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Transitioning to Retirement Part 2 (1 to 5 years before retirement)

yeah hobbies is a big thing because a lot of people say i don't know what i'm going to do in retirement because i have no hobbies but they'll say i don't play i have no hobbies so you have to you've got five years to start to think about that a lot of people wait till it's too late and there's so much stress on them they have no hobbies they don't know where they want to live they're not talking to their spouse we want to prevent all of that today we're talking about transitioning into retirement and this is part two of our three-part series if you remember and if you watched it the first part is five to ten years out today we're going to focus on your planning and things you need to do one to five years out before you leave your business and enter this third phase you know this is going to be a hard transition in your life if you aren't prepared and if you don't plan when we entered this phase we looked for help we looked everywhere but the only thing we could find was financial planning help and that's not what we needed and that's why we started this company because we realized we were struggling a bit and had to figure out how to pivot to make this time of our life as good as it could be so here we are retirement transformed in part one which was five to ten years out we gave you four strategies to work on the first was planning the second was understanding risks and when we talk about risks in retirement it's things like your loss of identity and creating a new identity your loss of community and creating a new community and those 40 hours of free time that everyone gets back the other thing was building a vision for your retirement five to ten years out you want to start thinking what is it going to look like and you also the fourth thing is start thinking about habits and routines what are some good habits you want to bring forward what are some bad ones you need to stop we want to make sure you go back and watch that episode the link is pasted below in the notes so we're going to build on those strategies today as we look at the one to five years out you know and in this time frame by now one to five years from your retirement date you do need to have a financial planner in place and so you have the financial planner your vision should start being clear and assuming it's your choice to retire you have a time frame and a date you know you have to start getting comfortable with the idea and getting more overall clarity time is going to go by really quickly now you know we both retired a lot earlier than we thought and because of that we weren't prepared you know i was at the peak of my career and i decided to sell my company i was 55 years old and i planned on working another 10.

Everyone wants to work to 65 right but i only worked for five and you know simultaneously my company was sold to a competitor and i stayed during the integration for three full years but i found that it wasn't going to work for me anymore so together in december of 2018 we left together and our entry into retirement was rough you know we we spent a year traveling the globe we went to italy uh florence uh where else are we london london bora bora bora bora was great but we did that we entertained family and friends for a summer that felt like a year we realized we didn't really have a purpose and one day we looked in the mirror and neither of us liked what we saw no we didn't we didn't we didn't we didn't look good and we didn't feel good and the thing is we don't want that for you this transition is hard and the more prepared you are the better chance of success you'll have so here's some additional steps that you should be taking one to five years out before retirement now this comes from our experience our success and our failures but also from many of the clients that we work with you know the first thing we're going to ask you to do and you might roll your eyes is to buy a journal aligned or unlined journal a cheap journal just something to start writing in something you can start documenting your thoughts and we're going to give you a little structure on that but writing is better than electronically typing it start recording your thoughts your feelings your struggles and your successes you know the reason that writing is better than electronic is it forces you to actually slow down you can't get the words out fast enough so you have to actually think of the words and write them and you retain it better when it's electronic even if you're a good typist you can just bang them all out you're not really allowing your brain to slow down and focus so journaling and writing is really important it's funny when you said bang them all out because you're a one finger typer two fingers this one and that one anyway be a place for you to gather your thoughts but more importantly to break up your journal into buckets and i'll tell you one of the buckets can include our five pillars physical wellness mental wellness relationships that you want to deepen or let go of your spouse partner alignment or misalignment wherever it might be and the last bucket is wisdom sharing you want to start thinking about what is it you're going to do after your career ends to get fulfillment to make good use of all of your skills and your experiences to to to serve others in a way like what jody and i are doing with this business and you want to start listening to your voice and writing it down and we're actually going to go deeper on wisdom sharing today because that's for the next five years you really want to start thinking about how that's going to fit into your life so this journal is going to incorporate kind of where you are now and you're going to put some reaching statements in to figure out where you'd like to be and then you're going to be able to do some research and organize your thoughts right and some other areas to put in the journal to start thinking about is travel plans if you want to travel write it down and figure it out and start thinking about it we have the greatest travel agent by the way that helps us figure some things out but you also might want a vacation home right and you also might want to think where do you want to live in the next 30 years right and how's that going to impact or affect or include your children and family how does that where you live how does your location impact your hobbies yeah hobbies is a big thing because a lot of people say i don't know what i'm going to do in retirement because i have no hobbies or they'll say i don't play i have no hobbies so you have to you've got five years to start to think about that a lot of people wait till it's too late and there's so much stress on them they have no hobbies they don't know where they want to live they're not talking to their spouse we want to prevent all of that we also want to give you a place where you can put down some aspirational hobbies yeah maybe learning a language or going to an art studio or picking up a new sport start painting start painting yeah mark's laughing at me because i want to start painting i just haven't had the time four years ago i gave you the whole painting kit the easel and all of the things and they're still in the closet maybe i'll go now okay okay there you go all right second thing to do we're going to focus the rest so the first is the journal that was all the big journals get a journal and start writing right and you know write and then put it away take it back out again put some tabs in there on these different sections i think you'll really enjoy it but let's talk about wisdom sharon because this is really a core component of your retirement transformed and one of the things that we did ourselves and we do with our clients and we share with this in a very deep way in our online course is to figure out some things about yourself so we want you get a blank piece of paper and we want you to put five columns in there going left to right and the first column really is to list all of the jobs and the roles you've played over your entire career or your life in the last 30 or 40 years and sometimes it's easy to break it into buckets the last 10 the previous 10 whatever it might be sales role ceo and you want to go back as far as you're comfortable with i know for me i went back 20 years i know for mark he went back to his first job out of middle school which was cutting lawns paper boi oh paper boi paper boi when did you cut lawns after that because you went all the way back i wasn't allowed to use lawnmower it was too little so you pick the time frame that works for you but in that first column you want to list all those jobs that you had and then put the date because the date the second column the date just so you kind of have a reference but really where it gets interesting is the third column we want you to write down what did you love about that job what what excited you about it why did you like it so much what emotion comes to mind when you think about being a paper boy or cutting lawns or right i happen to be the world's greatest waitress which helps me helps me be a good mom of six kids carrying plates the fourth column is perhaps what did you dislike about that role because if you didn't like it you clearly do not want to take up that type of job right or that that service in your retirement if you don't like it and then the fifth column is what has this job or role taught you and then to sum it up you want to go through those sheets and do a whole bunch of them pick your top five it's critical it's all we want you to do is what were the top five jobs or roles that you played in the last 30 years so that's probably a pretty big and a pretty busy sheet for most people the second thing we want you to do is list your strengths and values as they speak to you go through and list them and get a top five for each strength or value and once you have that combine that with your top five jobs and see where you land and start writing about it you're gonna start getting a little clarity on what it is you think you might want to do the other thing to do as you're writing and thinking about it you've got you know one to five years left of work start paying attention to your to your days now so you went backwards now going forward if you have identified sales leadership as something you like really pay attention when you're doing it now you know if you're a finance person and you love working on spreadsheets is that really what you see yourself doing after so it's really important it makes makes me think of that what was that book that uh we read um wisdom at work by chip conley yeah we'll put those notes down below wisdom at work by chip conley the making of a modern elder an awesome read it's a really interesting book about his role in airbnb and the other thing to do during this phase if you're not already is start volunteering in any way shape or form you know it could be at the food bank it could be anything but you want to find a way to volunteer board service well i'll tell you it makes it easier to find your volunteering niche after you've gone back and you've looked at what inspires you in different roles and what your core values and competencies and where you get your juice from and then you figure out how much time you have now with the one to five years still working and then you figure out how to launch into a volunteering role and every community needs you now look these next five years are going to be a challenging time they're going to go fast we don't want you just to coast and all of a sudden end up thinking oh my god i'm leaving in 12 months the next video is about the last 12 months but we want you to do everything we talked about in the first video and this one to get you ready for that and that way you'll land in this phase fully prepared and listen if you enjoyed this please share with your friends and also please subscribe by clicking the subscribe button below and don't forget to join our free facebook community the link is in the notes as well it's a great place to start to build a community for your retirement phase thanks so much for listening and we look forward to being with you again soon you

