Set Smart Financial Goals for 2025 Success

In this episode, April Schoen dives deep into the secrets of setting meaningful financial goals for the new year to guide you towards a secure and prosperous 2025.

In this episode, you’ll discover…

• The pivotal role of the SMART framework in financial planning

• Unique strategies for building a robust emergency fund

• Methods to maximize your retirement contributions effectively

• Insights into tackling high-interest debt with precision

• Practical tips for creating a balanced investment portfolio

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello and welcome to The Secure Retirement Method. I'm one of your hosts April Schoen and I'm so excited that you're here with me today because this is truly one of my favorite times of the year. I'm sitting here recording this today on January 2. So Happy New Year to you all. And, you know, there's just something so refreshing about a clean slate. This chance for us to look back on the last year and think about like, what went really well last year. What are some things that we want to change? And then also plan for the future. 

And I love this time of year because it's really a chance for us to dream a little bit, for my fellow dreamers out there. Think about the person that I want to become and then the life that I want to create. Now, my husband loves to make fun of me this time of year, because, listen, I am a planner and journal junkie, so usually, starting in December is when I really start thinking about the new year, and I might get a new planner, some new journals, and so it's quite a little joke for us at home. 

But it is truly because I really feel like this is a great time for us to start again, or continue on. Maybe it's not all about starting over. Maybe it's last year went so well, and we want to build on that coming into the new year. Now for me, I've already set some goals for this year, so I'm going to share those with you today. One goal is I want to read one professional development book a month. 

Now you may not know this about me, but I love to read but I love to read fiction books. I totally can geek out, nerd out on some fiction books, especially in the fantasy, sci-fi realm. And because I love to read fiction books, I actually find it hard to read those personal development books. So it's something that I have to be intentional about I have to set time aside daily or weekly to make sure that I'm getting that done. 

So that's definitely one of my goals is to read one personal development book each month. I used to do this and got away from it last year, so it's something I'm going to bring back in 2025. One of the other things I'm going to work on is having some intentional time with my two boys. Now, my boys are eight and 11, and my goal for this year is to spend some one on one time with them each month. 

And that might sound like something really simple, but for me, what I find is that if I don't again, schedule that out or set time aside for that, guess what? It's not going to happen. I'm going to get to April or May and say, you know what? I wanted to do this. I wanted to set time aside every single month for that, and it just hasn't happened. So I love having this as one of my goals, and then also the same time going to my calendar to think through when am I going to do that. 

Another goal that we have financially for this year is to save 20% of our income. So I'm going to talk more later about financial goals. Obviously, that's going to be the big part of what we're talking about today is going to be on more like financial goals, and one of mine is to make sure that we're saving 20% of our income. So I'm gonna talk more about that and how to get to that place, and where are you at and how to look at those things. 

And then we also want to replace the floors in our house. So those are just some of the goals that we've had this year. And I want to talk about how you can create these meaningful financial goals for the new year. We're going to talk about how to, how do you reflect on last year? I want to make sure you're celebrating your progress because that's one thing I find people don't do enough of. And let's look at for some areas that we can improve. 

And then I'm going to share some tips, like, how do you set some goals? And then, like, sticking to a plan, creating a plan to achieve those. So before we dive into setting new goals, I want you to take a minute and look back at 2024. So first of all, did you set any goals for 2024? And how did they go? Personally, I like to keep a list of my goals each year. And actually, I keep them on the Notes app on my phone. This way I can review them throughout the year. It's not something I want to set in January, and then not think about again until December, right? 

So I want to make sure these are front and center of my mind, and then I'm looking at these throughout the year. And it's a great way to see your progress. I love being able to check them off. Putting a little X or a checkmark next to them when they're done. And then I can also see what other areas that I need to work on. So if you haven't done that, make sure you've got them written down somewhere visible that's going to be easy for you to refer to. 

I also encourage you to celebrate your wins. Even if they're small, they're worth celebrating. So let's think about some wins you had last year. Did you pay off a credit card? Did you save for a major purchase? Did you invest in your future? Give yourself some credit for these things that you've done. It's important to acknowledge that process, no matter how small it feels in that moment. 

And then also think about, what were the challenges? What did not go as planned? Were there goals that you struggled with, that you didn't quite achieve? And think about why didn't you hit those goals. Maybe they were unrealistic? Maybe we just set these really big goals in January last year that just weren't achievable, or maybe we had some unexpected obstacles or did something pop up happen that was not on your radar that prevented you from hitting that goal? Or does our plan need to be tweaked one way or the other? 

So taking that time to reflect both on what went well and what struggles you had, this is going to help you set more achievable, smarter, better goals for 2025. So after you've reflected on last year, let's focus then on setting some goals for the year ahead. And a great way to do that is by making sure that you're using I love the SMART framework, if you're familiar with that, that's S, M, A, R T. 

The SMART framework, this is where you make goals that are specific, measurable, achievable, relevant, and time-bound. So I want to break that down, and I'm going to do that in just a minute, what that SMART framework looks like. But let me give you some ideas for some financial goals that you may want to consider. One you may want to work on building an emergency fund. 

So, like, if you don't have one already, an emergency fund where you have three to six months worth of expenses saved, then make that a priority. Set a specific goal. So first you got to figure out what your expenses are on a monthly basis, to know what you need for your emergency fund. But figure that out. How much do you need for your emergency fund? And then break that into monthly contributions that you can fit into your spending plan, which we're going to talk about in a little bit. 

So one goal might be building an emergency fund. You may want to maximize your retirement contributions. So increase how much you're putting into a 401k or an IRA so that you can take advantage of some tax benefits or employer matches. Aim for, I like to say, aim for saving a certain percentage of your income. We recommend clients save between 15 and 20% of their income. 

So another thing to look at is, hey, how much did I save last year? And not only how much did I save, but how much is that as a percentage of my income to know where I am in this, you know, 15 to 20% range. And then thinking about for the next year, how do I increase that? So I remember years ago, my husband and I, we were saving 10% of our income, and then we wanted to get to 20. And let me just tell you, that seems like a very big, daunting goal if you're saving 10 to get to 20, doubling your savings. 

And it just feels, you know, too big, right? It feels like you can't get there. So we did it in small increments. We started every year in January, increasing our savings by 1%, and then also when we got raises, we increased our savings then too. So we kind of got to 12, and then bumps it up to 15. Anyway, it took a few years for us to get to that 20% number, but now that's like a non-negotiable for us. 

And of course, things happen and life happens, and I can talk more about that if you guys want, but I think it's important for us to look at how much did we save, and then thinking about the next year, how much do we want to save? Do we want to increase our contributions? And like, where are we going to do that at? You might already be maxing out your retirement account, so we have to go look at some non-retirement account options. So increasing those retirement investment contributions. 

Eliminating debt. So think about if you've got credit cards, loan balances. Really focus on paying off those high-interest debts first. Interest rates are high right now, which is good for savings accounts, money markets, CDs, but it's not so great for debt. So you might have some credit cards or a home equity line of credit, or a personal something that maybe even had a low interest rate years ago, where now if you look at it, there's got some pretty high interest rates on them. So definitely look at your debt and work on eliminating that high-interest debt.

Another goal would be to diversify your investments. So look at your portfolio. And when I say your portfolio, I mean your overall portfolio, right? Your savings, your investments, your retirement accounts. Really think of everything all as like one big bucket, and look to see, is your portfolio heavily concentrated? And if it is, you're going to want to work on creating a balanced portfolio that aligns with your risk tolerance, that aligns with your goals. You may want to consider reallocating into some different asset classes. 

For example, my husband gets company stock, and so we are always just too heavily concentrated on this one company stock, his company stock. And so it's something that we have to work on to diversify, to make sure that we're not so heavily concentrated in that one company. So you want to look at, do I have any company-specific risk? Do I have any industry-specific risk? That might be tech companies right now. 

So we want to take a look at this through that lens of, how does everything work together in our retirement accounts and in our investments. Another goal you may have is to plan for a major purchase, right? So that might be a home renovation. Like I mentioned, we want to replace the floors in our home. That's obviously a big purchase, something that we have to work on, that we've been working on. It might be a family vacation, a new car. 

So we want to start thinking about then planning for these major purchases, setting a savings goal, and then a timeline to reach that. So now I want to go through and talk about, I'm going to break down these SMART goals. And again, that's Specific, Measurable, Achievable, Relevant, and Time-bound. And I want to use the example of, let's say that you wanted to save $15,000 by December. 

So the first thing we're gonna do is we're making that specific. Ao a specific goal, clearly defines what you want to achieve. So instead of just saying, hey, I wanna save more money next year, you say, I wanna save 15,000 by December for like, what's it for? Is it for your emergency fund? Is it for a big trip? Is it for a home renovation? Make sure it's clear and it's focused. The M is for measurable so break down your goal into smaller, trackable steps. So for $15,000, that's $1,250 per month. That's $1,250 per month, and so you could track that progress every month and see if you're on target. 

And then the A is for achievable. So this is like, is that achievable? Is saving $1250 a month realistic? You're going to want to look at your spending plan, which I'm going to talk about in a few minutes. But we have to figure out, is that achievable? If it's too tight, then we might have to adjust the amount or extend the timeline to make that goal more achievable and attainable. Relevant. The R is for relevant. Your goal should align with your values and priorities. 

So saving that $15,000 for an emergency fund. That might give you the peace of mind to have a fully funded emergency fund. Or it might be for that big trip, so it's going to help you create those lasting memories with your family. So I always think about, why? Why do we want to do that? What's our goal, and why is that important to us? So that's how you make it relevant. 

And then time-bound. That's the T is time-bound, so you want to set a deadline. This is going to create some urgency, some accountability. In this case, it's December. So having a specific timeline helps you stay focused and on track. So when we think about setting these goals, one, make sure that you're aligning them with your values. So whether it's financial security, family, travel, make your goals reflect what's important to you. 

Two, write them down. I know it sounds silly, right? We hear that all the time, but write them down. Studies show that writing down your goals makes you more likely to achieve them. And then keep them somewhere visible, where you can see them like in a journal or planner like I do. You could also keep them on your phone. Like I said, I have the Notes app on my phone, and I actually can go back and see goals for the last several years on my phone. 

And then number three is you're going to want to review these regularly. So schedule monthly or quarterly check-ins to track your progress and adjust as needed. Sometimes, depending on our financial situation, we've got to have regular reviews. Maybe it's even weekly check-ins or monthly check-ins, right? If there's something that we have to really stay on top of. That might be if you are struggling to stick with your spending plan, or you're struggling to pay off debt, that might be something that we need to review on a more regular basis. 

So we really just kind of figure out what's going to work for you. And like, when do you want to check your progress and make any sort of adjustments that you might need? But I'd recommend at least quarterly. Like, don't set a goal in January, and then don't look at it again to December. The likelihood of you hitting that is slim to none. So I would suggest doing like a quarterly check-in. 

So now that you've set some goals for the new year, the next step is to create a plan to achieve them. And this involves three key steps. Reviewing your current financial situation, creating a monthly spending plan, and then scheduling those regular check-ins to track your progress and make adjustments. So let's dive into each one. So before you can make a plan, you've got to know where are you today. 

So think of this as like creating a baseline. It's like a starting point on your financial roadmap. And when you do this, you're going to want to take a stock of your income. How much money is coming in each month? Think about your salary, side hustles, rental income, other sources. Expenses. What are you spending each month? So many of my clients, when we first meet, they don't know. 

I hear things like money just comes in the front door and goes out the back door. Or, hey, at this stage of our life, the kids are grown and the house is paid off, and we just, we don't have to pay attention to that. And that's okay, you don't need a budget. I'm gonna talk again about a spending plan in a few minutes, but you wanna at least have a rough idea. It doesn't have to be exact, down to the penny, but, like, we just need to have a rough idea about what we're spending each month. 

And we really want to break that down, if we can, into essentials, like, what are the bills, so to speak, savings and then discretionary spending. We want to know how much have we currently saved? What? How much have we? Do we have that emergency fund saved and set aside? How much are we putting towards retirement? How much are we putting towards other goals? You know, what are our investments? Are they aligned with our long-term goals? Do you have a diversified portfolio? 

Sometimes, or I should say, a lot of times, I meet with new clients who have an account that they haven't looked at in years, and it's just kind of been sitting there doing its thing. And that might be really good, that might be really bad. A lot of times, because the stock market has done so well in the last few years, these accounts, they're not in line with where we want to be. 

They're gonna be way more growth-focused and too concentrated on stocks than where we really want those accounts to be. And it's just because we haven't taken the time to look at them and rebalance. So definitely look at your investments and see are they aligned with your long-term goals. And so by reviewing these areas, you can identify gaps or opportunities. For example, maybe you're spending too much on discretionary items. Maybe you can increase your retirement contributions. 

So understanding where you are today is going to help you make those informed decisions for the future. Now, step two is to create a monthly spending plan. I like to think of this, you know, as a I like to think of the spending plan rather than a budget. Because a spending plan isn't meant to be restrictive like a budget is. It's about being intentional. It allows you to be intentional about how and where you want to spend your money. 

So it actually empowers you. And so here's how you build your spending plan. You're first going to start with your essentials. Cover your basic needs first. Housing, utilities, groceries, insurance. Then we also want to allocate for savings. You've always heard that that line of pay yourself first? Well, it's the same thing here. You want that to be a line item on your spending plan. So set aside each month. Whether that's that emergency fund, retirement, another financial goal like we mentioned earlier. 

Again, if the example is you want to save $15,000 this year, then your spending plan should allocate that $1,250 each month to savings. And then once essentials and savings are covered, then allocate funds for discretionary spending items. Dining out, entertainment, hobbies. Your spending plan can help you stay on track, but it's also again, while enjoying life, it's not about being restrictive. 

I always encourage you to include the fun things in your spending plan. And if you realize your plan is too tight, then you just need to adjust your goals or your spending to create balance. And again, always make sure that you include the fun things, whatever that is for you. Eating out, hobbies, entertainment. It's just not realistic to make it so restrictive that you can't stick to it.

And the third step that you want to do is you want to schedule some regular check-ins. So goals, they're not a set-it-and-forget-it kind of thing. Life happens. Things change is why these check-ins are so important. So I'd recommend at least setting a time every three months for you to revisit your goals and review your progress. So I would say put time on the calendar or a reminder. You need some way to know, like, hey, I need to check on my progress and ask yourself, am I on track to meet my goals? Do I need to adjust my spending plan or savings targets? Are there new priorities or challenges that I need to account for? 

And flexibility is key here. Don't be afraid to tweak your plan. Maybe you had an unexpected expense or an income change. Adjusting your plan isn't failure, it's just part of the process. And these regular check-ins are going to help you keep aligned with your objectives and help you make adjustments. It's really going to help you stay on course. So creating a plan to achieve your financial goals is all about intentionality. 

By reviewing your current financial picture, building a spending plan, scheduling regular check-ins, you're setting yourself up for success. And remember, progress is empowering. It puts you in control of your financial future. So before we wrap up, I want to recap what we've covered today. Reflect back on last year's wins and challenges. Take time to acknowledge your progress, identify areas where you can improve, celebrate even the small wins. It's super important. Understand your challenges so that you can set better goals for this next year. 

Set SMART goals for 2025. Use that SMART framework to create goals that are specific, measurable, achievable, relevant, and time-bound. Having clear and actionable goals makes it easier to stay focused and track your progress and then review your financial picture and create a plan for the year ahead. Start by assessing your income, your expenses, savings, investments, and then build a spending plan and regular check-ins to keep yourself on track. 

This is going to help you stay intentional about your financial decisions throughout the year, not just thinking about them here in January when we're all gung ho for the new year. So the start of this new year is really a great time for you to take control of your financial future. Remember, small, consistent steps today can lead to big results by the end of the year. Whether that's paying off debt, saving for a dream vacation, investing for retirement, the key is to start now and to stay committed. 

I know it can seem big and daunting sometimes, but remember, no matter where you're starting from, progress is what matters most. So if you're ready to make 2025 your best financial year yet, I'd love to help you get there. So whether that's creating a retirement plan, building wealth, tackling financial challenges. We are here to help and guide you. I'd recommend, if you're interested, to schedule a consultation with me or join one of our upcoming webinars for more tips and strategies. 

You can go to our website, which is curryschoenfinancial.com to get started, and don't wait. Here we are the new year still, so take that first step towards securing your financial future today. Thanks for tuning in to today's episode. I hope this episode inspired you to reflect, plan, and take action for your financial goals for the year ahead. If you found this helpful, please subscribe, share it with someone who can use a little motivation as we get started here in 2025. Here's to all your financial success. Take care, and I'll see you next time. Bye now

Voiceover: This promotional information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific, individual, or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities, LLC. Address, 1700 Summit Lake Drive Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

7492353.1, expires January 2027.

Navigating The DROP Program: Retirement Strategies and Financial Planning Explained

How can a simple program supercharge your retirement income strategy?

In this episode, April Schoen breaks down the intricacies of DROP, The Deferred Retirement Option Program, and its latest updates impacting your financial future.

