Retirement Answer Man

This is a time of year when many people give thanks for what they have. On this episode of Retirement Answer Man, I explore the definition of thankfulness and gratitude with our Rock Retirement Club retirement coach, BW. He even brings us 5 tips that can help us to cultivate gratitude on a regular basis. 

Tanya Nichols joins me again to help answer listener questions. You’ll learn what you can do if you are worried about a market crash, what to do if you think you are too old for long-term care insurance, and we’ll discuss Roth conversions from a 403B. Press play now to join me to hear the answers to listener questions and more.

What are you thankful for?

The definitions of thankfulness and gratitude are very similar. Thankfulness is the consciousness of benefit received from others. Gratitude is a thankful appreciation for what an individual receives both tangible and intangible. 

One way to combat worry is to create a habit of thankfulness. I have done this personally and it has changed my life. Practicing gratitude contributes to greater happiness and it allows us to focus on what we have rather than what we lack. Listen in to hear what I am grateful for this year.

5 tips to help cultivate gratitude on a regular basis

Cultivating a gratitude practice can seem like a good idea but it often falls by the wayside after a few days or weeks. The beauty of practicing gratitude is that it shifts your mindset. You can use these 5 tips to help you become more thankful by creating your own practice of gratitude each day. 

  1. Write and send a thank you note to someone who has had an impact on your life each month.
  2. Get in the habit of saying thank you to at least one person each day. 
  3. Keep a gratitude journal. You get bonus points if you try and come up with different things to be thankful for each day.
  4. Pray. If you are religious, praying can help you cultivate gratitude.
  5. Meditate. Instead of focusing on your inner self, try focusing on gratitude in the moment.

Does sequence of return risk keep you up at night? 

The world around us seems so unstable right now. Many people worry that we could be at the start of the next big crash. What if we are at the beginning of several years of zero returns? Sequence of return risk is one of the biggest worries of those on the cusp of retirement.

Although people worry about sequence of return risk, if you look back at history and study bear markets, youĺl see that even within those years there were good years and bad years. It’s also good to remember that your portfolio won’t directly reflect the S&P 500, we simply use it as a planning tool. 

How to balance market risk against inflation risk

Why do we take market risk when we are worried about sequence of returns? Inflation! Inflation risk is just as big, but it creeps up slowly over time. You have to balance the risk of inflation with market risk. 

You can take market risk. You just have to know how much you are comfortable with. The first thing you need to do is understand the minimum effective dose of investment risk you need in order to create the life you want. Next, you’ll want to time segment your money by building your cash flow model early in retirement. Plan for statistically probable outcomes and then test for outliers. Listen in to hear the details of how you can protect yourself from both inflation risk and market risk.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [1:30] What is thankful?

PRACTICAL PLANNING SEGMENT

  • [5:02] Is Chris too old for long-term care insurance?
  • [8:11] A 403B and Roth conversion question
  • [12:12] A new learning experience as a couple
  • [14:06] What are the chances that the market crashes?

COACHES CORNER WITH BW

  • [22:09] Practice gratitude to improve your happiness
  • [26:17] 5 tips to help cultivate gratitude on a regular basis

TODAY’S SMART SPRINT SEGMENT

  • [30:16] Give yourself and everyone around you some grace this Thanksgiving

Resources Mentioned In This Episode

Align Financial

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM353.mp3
Category:general -- posted at: 6:00am CST

There are so many things to take care of in retirement. It can all feel overwhelming. Many people worry about their jobs, the state of the world, retirement, and their uncertain future. On this episode of Retirement Answer Man, you’ll learn what you can do to ease your worries about the unknown as well as discover the answers to questions from listeners like you. Join Tanya Nicols and me as we answer questions about an early retirement package, what to do when you have a significant portion of your net worth in one stock, and how to use second to die life insurance.

What is worry?

Worry is a noun that means a state of anxiety and uncertainty over actual or potential problems. It can also be a verb meaning to give way to anxiety or unease.