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Retirement Planning: I’m 66 Years Old With $800,000, Can I Retire?

we all want to know do we have enough can we retire and how long will our money last well the key in retirement is to compound good decision after good decision and what that does is that helps to optimize your overall retirement assets and increase the probability that you do have enough and you can retire and most importantly you don't have to to live with anxiety throughout retirement worrying if you have enough or not in this video we're going to look at a 66 year old with 800 000 saved and really get into some of the nuances of different decisions that have to be made in the potential outcome of those various decisions [Music] hi i'm troy sharp ceo of oak harvest financial group certified financial planner professional host of the retirement income show and certified tax specialist the purpose of these videos is to help get you thinking along the lines of what decisions need to be made and how they are all interrelated from social security to health care to investments in asset allocation to managing risk to taxes to really get get you thinking about all the decisions that have to be made and how one decision impacts other decisions as we go through these what you'll start to see with retirement is that it's just as much an art as it is a science because everyone's situation is so unique everyone's circumstances are so different so we're going to look at some different variables here but we're going to start out with some very basic ones so first we have john and jane just a sample case male female both age 66 and just retire now we're in texas so we put texas as a state residence but obviously if you live in a state with an income tax a state income tax there would be a little bit different scenario but that's why the customization is so important okay so retirement period so we like to assume a long life expectancy and the reason is that the age 85 population segment in this country is the fastest growing population segment out there also according to pew research which i brought this article up here when we look at the projection of growth this is the estimated number of people over 100 years old over the next 30 years in 1990 there were 95 000 people over age 100.

In 2015 451 thousand by 2050 this is a pew research study by the way 3.6 million people estimated to be over the age of 100. this is advances in science and technology and medicine and treatment to help people overcome various diseases that they may they may find themselves with in retirement so underestimating life expectancy is a big mistake for a retirement planner because if we plan for 95 or 90 and you don't make it that far well you have that money you're secure but if we plan to 82 and you make it to 90 well guess what that's a big problem so when we talk about life expectancy this is one of the pieces of financial planning that is specialized to you and yourself you know your health you know your longevity you know what health problems you may or may not have of course we can customize this for your particular situation but most people from my experience underestimate the advances in medicine technology and science that will continue to extend our lives as time progresses we have treatment right now for various diseases and cancers that even five ten years ago we didn't have so underestimating our life expectancy is one of the big mistakes that people make now if you do have health conditions if you smoke if you drink you're probably not making it to 95 that would be customized for your particular situation but generally speaking i'd much rather plan for you to live to 95 and you don't make it there then plan for you to live to 85 and then you make it to 95 and then the plan obviously would be insufficient because there wouldn't be enough money to pay for health care to keep up with inflation taxes etc so that's why we put the life expectancies at 95.