In this episode, you’ll discover…

• The enticing benefits that make the DROP program a game-changer.

• Key eligibility changes in 2023 that could affect your retirement timeline.

• Various pension options within DROP and how they cater to different retirement goals.

• The significant pros and cons that you'll need to weigh before opting for DROP.

• Strategic ways to manage your DROP payout to maximize retirement benefits and minimize taxes.

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello and welcome to another episode of The Secure Retirement podcast. I am one of your hosts, April Schoen, and today's episode is dedicated to understanding the DROP program, which is part of the Florida Retirement System. Now DROP stands for deferred retirement option program, and it's really a unique planning tool that's designed exclusively for FRS pension plan members who qualify for normal retirement. 

How the DROP program works is it offers a way for you to retire on paper while continuing to work in your position and continuing to earn your salary. And then what happens while you're in DROP is the state actually starts paying out your pension benefits, and they pay those into a dedicated retirement account that's just for you. 

And those pension payments, they go in every single month while you're in DROP, and it earns interest so that when you exit DROP, when you officially fully retire, now you start receiving the pension payments as income, and you also have a lump sum. Sometimes you'll call this like my DROP amount, or my DROP account. 

So we're going to talk about today is, what are some of those common questions we get about DROP. What is it? How does it work? I'm going to tell you about a client that I worked with recently who is deciding if he should go into DROP or not. And just really want to dive deep into this topic, because we get a lot of questions about this. 

So first, let me talk about some of the highlights of the decisions that you might be facing when it comes to DROP. So recently, I worked with a client, and he's at a crossroads. He's 55 and he's eligible to go into DROP, but he's considering his options. He could go into DROP now work five more years and then fully retire at 60. 

By going into DROP when he fully did retire, and he came out of DROP, his pension, monthly pension payments would be about $4200 a month. That's what he would get. And he'd also walk away with a significant DROP payout of almost $275000. Now, the other option choice that he has is to not enter DROP at all, just continue working those five more years. So he gets five more years of service credited, and this would increase his pension to about $5300 a month. 

So it's definitely higher than if he had gone into DROP, but he wouldn't have the lump sum. So why might he choose one option over the other? Well, let's, let's break down some of his choices. By going into DROP, he's gonna have this guaranteed lump sum when he fully retires, and he can use this to help him with other goals, and investments. It could provide immediate flexibility, and financial security in a way that just getting that higher pension payment might not. 

The pension is not liquid. It's not flexible. You can't go to the state and say, hey, could you send me an extra $10,000 this month because I need a new air conditioner, or I got to get my roof repaired. So the DROP account gives him flexibility by having access to this lump sum. 

And then it's going to give him more control over his choices because he's going to have lots of options about what to do with his DROP account, which is what we're going to talk about in a little bit. But he could roll it over into an IRA or another tax-deferred account, which is going to let him control how and when he uses those funds. He might choose to invest those for growth, create additional income streams, or even have it be part of the legacy that he leaves for his family. 

Also going into DROP gives him a structured retirement timeline. He knows, hey, for him, it was five years. I know that I'm going to be retiring at the end of five years. And hey, I'm going to have this pension, I'm going to have this lump sum. But for some, it's having this defined exit date that makes financial planning and future lifestyle choices so much easier. 

You've got that date circled on the calendar that you know is coming, and it gives you time for about five years or eight years, you can be in DROP to make changes. Sometimes I have clients who say, well, you know what, April, I want to make sure I have all my short-term debt paid off by the time I exit DROP. Or I want to build up my savings, or we want to go ahead and buy a car and have it paid off. 

We want to do some remodeling at the house before I step off into retirement, because we know there's this date in the future, and we've got time. We've got five to eight years for us to get some of these things done before we actually retire. And obviously, his pension is going to be lower with DROP, but he's going to have both this steady income and he's going have access to this lump sum, which is going to be helpful for large expenses or unexpected costs in retirement. 

And it can also help him do some other planning with some of his other assets. So let's talk about now, though, why would maybe he choose not to go into DROP? Well, first, by skipping DROP he's gonna significantly increase his pension. I mean, going from $4200 to $5300 a month, that's a big difference in guaranteed lifetime income. And for some who are focused on that stability, this could be something that's really important to them, especially if you're concerned about longevity or inflation. 

The higher pension is going to give him more discretionary spending ability without having to rely on the market or other income sources. And this could definitely be beneficial if he thinks that expenses are going to be higher in the future, or if he just wants to have more financial independence each month. Now, again, he's not going to have that lump sum, but maybe he's okay with that. Maybe he has other assets to offset that. 

He may not need a large, immediate payout. It could be that having those higher pension payments allows him to maximize his lifetime income, especially if he plans to say, hey, I'm going to live a really long time in retirement, and he wants to reduce how much he has to rely on other savings and investments. 

And then by not taking DROP, he doesn't have to worry about some of the tax impacts of DROP, which we're going to talk about in a little bit, about what you do with your DROP payout. And you really got to pay attention to the tax side. Obviously, with the DROP, you can roll it over into an IRA, but at some point, you have to start taking money out of that. 

So there's also some tax planning to consider. So you can see as going through this scenario, that it's a big decision. I mean, you're talking about changes in your monthly income. You're talking about, for him, specifically, you know, a DROP payout of over $250,000.

That's a lot of money for you to decide what you're going to do with it and are you going to go down that route, that path. So you can see how it's really important that you investigate and research both sides to see how it's going to impact your retirement. So now let's take a few steps back here and go through and talk about what is DROP and how does it work. 

Well, DROP is a voluntary program that lets you effectively retire again, the state considers you retired on paper when you go into DROP, but you defer your actual termination for up to eight years. So when you go into DROP, it used to be five, but they changed it. You can now be in DROP for eight years. So this means you continue to work in your same position. You're earning a salary, but at the same time, the state is starting to pay out your pension payments, but it's accumulating into a dedicated retirement account that's for you. 

So when you enter DROP you're considered retired for the purpose of the pension payments. So that means you stop earning those additional retirement service credits, and then your monthly pension benefits, they begin accumulating in a retirement account, rather than being paid out to you. 

So they're going to go in tax deferred. You don't pay any taxes while your money's accruing in the DROP. And this balance is going to grow both by how much is being paid in by your pension and then also the interest that it's earning. And since all of this is going to go in tax-deferred, you're only going to pay taxes when you start to take your DROP out. Either you could do a lump sum or as you're taking money out as income. 

And the beauty of the DROP program is that it kind of lets you have the best of both worlds. You get this financial security of I'm still going to have my pension, but I'm also now going to have this lump sum that I otherwise wouldn't have. Or I'm going to have it in addition to what I've saved in deferred comp, what I've saved maybe in other savings and investments. 

So it gives you some more flexibility and control and helps you maximize your retirement savings. That's going to help you transition into full retirement. So you may be wondering, okay, April, this all sounds pretty good so far. So how, how do I participate in DROP? How do I know if I'm eligible? 

Well, to participate in DROP, you need to be vested in the pension, and you have to be eligible for normal retirement age, which is going to be based on your years of service and your age. It also depends on when you started with the state because in 2011 they had made some big changes about what is a normal retirement age. So you gotta be of normal retirement age or have a certain number of years of service to go into DROP. 

Now, I mentioned a few minutes ago that in 2023 they made some big changes to DROP, and one of the things they did was they extended it from five years to eight years. Now it doesn't mean that you have to be in DROP for the full eight years. It just means that the longest that you could be in DROP would be up to eight years. They also increased the interest rate that you earn. 

It used to be 1.3% but now that's increased to 4%. Which is a huge increase in how much interest you're earning. So let's talk about what are some of those key decisions that you need to make about entering into DROP. So should you go into DROP? Here are some things you want to consider. You want to think about your personal financial goals. 

Is having that DROP payout, is that going to help you in retirement? Is that going to accommodate and compliment your retirement income goals that you have? How happy are you in your job? Are you comfortable with working in your same position for another eight years? Now, like I said, you don't have to work the full eight years. 

You could do two years or five years. It's really up to you, but that is one things that you want to consider is are you going to be okay continuing to work in that position for the duration of DROP? But there are a lot of people will look at those numbers, and it's a big jump as your account continues to accumulate that they want to hold out for the full five years, or they want to hold out for the full eight years. So take that into consideration. 

Also, your pension amount is going to be set, because once you go into DROP, they consider you retired, so you're not going to get any more service credits. So if we think about how the pension is calculated, and it's a formula of taking your highest five years of salary, and then also a formula of years of service. So when you go into DROP that stops. So think of it like your pension being frozen. 

I mean, you're still going to get a cost of living adjustment, though, that still happens even when you're in DROP, but you are locking in those years of service. Again, one of the benefits is that you're going to get this lump sum at the end in addition to your regular pension. I mean, I can't tell you how many clients that I've worked with that when they get to that part, they're exiting DROP, that their DROP account is the same amount of money that they have in their deferred comp. 

So think about that for a second. Here's this retirement account that they may be having saving in for most of their career, and it's the same amount of money that's in their DROP account. And at those times that was over that five-year time frame. So it's not a small amount of money we're talking about here. Now, again, we did talk about some of the negatives of limited pension growth. 

So again, your pension benefit is frozen, but you do get that cost of living adjustment every year. And then what if things change, and if you exit early, this might impact your lump sum. It's not might. It will impact your lump sum. So I'm thinking about a client of mine a few years ago who was in DROP, and she was three years in, and her mom had some major health issues, and she had to step away from work. 

She basically had to end her DROP at three years and instead of five. So her pension was much, excuse me, her DROP account was much lower, and then her pension is lower too because she didn't get all the cost of living adjustments. So that's definitely something that you want to consider. And then also remember that when you go into DROP is when you again retired on paper. 

So this is when you have to choose your pension option. So which pension option are you going to choose? Because that's when you make the decision, is when you go into DROP. And it's an irrevocable decision. So once you enter DROP, your pension option is locked in permanently. So this is so crucial for you to review your options and understand the impact of on your long-term income, for your spouse, and for your heirs. 

So let me just give you one. I'll kind of run through those four pension options so you can understand how they work. But option one is going to be what we call lifetime benefit only. That means the pension is going to be paid to you, the employee, for your lifetime, for as long as you're living, but the day you die, the pension dies with you. 

So option two is life to you, the employee. You get it for life, but it gives you a 10-year guaranteed period where if you pass away in those 10 years, a benefit is going to continue to your beneficiaries. Whoever that is. Could be a spouse, a child, but just know when you go into DROP is when that clock starts on that 10 years. So if you're in drop for eight years, and then you exit DROP, well, you only have two years left on this guarantee. 

Option three is joint with 100% to the survivor. So usually this is for spouses. So this says I get this pension for as long as I'm living, and the day I die, my husband gets it for the rest of his life, and he's gonna get the same amount of income. There are no changes for either one of us.

Now, option four, though, is where there's a lot of confusion. So I want to make sure I go through this one. Option four says that it is joint with two-thirds to the survivor. But what happens with the survivor benefit is it's when either spouse passes away. So let's say that I worked for the state, and it's my pension benefit, and I'm just gonna make the math easy here. And let's just say that my pension is $2000 a month. 

So what happens is, my husband and I get this pension the $2000 a month for as long as both of us are living. But when one of us passes away, that could be me, the employee who worked for the state, or it could be my husband, who didn't work for the state. Either one of us passes away, the pension gets reduced down to two-thirds. 

So now what happens is my $2,000 a month is now $1,320 a month. So it's a big drop, especially in those situations where it happens to be that the non-pension plan spouse passes away first. So make sure, when you're making these decisions that you're looking into all options, and really taking into consideration with everything else in your financial world, not just this one piece. So let's talk about here the pros and cons. 

I want to summarize some of these pros and cons we talked about going into DROP. So some of the benefits. This lump sum accumulation, you've got the potential for a significant payout upon retirement. You're going to have that steady income already from your pension, of course, but you're also going to have that lump sum in that tax-deferred account. So this is going to give you the opportunity to have flexibility, and control. 

Maybe it lets you plan for major expenses, and investment opportunities. Lots of more choices and liquidity, because you've got access to that lump sum. The negatives are that fixed pension benefit, because, again, you're going to lose those additional pension credits, those years of service while you're in DROP. 

But you do get your COLA, but it is going to impact your pension payout. And this may also help from some tax standpoints because you don't have the lump sum to worry about. Because then we don't have to worry about, what do we do with this drop amount and the retirement account, and how all that's going to impact you from a tax standpoint. Now let's say you're already in DROP. 

What happens when you exit? What happens when you leave DROP? Well, when you transition from DROP to full retirement, now you're going to start getting your pension payments as income, and this is when your DROP account is going to be accessible. This marks the transition from accumulating benefits in DROP to now you're receiving that pension payment directly, and you're going to have to decide, what do you do with your DROP payout? 

And there are only a few options. One, you can do a lump sum payment. So this allows you to take the total DROP balance at once. But remember that all of this has been in a tax-deferred account, so every dollar that you take out is going to be taxed at your highest marginal rate. That's why, for most people, that lump sum payout is not a good option. 

You can also roll it over into another tax-deferred account. That could be an IRA, that could be deferred comp. This is going to help you avoid those tax liabilities, and it's going to give you more control. Like we talked about earlier, where you can invest it for growth, you could invest it for income, you could have it be set up to go as a legacy. 

It's gonna give you flexibility, choices, and control about what you do with it. Some may choose to actually take that DROP payout and turn it into an annuity, so they've got additional guaranteed income. Now that is attractive for people who say, hey, I want more income, but I also want to have the liquidity that's available in some annuities. But taking that as a reminder, we've got to think about those tax implications, because taking that payout as a lump sum, it's going to be taxable, could push you into a higher tax bracket. 

And then rolling it over, defers those taxes until you withdraw, allowing you again to have more tax-deferred growth. And as of today, as I'm recording this in November of 2024 you can let those retirement account funds grow until you're 73. But at 73 you have to start taking money out of any pre-tax vehicles like IRAs, deferred comp, 403b's 401k's as for your required minimum distribution. 

So keep that in mind. So how do you decide what to do with your DROP payout? Well, first you want to think about your retirement timeline. When are you going to need to access those funds? Do I need income right away when I retire? Or am I going to let it grow for the future? What are my goals? Do I have any big financial needs coming up? Do I need to help pay for health care or travel or support family? Do I have savings or investments elsewhere? 

So rolling over that DROP might help you have greater control. Maybe it's something where you look at doing Roth conversions, for example. Lots of different options available to you. One of my clients recently retired and she's got her DROP account, and we're doing a couple things. One, she's gonna do some renovations to her house, but we looked at her options and decided it was gonna be best for her to wait until the next calendar year, because of taxes, to start taking money out of DROP. 

So what we did is we had the whole DROP balance go into an IRA, and then that way, she can control when she takes the money out and for what purpose. So for part of it, she's going to be using for renovations next year, and then the rest of it, we're going to let it continue to grow because she doesn't need income from the rest of it yet. 

She's got her pension, she has social security, she's got money accumulated in deferred comp, and so she's got other assets to tap into for income, so we're gonna let this account continue to grow. And she's 67 so she's got six years before she has to start taking money from it. This was a great opportunity for her to have that grow. 

So again, you want to think about what are those financial needs that you're going to have and consider those investment choices. Are you going to do a lump sum? Are you going to do a rollover? Are you going to look at an annuity? What investment options are you going to look at? And this is when you really want to work with an advisor. Because each option has very unique tax implications. It's going to impact your overall financial plan. 

So this is really when consulting that financial advisor, consulting that tax advisor is crucial to make the most informed decision. An advisor can really help you look at your income needs, look at tax planning, and legacy goals, not just one piece of the puzzle, but the whole thing. And they can help you look at both options. 

Like I was talking about with the client earlier, of hey, does it even make sense for him to go into DROP or not? And for him with these other financial assets, yes, going into DROP is going to be a very good decision for him. But it's not one size fits all. It's not a hey, everyone should always go into DROP or no, you should never go into DROP. 

It really does come down to your individual situation, and this is why it's so important that you work with an advisor, someone who can walk you through that and show you both sides. Now, some other kind of common questions that we get are, what happens if I leave early? So yeah, you can leave early from DROP but it's going to reduce how much accumulates in that DROP balance, and it's obviously going to impact how much you're getting in that pension payment, too. 

One thing is, you want to make sure that you coordinate this with your other retirement accounts. So again, think if you have old 401k's, or you have a 403b or 457 plan, how is this all going to work together? What about also social security, and where does that fit in? Sometimes we might find where someone uses DROP to actually bridge the gap for income so they can let their Social Security grow longer. 

We defer taking Social Security, and maybe we're using some of that DROP to bridge the gap for income. Or the opposite. You might look at it and say, hey, for a couple, we need to turn Social Security on for one and let the other one grow. So there's definitely some planning that you can do there. 

And then DROP does have some flexibility. Because, like I said, if your situation changes, like, maybe your health changes, or you've got a family member that has changes. Maybe there are changes in your position and job in your department. I had a client come in who said, you know what, I thought I was going to be in DROP for the full five years, but they're going to be implementing a new software system, and I don't want to do it again. 

