 3% rule which is going to be a multiple of around 33, but anywhere between 25 to 33 times, your desired annual retirement income is how much money you should have set aside saved and invested for retirement. So obviously guys, the main thing here is the less money that you need per month based on your lifestyle, the less money you need saved and invested and the sooner you can retire. That's where that whole FIRE movement comes from or Financially Independent Retire Early, that's people who live off of as little money as possible. They save as much as possible and they aim to be retired in their 30s. And they're able to accomplish that by living off of as little money as possible. I did a whole video on this called how to retire by 30. If you guys wanna check it out at the end I will include a link down below. So now what I want to cover here is what to do, if you're somebody who doesn't have 25 to 33 times their desired annual income in a savings or retirement account.

Maybe you're already in your 50s or early 60s. And you're saying, "What am I gonna do? I don't have money that's just going to fall out of thin air to put in this account, what options do I have?" Well, let's cover those right now. The main things that you can do are surrounded by things that you can control. And the main thing you can control is how much money you're actually spending during your retirement. So essentially you have two options.

You can try to make more money or you can try to spend less money. Now I'm more of a fan of the offensive approach here which is figuring out how to make more money. And so let's talk about that now. The first thing you could do is figure out some kind of side hustle that you wanna start maybe in retirement or maybe you wanna do this before retirement and save up extra money and take all that money and invest it. I've done a lot of videos about side hustles. We're not going to get into them here but just understand that this right here, this laptop this provides a lot of opportunities to make money.

And it's certainly not rocket science, and I know a lot of people who in their later years have started YouTube channels and blogs and these different things that allow them to make extra money on the side. So the first thing you wanna consider is, "Hey, let me look into starting a side hustle." Second of all, pretty simple, spend less money now, pre-retirement. That way you can save more money to invest. So if you're in your 40s or 50s, and let's say for example, you're driving a brand new luxury car and you're watching this video and you're realizing, "Oh crap, I'm not preparing for retirement." Maybe you make some small sacrifices today, that allow you to save and invest more money. So maybe you trade that car in and you get an economy vehicle and you take that difference in your monthly payment, and you put that into your Roth or your 401(k) instead. Another option, pretty simple, spend less money in retirement. We're gonna cover that more in a little bit. I'm gonna give you guys some tips on how you can do that.

And then lastly, option number four not the best one, which is delaying retirement. Maybe you wanna push it until age 70, age 75, which will allow you to stay working longer. It will allow you to contribute money towards retirement accounts and investment accounts longer and allow that money to have more time to grow before you have to start drawing. So now what I wanna cover here is a rough idea of how long your retirement money is going to last. And I don't wanna sound morbid here guys but the truth is, you want your retirement money to last until you pass away. And then you also wanna make sure you have enough money sitting there to cover medical bills, funeral costs, and things like that because most people just don't wanna be a burden on their family when they pass away.

Where they're out of assets, they're in debt and then their family has to scrape together 10 or 20 grand for a funeral. So it's not something that we like to think about or really talk about but it is something that's important to prepare for. And so your goal here should be to have enough money that you can have your money outlive you and cover some of those costs and maybe have a little bit of money to pass on to your family as well, maybe towards, you know college expenses or things like that. But anyway, let me give you a couple of pointers here on, how long that money will last in a couple of different factors to consider. Well, first of all how long your money will last is going to largely depend on your investments. Some of them are lower risk and some of them are higher risk. And so if you're investing in higher risk assets, they may be more volatile but you may also see greater returns. On the other hand, if you're super conservative and let's say you only put your money in fixed income assets, you may find that you're not taking on enough risk, and you could find that your money doesn't last as long as you need it to.

So, one of the main things you have to understand with retirement is that asset mix. And for most people, it's a split between stocks and bonds. And so that's the main thing you wanna focus on is that allocation. If you'll have too much money in stocks and not enough in bonds, you might be taking on too much risk and your portfolio could be very volatile, going up and down in value all the time, stressing you out. If you're too low-risk you might not be growing your money fast enough and it might run out too soon. So figuring out that asset mix is very important. Now as far as that number goes, there's a couple of different rules of thumb out there, but one that most people agree upon is the 110 or the 120 rule. And it's based on your life expectancy. So, I actually am a fan of the 120 rule, which basically means you take your current age and subtract it from 120. And that tells you how much money you should have in stocks and the rest should be in bonds.