okay this particular couple what we're trying to do is account for spending and retirement of sixty thousand dollars per year of course this is after tax so if most of your money is inside a 401k or an ira there is a tax problem there to get 60 000 out we have to pull more than that after taxes to be left with 60. healthcare this is the average medicare cost for a 66 year old couple in this country now it may be a little bit more a little bit less for you depending on your prescriptions and various out-of-pocket costs but this 9 400 this is the average including medicare premiums out of pocket costs for health care expenses for a 66 year old couple in this country okay so social security john has he will file his normal application at sixty six and a half and receive thirty six thousand dollars jane will then file spousal benefits in this scenario which is um a lot of times what we see working with clients where the husband files social security and then the y files for spousal benefits of course your situation may be different again this is where customization comes in but 36 000 and 18 000 are the social security benefits now here's something very important when we look at the breakdown in assets this is where retirement planning starts to get very very fun for us because it start it's putting that puzzle together but where it becomes very complicated for for most people because they don't understand the challenges that come with having too much money inside that 401k so we did a breakdown here six hundred thousand inside the 401k and 200 000 inside the brokerage account there are literally millions and millions of different ways that you could take retirement income from this breakdown of accounts you could take x amount from the 401k take x amount from the brokerage account brokerage of course when you say this this is a non-retirement account a non-ira optimization comes into play when we we are we identify what is the appropriate amount to take out of that 401k and what is the appropriate amount to take out of the non-ira in order to not just reduce taxes today but look at the impact over the course of your retirement which income distribution strategy makes the most sense for not only today but over the next 20 to 30 years so this is the breakdown here we're going to when we look at the tax analysis in a few minutes it's going to make a lot more sense we're going to look at the top 100 different income distribution possible strategies and the impact that they have over a long period of time okay so very simple we're not looking at real estate here so a net worth of eight hundred thousand dollars because yes when you have equity in your home it's a great thing to have you can pull that out for emergencies later we just want to isolate the financial assets that this couple has saved look at them spending sixty thousand dollars a year after tax with inflation uh inflation by the way we have it two and a quarter percent i'll touch on that in a little bit because we received some comments about inflation and health care costs now health care obviously is increasing a lot more than general inflation in the economy but we just want to isolate with these financial assets is that enough to answer the big questions can i retire stay retired and maintain my standard of living so when we look over here at a monte carlo analysis so this button what we're going to do is we're going to hit it it's going to run a thousand different simulations looking at a thousand different market returns over the course of time we just have them in a basic 60 40 portfolio again asset allocation is a big part of a successful retirement but we're just trying to to provide information based on what the majority of people out there are currently doing with retirement okay so this comes in at about 87 percent so 87 percent you may be saying well is that a good number is that a bad number the truth is it doesn't really matter too much it's just a snapshot in time what's most important with a financial plan and a retirement plan is that you stay connected to this over time when markets are up or down and you have various returns over time and you're spending money as well you run into what's called sequence of returns risk which is the combination of taking money out and market losses if you take out five percent you lose 20 you're down 25 percent in a single year now if that happens in consecutive years that's where the sequence of returns risk comes in when you're in the distribution phase of retirement so yes 87 percent i would feel comfortable myself retiring if this came in at 87 percent for me because that means 870 out of a thousand simulations i die with money now it's more nuanced than that of course but what's most important is that we're tracking this over time is it staying at 87 percent is it going up is it going down that's what's really important this is nothing more than a snapshot in time now when we start to look at before we get to the tax analysis i want to come over here to what's called the play zone in this particular software that we use and i like this because it shows what happens if we spend a little bit more money or less money how does that impact our probability of success so right now we have this couple spending sixty thousand dollars after taxes let's say they wanted to spend seventy thousand though seventy one look at the impact that this has it drops it from 87 to 41 that is a massive change in probability of success now what we would do in this situation if somebody wanted to spend 70 000 of course we can customize a plan where seventy thousand is spent maybe in the first five years seven years ten years with the intention of eventually tapering it back down to an inflation adjusted sixty thousand per year so inflation adjusted sixty thousand per year what does that mean well 60 000 today if you take that out of your portfolio it will buy more goods and services than if you take 60 000 out of your portfolio in the future this is a basic time value of money concept inflation erodes our purchasing power over time so to have the same purchasing power in the future of 60 000 today we probably need to pull out 68 69 70 71 000 something in that range we'll actually look at this in a second but the 70 000 this assumes we spend 70 000 today after taxes and it's just inflating at two and a quarter percent over time now i said i would talk a little bit about inflation and right now what's going on as i record this video is we are going through a period of a bit higher inflation in some areas other areas we absolutely don't have any serious inflation the truth of the matter is whatever you believe inflation to be when we customize a plan like this for you we can look at various amounts of inflation but if you start to put it out at four five six seven percent it's very likely you're not going to have enough money to keep up with that level of inflation unless the investment returns are that or greater now positive news there is typically in high periods of inflation stocks have performed well but when we look at inflation inputs and inflation estimates it's been 12 plus years where general inflation in the economy has been under 2 we are starting to see some inflation now most experts believe that it's transitory and by the time we get to next year inflation should normalize but we'll see most importantly again what we do is we stay connected if inflation does start to to sustain itself in a way that gets above two and a half three three and a half four percent well that's why we have a financial plan we start to adjust for those changes same thing with taxes same thing with markets same thing with everything in retirement our health our goals and in the circumstances we find ourselves in they change throughout retirement that's why when we look at something like this it's just a snapshot in time we need to be able to be flexible and pivot based on whatever circumstances come our way okay so taxes i want to look at taxes now we have this this is a different software that we use to look at taxes we'll overlay this software and the outputs from this one to the other software along with a few other ones that we use then of course the human element is the most important when combining all of this together but what we're looking at here is the top 100 distribution strategies for this same couple number one tax planning and income distribution scenarios the number one ranked strategy of course is up top it shows an estimated ending balance of 663 000 and taxes paid over the course of retirement of 42 sixty so ending balance of six sixty taxes paid of about forty two thousand if we come down here to the very lowest ranked strategy so i went to number eleven it's number 101 ranked cumulative taxes 156 000 with an ending balance of 170.