I've already been through two major software changes, and I don't want to do this a third time. So she chose to leave DROP early and didn't hit her full five years. So we just want to understand how all that's going to work, and so that you can see what your options are. And of course, you want to take into consideration future healthcare needs. If that's going to just be part of your overall retirement plan. 

Healthcare costs can really impact your overall retirement income and expenses. And so you can see here that deciding to go into DROP or not is really an individualized choice. It's not a one size fits all. You think back to that client I mentioned earlier, and how important it is to really weigh those immediate financial gains against long-term benefits. And that's why it's so important to work with someone who can guide you through a personalized analysis and show you the impact of both choices. 

So don't just assume that going into DROP or delaying retirement is always the best. You really want a tailored approach that's going to help you make the most informed decision for your unique situation and goals. So if you're considering going into DROP, if you've got questions about how it fits into your retirement strategy, I'd recommend you reach out to our team, and let's explore these options together. 

So the best way to do that, I would say, would be to go check out our website, and we'll link it in the show notes. But it's curryschoenfinancial.com. You're gonna see access to all of our podcast episodes. There's a link to book a call. You can request our information package, and so just definitely some resources on the website. 

And like I said, links to to the podcast as well. But I just want to say thanks for joining me today as we're exploring this. I think it says a lot about you that you're taking the time to understand this important benefit. And we look forward to seeing you either on one of our webinars or a future podcast. Bye now.

Voiceover: This promotional information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address, 1700 Summit Lake Drive Suite 200, Tallahassee, Florida, 32317. Phone number, 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

7261910.1 Expires November 2026.

Pension vs. Investment: Which Should You Choose?

Retirement planning can be confusing and filled with misinformation. How can you ensure you're making the best choices for your future?

In this episode, John Curry and April Schoen, tackle the common questions and misconceptions about the Florida Retirement System (FRS) that many employees face.

You’ll discover…

• A surprising truth about why some employees might opt for the Investment Plan over the Pension Plan.

• The critical differences in vesting periods that could impact your retirement plans.

• Why understanding pension options is pivotal to avoid costly consequences.

• Essential steps for coordinating your pension, Social Security, and other financial resources.

• How to navigate the complexities of the DROP program for a more powerful retirement strategy.

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

John Curry: Hello, folks. This is John Curry. Welcome to another episode of The Secure Retirement podcast. I'm sitting here with April Schoen and we're going to have a little conversation about the Florida Retirement System here in a moment. But April I want to start off and share with folks why I've had a passion for working and serving the members of the Florida Retirement System. 

Back in 1983, I realized that there were really three groups of people in this community. You had the state workers, if you will, members of the Florida Retirement System. You had state employees, you had university system, and you had the business community. And I realized there had to be something in common, and it's retirement. It's planning for retirement. 

And I became so energized about that. Then I got to thinking about my grandfather and my father, the mistakes that they made. They did the best they could with what they had. Limited information. DROP was not around back then, but in some cases, they just got bad information. My grandfather retired. 

He took option one. When he died, less than five years into retirement, that money died with him. So my grandmother, for the rest of her life, she lived to be 95, all she had was Social Security coming in. So my dad and my uncle had to help her. My dad seeing that because he worked same place, Department of Transportation in Defuniak Springs, he said, I'm not making that mistake. So what he did, is he chose option three. 

So he had about 18% less income than he could have had with option one or two, and he had an income stream that he could count on for the rest of his life, and upon his death, know that his wife, my stepmother would get that income for the rest of her life. My dad retired at 62. He died at age 85. My grandmother lived to be 85. I mean my mother lived to be 85. 

So she benefited from that, but along the way, they both could have had more money with different planning. So which man did the planning properly? It's a matter of opinion. Some people say, you take the maximum and you take that chance. Other people, like my dad, said I'm not taking a chance on that money. I want to know it's there for me. I want to know it's there for my wife. 

And I think that is a good way to think about what do you decide to do with retirement. If you're in the Florida Retirement System, or in the pension or in the investment plan, when do you want to retire? And then we work around that. And I'd like you to jump and just talk a little bit about some of the questions that we get and our approach to doing retirement planning because it's pretty different than the average quote financial advisor.

April Schoen: Yeah. In today's episode, we're going to really, John, be going through and talking about, what are the most common questions that we get from clients about FRS benefits. There is a lot of confusion out there, a lot of information, and a lot of misinformation as well. And so we want to cover really, one of those that kind of most common questions that we get from clients about FRS retirement benefits. 

We had a new client in last week, and when I had first met with them, we talked about how we know a lot about the FRS benefits. And I made the joke, you know, you could poke me in the rib at two in the morning and ask me what are the four pension options out of the four Retirement System? And I could recite them to you. 

John: Absolutely. 

April: And he laughed. And then last week, when he was in, we were going through some things, and he had some misinformation about how something worked when it came to his DROP, so we were talking through it, and he goes, aha, I see. You do know a lot about the FRS retirement. 

And I said, yes, that's really what we've spent, I know John, for you, coming up on 50 years, and then really for me, working especially with state employees for the last 14, 14.5 years of learning those benefits. So what we like to do is just break down those common questions that we get from clients about FRS retirement benefits. And I think you're going to find this to be very useful for you, and something that you can refer back to when some of these questions come up.

John: And let me make a point here. We're not going to try to give you a dump truckload of information. We're going to keep it brief. And I would encourage you to either have a telephone call with us or come in and have a visit if you'd like to know more, but because we're going to try to give you a big chunk of information here, but we're going to keep it brief so we don't overload you.

April: That's right. That's right. So let's start with the first thing here. What are the differences between the pension and the investment plan? So the first thing I would say I encourage you to do, if you don't know which plan that you're in, you're going to want to double check that with your human resources department or the division of retirement to know for sure which plan that you're in. 

But the pension plan, this is a traditional defined benefit plan. So what does that mean? That means that when you get to retirement, you're going to receive a stream of guaranteed income from the state of Florida for the rest of your life. So that is the pension plan. It is a guaranteed income for you at retirement. And then what's the investment plan? 

Well, the investment plan is similar to a 401k. It's called a defined contribution plan. This is a retirement account that's in your name, where you contribute and the employer contributes for you. But you the employee bear the investment risk. You are responsible for determining how to have your investment plan invested, making sure that changes are made to that throughout your career as well. 

They're not going to automatically do it for you. You have to be proactive in making those investment changes. And you bear the investment risk, because when you get to retirement, yes, you are going to have whatever amount has accumulated in your investment plan, but it's going to be your responsibility for then what to do with that and how to structure it.

John: And the question becomes, can that person manage that money along the way in a way that they have a chunk of money to then create their own pension type income? Or do they just do withdrawals along the way? And that's risky. It's risky if the market is down.

April: Yeah, and contrasting that back with the pension plan, the state of Florida is bearing that investment risk. Yes, you are still contributing. You're required to put in 3% to either plan, but with the pension, the employer or the state of Florida is bearing that investment risk. Now there are vesting schedules on how long do you have to work for the state, have years of service, to be totally vested in these two plans. 

Meaning that you're going to receive 100% of the benefits. Well, with the pension plan, it depends on when you started working for the state. If you started working for the state before 2011 you vest in six years. Six years if you started working before 2011. 

But if you started after 2011 it's eight years, eight years for you to be totally vested in the pension. And then the investment plan is different. It's one year of service to be vested in the investment plan. Meaning that after one year, if you leave the state, you can take with you 100% of what you have in the investment plan, both what you put in and also the employer. 

So what we find is people who start with the state that aren't sure if they're going to be there for a long time, they may choose the investment plan initially because, oh, I don't know if I'm going to be here for eight years or longer, so I'm going to choose the investment plan so I have more flexibility.

John: Or in some cases, we know people who know up front they're not going to be there very long. I'm thinking of an attorney that we've worked with over the years where he knew going in initially he was not going to be there. But surprisingly, he changed his mind three years later and is still under the pension plan.

April: I was just having a conversation with a good friend of mine and my sister-in-law. They both work for the state in different agencies. One is with the Department of Health and one is with elder care, and he said, I'm a lifer. I'm what's known as a lifer. You know, I've been there 20 years, and I don't plan, I'm not going anywhere else, so I'm a lifer. I love that. 

So another question we get is, when can I start receiving my benefits? So normal retirement age under the pension plan is going to, again depend on, when did you start for the state. So you want to go back and see when did you start your years of service so that you can know exactly when your what they consider your normal retirement age to be. 

And that is going to be when you can start receiving 100% of your full pension benefit, is when you reach normal retirement age. Now if you again are under the pension and you retire prior to that early retirement age, then you're going to have some penalties. What they will do is you can still get your pension, but they're going to reduce it. 

So it's important to know when is your normal retirement age and take that into consideration about when you're going to start taking your pension. And then again, with your investment plan, there's not necessarily a magic age for that. It's going to be when you've been vested for one year, but then you also have to take in taxes into consideration. 

So with the investment plan, it may not be a plan description saying, oh, this is my normal retirement age, but it's going to also take into consideration taxes. So if you can take money out of your investment plan early, you may have tax penalties. So not a penalty from the state, but a penalty from the IRS. So it's important to keep those in mind too.

John: I think the best thing there April is to think in terms of an IRA. If you take it out before 59.5, same idea from the standpoint of people who are listing when we refer to a penalty, that's what we're talking about.

April: Absolutely. So let's talk a little bit too about what those normal retirement ages are so that everyone can have a good idea what that will look like for them. So if you started with the state prior to 2011 again, that's when a lot of changes were made in FRS benefits. So you may hear us reference that time frame a lot. 

But anyway, if you started before 2011, normal retirement age is age 62 or 30 years of service. So 62 or 30 years of service. If you started after July 2011, it's age 65 or 33 years of service. And again, that's going to determine your normal retirement age for the pension. Now, how are benefits calculated under the pension plan? 

So a couple things here. One, I would really encourage you to reach out to the Division of Retirement. They do a great job of putting together pension estimates for you, and you could ask them for various scenarios. They can show, I know we're going to get into DROP, but they can show if you go into DROP if you don't go into DROP, how long you worked. So they can do a really good job of helping you calculate this. 

But with a pension, the state of Florida has a formula that they use, and the formula is a combination of your years of service. So how many years of service do you have with the state? It's the average of your five highest compensation, like your salary, highest five, and then they have an accrual rate that they use based on your position type. 

So years of service, highest five, and then they have a multiplier that they use based on your class. Again, that's why we can do some rough estimates and calculations for clients, which we do. But it is also good to go straight to the Division of Retirement to get those estimates. 

And if we think about them, using your highest five years of service, that's why people will work longer in retirement, because when we get towards that end, this is when we're making the most money we've ever made. And it can make a huge difference in that pension. So one of our clients was, they've been working with us for a few years, and he just got a big promotion. 

And so this is going to now change their landscape. He was thinking he was going to go into DROP and retire earlier once he hit his 30 years of service, but now he's rethinking that based on this raise. Because now he knows, oh, now I want to get five years at this new position. And then one question we get a lot too, is, can I switch between the pension and the investment plan? 

And the answer is yes, you can do that once during your career. So if you're in the investment plan, you can, they call it buying into the pension. You can buy into the pension. This is something you're going to want to get a quote from the Division of Retirement, because one thing you have to know here is, do I have enough money in the investment plan to buy into the pension or not? 

And then the Division of Retirement can also give you an estimate if you switch from the pension plan to the investment plan, how much is that? What is that value that they would put into the investment plan for you? So John, let's talk about that for a minute. Why would someone switch from either the investment plan to the pension or from the pension to the investment plan?

John: I've thought about that a lot over the years, and the truth of the matter is, I've had very few people, I think, if I really think hard, I'm gonna say only three people. I may be wrong. Might be three or four that went from the pension plan to the investment plan. And it's rarely done. Because when you start looking at having the guaranteed streams of income, and can I take on that investment burden myself and match what the pension could give? 

Most people determine they can't do it. And in our case, we just show the numbers. This is what you have with a pension. Here's the calculation you got from the state, showing what would go into the investment account. What interest rate do you want to assume you can earn on your money? How do you want to invest? And that's a big choice. That's a big decision to make. 

But if I know for a fact that I'm going to be leaving early, then I may want to get that money in my lump sum, either cash out and pay the taxes, or I'm able to invest it. And maybe I'm going to be conservative and use a money market fund or treasuries, or maybe I want to go for the home run and invest it.

April: That's right. Yeah. You bring up a great point there. It's the state of Florida has a great pension. No doubt about it. Great pension.

John: One of the best in the country.

April: It's hard to match those pension numbers on the investment side. But I think where I see people that do that too is if they have poor health. 

John: Correct. 

April: So if they know, okay, I have poor health, my longevity, my lifespan doesn't look so good. My outlook here doesn't look great. Then they may want to switch to that investment plan so that there are proceeds left behind, not just for a spouse, but also kids.

John: Plus they may want to enjoy that money. Think about this for a moment. Most people by now who listen to our podcast know about my cancer diagnosis. Okay, well, if I know that I have a shorter life expectancy, which I now do, maybe I want to take a chunk of money and spend it. And I have. There are things that I'm doing. That money I'm going to spend and enjoy, and that's not on the table as far as legacy. The other legacy needs are taken care of. So I can see people doing that.

April: Absolutely. What about if they want to switch from the investment plan to the pension plan? Why would someone want to do that?

John: Because they want that guaranteed stream of income, but, but timing is critical, because you may not be able to afford it because of the cost. Because what they're going to do with this estimate, they will calculate how much money you've got to have in there and what the cost would be. And again, most people, when they look at it, go, I'm not doing that.

April: I know in 2022 when the market was down, we had several of these conversations quite frequently during that year because the market was down. But then people are seeing on their statement, okay, my investment, or logging in on their account, my investment plan is down. I don't like this market volatility, so I want to switch to the pension plan. 

And that's an emotional decision because of what we're seeing happen with the market. So we now want the guarantees. But then that's a tough time to make that switch, because now your account value is down in the investment plan, so you got such a bigger number that you may need to go into that.

John: And if you have money in retirement accounts, you could do that. But what if you don't? What's the buy-in going to be? What's it going to cost you? This is an interesting topic and I'm glad that you chose for us to cover this today because most people don't think about this until they're really close to retirement. 

Especially which option to choose. I love working with people in their 30s, they say, well, when should I start thinking about retirement? The day you get the job. That's your exit strategy. You love what you do, but what are you going to do at the end?

April: And that's a great question, too. I get this a lot from clients, too, about when do I have to make that choice on my pension. When do I have to choose? And you have to make that choice on your pension when you go into DROP, which we're going to talk about in a few minutes, or when you officially retire and step out. 

So some people think I have to make this decision much earlier, and you don't have to make it until towards the end of your career, but you want to have a game plan way before then about what you're going to do. So one thing too, is, one question we get is, what happens if I leave working for the state? 

So maybe I leave, I didn't work the full 30 years, maybe I leave early, or maybe I just left and I go work on the private side. We see that a lot too. So we get questions about what happens to my benefits. Well, on the pension plan, if you're vested, then you don't lose your pension. 

So some people think that if they don't work the full 30 years, that they're going to lose their pension, and that's not accurate. As long as you're vested, your pension will stay there. Now you may again need or want to wait until you hit that normal retirement age and start taking your benefit so you get the full benefit, or you can take it early, but they would have a penalty for that.

John: They'd have a reduction in benefit based on the number of years.

April: That's right, and again, so that's for the pension. And then on the investment plan, again if you're vested, you can take your account balance with you. So you can roll it over to another retirement plan. You can roll it over to an IRA. You can leave it in the investment plan. 

John: Or cash out.

April: Or you can cash it out.

John: And that's something we should touch on, just for a moment. Why would someone cash out? Well, let's say you have an emergency and you need the money, but let's say everything's good. Tax planning is important here. You know, in 1986 when Congress dropped the tax rates from 50% down to 28, I tried to convince a friend of mine to take a chunk of money out of his retirement plan. He said I'm not going to do that. 

Well, he's been dead several years now, but so many times he said, John, I wish I had taken that money out and paid 28% tax instead of the tax rates going back up. So part of it could be if you see that the tax rates are going down, which is not likely, but it could happen again. But if we see that happening, maybe at that point your plan is I'm gonna take a chunk of that money out and enjoy it now and pay less tax. 

But that's hard for people to do. And I call that letting the tax tail wag the economic dog because we do everything based on taxes. I'm not a big proponent of that, but I am in favor of taking money out occasionally, paying the tax on it, and enjoy it now if you need it or want it.

April: Yeah, and taxpaying is very crucial. So I know one of our clients, she just retired at the end of August, and she was going to take some money out of her DROP to pay off some debt, and we talked about how, well we encouraged her, can we wait until January? 

Because she'd had all her income that she'd earned this year, next year, she's not going to have as much coming in from just the pension. And so we're like, let's wait and do that next year to take advantage of some of that.

John: It's interesting looking at people's faces when you bring up the tax calculator and you show that tax bracket today versus then. It's interesting because I go, I never thought of that. I know because you're you're so focused on a goal, or you're so emotionally committed to it that you're not doing the day the analytics we call it. Looking at the numbers. And of course, you're a geek when it comes to that stuff.