So for example, I am 25 years old, I would take 120 minus 25, and that leaves me with 95. That tells me that 95% of my money should be in stocks and only 5% should be in bonds. Whereas if we take a 70 year old, for example we would take 120 minus 70, and that leaves us with 50. And that tells us that 50% should be in stocks, 50% should be in bonds. Now, of course, guys that is a very basic example and it doesn't take into account your unique personal situation. So for exact numbers I would actually recommend speaking with a financial advisor and you don't necessarily have to have them manage your money, you can pay them for a one-time consultation where you're basically saying, "Hey I want you to tell me what my allocation should be, and help me understand how that changes over time." But by far that's one of the most important factors to consider is your asset mix or asset allocation? Now in general guys, that 4% rule that we discussed earlier has been pretty successful, and most people have found that it lasts them around 30 years, which is a pretty long retirement.

That's about how long most people expect to be around once they retire. However, the success of that 4% rule is largely dependent on that asset allocation we discussed. Because if you're not taking on enough risk, and you're only earning a very small return, you're going to dwindle that money a lot sooner. Another important factor to consider is taxation. And this varies based on the types of accounts that you have. As mentioned earlier, the Roth IRA is an account where you put your money in and you pay taxes on the way in. But when you draw from that account you don't pay any taxes. Whereas with the 401(k) it's tax-free going in but when you come out, you're actually going to pay taxes.

So this tax situation is largely dependent on your own investment accounts. Maybe one person has all of their money in a Roth and somebody else has all of their money in a 401(k). Those are vastly different tax situations. And this is a scenario again where a financial advisor can look at this for you, and help you with some tax planning. And you can understand what are the tax implications associated with your different investments. So now that you have a general idea of the factors that will tell you how long your money will last, let's talk about some different ways to make your retirement money last longer. So the first thing you can do to make your money last longer, which is getting more and more popular is something called downsizing. So most people end up having a home where they raise their kids. And let's say that you're still together with your spouse. You may now be in this situation where you have this three or four bedroom house, you're paying to heat all those bedrooms.

And you're maintaining this big house, when you're only utilizing like 25% of that space. Even if your mortgage is paid off, you're still paying for utilities and landscaping and things that on a much larger property than you need. So you could downsize into an apartment or downsize into a smaller house. That's becoming more and more popular with the goal of reducing your fixed monthly expenses. Another option, going back to the side hustle idea, maybe you Airbnb, a part of your home or you do one of your bedrooms or something like that, to figure out how to generate income from that unused space.

But downsizing is a very popular option. Another one is reducing your fixed expenses like your car payment, as well as things like your utility payment and things like your phone bill. So this is where I wanna talk more about our sponsor for today's video, which is T-Mobile, because they have specific wireless plans designed for people in retirement to save you money on those fixed monthly costs. So, 55 and up customers who live anywhere in the United States, not just Florida are able to get two lines of unlimited talk, text and data on T-Mobile's network, starting at under $30 each.

Which if you have an existing phone plan you have a general idea of what you're paying, and I can tell you guys right now I'm paying a heck of a lot more than $30 per line. Now you might be wondering if you're getting some really cheap plan in the process and the answer is no. In fact, it comes with a lot of different bells and whistles and extra perks. For example, it comes with the industry's best scam protection, unlimited 3G mobile hotspot data, international texting, no annual service contracts, your very own dedicated customer service team, as well as additional free items here and there and discounts every single week through T-Mobile Tuesdays. So oftentimes if you switch from a carrier like, AT&T or Verizon, over to T-Mobile with this plan, you could save upwards of 50% every single month. And while it may not sound like a lot of money upfront when you factor in that cost over the next 20 or 30 years, these little things you can do to save money on those monthly expenses really are going to add up. So if you are interested in those 55 plus plans through T-Mobile, switching carriers is very easy.