so that's over a 500 000 or so change in an estimated ending balance and a hundred thousand plus in additional taxes paid what's cool about this software is it isolates everything else except your distribution strategy how much are you taking from the ira how much are you taking from the non-ira are you doing any roth conversions so being able to isolate everything else and just looking at those variables shows us very clearly that the tax planning and income planning component for this couple in this scenario john and jane is extremely important it's the difference isolating everything else between finishing with about a hundred and seventy thousand estimated or six hundred and sixty thousand so as you can see income planning tax planning play a very critical part in the overall retirement plan this software that we looked at over here this one is assuming what we call a conventional wisdom distribution strategy now this software is that's the software's weakness this does not do a great job tax planning but when we overlay the tax planning software with the financial planning software here when we get the 87 percent and we get it all done this gets it up to 90 95 96 99 a lot of times the big takeaway here is that retirement is not just about your investments it's about having a plan that looks at your investments and manages risk but also generating income tax planning and health care planning along with estate planning estate planning is very important if it matters to you what happens to your assets when you're gone so we always keep a link in the description if you want to reach out to us set a consultation have a phone call and see if this type of planning is appropriate for you it may not be appropriate for you you may not be a good fit for what we do and that's okay hopefully we still can provide value and help you become a great have a greater understanding of retirement but if you do want to talk to us there's a link below you can schedule an appointment and of course share this video with a friend or family member hit that subscribe button and thumbs up if you liked it and if you don't like it hit the thumbs down that's fine too and if you leave a comment we're gonna make an attempt to address those comments in one big video of course we can't respond to every single comment or provide personalized financial advice but feel free to comment below that helps you to know that there's engagement with this video and they'll help share it with others so they can learn as well

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Retirement Planning: I’m 66 Years Old With $800,000, Can I Retire?

we all want to know do we have enough can we retire and how long will our money last well the key in retirement is to compound good decision after good decision and what that does is that helps to optimize your overall retirement assets and increase the probability that you do have enough and you can retire and most importantly you don't have to to live with anxiety throughout retirement worrying if you have enough or not in this video we're going to look at a 66 year old with 800 000 saved and really get into some of the nuances of different decisions that have to be made in the potential outcome of those various decisions [Music] hi i'm troy sharp ceo of oak harvest financial group certified financial planner professional host of the retirement income show and certified tax specialist the purpose of these videos is to help get you thinking along the lines of what decisions need to be made and how they are all interrelated from social security to health care to investments in asset allocation to managing risk to taxes to really get get you thinking about all the decisions that have to be made and how one decision impacts other decisions as we go through these what you'll start to see with retirement is that it's just as much an art as it is a science because everyone's situation is so unique everyone's circumstances are so different so we're going to look at some different variables here but we're going to start out with some very basic ones so first we have john and jane just a sample case male female both age 66 and just retire now we're in texas so we put texas as a state residence but obviously if you live in a state with an income tax a state income tax there would be a little bit different scenario but that's why the customization is so important okay so retirement period so we like to assume a long life expectancy and the reason is that the age 85 population segment in this country is the fastest growing population segment out there also according to pew research which i brought this article up here when we look at the projection of growth this is the estimated number of people over 100 years old over the next 30 years in 1990 there were 95 000 people over age 100.

In 2015 451 thousand by 2050 this is a pew research study by the way 3.6 million people estimated to be over the age of 100. this is advances in science and technology and medicine and treatment to help people overcome various diseases that they may they may find themselves with in retirement so underestimating life expectancy is a big mistake for a retirement planner because if we plan for 95 or 90 and you don't make it that far well you have that money you're secure but if we plan to 82 and you make it to 90 well guess what that's a big problem so when we talk about life expectancy this is one of the pieces of financial planning that is specialized to you and yourself you know your health you know your longevity you know what health problems you may or may not have of course we can customize this for your particular situation but most people from my experience underestimate the advances in medicine technology and science that will continue to extend our lives as time progresses we have treatment right now for various diseases and cancers that even five ten years ago we didn't have so underestimating our life expectancy is one of the big mistakes that people make now if you do have health conditions if you smoke if you drink you're probably not making it to 95 that would be customized for your particular situation but generally speaking i'd much rather plan for you to live to 95 and you don't make it there then plan for you to live to 85 and then you make it to 95 and then the plan obviously would be insufficient because there wouldn't be enough money to pay for health care to keep up with inflation taxes etc so that's why we put the life expectancies at 95.