April: Oh I love it. I love it. I really need that sign that says I have a spreadsheet for that. That's totally true. 

John: You have a spreadsheet for everything. 

April: That's right, I have a spreadsheet for my spreadsheet. So let's talk about the DROP program, what it is, and how it works. So DROP is just for those in the pension plan. And what happens with DROP is it allows you to retire. I'm going to use air quotes for that retire while still working. 

So on paper, you've retired, even though you're still going to be working and you still receive your income, your salary. And what happens is the state starts paying your pension into a, it starts accruing into a retirement account on your behalf, and it's going to earn interest. And so while you're in DROP every month, that pension payment, instead of going to you, is going into your DROP account, it's a retirement account. 

And at the end of DROP, you're now going to start getting your pension as income, and then you're also going to receive a lump sum. They call that your DROP payout. This is the accrual of all those pension payments while you were in DROP that have been earning interest. 

And again, this is going to be in a retirement account, because this wasn't paid to you as an individual. It's going to be categorized as retirement money. Very important to understand how that part works. And you'll have to make a decision about what do you do with your DROP. 

Do you transfer it to some type of retirement account, like an IRA or deferred comp, or do you cash it out? So you're gonna have to make decisions about what to do with that DROP payout. And today, you can stay in DROP for up to eight years. It used to be five, but now you have the choice, the option to be in DROP for up to eight years. 

One thing to note here is when you go into DROP, that is when your years of service stop. And sometimes there's some miscommunication, misinformation about that because you've retired on paper. Your pension is now starting, so your years of service stop, and also your highest five. 

John: Yeah, you've officially retired. 

April: Yeah, you've officially retired. So keep that in mind, too. And then on the pension I want to cover briefly, what are the four pension options and how do they work. And just know we have other episodes that go into way more detail on not just the pension options, but all of these topics as well. 

So if you're curious and have more questions, go check out our other videos and episodes. But the four pension options. Option one is called life only. That means you get that income for life, but the day you die, that pension dies with you. There are no options to a beneficiary. 

So life only. Option two pays you an income for life, but guarantees that that income is going to go to some beneficiary for the first 10 years of retirement. So let's say I chose option two and I passed away after one year, then my beneficiary would receive my pension for the next nine years. One thing to note on option two is when you go into DROP starts that clock. So if I'm in DROP for eight years, and then I fully step out, now I only have two years left of the 10. 

Option three is called joint and survivor. We usually think about this for couples. So it would pay me an income for life, and then the day I pass away, it pays the same income to my spouse, or vice versa, if he passed away first, there's no change to my pension. We get both get the same income for the rest of our lives.

John: Just like I described at the beginning with my dad. Same thing.

April: Option four is the one there's the most misinformation and confusion about. Option four says it's gonna pay, it's a joint and survivor benefit, so let's say for you and your spouse, and it's gonna pay you income for as long as you live. But when one of you has passed away, your benefit is going to be reduced down to two-thirds of what you're receiving before.

John: So let's be clear. You and I are married. I've died. You die first, let's say I'm the worker, and it's my pension plan, but you die first. I'll soon get a reduction of a third. 

April: Correct.

John: And I've had the, I'll call it displeasure of having to sit down with people during my career and say, look, this is the way the system works. They're not hurting you. They're not taking advantage of you. You made this choice, and it's usually because they saw the higher number. 

I'll get this for life. And a guy said this, he said, and somehow the old girl is going to live on less. Well, now it's the old boy living on less. So it's very important to understand these options thoroughly before you sign up for them.

April: Absolutely. It's so crucial, so crucial. And a lot of you may be listening to this. You may have already made your pension option when you went into DROP. And you may be saying, oh, I don't even remember what pension option I chose. We see that a lot. 

It's so important for us to understand which pension option that we're under. It's gonna change your retirement plan. So thinking of that, what are some things, John, that people should consider in just planning overall for retirement? Of course, their FRS benefits are going to play a huge part in that. But what are some things they need to consider?

John: The things that pop in my mind, April, are number one, don't just count on the pension to give you the income. Don't just focus just on that. What are the other benefits? What are you going to do as far as health insurance in retirement? Are you going to do Original Medicare with a supplement? 

You going to do Medicare Advantage? What are you going to do? So the health insurance side of it. What are you going to do with money that's in DROP? How do you manage that in retirement? Will you need that income or not, or do you want to let it continue to grow to help offset inflation? So many things to look at.

April: Social Security. When are you going to take Social Security? And there's some, there's definitely some planning strategies out there for Social Security, whether you're a couple or if you've been divorced, if you're a widow or widower, there are definitely planning strategies around social security to maximize those benefits.

John: Well, if you think about it,  if you're in FRS pension, and you have Social Security, that is two guaranteed streams of income. However, they're going to be reduced at some point without proper planning. And you want to coordinate those two benefits with whatever you've done on your own, whether it be an IRA, deferred comp, DROP, whatever. It's just important to look at the whole picture. 

And then the big issue for me, because my health issues, I'm soon to be 72 years old. What is your health situation? Because that may change how you use that money. I guarantee you, my mindset has changed on how I'm gonna use my resources. I'm using more of the money now and enjoying it while I can with the people I want to spend time with.

April: Yeah, you know, we think about this retirement planning and this FRS benefits, we always talk about the retirement planning puzzle, and how we just think of all of these different pieces being part of a puzzle for our clients that are trying to figure out, how do we put it together in the best way possible? 

And that's where we come in to help them. And I think about these FRS benefits, and those are those cornerstones, right? Those are those corner pieces. We've got to identify those first and figure out how they fit in, and then where does everything else come in and coordinate as well.

John: Not only cornerstone, they're the foundation. Especially the pension.

April: Absolutely. Well, thank you guys for tuning in today as we are covering these common questions that we get. Really quick, I know we've got a couple other podcast episodes coming in the pipeline where we're going to talk about one episode just on DROP. So we're going to go into more detail about what it is. 

How does it work? When should you go into DROP? We're going to do a case study of going into DROP versus not going into DROP, and how does that impact your pension. So be sure to stay tuned to that. And then we're also going to talk about some tax efficiency strategies when we think about retirement, especially for those of you in FRS. 

We're going to talk about what we see from a tax planning standpoint from FRS members. What are those common tax planning mistakes that we see? And we're going to dive deep into that piece.

John: I want you to show us how we can pay zero tax for the rest of our lives.

April: If I could wave a magic wand and do it, I would. Thanks you guys for tuning in, and we'll look forward to seeing you next time.

John: It was a pleasure sharing time with you folks. 

April: Bye now.

Voiceover:  This promotional information is not approved or endorsed by the Florida Retirement System or the Division of Retirement. Neither Guardian nor its affiliates are associated with the Florida Retirement System or the Division of Retirement. This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice, make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and the opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address, 1700 Summit Lake Drive Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of  FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

7188596.1 Expires November 2026

Finding Balance in Life and Finances

Retirement isn't just about building a nest egg—it's about crafting a balanced, fulfilling life. Dive into a conversation that goes beyond the numbers.

In this episode, John and April uncover the holistic approach to retirement planning that goes far beyond financial savings.

You’ll discover…

• Why retirement planning involves much more than just accumulating wealth

• Four essential areas to focus on for a balanced retirement

• How to identify your personal retirement needs and goals

• A unique approach that differentiates Curry Schoen Financial from other advisors

• The most common yet overlooked expenses you need to prepare for

Mentioned in this episode:

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello and welcome to today's episode of The Secure Retirement Method. Today we talk about something important, and that is how retirement isn't just about money. I know a lot of us think that. We get sometimes even obsessed about that, thinking that retirement is all about the money, and how much money do we have, and what is that going to look like. But it goes way beyond just the money side, the financial side of our lives. And today I'm joined by John.

John Curry: Hello April. Hello everyone.

April: And we're gonna talk about these four key areas in life that are really crucial when we're thinking about having a fulfilling retirement. We're gonna talk about your health, wealth, time, and relationships. So let's dive right in. So John, as you're thinking about this, I know you're gonna be coming up on your 50th year in financial services and helping people with these topics. 

John: Yeah, for a long time. 

April: Long time, long time. And, you know, we can kind of joke sometimes that a lot has changed in those 50 years, but I think a lot of stayed the same, too.

John: I agree with that. More has stayed the same.

April: Absolutely. And so, we're going to get into this today in talking about these four crucial parts of someone's life. I think these are important while we're working, too, but today we're going to focus on the retirement side. What have you seen from your perspective of how these four different components work together when we're thinking about wealth, health, time, and relationships?

John: Well, first of all, most people come in the door worried about retirement. They're very insecure. And that's why, when I created the Secure Retirement Method, I used the word secure. Not a comfortable retirement, a secure retirement. And secure retirement means different things to different people. But it's not just about retirement. 

You could be 35 years old or 20 years old. We all have some insecurities about money, and if not, everything would be perfect. But everybody's worried about. Do I have enough? Will I have enough? Will I lose my money in the market? But the things from a wealth-building standpoint, people come in with this mindset of, okay, I have to work harder, investing money, and put myself in a position where the best balance that I have in this account, a 401k, my IRA, 457, deferred comp, TSA, whatever they've got. 403b. 

Okay, I have to use this money to take care of me in retirement. Then they are worried about rate of return. Okay, am I getting a good rate of return? Then they worry about, okay, am I gonna lose my money? Because you could. Go back and look at 2008. The market was down 47% for a lot of our clients. 401k, just half of it disappeared, you know, and that's scary. Could it happen again? Yes. And it will happen again. Question is, when? 

So I think number one is from the standpoint of the wealth side is people, they're anxious, they're concerned, and part of this is because they do not have the unique planning process that they can follow to help them address those issues. And we'll talk about that some. Matter of fact, why don't you talk a little bit about our planning process, and then we'll talk about the health side of it.

April: I think a couple of things on that, you're absolutely right, in that the first people think about, is this money side when we think about retirement. But you know, I know we, what we've seen, especially in the work that we do with our clients, that it's not just about accumulating some big number in their retirement account. It's about having this holistic approach to the financial side. 

So yeah, I'll talk a little bit about our planning process. And we have a proven process that we take all of our clients through. I was just meeting with a new client last week, and he's retiring next year. And one of the things that he said is that he wanted to work with someone who could help him figure out the timetable, even. When do I need to do what? When do I need to sign up for Medicare? When do I need to apply for Social Security? 

He's retiring from the state of Florida. So then he would say, well, when do I need to let them know about my DROP options and what I'm gonna do with that? When do I need to let deferred comp know? So he just even had a lot of questions about the when and the timing side of things. A lot of clients, and this might sound silly, but they really wonder the how. How do you do these things? 

John: Correct.

April: How do you sign up for Social Security? I've done a great job-saving money, and I've got money in my retirement accounts, but how do I actually start turning this account balance, this account, into income? What's the process for that? So I think some of it's that. But when we're looking at overall retirement planning, we look at having this bucketed approach to retirement income. 

So we first take a look at what are the guaranteed streams of income that you are going to have in retirement. That might be Social Security and a pension, and we call that your retirement baseline. What is the base income going to be for you in retirement? And that's a great starting point for us. We've got to know what's that guaranteed income going to look like. 

And then we can have conversations around, is that enough, or do we need more guaranteed income in retirement. And then from there, we also want to have other distinct buckets. We want to have buckets for discretionary income. So if we have all of our basic needs covered by guaranteed streams of income, and that would be the ideal situation. That our basic lifestyle is covered by guaranteed streams of income. 

John: Absolutely. That should be the goal.

April: That's the goal, right? And we think about having working and you got this paycheck coming in every couple of weeks, we want to have the same feeling in retirement. We want to have that income just coming in on autopilot, so you don't have to worry about it. You don't have to think about it. And then we want to have discretionary income, so we've got assets that we tap into for discretionary needs. Thinking about maybe we're going to take a trip, or maybe we're going to remodel the house or something. Whatever it is. A new car.

John: Or a wedding. Something pops up where you need money to help a family member.

April: What are those things that are going to happen that are outside of our basic living needs? And then we also need asset buckets that are continuing to grow on our balance sheet. Ones that we're not tapping into because we know you're going to need more income tomorrow than you need today. We've got to have enough future income coming in to offset inflation.

John: And we hear a lot about inflation nowadays, don't we? 

April: That's right. 

John: The Fed is focused on it. They're absolutely obsessed with it, trying to get it down to 2%. They say it's around two and a half right now. But I don't know if I believe that. You go to the grocery store and see what I pay for milk and eggs, I'm not so sure I believe the numbers anymore.

April: Absolutely. I know we don't have enough time to get into all of this today. And the intricacies of these buckets, because there are definitely some key points. You gotta think about the tax situation. You gotta think about required minimum distributions. You know, there are some assets that are better suited for that guaranteed stream of income. 

There are some assets that you can't use for the growth bucket because you have to tap into it for required minimum distributions. So there's a lot of intricacies there, and a lot of things that you want to work through, but that's definitely one of the things that we look at. you

John: On a regular basis, a few times a week now, somebody will say something to me along the lines of, hey, why are you still working? Are you still working? Do you have to work? Different questions. And I'll tell people, look, here's my retirement plan. I have two things that are working for me that help me tremendously with retirement. 

I have life insurance in place as one bookend, and I have guaranteed streams of income on the other. Now, some of those guaranteed streams of income are two pensions, Social Security, the VA benefit, and annuities I purchased to guarantee me income. So as you were saying earlier, all of my base expenses are covered. 

If everything else went away and I had those benefits, my life's good. Now, in the middle I have money that's in the savings account, making very little interest right now. But it's parked there for a reason because I want to use that to do things. I have money in money market accounts, in my brokerage account, then I have individual stocks, then have some ETFs. 

So I'm in a position that if I need money, I have it available. When we get into some of the health issues in a few minutes, I'll explain more of why that's important. But the key thing is, these buckets you're talking about, most of us want to leave money behind in some form of legacy to someone or something, some organization. 

So that could put somebody in a position where, how do I do that? And that's why I have the life insurance in place because it allows me to use the life insurance to replace every dollar if I spend the dollar, I have guilt-free ability to spend every dollar that I have in savings and investments.

April: I think that that's great. Thinking about that and how to structure that, I know that's what we coach our clients on. So on that theme, can you talk a little bit about why having money set up correctly is more important than just having some magic number? Sometimes people think, what's my number? How much do I need to have saved before I can retire? We get that question a lot, and we talk it's not so much about having some magic number and just having all this money saved up. It's really about how you have it structured and set up. So can you talk about why that's more important?

John: I'll tell you why it's more important for me. I have money coming in that I don't have to worry about the market. I don't have to worry about, did the market go up or down today? Because it's guaranteed income that shows up in my account. Some of it shows up on the first of the month. Some of it shows up on the second Wednesday. 

Social Security is the second Wednesday. It's just like a mushroom overnight, it pops up, and that's in my account. So I would say to people listen to this, some of your money, a good portion of your money, should be invested in a way that increase guaranteed, reliable streams of income for you that can never go away, never. Now you can't put all your money in something like that, because you have to have liquidity. 

Liquidity is a big deal, and we focus on that with people. But for me, April, it's come down to where it's more important today, I'll be 72 in less than two months, December 9th, I'll be 72. At 72 all of this means more now than ever. And I'm gonna jump into the health side for just a minute. I know you probably have some questions on this as I go through it, but I look at my health situation. 

You know, three and a half years ago, my right leg was amputated above the knee. That was a life-changing event. That's the most difficult thing I've ever dealt with. Heart surgery back in 2008 was child's play compared to this. Changed everything. How I walked for six months. I was confined to a wheelchair, then I finally got a prosthesis. 

Had to learn how to use it, still learning how to use it. I still fall every now and then. So the health side has become even more important. And I started working on that back in 2008 after the heart surgery. And I read and I study about longevity. But I also pay more attention to health, because what good is it to retire with all the wealth that we've been talking about, but your health is so bad that you can't do the things that you like to do? 

You can't travel and you can't walk across the parking lot because of knee replacement or hip replacement, things like that. And I'm seeing that as I'm getting older. I see things that pay more attention to. We have a lot of clients in their 80s and 90s, even 100 and you see they can't do some of the things they used to do. And you reach a point that you don't even want to do it. There are things I used to want to do. I'm not doing that. I'm not doing that now.

April: How would you say thinking about your own health journey, how would you say that that has shaped your view of planning for retirement, especially in the most recent years?

John: That's an interesting question. I would say that the latest challenge that I'm dealing with is the cancer. I have colon cancer that already spread to the liver when we found it. And I would tell everyone listening, please pay attention to your doctors and get colonoscopies scheduled and go. Don't miss it, because that's how we found mine. 

And when I asked the doctor, if we had not found it, what do you think my life expectancy would have been? She said, I think you'd have less than a year, six months to a year if she wouldn't have found it. Now that we found it, what do you think? She said I think you have three to five years. But she was quick to point out that she's not God. 