Are you a worrier? Although worry is a healthy thing, oftentimes people allow their minds to dwell on difficulties or (perceived) troubles. There is a fine line between healthy worry and overwhelming worry. 

The fine line between healthy and unhealthy worry can be hard to walk

Just like how exercise creates stress in your muscles and grows them, worry can do the same to your mind. Worry can spur you into action causing you to improve your situation. However, worry taken to excess can be paralyzing. It can cause you to lose perspective so that you can no longer see clearly. You can’t let worry overwhelm you so much that it steals your life away. Listen in to hear what you can do to help ease your worries about the state of the world, life, and retirement. 

How do you perceive the wealth you have created?

It is often said that money is the root of all evil, but this isn’t true. The love of money is the root of evil. 

Do you feel guilty about the wealth you have created? Guilt is a common theme for many successful people. Many create an emotional attachment to their money. Rather than judging yourself for creating your wealth, use that wealth as a tool. How you use it is important. What will you do with your wealth to create an amazing life? 

What to do when you have a significant portion of your assets in one stock

One listener has ⅓ of her net worth tied up in one particular tech stock. She is looking for some guidance on how to handle this. 

A great question to ask is: what would happen to your net worth if that stock simply vanished? This question can get you thinking about how much you need to have a good life. Once you have thought deeply about your life then you can be methodical about this asset. Set a number to help guide you and don’t let taxes sway your decision. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [1:40] What is worry?

Q&A WITH TANYA NICHOLS

  • [10:56] How do you feel about your wealth?
  • [16:52] What to do when you have a significant portion of your assets in one stock?
  • [22:57] How to balance Social Security, taxes, and an early retirement package
  • [25:46] Second to die life insurance

TODAY’S SMART SPRINT SEGMENT

  • [30:47] Control your input

Resources Mentioned In This Episode

Align Financial

BOOK - The Daily Stoic by Ryan Holiday

BOOK - The Rational Optimist by Matt Ridley

BOOK - The Power of Agency by Anthony Rao

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM352.mp3
Category:general -- posted at: 6:00am CST

Do you use an HSA? If not, you may want to start one after listening to this episode. Find out how you can use an HSA to help lessen healthcare costs in retirement and stick around to hear the answers to listener questions on this episode of Retirement Answer Man.

Are you trying to figure out how to deal with an unexpected retirement? Would you like to come on the show? We are looking for a volunteer for the next Retirement Plan Live coming up in January. If you would like some help in navigating your unexpected retirement head on over to RogerWhitney.com/rpl to put your name in the hat and potentially become our next case study for Retirement Plan Live. 

What is focus?

Focus is the act of concentrated activity on something. You choose where to place your focus in your life. 

What do you choose to focus on? Do you choose to focus on fear, problems, and all that could go wrong? Or do you choose to focus on the present and future excitement? 

When you focus on a problem does it seem huge and overwhelming? Or do you break that problem up into chunks so that you can determine what to do next? 

I like to say focus on the WHAM. Figure out what the problem is, how to do it, get accountability, take action, and achieve momentum. In your retirement planning, think about how you can shift your focus to best serve yourself.

Can you still contribute to a Roth IRA with only a 1099R?

One listener has a question about Roth IRA contributions. He is no longer working and receives a pension, but would still like to contribute to a Roth IRA since he is under the income limitations. 

Unfortunately, this isn’t allowed since the income must be ‘earned income’ according to the IRS. But the good news is, his wife can still contribute to his Roth IRA since he is considered a nonworking spouse. 

Learn the specifics of his question and the answer by listening to this episode of Retirement Answer Man. 

HSAs are like ‘SuperRoths’

Lynn wrote in to encourage us to discuss HSAs a bit more. This is a great idea since HSAs can be like ‘SuperRoths’. 

I knew I was missing out on having an HSA so when I was shopping for healthcare plans last year I specifically looked for a healthcare plan that was HSA compliant. With an HSA an individual can contribute $3500 per year and a family can contribute $7100. 