okay this particular couple what we're trying to do is account for spending and retirement of sixty thousand dollars per year of course this is after tax so if most of your money is inside a 401k or an ira there is a tax problem there to get 60 000 out we have to pull more than that after taxes to be left with 60. healthcare this is the average medicare cost for a 66 year old couple in this country now it may be a little bit more a little bit less for you depending on your prescriptions and various out-of-pocket costs but this 9 400 this is the average including medicare premiums out of pocket costs for health care expenses for a 66 year old couple in this country okay so social security john has he will file his normal application at sixty six and a half and receive thirty six thousand dollars jane will then file spousal benefits in this scenario which is um a lot of times what we see working with clients where the husband files social security and then the y files for spousal benefits of course your situation may be different again this is where customization comes in but 36 000 and 18 000 are the social security benefits now here's something very important when we look at the breakdown in assets this is where retirement planning starts to get very very fun for us because it start it's putting that puzzle together but where it becomes very complicated for for most people because they don't understand the challenges that come with having too much money inside that 401k so we did a breakdown here six hundred thousand inside the 401k and 200 000 inside the brokerage account there are literally millions and millions of different ways that you could take retirement income from this breakdown of accounts you could take x amount from the 401k take x amount from the brokerage account brokerage of course when you say this this is a non-retirement account a non-ira optimization comes into play when we we are we identify what is the appropriate amount to take out of that 401k and what is the appropriate amount to take out of the non-ira in order to not just reduce taxes today but look at the impact over the course of your retirement which income distribution strategy makes the most sense for not only today but over the next 20 to 30 years so this is the breakdown here we're going to when we look at the tax analysis in a few minutes it's going to make a lot more sense we're going to look at the top 100 different income distribution possible strategies and the impact that they have over a long period of time okay so very simple we're not looking at real estate here so a net worth of eight hundred thousand dollars because yes when you have equity in your home it's a great thing to have you can pull that out for emergencies later we just want to isolate the financial assets that this couple has saved look at them spending sixty thousand dollars a year after tax with inflation uh inflation by the way we have it two and a quarter percent i'll touch on that in a little bit because we received some comments about inflation and health care costs now health care obviously is increasing a lot more than general inflation in the economy but we just want to isolate with these financial assets is that enough to answer the big questions can i retire stay retired and maintain my standard of living so when we look over here at a monte carlo analysis so this button what we're going to do is we're going to hit it it's going to run a thousand different simulations looking at a thousand different market returns over the course of time we just have them in a basic 60 40 portfolio again asset allocation is a big part of a successful retirement but we're just trying to to provide information based on what the majority of people out there are currently doing with retirement okay so this comes in at about 87 percent so 87 percent you may be saying well is that a good number is that a bad number the truth is it doesn't really matter too much it's just a snapshot in time what's most important with a financial plan and a retirement plan is that you stay connected to this over time when markets are up or down and you have various returns over time and you're spending money as well you run into what's called sequence of returns risk which is the combination of taking money out and market losses if you take out five percent you lose 20 you're down 25 percent in a single year now if that happens in consecutive years that's where the sequence of returns risk comes in when you're in the distribution phase of retirement so yes 87 percent i would feel comfortable myself retiring if this came in at 87 percent for me because that means 870 out of a thousand simulations i die with money now it's more nuanced than that of course but what's most important is that we're tracking this over time is it staying at 87 percent is it going up is it going down that's what's really important this is nothing more than a snapshot in time now when we start to look at before we get to the tax analysis i want to come over here to what's called the play zone in this particular software that we use and i like this because it shows what happens if we spend a little bit more money or less money how does that impact our probability of success so right now we have this couple spending sixty thousand dollars after taxes let's say they wanted to spend seventy thousand though seventy one look at the impact that this has it drops it from 87 to 41 that is a massive change in probability of success now what we would do in this situation if somebody wanted to spend 70 000 of course we can customize a plan where seventy thousand is spent maybe in the first five years seven years ten years with the intention of eventually tapering it back down to an inflation adjusted sixty thousand per year so inflation adjusted sixty thousand per year what does that mean well 60 000 today if you take that out of your portfolio it will buy more goods and services than if you take 60 000 out of your portfolio in the future this is a basic time value of money concept inflation erodes our purchasing power over time so to have the same purchasing power in the future of 60 000 today we probably need to pull out 68 69 70 71 000 something in that range we'll actually look at this in a second but the 70 000 this assumes we spend 70 000 today after taxes and it's just inflating at two and a quarter percent over time now i said i would talk a little bit about inflation and right now what's going on as i record this video is we are going through a period of a bit higher inflation in some areas other areas we absolutely don't have any serious inflation the truth of the matter is whatever you believe inflation to be when we customize a plan like this for you we can look at various amounts of inflation but if you start to put it out at four five six seven percent it's very likely you're not going to have enough money to keep up with that level of inflation unless the investment returns are that or greater now positive news there is typically in high periods of inflation stocks have performed well but when we look at inflation inputs and inflation estimates it's been 12 plus years where general inflation in the economy has been under 2 we are starting to see some inflation now most experts believe that it's transitory and by the time we get to next year inflation should normalize but we'll see most importantly again what we do is we stay connected if inflation does start to to sustain itself in a way that gets above two and a half three three and a half four percent well that's why we have a financial plan we start to adjust for those changes same thing with taxes same thing with markets same thing with everything in retirement our health our goals and in the circumstances we find ourselves in they change throughout retirement that's why when we look at something like this it's just a snapshot in time we need to be able to be flexible and pivot based on whatever circumstances come our way okay so taxes i want to look at taxes now we have this this is a different software that we use to look at taxes we'll overlay this software and the outputs from this one to the other software along with a few other ones that we use then of course the human element is the most important when combining all of this together but what we're looking at here is the top 100 distribution strategies for this same couple number one tax planning and income distribution scenarios the number one ranked strategy of course is up top it shows an estimated ending balance of 663 000 and taxes paid over the course of retirement of 42 sixty so ending balance of six sixty taxes paid of about forty two thousand if we come down here to the very lowest ranked strategy so i went to number eleven it's number 101 ranked cumulative taxes 156 000 with an ending balance of 170.