She can't cure me. She can just treat me. And it reminded me. I told her what my dad used to say, God will not take me till he wants me. When God wants me, He will take me. So you can't run around worried about dying. I don't worry about it. People say, well, I would think you'd be more depressed or whatever. I'm not going there. I'm not going there. 

But what it has made me do is pay attention to my health, because some of the reading, and I noticed you have the book here, Outlive by Peter Attia. I've always been a big student about longevity. Started that with a guy named Ken Dychwald who made it popular. We're living longer as Americans, although life expectancy has dropped some for men and women in the last few years. We're living longer in retirement than most people think. 

Well, let's take a picture of that. At one time, I weigh 284 pounds. Now I hover around 212, 213. So I got serious about my health because I realized that if I started making changes in my 40s and 50s, it would pay big dividends later. Someone your age, tender young age of 40, so the things you're doing today when I see you in the gym are going to give you huge benefits when you're my age that you don't even realize yet.

April: And it's interesting. As you know, John, my really good friend, we work out together several times a week. And we talk about this, that the things that we do today it’s not about looking a certain way. And it's not necessarily trying to do something for today. It is all those future benefits. 

John: Big time. 

April: We talk about how, and we see you, we see other people in the gym. We're like, you know what? We're gonna we wanna be. She was telling me how she was in the gym working out, and there was a gentleman who was 84 and was doing the leg press. That's what we want to be. We want to be in the gym, you know, 40-something years from now, doing this together, and it's all about building those future benefits on that. A lot of times you'll hear that, that saying too, that your health is your wealth. I have a friend who's a personal trainer, and her thing is, is she'll say, you either pay for it now, you pay for it later.

John: Just like the old oil filter commercial that some people will remember, pay me now or pay me later. You do the oil change now or buy an engine later. It's the same concept. It's the same concept, the same idea. But one of the things that I'm amazed by, you made a comment about being in the gym. One of the things I do is the farmer’s walk with 53-pound kettlebells. One in each hand. That blue carpet wear was 90 feet according to Tom. 

So I walked down 90 feet that weights down, rests are 45 seconds to a minute, and then repeat. I'll have people come to me and say why are you doing that? Why do you do that? I say, well, it works on my balance. It works on my strength overall, my hand strength, my grip. And then research has shown that one of the measures of how healthy you'll be in retirement is how good your grip is. 

And I work on that. I mean, my hand grip is like where I could, I could grab your arm and you're not getting loose. And it's not just about going to work out. Why are you doing it? I like the concept of functional fitness. You know, have the false illusions. I'm not going to look like Mr. Universe or whatever. I just want to go in and get in better shape. 

I did some traveling in September, the first time in four and a half years, I was on an airplane. And that travel, that little trip, speaking in Dallas, Texas, I was there, got there Sunday and left on Wednesday, flew to Columbus, Ohio, spoke there, came back on Friday. So it was an experiment. It was a test. Okay, how am I doing? 

And do I even want to travel and speak like I used to on a regular basis? I used to be on a plane two or three times a month, and this was four and a half years in between. That was the big deal. What I learned from that, April, the most important thing I learned from it, number one, I loved what I did, but the most important thing was I have to work on my endurance and my stamina. I gotta walk more. 

So now what I'm doing, I was going to increase the number of days at the gym. I'm not doing that. I'm walking more outside, up and down hills because I have to be able to walk longer distances. And it's more difficult with the prosthesis. It wears on the hips and the left knee. So I just have to work on that.

April: What are some other things? So you mentioned there, like grip strength, you mentioned endurance, and walking. So what are some other things you think that people should be thinking about, as kind of being prepared for that, or things they should be working on for their health? What are some things else that you're working on?

John: I'm working on more and more of making sure I don't sit as much as I used to. Like when you come in to work. Yeah, folks, I'm still working two or three days a week. This week, April is making work a lot.

April: It's good for you.

John: But you sit too much. We all are sitting too much. So what I'm working on more and more April is getting up and moving more. I've always talked about the key is, how did you go from 284 down to 213, 214, 212. Real simple. Eat less, move more. But the things that I'm reading and studying that are impacting people as they're getting through their 80s, 70s, 80s that's limiting them is overweight, okay, not strong, and endurance. 

April: And mobility.

John: Mobility and the ability to get out and walk. Some of the things that I'm involved in with my lady, Susie, we'll talk about relationships later. But do I have the ability to go do some of the same things? Some things I can't do. There's some travel that we do for festivals because of our role in Springtime Tallahassee. I'm not gonna do those. But, yeah, I'll just be in the way. The other things I do, and I do it with fervor.

April: That's right! So let's move on and talk about time. I love talking about this, especially thinking about retirement. So one of the things I think that people don't think about is how much time they're going to have now that they're retired. And people may look forward to that of being able to be on their own time and doing the things that they want to do. But how have you noticed that people handle now having all of this free time now that they're not working? Both the good and the bad, because I know we see both.

John: Well, let me start with me first, then I'll tell you what I see. When someone says to you, I think you have three to five. Years to live, it damn sure changes your focus about time. And even the oncologist, she said, John, I'm amazed at how you responded when I told you that. I don't see any anger, bitterness. What's up? I said, well, I appreciate you telling me what you think, but I think I'll live longer. I may not. If I don't, I don't, but I'm prepared. Everything's in place. I'm at peace. I've had a good life. If I die today mid-sentence, I've had a good life.

April: Let's not do that today.

John: I'd rather not. I'd rather not do it today. I'd rather not do it any day. I even talked about it sometimes in workshops and speeches I did when I was gone in September, that one of the financial hazards is dying too soon. I said, I don't know about you, but whenever I die, it's too soon. 

But when I see with people who come in the door or just chatting with a guy at the post office yesterday, a total stranger. I didn't know him, he knew me. He said you're John Curry, the retirement guy. I said you're close. I'm the Secure Retirement guy. Well, somewhere along the way, he had gotten a postcard that we'd set and he told me about it as he was throwing away a political postcard. He said that's how I'll remember you because I used to get postcards from you about your seminars. 

So we're talking about retirement. He said, if I had known that I was going to be this old in retirement, I would have taken better care of myself. So think about it. Goes back to health again. So we spend all these years trying to get wealth, then in the end, we're spending all of our money to try to get health. 

April: And time.

John: And time. So the time part of it, what will you do with your time? I'm struggling with this a little bit now, because, you know, I'm fortunate that I have a place on Lake Talquin so I go there. But if I'm not careful, I'll catch myself sitting too long, either on the back porch there or watching television. Because I love watching the financial and political news. I'm a junkie when it comes to that. 

I could sit in front of that television, well, from 6 to 9 in the morning Maria Bartiromo, then from 9 to 12 watching Stuart Varney because I like what they cover. But that would be six hours of my life I did nothing. So instead, I am working on watching less television and reading more. I'm back to reading two or three books a month again. I got off for that for a while. But how do you spend your time? What do you want to do? What do you want to do with that time?

April: I know when we're working with clients, we talk about how important it is that we're retiring to something, not just from something. Because sometimes we get to a place where we're so unhappy in our job. We're so frustrated. There's been maybe management changes. Maybe there's, sometimes we hear too, they're making all these software changes. 

I don't want to deal with it anymore. And so sometimes we're retiring from something, and that's okay, as long as we're also retiring to something. So really thinking about what are you gonna do now that every day is Saturday and Sunday?

John: Correct. Expand on that. What do we tell people about that?

April: Absolutely. So right now, if you're working a traditional job, and we work Monday through Friday, then we have Saturday and Sunday to go do the things that we want to do. So like this past weekend, I feel like I did nothing but run 90 miles an hour because Saturday morning, Eli had soccer, and then a flag football game, and then we went out with my in-laws to celebrate my brother-in-law and sister-in-law to celebrate Brian's birthday. 

And then on Sunday, we went to church and we played golf and had dinner with the family. And so it was just, it was great, and it was wonderful. We got to spend some time outside. It's a beautiful time in Tallahassee right now outside. And you know, it was great, but it was just jam-packed. 

So then you kind of come in on Monday like, oh, I need a break. I need to rest from my weekend. So now, what will we do, though, if we've got seven days of free time? We're not going to golf all seven days. So what are you going to do? But some of our clients, they do now play pickleball.

John: One of our clients plays golf every day. Literally every day that man plays golf.

April: Yes. So, but what are we going to do? And you need money for that too, right? So thinking about what are we going to do with our time? What is that lifestyle that we want to have in retirement? Do we want to volunteer? Now there are a lot of our clients that we hear that they're doing so much wonderful things in retirement, whether it's volunteering or traveling, or their hobbies that they say, I don't know how I ever had time to work. Isn't that amazing?

John: I hear that all the time. We hear it every time we see clients.

April: And, you know, my favorite story to talk about all the time is a client of ours who was 90 at the time, and we had reached out, scheduling a time for us to get together, to meet and review his things. And he goes April, I have got to let go of some of my social commitments. I have no time in the next three weeks. 

John: Was that Charlie?

April: Mm-hmm. 

John: I thought so.

April: At 90 years old. 

John: Yeah, he's 97 now I think.

April: And I was just like, this is where you say, oh, I want to be like you I grow up. To have so much going on in your life and to feel still so engaged in having a purpose. And I think that's the thing for most people, is like again, is going back to that purpose, whether it's good or bad, we get a lot of our purpose and our identity from work.

John: Well let's talk about that. You made a comment earlier about your dad, that when he retired, that, you know, he lost that social connection with people that he worked with. My dad retired at 62 and he died at age 85. 85 and a half, to be exact. Almost to the day. And I asked him, I said, any regrets? 

And one of his regrets was, he said, son, I retired too soon. I should have worked longer. I said because of the money. He said, no, just because of the relationships. He said because you think about it all this time. He's on his deathbed when we're having this conversation, he said, all this time I've been retired, I've enjoyed the time with your mom. 

I've enjoyed the time with you, going to the lake house, riding the pontoon boat. He said, but I should have worked longer. I would have had a better financial situation, and I would have maintained a relationship with those people. But I've lost those relationships because they don't keep in touch. He said I regret that. I regret that. 

And one of the things that I want to work on is nurturing those types of relationships. I picked up the telephone this morning on the way in and called a friend. I've known him since 1975. 49 years. A colleague, you know. We talked for 15 minutes and it was great, but we don't talk enough. Too busy. Everybody's busy. Too much to do.

April: Yeah, so let's talk about the relationship side of things, and what we see. I do think that the social aspect is important too. If you think about it, we spend more time at work than we do with our family. So you know, now that we're retired and we don't have that aspect of our lives anymore, what is going to fill that? 

Are we going to maintain those relationships with the people that we used to work with? And then also, what are we doing while we're working to foster those relationships with our family or whoever is important in your life, whether that's friends or, you know, your spouse or your kids, but who are those relationships? And how are we going to work on those? Do you want to talk about the relationship side for a few minutes?

John: I do. I do. Because another thing that happens when you are facing some type of health crisis, especially one that's shortened your life expectancy. I have no false illusions. I used to tell people I'm gonna be like George Burns lived to be 100 years old, or Kirk Douglas, 102. Kirk Douglas and I have the same birthday, December 9. So I always used it as an example. Bob Hope lived to be 100 years old. 

Betty White missed it by about two weeks. These are all people that I read and studied because of how they adapted to change. But I have no false illusions. I'm not gonna live to be 100 years old, but what I can do is if I have the wealth in place, and I work on my health and I manage my time wisely, okay, if I got this time who do I want to spend it with? 

I got to thinking about that big time, especially when I was when you go to chemotherapy, the infusions, you’re sitting in a chair for four or five hours, sometimes. The whole day is about five six hours from that. So it gives you time to think. So I got to thinking about some things. There are people around us that are toxic, that when you're around them, they drain your energy, they don't give you energy. 

So one of the things I've worked on for many years, even more so now, if I'm around someone that's draining my energy, I limit that time. I want to be around people that I feel like I'm encouraging them. They encourage us. It's almost like it's two batteries, you know, we energize each other. And if I find that I'm around someone who’s toxic, I get the hell away as quickly as I can. I'm nice, I'm cordial about it. 

And I've got family members that are in that mode that I spend very little time with. I spend time but I'm going to limit it. So the question I have for people is this, when you retire and you have this money, hopefully good health, and now all this time, who are you going to spend it with? You going to be by yourself? Studies have proven people who are by themselves, they get real lonely, they get into a period of depression, and they don't do very well. 

So you got to have some social interaction. I would encourage people to think about that way before you retire, a long time before you retire. For me, I rejoined a couple of organizations I dropped out of because I like those people. I like being there. For a while, I stopped going to my Rotary Club. Now I'm going back to Rotary and I enjoy it because of the people here. 

So I would just say, determine where you want to spend the time. What are the things you want to be doing, but most importantly, who will you do them with? And think about this, if you have no relationships, and you have the wealth, you got the money, you're in good health, you can travel, you got the time, and you got nobody to do it with, what kind of life is that? 

And I'm working diligently on repairing some relationships that frankly, suck. Family wise. I had a very good friend tell me over the weekend, look, you've done all you can do, you've reached out, you've done all you can do. The other person has to want to do it. And I said, thank you for that reminder. That's true. 

But what are the relationships that you want to work on? You think about it. You got work, okay, we got your free time, maybe with your children. You go to soccer games, you go to flag football games. You meet other people there. There's a common interest. So what is the common interest? And that's where you're most happy when you're doing things like that. And then the same this with work. A friend of mine, his name's Chuck. 

He said, why do you still go to work? You don't have to work. Why do you do that? And I said, well, let me ask you a question, Chuck, if you're doing something you love doing, you're dealing with people you love doing it with, and you have a team around you you love working with, and you still get paid. When would you want to stop that? He said, well, you put it that way, never. I'd always wanted it. 

And I said that's what I have. I said, because of the relationships I have with people. At the same time, if somebody comes in and they're rude to you, me or Leslie or Luke, our team, we're not gonna work with them. Well, we have a little come to Jesus. You can't do that. We're going to work on mutual respect. And if we don't have that, then we probably should not work together. It's a two-way street.

April: It's a two way street, that's right. Also what I think is interesting about thinking about these four concepts is, you know, it's very clear that retirement is more than just about the money. And even though that might be where people initially think about retirement, all of these other aspects are tied into it at the end of the day. And I really think it's more about having balance in these areas. 

And yes, you know the money is important, right? You got to have money to be able to go do these things. You got to have money to be able to go travel, if you want to travel, or even to spend on things for your health, or spending time with people that you want to spend time with. So yes, I'm not cavalier and just thinking it's not important, but it is just one piece of the puzzle.

John: You're right. And other things, let's think about activities we've talked about, going to the gym. Membership is not free, right? Going to play golf. You gotta pay greens fees, get a cart, or you gonna walk. So everything you do, you need money, everything. Now you can just say, well, I'm not gonna go to the gym. I'm just gonna have some weights at home and walk. You can do that. And some people do it very well. I don't do that so well. 

I find that going to the gym a couple of days a week is good for me. I used to go three days a week and work with a trainer, and it was the best health I ever was in. Talking about leg presses earlier. One time I was leg pressing 600 pounds. That's how we found the aneurysms that later led to the amputation. I was in my 60s when I happened. 

So you look at how you spend your time, your money, the people you spend it with. It's all connected. And I think that's where we're different than most financial advisors. We don't just say okay, how much money you got, where do you want to put it? Have the conversation first. Who are you? What do you stand for? What's important to you? What does the future look like? What do you want it to look like? 

You know, and that's where our planning process helps so much because we can actually demonstrate, okay, this is what you said you wanted. Here's a picture of it. What do you think? Well, I don't like that. Well, you have time now to make changes, so what would you like to change? But you asked a question earlier about the money side. 

I think most important is, before you get into how to invest is how much money do you think you're going to need/want in retirement. And the truth of the matter is, none of us really know for sure. We don't know for sure what's inflation going to be, or what's our tax rate. We don't know that. 

April: What's healthcare gonna cost?

John: Healthcare, that's the biggest expense we have. And then work on at least, as you call it, the baseline, what is the minimum number you want to know that's coming in every day, every month or other. And I would just tell you, from a peace of mind standpoint, I have that, and I am going to preach that until the day they bury me. I'm just going to say over and over, it's the four things. Work on your wealth, your health, your time, relationships. 

Over and over, until people get it. And then, you know what? Every time I work on teaching that, I did that, I spoke six times in one week, and every time I spoke, I made sure that I shared that with people. And you know what? People in the room, I'm talking about advisors, other advisors are like, wow, that is so different because we're not hearing that. We're not hearing that which is so important.

April: Absolutely. And I'm just, I want to remind you listening to this too, that we're here to help guide you through this process. We understand that retirement is about the whole person. It's not just your bank account. So if you're interested, you want to learn more about how we can help you, feel free to reach out. You can go to our website and find ways to connect with us. 

You can listen to other podcast episodes. We have a YouTube channel. Make sure you subscribe to our YouTube. But yeah, if you want to start working through this process of thinking about retirement, especially in these four areas, not just the money side, but all of it. Your health, your wealth, your time, and your relationships, again, I would encourage you to just reach out. A lot of times how we structure that is scheduling a time for a call. 