If you're ready to make the switch, you just have to stop into a T-Mobile store, or you can call 1800 T-Mobile or visit T-mobile.com/55, and I'll go ahead and include links to all of that as well as the phone number down below, if you guys wanna go ahead and take advantage of those discounted plans. Now another thing you can do to make your retirement money last longer is falling into that category of delaying your retirement. You can also delay taking social security, and this can lead to you having a larger monthly benefit. So for every year that you wait, you're going to get an additional 8% in social security, every single month. And if you wait until age 70 to start taking social security you can get up to 24% more every single month. So if you can delay retirement, and delay taking your social security benefit, that can result in additional monthly income. Another great strategy is exactly what we're talking about here, which is having a retirement spending plan before you stop working.

So you do things in advance to get your ducks in a row. You cut down on recurring monthly expenses like your phone bill, maybe you take advantage of something like T-Mobile's 55 and up plans. Maybe you downsize, or you decide to Airbnb a spare room as us as a side hustle. You just start planning early on before you hit retirement age, and then you think, "Okay, I haven't planned for this at all. Let's get something going." You're better off to plan in the beginning and get your ducks in the row early. Another suggestion that I have is utilizing credit card reward points, because a lot of people in their later years want to travel during retirement. We're in a unique situation right now with the global pandemic, but once it's safe to travel, that's a popular thing in your retirement age is seeing the world.

Well, if you're able to effectively use credit cards and get free points for travel or free miles, that's another way to get more bang for your buck. And as long as you're not paying interest on those credit cards and you're paying them off every single month, I would highly recommend utilizing credit card reward points and bonuses for travel. Lastly, one of the things that you can do is make investments in your health to make sure that you're not having a lot of medical stuff coming up in retirement.

Hopefully you have some plan for health insurance. So let's say now that worst case scenario, you're somebody who is in retirement right now and you're slowly realizing that you're going to run out of money. You don't have enough for that 4% rule and maybe you only have one leg to your stool, which is social security. What options do you have available to you, if you know, you're going to fall short? First of all, as covered earlier, you can reduce expenses or pick up a part-time job or side hustle.

A lot of people in retirement end up working 10 or 15 hours per week on the side. Number one for something to do, and number two, just to have extra spending money. Another option is to tap into the value of your home with a home equity line of credit or a reverse mortgage. That's pretty complicated, not gonna get into that too much in this video, but if you want to hear more about that leave me a comment down below, and maybe I'll do a whole video talking about the reverse mortgage. Another option that you may explore is, if you have a life insurance policy, you may be able to tap into the value of your life insurance policy and get something called the cash value, if you draw on that early. Again, complicated subject maybe a topic for another video but if you have a life insurance policy, you should sit down with a financial planner or financial advisor and ask them about those options.

And one thing I want to mention here is, if you're somebody who's in retirement and you know that your money supplies dwindling, don't ignore this problem. There are things that you can do. The longer you wait the worst it's going to be. So I would start addressing these issues now. So just to wrap up here guys, one of the main things that I want to recommend as a call to action is it may be worthwhile to sit down with a fee only certified financial planner.

It's gonna cost you a couple of $100 out of pocket, but they're going to be able to help you answer a lot of questions you may have, such as asset mix, asset allocation. There'll be able to look at your different retirement accounts and help you understand the tax implications, because on the surface retirement planning is pretty simple. It comes down to your expenses, your income, your lifestyle needs, and basically what you're looking to get out of your retirement. But when you look into the individual details that each person has with their different accounts, that's where it becomes more personalized and more complicated. So I think you're going to get a lot of value out of a fee only certified financial planner that you pay an hourly rate to, that way you can get unique information about your personal financial situation. At the end of the day here guys, if you fail to plan, you're essentially planning to fail.

And I want to discourage you from doing that. This isn't the most exciting topic and it's certainly not on the top of my to-do list but retirement planning is very important. So I encourage you to take action on this advice today. I thank you so much for watching this video. I hope you've got a lot of value out of it.

Let me know down in the comment section below what your thoughts are on this. And if you made it to the very end, let me know too because I'm always curious how many people stick around for full videos. Lastly, one last, thank you here to T-Mobile for sponsoring this video. I have a link down below, if you wanna check out T-Mobile's essentials, 55 and up plan, which is a great option to minimize your monthly recurring expenses in retirement, to make sure that money lasts longer. If this is your first time seeing me make sure you subscribe and hit that bell for future notifications, and on that I hope to see you in the next video.

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