so that's over a 500 000 or so change in an estimated ending balance and a hundred thousand plus in additional taxes paid what's cool about this software is it isolates everything else except your distribution strategy how much are you taking from the ira how much are you taking from the non-ira are you doing any roth conversions so being able to isolate everything else and just looking at those variables shows us very clearly that the tax planning and income planning component for this couple in this scenario john and jane is extremely important it's the difference isolating everything else between finishing with about a hundred and seventy thousand estimated or six hundred and sixty thousand so as you can see income planning tax planning play a very critical part in the overall retirement plan this software that we looked at over here this one is assuming what we call a conventional wisdom distribution strategy now this software is that's the software's weakness this does not do a great job tax planning but when we overlay the tax planning software with the financial planning software here when we get the 87 percent and we get it all done this gets it up to 90 95 96 99 a lot of times the big takeaway here is that retirement is not just about your investments it's about having a plan that looks at your investments and manages risk but also generating income tax planning and health care planning along with estate planning estate planning is very important if it matters to you what happens to your assets when you're gone so we always keep a link in the description if you want to reach out to us set a consultation have a phone call and see if this type of planning is appropriate for you it may not be appropriate for you you may not be a good fit for what we do and that's okay hopefully we still can provide value and help you become a great have a greater understanding of retirement but if you do want to talk to us there's a link below you can schedule an appointment and of course share this video with a friend or family member hit that subscribe button and thumbs up if you liked it and if you don't like it hit the thumbs down that's fine too and if you leave a comment we're gonna make an attempt to address those comments in one big video of course we can't respond to every single comment or provide personalized financial advice but feel free to comment below that helps you to know that there's engagement with this video and they'll help share it with others so they can learn as well

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Average Net Worth in Retirement | Age 65, 70, 75

in this video clip i discuss the typical total assets of retirees at age 65 70 as well as 75 turning up following on holy schmidt divine schmidt the majority of the videos on youtube go over funds internet well worth cost savings earnings for individuals in their 40s 50s and even 60s not unsurprisingly these numbers have a tendency to increase the older a person gets anymore that they make as well as conserve during their lifetime this is the first video clip i'' ve carried out in truth that i'' ve seen below on youtube that discusses what occurs to individuals'' s internet worth after they go into retirement and also it talks regarding what their net worth is at age 65 age 70 and also 8.75 it'' s an essential video since there'' s not a whole lot of openness around on what takes place to somebody'' s funds once they enter retirement it ' s nearly like a black box where the information just goes away which is a shame due to the fact that for a lot of individuals they wish to know what happens after they obtain into retirement and also there simply isn'' t a whole lot of details available and also that ' s why i created this video for you in this video i discuss the mean and the typical internet well worth of people at 65 70 and also 75 and also the outcomes are a lot various than you would expect before we start please ensure you click subscribe as well as notifications there'' s a great deal taking place around in the globe as well as retired life for folks is transforming day-to-day often in terms of the policies and the information and also i job really difficult to obtain what'' s taking place out there in below for you when somebody enters retirement the video game modifications they had simply invested the last 30 or 40 years adding to their retirement savings as well as currently they'' re really attracting down on their retirement nest egg they'' re living off the return on their investments a pension social safety and security maybe also some part-time work it is this vibrant which causes a great deal of issue for individuals in retired life since the message that they had obtained up until that factor had to do with preparing for retired life not what to do following with the security of full-time employment gone and also the experience of living off of the returns from your retirement savings the road in advance is both interesting and also a little bit demanding allow'' s begin with age 65 since this is the following stop for a great deal of you as well as certainly you'' re naturally curious about those numbers first the data i'' m going to make use of originates from the 2020 study of consumer finances from the federal get board so it'' s fairly precise the very first number we'' re going to discuss is the mean which is just the standard of every one of the respondents that the federal get board spoke to this data comes from both ends of the spectrum on the low end individuals that have a lot more liabilities than they do properties this suggests that they'' re financially troubled and also at the high-end people that have so lots of possessions that they couldn'' t perhaps spend their means via them during their lifetime and those are going to most likely to their relative when they pass at age 65 the mean net worth is 1 million ninety 6 thousand 8 hundred bucks now i can inform you now that the majority of the people watching this video clip don'' t have that amount a much better number is the typical mean just implies there are an equal number of respondents with a greater total assets as well as an equivalent number with a reduced net well worth so it'' s the individual right in the middle that individual has a total assets of 239 450 so simply put much less than quarter of the ordinary total assets of the mean of that team what do you assume the typical total assets of a 70-year-old would be well if you ask most individuals they would believe that the 70-year-old would have attracted down on their pensions their 401ks their cost savings and so on and also their web well worth would have gone down interestingly that'' s not really the case though at age 70 the typical total assets really enhances to one million 2 hundred seventeen thousand 7 hundred bucks up one point 7 percent the average goes up to two hundred sixty six thousand four hundred dollars to put it simply it rises by 11 so why did both increase well there are a lot of concepts however the one that'' s more than likely is that individuals are adjusting during the initial few years of retired life they'' re intentionally not spending as a lot as they might since they wear'' t desire to obtain it incorrect so if that'' s the situation you ' d anticipate the following five years to actually go down as well as that'' s precisely what takes place at age 75 the mean web worth goes down to 977 thousand 7 hundred bucks down 19.7 percent from the net worth at age 70.