So it's a 30-minute call. We do not charge for that call. It's complimentary, and it's just a time for us to get to know you a little bit, and understand, what are your concerns when you think about retirement. What questions do you have? 

Of course, we'll share with you how we work with clients. And we're obviously, we're not the right fit for everyone, but I do know that at the end of those 30-minute calls, it's really clear if it's a good fit for us to work together, and we talk through what that looks like.

John: I'm gonna make a very bold comment. There's no way, no way that someone will not benefit from either a 30-minute conversation for coming sitting down face to face with us. Because we've had people walk away and say wow, I'll learn more in one hour with the two of you, or with you or with me, than I ever have before when it comes to financial planning and retirement planning and estate planning. And it's because we have no need to pressure anyone. We could be just as relaxed. If we do business, great. If we don't, it's okay too. There's zero pressure. Zero. Come have a cup of coffee and chat.

April: Well, thank you guys for tuning in today, and we look forward to seeing you on the next episode. Goodbye.

John: Thank you.

Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial, and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address, 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

7188586.1 Expires October 2026.

Maximize Your Social Security Income Without Confusion

Planning your retirement can be a maze, but knowing when to claim your Social Security benefits might just be the key to unlocking a secure future. Ready to make the most pivotal decision of your retirement journey?

In this episode, April Schoen, dives into the intricacies of Social Security, outlining strategies to ensure your golden years are actually golden.

You’ll discover…

• How to determine if you and your spouse qualify for Social Security benefits.

• Various timing strategies for claiming your benefits to maximize your income.

• The critical differences between spousal and survivor benefits.

• How your work history and earnings impact your Social Security payments.

• The often-overlooked tax implications of taking Social Security benefits.

Mentioned in this episode:

• https://www.ssa.gov/

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello and welcome. My name is April Schoen, and I'm glad you're joining me today. I'm a financial advisor with over 10 years helping clients not just get to retirement, but through retirement with confidence. And today we're going to be talking about one of the most important subjects when it comes to planning your retirement, and that's going to be Social Security.

When you start taking your Social Security benefits is going to be the biggest decision you make when it comes to your retirement. Not only is it going to impact your income for the rest of your life, but if you're married, it's going to impact your spouse's income for the rest of their life, too.

So I'm glad you're here. I'm glad that you're diving in to learn about this important topic. Now this is actually going to be part three in a series that we're doing about retirement planning for people over 50, called your path to a secure future. So if you haven't watched episode one and two, I encourage you to hit pause, go back, watch episodes one and two, and then jump back into today all about Social Security.

Now I know this is not going to surprise you, but people who have more guaranteed streams of income in retirement are happier. They feel less stressed. They're happier. And Social Security is one of those benefits that's going to provide you with that guaranteed stream of income. And Social Security is really this cornerstone for retirement income for many Americans.

We consider it part of your baseline for retirement, and then you may have a pension, which is going to increase your guaranteed income. You're going to have investments, retirement accounts. All of that added up is going to create your retirement income. But Social Security is one of those cornerstones. It's one subject that we get the most amount of questions on. People are always asking when's the best time for me to take Social Security?

So let's get into it today. As I said, this is gonna be one of the most important decisions that you make about your retirement. I think the two questions we get most often have to do with Social Security and also healthcare in retirement. That's another big topic of discussion. What are we going to talk about today? We're going to go through and talk about, how do you qualify for benefits?

Just going to give some high-level basic information about how do you qualify for benefits. Because sometimes there's some questions around that. We're going to talk about, when can you claim and how do you maximize your benefits under Social Security? There's some different claiming strategies. And then also understanding spousal benefits and survivor benefits as well. Let's get into it.

First, let's talk about how do you actually qualify for Social Security? It's pretty simple. As you're working, as you're paying into Social Security, you earn what are called credits. And you essentially need 10 years of work history to be able for you and your spouse to qualify for both Social Security and Medicare. Now one of the things I encourage everyone to do is review their Social Security statement.

They used to send them in the mail, but now you have to go online to see your Social Security statement. And the Social Security website has got a ton of great information. We'll make sure that we link the Social Security's website in the description box, but it's got a ton of great information. There's some calculators actually out there too on their website. But I encourage you to create a login.

Go look at your statement. You're going to see your earnings history, which we're going to talk about in a few minutes. You're going to see the different benefit amounts, showing if you took Social Security at 62, your full retirement age or age 70, and every age in between there. You want to go and take a look at that and review that about every year or so as you're getting closer and closer to retirement.

How are benefits calculated? What is this amount going to be? How much am I going to receive from Social Security, and again, your statement is going to tell you all of those options. But let's walk through it. Benefits are based on your average indexed monthly earnings, and they look at your highest 35 years of work history. Let's talk about this for a second. Couple things I want to note here.

If you don't have 35 years of work history, they put in zeros for those years that you don't have. So be careful of that, because that's really going to pull down your average if you don't have 35 years of work history. The other thing I want to point out here is it's your highest 35 years of work history.

And for most people, when we're getting towards, close to retirement, that's when we're earning the most amount that we've ever earned. So the more years that we have of those higher earnings, what happens is something from early in our career, say, in your 20s or so, falls off of that average. The longer we work, earning more income, a higher salary, the higher those Social Security benefits are going to be.

They use a formula using your highest 35 years of work history to determine what they call as your PIA, your Primary Insurance Amount. And really, all this is, is this is the amount that you receive if you claimed Social Security at your full retirement age. So again, we're going to talk about that in a few minutes as well. What is that? How do you figure that out? How does that play into your Social Security benefits? So we're going to go through that in a second.

But like I said, you can see how a working longer is going to increase your benefits, because the more income you have at these higher levels, it's going to replace those earlier earnings history when we didn't make as much. So what are some things that we can do to increase our benefits, to maximize our benefits? That's really what most people want to know. How do I get the most out of it? I've been paying into Social Security all these years. How do I squeeze every bit out of it that I can?

First know you've got some different claiming options, and you can start benefits as early as 62. That's the earliest that you can claim Social Security. But if you do that, you're going to have a permanent reduction in your benefits. So if you're not taking it at your full retirement age, you take it early.

Now, full retirement age for most people, is between 66 and 67. I'm going to show you a chart in a minute that's going to show you exactly what your full retirement age is, but I just wanted to point that out to you as a point of reference. We think of three stages of Social Security. The earliest I can take it is 62, I have my full retirement age when I receive 100% of my benefit, and then I could also delay to age 70, where I get a higher benefit.

Anyway, so you can start it at 62. Also, like I said, your full retirement age, that's going to be based on the year that you were born. And then you can delay taking benefits until age 70. And every year that you delay past your full retirement age, you're going to get an 8% increase. Let me say that again. 8% increase. It's pretty big. So here's how you figure out your full retirement age. It's based on the year that you were born.

So if you were born in 1960 or later, your full retirement age is 67. So when I'm going through and talking about some examples today, I'm going to assume someone's full retirement age is age 67. But again, like I said, you can take it early at 62 so let's talk through that. What if you say, hey, April, I'm retiring. I'm not going to be working anymore, because there are definitely some key considerations you want to take.

You want to think about if you take it early. But let's get into a little bit about claiming strategies and what are some benefits of taping it early? Well, one of those is, you're gonna get immediate income. This might be, if someone has, maybe they've got some health concerns, they may want to go ahead and start taking their benefits early. But you're gonna get that immediate income.

This may also mean that you can delay tapping into your retirement accounts. Your investment accounts. Some clients say, Hey, I would rather take Social Security and let my investment account, my retirement account, continue to grow on my balance sheet. Kind of like keeping your powder dry. We want to keep money on your balance sheet growing for your future, and then tap into this Social Security benefit instead.

Coordinate it with your spousal benefits. It might be that one spouse takes it early and another spouse lets theirs grow until age 70. There's a lot of coordination you can actually do for a couple, and it's one of things that we help clients with. If that's something you're interested in, we could definitely help you with that.

What we would need is just a copy of each of your Social Security statements, and we can put a report together that's going to show you taking it early, taking it late, what's that kind of crossover point. How do you actually maximize those benefits. And then again, this might be useful for someone who's thinking, oh, I'm retiring at 62 I might be having some health problems. I'm not sure what my life expectancy is going to look like, and so I'm going to go ahead and take these Social Security benefits early.

Now, for Social Security calculations, what they assume is that someone at age 65 they are assuming that your life expectancy is 20 years, about age 85. That means, if you really look at the numbers, women live a few years longer than that on average, men a few years shorter. So they average it out to be about age 85, is what Social Security looks at.

Again, these are some benefits of taking it early. And this is stuff that we all walk through with our clients. But let's talk about the benefits of also delaying Social Security. Because I hear this a lot, I want to delay it as long as possible. If you do that, you're going to get those higher monthly payments.

Like I said, when you delay from full retirement age to age 70, you get an 8% increase per year. So my full retirement age is age 67 so if I wait till 70, that's 124% of my full retirement age benefit. That's a huge increase. This would mean an increased benefit for my spouse. Let me walk through that. We're going to talk about survivor benefits in a minute, but surviving spouses receive the higher of the two Social Securities.

I'm a numbers person. I don't know if that surprises you or not, but let me just put some numbers on it. So let's say that my Social Security benefit was $3000 a month, and my husband's benefit was $2000 a month, and I passed away first. Well, then Brian, my husband is going to receive $3000 a month from Social Security. He's not going to get both, but he's going to get the higher of the two. This is when we do look at, does it make sense for someone to delay their benefits because it's going to be a higher Social Security benefit for either of the surviving spouses.

I was just talking with a client this morning about this. Sadly her husband passed away earlier this year, and we were talking about the different Security Benefits and what she used to get and what she's getting now. And this can be ideal for people who are continuing to work, because Social Security penalizes you if you take your benefits early and are still working.

So it's really ideal for those who are continuing to work past their full retirement age.

And again, this can mean that you're going to have more financial security later in life, when we might find that health care is increasing, other expenses are increasing, you're going to have a higher baseline. If we compare that to say, someone taking their benefit at age 62. This really comes down to a very personal decision. I feel like sometimes people want me to give them a blanket answer.

Everybody should always do this all the time. And unfortunately, that's just not the way it works. It really comes down to everyone's specific situation. Comes down to your financial situation, your health situation, your family situation. There's a lot to consider about when to take your benefits. I really encourage you to sit down with a financial advisor, a planner, who knows what they're talking about, who understands Social Security and can look at this with you.

Don't make these decisions in a vacuum. Make sure that you're looking at all of your options and going through it. Let's talk about overview of pros and cons. Early benefits, you're going to get that immediate income, but your benefits are going to be reduced, and there are also income limits if you're continuing to work, which we're going to talk about. If you decide to delay your benefits, you're going to have higher income, increased benefit, and there's no income limit for working.

Now let's get into some of these spousal and survivor benefits. So for spousal benefits, the spouse must be at least 62 years old, and they're going to receive either their own record or up to 50% of the higher earning spouse's benefit. So let me use my example I gave earlier, where my benefit, let's say, is $3000 a month. Well, my husband is eligible to get his benefit on his own record, or half of mine, whichever is higher.

So even if the spouse didn't work much out of the home at all. Maybe they don't even have 10 years of work history. They still qualify for spousal benefits under your record, and can receive up to 50% of the spouse's benefit. If they claim Social Security before their full retirement age, they will also have a reduction, and there's also survivor benefits. This is a claiming strategy.

Now this is available to both widowed spouses and dependents. You can get up to 100% of the deceased spouse benefit, and you you can claim as early as age 60. We just had a client in this week, and her husband passed away several years ago, and she's been receiving his social security benefit. He was already getting Social Security, so she's getting 100% of what he was receiving, but she has never taken her benefit.

She's actually been letting her benefit delay and grow. And she just turned 70 this year, and she flipped over from her survivor benefit to her own record, because Social Security now is going to give her a pretty big bump, because she's changing over to her own record. This is a huge planning strategy. Definitely make sure that you keep that in mind if that is your situation.

So how do we have strategies to maximize benefits for a household? We want to coordinate when we're taking Social Security. It might mean that someone takes it early and another person delays into the future. We've got to look at those survivor benefits so that we understand what's going to happen when one of the spouses passes away. Do we have plans in place to replace that lost income?

That's a big part of what we do, too, for clients in that situation. When they've had a spouse pass away, we know they're going to have a reduction in income because of Social Security, and we've got to have buckets that we can tap into to recreate that, to replace that income. Now, what if you are continuing to work? I get this question a lot. You're saying, hey, April, I'm still working, but what if I want to start taking my benefits?

So the question I always ask here is if you're taking your benefits early, before your full retirement age, are you going to be working in any capacity? Because Social Security has earnings limits, and if you make over that limit, they're going to reduce your benefits. So the earnings limit in 2024 if you claim before your full retirement age is $22,320.

That means, if you are claiming Social Security early, and you're working, you have earned income, and you make over that amount, then they're going to reduce your Social Security benefit $1 for every $2 over that limit. Okay, so this is very important for us to understand how that works. And let me explain again. This is only on earned income.

So if you're getting money from a pension, you're taking money from retirement accounts, investment accounts, you have other passive income like real estate. None of that is earned income. It's, I have a job, I have a consulting business, I am self employed. It's any earned income is what they're going to look at there. And then when you do hit your full retirement age, they actually will go back in and do an adjustment and figure out what's your new benefit amount based on what your reduction was.

So you do get an additional adjustment for that when you hit your full retirement age, but it is something really important to know. So how do these earnings affect your benefits? If you claim early again, you've got that earnings test. They will recalculate. Once you reach your full retirement age, Social Security is going to recalculate your benefit amount to give you credit for the months that your benefit was reduced.

So that means then you're gonna have a higher benefit at your full retirement age. But a lot of times, the math doesn't work out where it makes sense for you to work and get your benefits early. It's still better for you to wait and take your benefits when you've fully stepped off into retirement. Balancing that work and benefits requires careful planning. So for some who continue to work it's going to be very beneficial.

This is when you want to work with that financial advisor and think about your financial needs, your health, and your long-term goals when making those decisions. Another question that we get a lot is understanding how Social Security benefits are taxed because they used to not be taxed a long time ago. And so a lot of times, people think that Social Security benefits are not taxed today, but that's not accurate.

Part of it does get considered in as your taxable income. And this one I'm going to give you my disclosure is that I'm not a CPA, I'm not a tax attorney, so make sure that you're consulting your own tax professional when talking through this. But let me give you an overview of how this works, and then you can meet with your tax professional. Social Security has something that's called combined income, and what they do is they take your adjusted gross income, they add any non taxable interest, and they add in half of your Social Security benefits.

And this combined income determines how much of your Social Security benefit is considered taxable. And that ranges from none of it's taxable, half of it's considered taxable income, or 85% of it is considered taxable income. Let me show you these income thresholds. Depends on how you file your taxes, if you file as an individual, or if you file married filing jointly. If you file as an individual and your combined income is less than $25,000 no taxes on your Social Security.

So there is still a possibility to have no taxes on your Social Security. It just doesn't impact as many people. And then, if your combined income is between $25,000 and $34,000 then 50% of your benefit is considered taxable income. And anything over $34,000, 85% of your benefit is considered taxable income. If you file married filing jointly and your combined income again this for both of you, so we have on your tax return.

So this is both incomes, is less than $32,000 no taxes. Between 32 and 44, 50% of your benefits will be considered taxable. And then over $44,000, 85% is considered taxable income. We talk through this with clients, and I'll tell you that when we're doing planning, we assume it's all taxable because of then that just means that bit that's not is going to be icing on the cake for you.

So if you're like, man April, that's kind of complicated to think about a combined income, and where does all that fit in? Then I would say in planning, just assume it's all taxable, and just know it's not going to be as bad as you think that it is. But again, this is really when you want to take this into consideration with everything that you have. Very important when you're doing strategic planning, part of what we do with clients is this strategic planning of like, hey, when am I going to take money from different buckets, so I can be as tax efficient as possible?

Maybe I want to stay under some certain tax limits because of federal income taxes, or maybe I'm concerned about IRMA, which affects your Medicare premiums. These are all things that you want to take into consideration when thinking about when to tap into benefits, when to tap into not just Social Security, but also investments, retirement accounts. That's a big part of what we do is as helping coordinate that.

Well, I hope today, again, I wanted to give like, a quick overview of Social Security, just to give you an overview, again, of how does it work? How do you qualify? When can you claim? What are some strategies to take into consideration? We do have, we actually give full hour, hour and a half long presentations on Social Security. I know we do have some of those up on the podcast, up on our YouTube channel as well, so you could definitely go there and get more detailed information.

But I want to just give that high level overview for Social Security, for those that are like, hey, I want to get this introduction and earn about Social Security as I'm diving into this. Make sure that you subscribe to our channel or our podcast, because the next episode we have coming up is going to be about investment strategies for a secure retirement. I think you're really going to enjoy that episode as well.

We're going to talk about developing that strategy for integrating social security with your other income sources, with your other investments and retirement accounts as well. Stay tuned for for that next episode that we have coming up. And you know, if you're like, hey, April, thanks for this but I'm really not sure what I should do in my situation.