A great way to use an HSA for retirement healthcare costs

There are a few things that make an HSA is so fantastic. The money you put into an HSA is tax-deductible and the money you take out is tax-free. HSAs are also extremely flexible. You can pay your healthcare expenses out of pocket now and save the receipts for reimbursement any time you want to. Listen in to find out how you can use the HSA as a medical expense slush fund and grow it in the long term.

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [1:42] What is focus?

PRACTICAL PLANNING SEGMENT

  • [11:26] Can you still contribute to a Roth IRA with only a 1099R?
  • [13:38] HSA’s in preretirement
  • [18:46] How valuable is 2 months of your life?
  • [22:26] Fire calc and inflation risks

TODAY’S SMART SPRINT SEGMENT

  • [29:37] Realize your focus

Resources Mentioned In This Episode

BOOK - The Rational Optimist by Matt Ridley

FireCalc.com

New Retirement Calculator

RogerWhitney.com/rpl

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

Direct download: RAM351.mp3
Category:general -- posted at: 6:00am CST

November is finally here and Nichole is back! That means it’s time for listener questions. This month is my planning month where I take the time to map out the next year so that I’m not just drifting along. I try to be intentional about where the show is going and where my practice and life are going too. Listen in to hear what’s in store for 2021 on the Retirement Answer Man and find out the answers to several listener questions. 

How to balance enjoying life now with planning for later

A listener, who describes herself as being in the constrained category of retirement readiness, asks how she can balance enjoying her life now with saving for retirement. This is a question that everyone struggles with, even those that are overfunded. We all tend to think of saving for retirement like climbing a mountain. This climb is filled with sacrifice and denial of comfort and pleasure. 

I argue that we must change our mindset when it comes to retirement. We must stop thinking of retirement as a destination and start enjoying this never-ending journey now. 

It helps to map out your spending and separate it into 3 categories. Listen in to hear what those categories are and how you can map out your cash flow to make you feel more at ease about retirement. 

How to decide whether to take the full pension or the pension with survivor benefits

One listener is faced with yet another retirement decision. Soon he must decide whether to take a full pension or a lesser amount with survivor benefits. How should one decide what to do? Just like with the previous question, it’s important to build a model first. Map out your cashflow and test it out by using different scenarios. This will give you a good idea of how much you really need to live the life you want. 

When should my spouse collect Social Security if her benefit is based on mine?

Mark and his wife have calculated that she will collect a larger benefit it is based on her husband’s earnings rather than her own. Spousal benefits are 50% of the higher-earning partner. However, the secondary partner can’t claim their benefits until the primary spouse claims theirs. So if the primary beneficiary decides to wait until age 70 to collect their benefit, then the secondary must wait to collect as well. Listen in to discover what the secondary spouse can do in the meantime to start the cash flowing in. 

Julie is looking for a safe investment for her 5 years of cash reserves

Julie wants to have 5 years of cash reserves but would like that large chunk of money to be earning a bit as well. It is hard to find a way to do this right now with interest rates so low. High yielding money market accounts may only yield .5%. CD’s aren’t much better and range between .65% - 1%. Individual bonds also have terrible returns. I do have one suggestion if you don’t mind a bit of complexity and paperwork. Listen in to find out what it is. 

OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN

WHAT DOES THAT MEAN?

  • [3:06] What is intention?

LISTENER QUESTIONS WITH NICHOLE

  • [11:20] How to balance enjoying life now with planning for later
  • [16:46] Deciding whether to take the full pension or the pension with survivor benefits
  • [19:40] When should my spouse collect Social Security if her benefit is based on mine?
  • [23:26] Julie is looking for a safe investment for her 5 years of cash reserves
  • [28:39] How to get a second set of eyes on his portfolio?

TODAY’S SMART SPRINT SEGMENT

  • [30:47] Look at your investment assets and see if they are giving distribution estimations so you can do some tax planning

Resources Mentioned In This Episode

Rock Retirement Club

Roger’s YouTube Channel - Roger That

BOOK - Rock Retirement  by Roger Whitney

Work with Roger

Roger’s Retirement Learning Center

 

Direct download: RAM350.mp3
Category:general -- posted at: 6:00am CST

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