the typical goes down to 254 thousand eight hundred bucks down 4 point 4 percent from age seventy so why does the mean net well worth go faster downward from 70 to 75 than the average throughout both period there are a whole lot of reasons one of the most likely factor for the increase between 65 and 70 is that those retirees at that age at the very least at the high-end more than likely possess their very own services and aren'' t totally retired yet but by the time they hit 70 and also they move in the direction of 75 not just are they out of business yet they'' re establishing up trusts and also arranging their lives to ensure that their assets are relocating right into various pockets for their heirs if you such as this video and also you'' d like to see more of me please see to it you click subscribe notifications to make sure that you obtain alerted the following time i publish a video clip i article concerning twice a week additionally have a look at this video on the average social safety and security settlement in this nation this is jeff schmidt many thanks for seeing.

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Transitioning to Retirement Part 2 (1 to 5 years before retirement)

yeah hobbies is a huge point since a great deal of individuals claim i don'' t recognize what i ' m going to perform in retired life since i have no hobbies but they ' ll claim i put on ' t play i have no pastimes so you need to you ' ve obtained five years to start to believe regarding that a great deal of people wait till it ' s too late as well as there ' s so much stress and anxiety on'them they have no leisure activities they put on ' t know where they wish to live they ' re not speaking to'their partner we wish to protect against every one of that today we ' re chatting concerning transitioning right into retirement as well as this is sequel of our three-part series if you bear in mind and also if you enjoyed it the very first component is five to ten years out today we'' re going to concentrate on your preparation and points you require to do one to five years out prior to you leave your organization and also enter this third stage you recognize this is mosting likely to be a difficult change in your life if you aren'' t prepared and also if you put on ' t plan when we entered this stage we tried to find assistance we looked anywhere however the only point we can find was economic planning aid which'' s not what we required which'' s why we started this company since we realized we were struggling a bit and needed to determine how to pivot to make this time around of our life just as good as maybe so here we are retired life transformed partly one which was 5 to 10 years out we provided you 4 approaches to function on the very first was intending the secondly was recognizing dangers and also when we speak regarding dangers in retirement it'' s points like your loss of identity as well as developing a new identity your loss of area and producing a new area and those 40 hours of cost-free time that everybody returns the various other point was constructing a vision for your retirement five to 10 years out you desire to begin believing what is it going to appear like and also you also the 4th point is start assuming regarding practices as well as routines what are some excellent habits you intend to advance what are some bad ones you require to quit we wish to make sure you return as well as view that episode the web link is pasted below in the notes so we'' re going to build on those approaches today as we look at the one to 5 years out you know as well as in this amount of time by currently one to 5 years from your retired life day you do require to have a financial coordinator in place therefore you have the economic organizer your vision ought to start being clear and assuming it'' s your choice to retire you have a period as well as a day you know you have to start obtaining comfortable with the idea and getting more total quality time is mosting likely to pass truly quickly now you know we both retired a great deal earlier than we assumed and also because of that we weren'' t prepared you recognize i was at the peak of my occupation as well as i made a decision to offer my firm i was 55 years of ages as well as i intended on working one more 10.