I'm trying to decide what's going to be best for me and my family. Then I would suggest scheduling a time to do a consultation. We do complimentary consultations, so there's no charge to you. We do a 30 minute call, and what we're going to help doing that call is first of all, get clarity. What are some of the most important things to you? What are your goals? What are your concerns? What questions do you have about retirement?

And usually in that consultation, we're going to have a couple of ideas that we can share with you, like, hey, I think you should look into this, or maybe these are some ideas to work on as you're getting close to retirement. If you're interested in that, I would say hop over to our website, which is curryschoenfinancial.com.

You're going to see a button that says book a call, and that's going to take you right to my calendar so you can book a 30 minute phone call. gain, best way to do that, I would say, would be to head over to our website, which is curryschoenfinancial.com. We'll have a link that in the description box, so you could easily get to it. You could also call our office, 850-562-3000. Again, that number is 850-562-3000. Hope you guys enjoyed today's episode, and I look forward to seeing you on the next one. Bye now.

Voiceover: The Social Security Administration has not approved, endorsed or authorized this presentation. There is no charge to attend this event or subsequent consultations. Contact the Social Security Administration for complete details regarding eligibility for benefits. Guardian, its subsidiaries, agents and employees. Do not provide tax, legal or accounting advice. Consult your tax, legal or accounting professional regarding your individual situation. This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with, or endorsed by, Park Avenue Securities, Guardian, or North Florida Financial and the opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address, 1700 Summit Lake Drive Suite 200, Tallahassee, Florida, 32317. Phone number, 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Company of America, New York, New York. Park Avenue Securities as a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

6990460.1 Expires September 2026

Boost Retirement Income: Secrets Every Senior Needs to Know

Retirement planning can be overwhelming, but what if you could uncover strategies to secure a steady income and live stress-free?

In this episode, April Schoen dives deep into various strategies to maximize your retirement income and ensure financial stability.

You’ll discover…

• The key factors influencing the timing and strategy of claiming Social Security benefits.

• Different pension options and the impact of your choices on long-term financial health.

• Strategies to transform your retirement investments into a reliable income stream.

• The pros and cons of annuities and how they could fit into your financial plan.

• The significance of asset allocation and diversification for risk management and stable returns.

Mentioned in this episode:

• https://www.ssa.gov/

• https://curryschoenfinancial.com/

Transcript:

April Schoen: Hello. I'm April Schoen, a financial advisor with over a decade of working with clients and helping them not just get to retirement but through retirement. And over the years, I've helped hundreds and hundreds of our clients achieve their financial goals, making sure that they can enjoy their retirement with confidence. Welcome to our channel, and today's video episode is really the second installment of our five-part series we're doing on how to get ready for retirement for people over the age of 50.

So if you haven't watched part one on creating your retirement framework, I suggest you hit pause, go back watch that first episode on creating your retirement framework, and then come back to this one. Because that first one's going to really be all about setting up goals for retirement, starting to really take a look at assets and liabilities, and what are all those things that you need to do to start getting prepared for retirement.

And this is part two. We're going to talk about how do you maximize your income in retirement. I'm sure this will be no surprise to you, but having a steady stream of income in retirement makes people feel more comfortable, right? Research has shown that retirees with higher more secure income sources are not just happier, but they tend to live longer and have less stress.

Who wants to sign up for that? Who wants to be happier, live longer, and have less stress? There have been studies by the LIMRA Secure Retirement Institute and the RAND Corporation, and they found that retirees with guaranteed income streams like annuities, Social Security, pensions, they report higher levels of satisfaction in retirement and lower rates of depression. So again, these are all things that we want to have in our world.

And today we're going to talk about various strategies to help you have that. We're going to talk about Social Security timing and strategies. We're going to talk about pension options. We're going to talk about how do you create an income stream from your investments in your retirement accounts. Excited you're here, let's dive in.

So on today's agenda, we're going to talk about Social Security timing and strategies. When you go to take Social Security is going to be the biggest decision you're gonna make when it comes to your retirement. If you have a pension, you're gonna have lots of decisions, lots of choices to make. We’re gonna talk about all these choices, and how do you know that you're making the right one for you and for your family.

And then, how do we create an income stream from our investments? Congratulations. Congratulations, you've done a great job. You've worked hard, you saved money, you have money in your retirement accounts and your investment accounts, and you get to retirement, but now what? What is that income stream really going to look like? And how do you go about that? We're going to talk about some key strategies on how to do those today.

These three topics are by far the most common questions that we get from clients about retirement. When to take Social Security, what to do with a pension, and then, how do they structure getting an income from their retirement accounts and their investments? Social Security timing and strategies.

Again, this is one of the most important sources for income for many retirees. And depending on when you start taking Social Security, is going to significantly impact your retirement income. So we're going to talk about the pros and cons of taking these benefits early versus delaying them. How do you maximize spousal benefits, survivor benefits, and how do we coordinate that with other assets that you may have?

Now today I'm going to give a high-level overview of Social Security because part three of this series is going to be all about Social Security. So today I'm going to give like high level and then come back for part three so you can learn more. Let's understand the basics of how Social Security works. Social Security benefits are calculated based on your highest 35 years of work history.

If you've ever looked at your Social Security statement, you'll see your earnings history. So if you do not have 35 years of work history, guess what? They add in zeros into the calculation, and that's really going to drive down your average. So pay attention to that. That's one strategy is making sure that you've got at least 35 years of work history. That's going to make a big difference. Now, you have to have at least 40 credits to qualify for Social Security benefits.

What are credits? Basically, you need to have about 10 years of work history because you earn four credits per year. So we need to have 10 years of work history to qualify, actually, it's for both you and your spouse to qualify for both Social Security and Medicare. Now the amount you receive depends on what's called your average index monthly earnings. And again, that comes from that 35 years of work history.

And what's also going to be really important for you to know is when is your full retirement age? Your full retirement age is determined by the year you were born. For most people, it's between ages 66 and 67. Now you can take your benefits early. So if you take your benefits as early as 62 which is the first time, that's the earliest you're able to claim Social Security, your benefit is going to be permanently reduced. Very important to know.

But if you wait past your full retirement age, you can delay taking Social Security all the way to age 70, then your benefit is going to be increased. We're going to talk some more about that. Let's talk about the impact of claiming age. When you take Social Security, that's going to have a big impact on your benefit amount. So when to start claiming benefits? Again, this is going to be one of the biggest decisions that you make.

You can begin taking benefits as early as 62 and you can wait until age 70. Claiming benefits before your full retirement age results in a permanent reduction. Let me give you an example. If your full retirement age is 67 which is what mine is, and that's also for anyone born after 1960. If you start your benefits at 62 your benefits could be reduced by up to 30%. Three zero. That's a big difference.

On the other hand, if you delay taking Social Security, your Social Security benefit is going to increase 8% every year that you're waiting to take Social Security past your full retirement age, until age 70. So this can significantly boost your monthly payments, which is what we're talking about here. Delaying your benefits is going to increase those monthly payments. So when should you take Social Security?

Well, really, you want to take a lot of factors into consideration. You want to think about your health, your financial needs. Are you married? How much life insurance do you have? There are a lot of factors that play into when should you take your Social Security benefits, which we're going to talk a little bit about here today, with survivor and spousal benefits, when we get to that which is coming up next.

Let's talk about these survivor and spousal benefits. Spousal benefits allow a spouse to receive up to 50% of the higher-earning spouse's benefits. Let me just put some numbers on it, because I'm more of a numbers person. I know that probably doesn't surprise you. But let's say that my Social Security benefit was $2000 a month. We're gonna make the math easy here. So $2000 a month. My husband is entitled to receiving Social Security benefits on his own record, or at least $1000 because that's half of mine.

So again, he will receive the higher of the two, but he can receive his benefit on his own record, or he's entitled to receive half of my benefits at my full retirement age. Again, in that analogy, in that example, if my benefit is $2000 he would be able to receive $1000 from the spousal benefit. Then you've got survivor benefits, and this can be up to 100% of the deceased spouse's benefit. So let's use that example again.

My Social Security is $2000, let's say my husband's receiving the spousal benefit of $1000 per month, and I pass away. What happens? Well, now my husband's going to receive the higher of the two benefits. So in that case, he's going to get $2000 per month from Social Security. He doesn't get both, but he's going to receive the higher of the two.

So these survivor benefits, these spousal benefits, can really provide financial support for spouses, for children, and understanding these benefits can really help you maximize the household's total social security income. One of the things that we do for clients is we do Social Security claiming strategies.

So if it's a married couple, if we receive both of your Social Security statements, we can run Social Security claiming strategy reports and show you what if we both take it early? What if you delay to get the maximum income? What if we do a combination of the two? We could actually show you how to maximize those Social Security benefits, and all we need is a copy of each of your Social Security statements in order to put that report together for you.

One of the things we talked about too is coordinating Social Security with other income sources, because this can be really crucial to helping optimize your total strategy. Let's consider how Social Security fits in with pensions, retirement accounts, other investments, and if planning is done properly, this can actually help you minimize taxes and maximize the longevity of your retirement savings.

One option is you may say, hey, I want to go ahead and start my Social Security benefits because I want to allow my investments, my retirement accounts, more time to grow. I want to leave more money on my balance sheet and tap into my Social Security benefits early. Or the opposite may be true. You may say, you know what, I'm actually going to use some of my assets to bridge this gap for retirement, and I'm going to allow my Social Security benefits to grow, especially past that full retirement age, where I'm getting 8% per year.

So when we're working with clients, and we do our retirement rehearsals, we look at both options. What if we take Social Security early, and then what if we also delay into the future? But if we're going to delay Social Security in the future, then how are we going to bridge that gap for income? Are we going to take it from investments or retirement accounts? Are we going to work part-time? How are we going to bridge that gap for income?

Because it's important to create a comprehensive retirement plan that integrates all of your income sources, and not just look at these things in a vacuum. Now let's talk about pension options and decisions. So if you have a pension, this is going to be a significant part of your retirement income, and understanding your pension options making informed decisions is crucial for you.

So we're going to explore these decisions that you have to make, like choosing between a lump sum or monthly payments, and also understanding those survivor benefits. A defined benefit plan, often referred to as a traditional pension plan, promises to pay a specific monthly benefit at retirement. This amount is usually calculated based on a formula that looks at salary history, years of service, the employer bears the investment risk, not the employee, because the employer is the one who's promising to pay a monthly income to the employee for the rest of their life.

Again, employer bears the investment risk, and you're going to have multiple payout options for how you receive your pension, called pension payout options. When we think about payout options on the pension, usually you're going to see a lump sum option as well as some monthly income benefits. The lump sum is going to give you the entire calculated value of your pension upfront.

It's basically like taking your money and running. Thank you very much for my pension, I'm going to take my lump sum and I'm going to go do something else with it. This option is going to give you more flexibility, so you can invest it, you can spend it how you want to. However, this also means now that you, the employee, bears the investment risk, and you have to make sure that it's going to last you throughout your retirement.

Monthly payments, on the other hand, are guaranteed for life. Think of it like an annuity. This can offer you more security, so you don't have to worry about managing the investment or the risk of outliving your money. And when deciding between lump sum or monthly payments, you really want to take into consideration your health, your financial needs, your risk tolerance, the stability of the pension plan. And this is really where a financial advisor can help you make the best choices for your situation.

Now there are usually survivor benefits available under pensions. Defined benefit pension plans again, usually offer some type of survivor benefits, especially for married couples. And so this is going to be on those monthly guaranteed income streams. So when you're choosing payout options, you're going to have multiple choices available to you.

You can do what's called a single life, a joint survivor, a period certain is also an option. And a single life provides, typically the highest amount of income to you, but it dies when you die. So when you pass away, that income is going to stop and there's there's nothing that's going to continue on to a beneficiary. However, if we look at joint and survivor options, yes, the income is going to be lower, but now it's covering two people. It's covering you and your spouse.

This means you get that income for as long as you're living. The day you pass away, that same income continues on to your spouse. So choosing between the survivor benefit really is going to depend on your financial situation, your spouse's needs, other assets that you have, life insurance.

Again, We don't want to make these decisions in a vacuum, and say, you know what option one gives me the highest income, I'm just going to select it. We want to make sure that we're making these decisions based on knowing our options, based on facts, based on looking at all scenarios to know we're making the right decision. Because when we choose these payout options on the pension, guess what, they're irrevocable.

You cannot change your mind. You can go back 10 years later and say, hey, just kidding. Instead of that single-life payout, I now want to do joint and survivor so my spouse is covered. It's irrevocable. So very important that we're making those decisions from the beginning correctly.

Let’s shift gears and talk about how do we create income from investments in retirement accounts? Again, Social Security, pensions, these are really going to provide you with that retirement, we call it a retirement baseline. These are your guaranteed streams of income. And what we want to talk about as well as, okay, great, April, yes, I have Social Security, maybe, or maybe I don't have a pension, but I've got money saved up in my investments, investment accounts, my retirement accounts.

How do we start structuring an income from those? Because when we're saving money, when we're in our working years, are saving money that strategy, that investment strategy, is very different from now that we're retired and we're starting to pull money out of our portfolios. So we're going to cover some different approaches like using dividend-paying stocks, bonds, different types of systematic withdrawals. We're going to talk about the importance of asset allocation and diversification.

And again, today I'm going to give a high-level overview, because later on in our series, we're going to talk more in detail about the investment strategies, but I do want to give you an overview so you can be thinking about these. Let's talk about systematic withdrawals and withdrawal strategies. Systematic withdrawals means that you're regularly withdrawing money from your investment account, your retirement account.

Usually, this is done on a monthly basis, and clients will use this to provide an income for them during retirement. This strategy really helps make sure you've got a steady cash flow while allowing your investments to continue to grow. And there are definitely different strategies when it comes to taking money out. Let's walk through these different withdrawal strategies.

The first one we're gonna talk about is called the 4% rule, or the safe withdrawal rate. And this suggests that we're going to take 4% out of our portfolio in the first year of retirement, and then we're going to adjust that amount every year for inflation. There were some studies done back in the ‘90s by a financial advisor, and he really sought to understand how much could someone pull out of their portfolio every year without running out of money.

And he went back and looked at the stock market and the bond market since 1928 up through the ‘90s, and he ran a bunch of different calculations to figure out what that number was, and he settled on 4%That rule took off.

There was research done at the collegiate level, who also backed up this 4% rule, and it kind of became known then as the 4% rule or the safe withdrawal rate. And it's still widely used today. Another approach is to use what's called a bucket approach, or time segment approach.

And this is where you divide your assets into different buckets based on when you're going to need them. So you might have a short-term bucket that's invested in cash, and then you're going to have some mid-term and long-term buckets that are invested more for growth, and as time moves on, you're refilling that short-term bucket.

There's also what's called the safety-first approach, which looks at having enough guaranteed income to cover all your basic living expenses and then using one of the other approaches to provide discretionary income for retirement, like travel and home remodels.

I can tell you in my work with clients that when we're going through these different strategies, a lot of clients like the safety-first approach, where we're covering all their basic living expenses with guaranteed income, and then we're having other buckets on their balance sheet for discretionary income and also for growth.

When we're working with clients, it's not really an either-or, we actually look at using a combination of these different withdrawal strategies to give you the best, optimal outcome. It's essential that we're choosing these strategies again, that we're aligning these with our goals, our risk tolerance, our life expectancy. And this is really when I encourage you to work with a financial advisor, because they can help you analyze these different strategies and figure out which one works best for you, or is it a combination of them.

When we think about the investment side, again, this is on those withdrawal approaches, one option is to look at dividend-paying stocks and bonds. This can be a great source of retirement income. Dividends are payments made by companies to shareholders, typically on a quarterly basis.

And we usually think of these companies, they usually have a history of being stable, growing dividends. They can often be seen as financially healthy and reliable. This not only gives you income, but you could also see improvements right through the potential for capital appreciation as the value of those stocks go up.

Bonds, on the other hand, are fixed-income securities that pay interest regularly. So when you invest in bonds, essentially what you're doing is you're lending money to a corporation or a government entity, and in turn, they promise to pay you interest over a specific time period. And again, when working with clients, you really want to have a diversified portfolio.

These dividend-paying stocks, bonds can help you have a steady income stream while managing that investment risk. It's important to research and make sure that you're selecting high-quality stocks and bonds that align with your risk tolerance and your income needs.

Another approach that you may look at is annuities. Annuities can have a good and bad name. There are pros and cons and annuities are really insurance products that are designed to provide a guaranteed income stream. There are a bunch of different types of annuities, fixed annuities, variable indexed.

Fixed annuities offer guaranteed interest rates, stable payments, while variable annuities or index annuities allow more for growth and investments in a different range of securities, and those index annuities can offer the potential for higher returns with some downside protection. The benefits, when we look at pros and cons of annuities, they can provide guaranteed lifetime income, protection from outliving your savings, and the potential for tax-deferred growth.

But what you also want to make sure that you look out for are fees, surrender charges, and less liquidity compared to other investment options. Make sure you understand what are those terms, what are those conditions, and how is this going to fit into my overall financial plan, and this is when consulting with a financial advisor can help you make that informed decision.