Everybody wants to function to 65 right however i just helped five as well as you understand all at once my firm was offered to a rival and i remained during the assimilation for 3 complete years however i found that it wasn'' t going to benefit me anymore so with each other in december of 2018 we left together as well as our access into retired life was rough you know we we invested a year traveling the world we mosted likely to italy uh florence uh where else are we london london bora bora bora bora was terrific however we did that we captivated friends and family for a summer that seemed like a year we recognized we didn'' t truly have a function and also someday we looked in the mirror and also neither of us liked what we saw no we didn'' t we didn'' t we didn'' t we didn ' t appearance good and also we didn ' t feel good as well as the important things is we put on ' t desire that for you this shift is difficult as well as the extra ready you are the better opportunity of success you ' ll have so here ' s some added actions that you should be taking one to 5 years out prior to retirement currently this originates from our experience our success and our failures but also from most of the clients that we collaborate with you understand the initial point we'' re mosting likely to ask you to do and also you may roll your eyes is to buy a journal aligned or unlined journal an economical journal just something to begin creating in something you can start recording your thoughts and we'' re mosting likely to offer you a little structure on that however composing is much better than online typing it start recording your thoughts your sensations your struggles and also your successes you recognize the reason that composing is far better than digital is it compels you to actually reduce you can'' t obtain words out quickly enough so you have to really assume of the words as well as create them and you preserve it better when it'' s electronic also if you'' re an excellent typist you can simply bang them all out'you ' re not actually permitting your mind to decrease and also focus so journaling and also composing is truly crucial it'' s funny when you claimed bang them all out due to the fact that you'' re a one finger typer 2 fingers this set which one anyhow be a location for you to gather your ideas however even more significantly to damage up your journal right into containers as well as i'' ll inform you among the buckets can include our 5 pillars physical health mental health connections that you want to strengthen or release your spouse companion alignment or imbalance anywhere it could be and also the last pail is wisdom sharing you want to start thinking of what is it you'' re going to do after your profession ends to obtain fulfillment to profit all of your skills as well as your experiences to to to serve others in a way like what jody as well as i are doing with this service and also you desire to start listening to your voice and also creating it down and also we'' re really mosting likely to go deeper on wisdom sharing today since that'' s for the next five years you really wish to start considering exactly how that'' s mosting likely to fit right into your life so this journal is mosting likely to include sort of where you are now and also you'' re going to put some reaching declarations in to identify where you'' d like to be and after that you ' re going to have the ability to do some research and also arrange your thoughts right and also a few other locations to place in the journal to start believing about is itinerary if you intend to travel compose it down and figure it out and also begin thinking of it we have the best traveling agent by the way that assists us figure some points out however you additionally may desire a villa right and also you additionally may desire to think where do you desire to stay in the next 30 years right as well as how'' s that going to effect or impact or include your youngsters and family just how does that where you live just how does your location effect your pastimes yeah leisure activities is a huge point because a great deal of individuals state i don'' t know what i ' m mosting likely to perform in retired life due to the fact that i have no pastimes or they ' ll claim i put on ' t play i have no hobbies so you have to you ' ve obtained five years to begin to consider that a whole lot of individuals wait till it ' s too late as well as there ' s so much stress on them they have no leisure activities they put on ' t understand where they wish to live they ' re not speaking to their partner we want to prevent all of that we likewise wish to provide you an area where you can take down some aspirational hobbies yeah maybe discovering a language or going to an art studio or getting a new sport start repainting start paint yeah mark'' s making fun of me since i want to start painting i simply place'' t had the time four years ago i provided you the entire paint kit the easel and also all of things as well as they'' re still in the wardrobe perhaps i'' ll go now alright okay there you go great 2nd thing to do we'' re mosting likely to focus the rest so the very first is the journal that was all the large journals get a journal and start writing right as well as you understand compose and afterwards put it away take it back out once more put some tabs in there on these various sections i believe you'' ll really appreciate it but allow ' s talk regarding knowledge sharon since this is actually a core element of your retired life changed and also among things that we did ourselves as well as we finish with our clients as well as we show this in a very deep method in our on-line training course is to find out some aspects of on your own so we desire you obtain a blank notepad and also we want you to put five columns in there going entrusted to best and the very first column actually is to detail all of the tasks and the functions you'' ve repeated your entire career or your life in the last 30 or 40 years and also sometimes it'' s simple to damage it right into buckets the last 10 the previous 10 whatever it may be sales function ceo and you wish to go back as far as you'' re comfy with i know for me i went back two decades i understand for mark he returned to his first work out of intermediate school which was reducing yards paper boi oh paper boi paper boi when did you cut grass after that because you copulated back i wasn'' t permitted to utilize lawnmower it was inadequate so you pick the moment frame that helps you but in that first column you want to provide all those jobs that you had and after that put the day since the day the second column the date just so you type of have a recommendation yet truly where it obtains intriguing is the third column we desire you to jot down what did you enjoy regarding that job what what delighted you regarding it why did you like it a lot what feeling comes to mind when you consider being a paper kid or cutting yards or appropriate i occur to be the globe'' s biggest waitress which aids me helps me be a good mama of 6 youngsters lugging plates the fourth column is possibly what did you dislike concerning that role since if you didn'' t like it you plainly do not intend to take up that kind of task right or that that solution in your retirement if you put on'' t like it and afterwards the collaborators of enemy is what has this work or role instructed you and after that to sum it up you intend to experience those sheets and also do an entire lot of them select your top 5 it'' s crucial it ' s all we desire you to do is what were the top 5 jobs or duties that you played in the last 30 years so that'' s probably a pretty large as well as a rather active sheet for the majority of people the second thing we desire you to do is list your staminas and values as they speak with you go via and note them and also get a top 5 for each stamina or value and once you have that combine that with your top 5 tasks and also see where you land and also start covering it you'' re gon na begin obtaining a little quality on what it is you believe you might wish to do the other thing to do as you'' re writing and also thinking of it you'' ve obtained you understand one to 5 years left of work start paying focus to your to your days now so you reversed now moving forward if you have actually determined sales leadership as something you such as really listen when you'' re doing it now you'recognize if you ' re a finance person and you love servicing spread sheets is that truly what you see on your own doing after so it'' s actually crucial it makes makes me think of that what was that book that uh we read um wisdom at the office by chip conley yeah we'' ll put those take down listed below wisdom at job by chip conley the making of a contemporary senior an awesome read it'' s a truly intriguing publication concerning his function in airbnb and also the various other point to do throughout this stage if you'' re not already is start offering in any type of means form or form you understand maybe at the food bank maybe anything but you intend to find a means to volunteer board service well i'' ll tell you it makes it much easier to discover your volunteering niche after you'' ve gone back and you'' ve considered what inspires you in various functions and also what your core values and also proficiencies and also where you get your juice from and afterwards you find out just how much time you have currently with the one to 5 years still working and afterwards you determine how to launch into a volunteering duty as well as every neighborhood requires you currently look these next 5 years are going to be a tough time they'' re going to go quick we don'' t desire you simply to coastline as well as all of an abrupt end up believing oh my god i'' m leaving in year the next video is regarding the last one year however we want you to do whatever we spoke about in the initial video clip and this to get you all set for that which method you'' ll land in this phase totally prepared and pay attention if you enjoyed this please share with your friends as well as likewise please subscribe by clicking the subscribe button below and also put on'' t forget to join our free facebook community the link remains in the notes too it'' s a great area to begin to develop an area for your retired life stage many thanks a lot for listening and also we expect being with you once again quickly you

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