Now, asset allocation, when we think about the investments and how important it is, so asset allocation, diversification, are important parts of a successful retirement investment strategy. I mentioned earlier, when we're in our working years and we're saving money, that investment strategy is very different.

Should be different from when we're in retirement and we're starting to pull money out of our portfolio. So we want to make sure that we're spreading out our assets across different asset classes, stocks, bonds, cash, so that we can balance risk and return. So this asset allocation can help us manage risks. It can help provide more stable returns over time.

A well-diversified portfolio can really help us have more stability. But it's also important that we're reviewing this on a regular basis. We have to make sure that as time moves on, as we have market changes, that this remains, that our investment portfolios are still aligned with our risk tolerance, our investment horizon, our financial goals. So, yes, diversification and asset allocation can be wonderful tools to help us reduce this risk, but we have to make sure that we don't just, it's not something you want to just set and forget it and not look at it.

It's something that you want to regularly look at and address. Especially as things are changing in the market. I don't know about you, but if you think back to how much things have changed in the last four years since Covid, you could get whiplash with how much things have changed. So think about the market, inflation, geopolitical risk.

There's been a lot going on, and so we've got to make sure that we're staying attuned to that and not just having a blind eye to it. Let's recap some of the things that we've talked about today. We've been talking about how do you maximize income from your retirement through social security strategies, pension options, creating income from your investments.

Here are some key steps I want you to take. I want you to review your social security options. I want you to go, if you haven't done it in a while, go to the Social Security website, which is ssa.gov, we'll probably link that in the show notes. You can create an online profile, and you can pull your Social Security statement. Take a look at it, review it, become familiar with it.

Understand what your options are. Work with someone who can help walk you through and actually model that out for you to show if you take Social Security at different time frames, what's that going to look like for you. If you have a pension, evaluate those options so that you can make better decisions.

And don't forget about those lost pensions. We had a client earlier this year, they got a letter from Social Security that said hey, you might have a pension from a previous employer. Somewhere he hadn't worked in 20 years. And guess what? He did. He has a pension with that company. And then develop a strategy about how you're going to get income from your investments.

Focus on diversification, focus on risk management, but again, it's not just set it and forget it, but what's our strategy gonna be to generating income from those investments? In our next episode, we're gonna be diving deep into Social Security. Again, that's one of the most crucial parts of retirement planning, so be sure to tune into that.

Thanks for joining us today. If you haven't done so already, subscribe to the channel so that you get alerts about new episodes. And if you're ready to take the next step in securing your financial future, I suggest you go to our website and book a free consultation. So all you're going to do is you're going to click the link in the description. It'll take you right to our website, and you can schedule a 30-minute call, and that way we can go through and personalize some advice to you and your unique situation. So again, don't forget to like and subscribe for more retirement planning tips and strategies, and we look forward to talking with you all soon. Bye now.

Voiceover: The Social Security Administration has not approved, endorsed, or authorized this presentation. There is no charge to attend this event or subsequent consultations. Contact the Social Security Administration for complete details regarding eligibility for benefits. This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial and the opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address, 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

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Decluttering Made Easy: Practical Advice for Organizing Your Space and Financial Documents

Drowning in paperwork and unsure how long to keep important documents? Don't let the clutter consume you! Learn the secrets to organizing your financial life and gain peace of mind.

In this episode, Erika Bell, owner of Organize with E, shares her expertise on how to effectively manage paperwork, digitize documents, and communicate crucial information to loved ones.

In this episode, you'll discover…

• A surprising tip for conquering the overwhelming feeling of paperwork buildup

• The key to creating a personalized organizational system that works for your unique habits

• A simple rule to prevent clutter from taking over your life

• The critical conversations you need to have with family about important documents

• The one thing you must do to ensure your loved ones can access vital information when needed

Mentioned in this episode:

• https://organizewithe.com/

• https://www.youtube.com/@organizewithe

Transcript:

April Schoen: Hello everyone, and welcome to another episode. I'm April Schoen and I have a special guest here with me today, Erika Bell. Welcome Erika. 

Erika Bell: Thanks for having me. 

April: Absolutely. And Erika is the owner and head organizer of Organize with E, so I'm super excited to have her on the show today. We get tons of questions about, like, how do you organize your documents, your life? There's like, so much going on. How do we get that stuff organized? And I know you've been helping me with a few things, so I'm excited to have you on and share with everybody today. 

Erika: Thank you so much. I'm excited to be here. 

April: Wonderful. Well, let's get started. So, first Erika, can you just tell everybody just a little bit about yourself, and how did you get into the world of organizing? 

Erika: Sure, and yeah, so funny, because I get this question all the time, and I never know how to answer it, because I feel like I don't remember a time when I was not doing this. It's like in my blood, it's in my bones. Even from a young age, I'd go to people's houses and be like, tidying things. Whether they wanted it or not. 

So then finally, it just kind of seemed like the right time to actually start my own business with it. So I have a master's degree from Florida State and visual merchandising is part of it. So I've always been drawn to making things look nicer, but also understanding the puzzle pieces that go into organizing someone's home. 

And all of the intricate details of why people are unorganized, and what has led to that. And I've always wanted to help people, so it just was the right time to start my own business. So I did that a few years ago, and now I'm actually getting paid to help people, instead of having my neighbors and friends and family ask me for free. 

April Schoen: No, I love that. That's great. That's great. So you've been doing it for a few years. 

Erika: Yes.

April: Awesome. And so talk about the range of services. So professional organizer. Break that down for us. What is that? What do you do? How do you help people? Kind of break that down for us. 

Erika: So it's so funny because it doubles as a therapist. Like, I was saying, there's a reason why people maybe get unorganized or have a lot of clutter in their home. It's not black and white. It's not just things just happen, you know? There’s things that go with it. 

So someone will reach out to me. It can be anything from just maybe one simple project, like help them with their desk, or help redo their office, or it can be their entire home. I have some people who are still recovering from the pandemic. They bought too much, and now they're just flooded with things. So it really can range across the board to even kind of life organizing. 

Let's get our schedules where they need to be. How can we kind of flow through our days and be more productive? So I say home organizer, to help people, but it really is life organizing too. You name it. If you have trouble with it, we can help you create systems that will work for you and your family. 

April: Absolutely. So give us some examples. What do you see as most common? 

Erika: What do people most ask for? Oh, it's so funny. It's so it's across the board. When I first started this business, I was thinking, okay, it's going to be working moms with young kids. So she was my target audience. That's who I thought I was going to be helping. I help single dads, I help widows, I help older clientele. It can be across, really, across the board. So everything from a pantry to, I have too many papers, and help me with these papers. 

April: Yeah. And I know when we first met, one thing we talked about was how it's almost like a domino effect. We can start in one area, I'm sure we'll get into this. But the idea of it can be a little overwhelming. You think about having someone come in and you may need some help across maybe the entire home in this case. Maybe you started with one project, but then can you talk about how then sometimes that bleeds over into everywhere else? 

Erika: Yeah, and that was the other thing, when I had first started, was like, oh, maybe it's going to be cut and dry. Someone will call me in, we’ll redo their pantry. That'll be great. And I did not realize how much it would bleed into other areas of the home, but that makes sense. You have your pantry. 

You don't have enough space in it. You're putting things elsewhere now. You're putting things in your linen closet where things don't need to be. So it's really a giant puzzle. And luckily, I've always loved to do puzzles. That's why it's not easy to say, okay, it's just this project. 

I let people know that, okay, I'll give you a quote for hours, but it could take a range because we do end up in different rooms. They're like, oh, I didn't realize you're gonna end up in my garage. We just are trying to kind of get to square one and start fresh in those spaces and do it the right way too. 

April: Yeah, absolutely, absolutely. So when you're thinking about helping clients, or just anyone listening to this, what are some top three tips that you would give someone who's maybe just starting out? 

Erika: Yeah, sure. So not only to have grace and patience with yourself. Don't beat yourself up, don't come from a place of judgment. It's very easy to do this, but then we don't really get anywhere when we do that, right? But besides that, start small. It's overwhelming. Even if it's one space, it can still be overwhelming. 

So my idea, you know, one of my tips, would be to start small. Even if it's a junk drawer, you'll go through it, you'll organize it how you want, and then you'll get the motivation to do more, instead of saying, okay, my whole house is a disaster. And I'm going to start with my closet, which is, spoiler alert, one of the hardest places to start. Don't do that, yeah, start small. Kind of get your trading wheels, yeah, and take it from there. 

Also, one thing that people don't always either think of doing or want to do is take everything out of your space. So if you're just shuffling things around, you're tidying more than truly organizing. So you want to take everything out, even though it may seem like a hurricane has come through in your house, take everything out because then you're really going to be able to assess what you have, what needs to go to a different home, either different space in your home, or to someone else's home. 

What do you want to keep? What do you not want to keep? So take everything out. It really makes a world of difference. And also, don't be afraid to hire help. Going back to that judgment piece of it, I have a lot of people who say they're embarrassed to hire someone. I'm like, I don't pretend to know how to do my own hair, or I don't cut my own grass. It doesn't need to be anything different than that. You're hiring some help. We all need help. 

April: Absolutely. You know, I see that a lot in the work that I do. Right as a financial advisor, where clients, they want that help, but if they feel, I always say a quasi-therapist. They come into my office for the first time and they feel like they have to financially undress. Here's all my mess. 

I don't necessarily see it that way. You've seen enough times, I think about that medical doctor, there's no judgment. It's just here's what it is. You're able to give some unbiased opinions and thoughts and solutions and things along those lines. But I definitely can see that. And even the work we did together, oh, this is how this feels. Come into my master closet. 

Erika: It's very intimate. And even with finances, people, they don't want to talk about that all the time, and it's an intimate experience, just like organizing. But both of those things are something that we're kind of expected to know how to do without having any training for it. We rarely get financial training unless we have some kind of business degree or degree in finance, and the same with organizing. Either you don't know how to do it, you don't want to do it, but we're expected to keep these clean homes. And it's just not how it works all the time. 

April: Yeah, and I'm not sure if you can speak to this, but I think one thing I thought was interesting or surprising is thinking of these storage solutions. Small things that you can buy to help organize a space. Where I don't think I was thinking of any of those. 

Erika: That's the thing about hiring an expert in any kind of realm is we have different tools in our tool belt that you don't know about all the time. You know I'm big on let's use all the vertical space in your home because it goes unused so often. Let's use behind your doors, because it goes unused so often. So same when someone comes and meets with you, you're saying, oh yeah, let's use this as a tool for this, and it's like, oh, I had no idea that that was an option. 

April: So it's so similar where, you know, you've seen it before time and time again. Oh, this makes total sense. Yeah, I should do this. 

Erika: Yeah, right, yeah, the same. And it's a whole new world. And it's those little tweaks that I find make the biggest difference. So for so long I just thought it was commonplace to know a lot of these things, and then the more I would share them with people, it was like, oh no, people don't know about this hack or this tip or this trick.

April: Yeah, absolutely. All those little things that people do make such a big difference. Awesome. So what do you think are some of the like, common mistakes people make when they're trying to do this on their own? 

Erika: I think not knowing where to start, and having that kind of decision fatigue and that overwhelm, that's a big thing. So trying to have a plan. Like I said, start small, and then once you map out how you're going to do it, do it in order of priority. If your office is driving you crazy, start there, and even by just having these steps, having a plan, it's going to help alleviate some of that turmoil in your head. That decision fatigue. 

Also, a lot of times, people want to buy things ahead of time. And even when I meet with clients, they're like, what can I do? How can I prepare? Which, I love it. I love that you want to do homework. I love that people want to prepare. But I really say, please don't buy anything. 

Unless there's a product that you are just dying to use, and then I'll say, okay, we'll make it work. But besides that, I would say, don't buy things ahead of time, because what happens is, we force our items into those spaces, and they don't always make the most sense. So not buying things ahead of time. 

Go through and do the purging, do the decluttering, do the organizing. Then you will see what kind of categories you have left, and what kind of makes the most sense for that space, and what is the best solution. Also, along the same lines is people try to look on Pinterest, look on social media, and then they want to replicate these ideas in their home, and it may not work for them. 

So we may be looking online, and you and I both have children, young kids, we may look online and see this very minimalist home, and say, oh, I really love that. I'm gonna implement this open shelving concept. And then we're like, oh, wait, that doesn't look as nice when there's Nerf guns in it. So we try to, again, look at these pretty pictures and think that they're going to work for our home, and it just doesn't always work like that. 

April: That makes total sense. 

Erika: So really trying to create something that is specific for your family and going with how you naturally flow through your life. Don't try to go against what you're already doing. So sometimes people say you kick off your shoes right at the door. I have so many moms who are like, oh, I can't stand that my kids do this. 

Well, instead of fighting against and saying having your kids pick up their shoes every time and move them to their room, which is a constant struggle and a constant fight. Let's just put a basket by the door where we just keep our shoes. So not going against what you're already doing, because it's just going to be a headache. Leaning into those things that you're already doing. 

April: Well, that makes total sense. Do you find that with some people, because I know this has been me in the past, where it's the start of the new year, and I'm like, I'm going to organize my entire house. I'm gung ho and ready to go at it and I get started. 

For me, it was always start with the, I don't know the reason why I picked a room closest to the front door if we were having guests over. So I feel like this needs to be presentable at the start of the year. I might do great with that one space, but then it is, it's overwhelming. Or maybe I'm halfway through a project, and then I don't finish it. 

Erika: I think that's where starting small and really just trying to take bite-sized pieces because otherwise, you do get in over your head really quickly. You really do. And it's great to have enthusiasm for the project, but then also having realistic goals. Same with home construction, with anything, just expect that it's going to take a little longer than you think it is. You may walk into a space and think, well, I can do this in an afternoon, maybe plan for the weekend, and then you can kind of get a flow for, get a feel for how things are actually gonna go.

April: Absolutely. 

Erika: Instead of being like, oh, I can do this on a Friday afternoon and you're like, oh, no.

April: I've redone the office three times, right? You're like, I'm gonna start, I gotta start here and finish it. The next I'm like, let's start here again.

Erika: And again, it's, I think it's having that plan too, of what do you want, having your goals, having a plan, and then trying to follow it, because otherwise, you're just running around like a chicken with its head cut off. 

April: I like one of the things you mentioned too, about just kind of identifying maybe some of those problem areas. Maybe it's not that room by the front door. But like, what area is now causing the most stress or overwhelm, or, hey, this is the part that I don't like, and maybe starting there to kind of get some momentum and feel better about that. 

Erika: Yep. Absolutely, absolutely. 

April: Love that. Love that. Cool. Let's say someone does go through that they work with you. They start doing this on their own, and they started to organize. I know one of the questions I always have is that how do I keep it this way? I might even go through and organize the kitchen cabinet, but then how do I keep it up? 

Erika: So it's so interesting because sometimes I think people think my house is organized, and I never have to do anything again. And I wish, but the good news is, you've done the hard work, but now you still want to tidy your home. So one thing that goes with tidying is something called the two-minute rule, which many people have probably heard of, maybe not. 

Okay, so if it takes you two minutes or less, go ahead and do it. That means those shoes that are on the floor, if you don't have that basket, put them away. That paper that you haven't dealt with, just put it away. Do something with it. The email that you've been putting off. It's not going to take that long. But clutter is nothing but postponed decisions, and the longer we postpone them, the more they pile up and the harder it gets to do.

April: Say that again. 

Erika: Yes. Clutter is nothing but postponed decisions. The dishes are in the sink. Postponed decision. But then they pile up. 

April: The stack of mail that you're like, yeah, I need to do something. I need to file this away. I need to go through this. 

Erika: I have a trick for mail, and we may get into this later, or I can mention it now if that's easier. Something with the mail, because a lot of people have problems with paper, and I know we will go into this more in-depth. My trick is that you don't get the mail out of your mailbox until you're going to deal with it. So when you grab it from your mailbox, anything that is coming into your home, you're doing something with. 

The junk mail is going in your recycling bin immediately. We're not bringing it into our home. The thing that just needs to be shredded, just hand shred it. It's fine, you know what I mean? You can shred it up enough to put it in the recycle. Then the only things that are coming inside your home are something that you're going to do something with, and that makes a world of difference for people. 

April: I love that.

Erika: So back to tidying up. So the other thing is, I suggest, and I've got videos on this and different things that will kind of go into more detail, which I know you can link in the show notes, but I like to say that you should tidy twice a day. Okay. 

Now, if you're listening to this and you're like, you are crazy, just hear me out. This is not deep cleaning. When I say tidy, I'm not saying deep clean your house. I'm not saying rearrange things. I'm not saying organize. I'm just saying pick up. This should not take very long. So I like to do it once, like before you go to work, before you walk out the door, so that way when you get home from work, your house isn't crazy. 

And then also before you go to bed so that when you wake up, your house is nice. So again, I'm talking about, let's do something with those dishes, or let's pick up the clothes or move the laundry. Stuff like that. Basic stuff. This is not going to add an hour to your day. This should only add a handful of minutes. The more you do this, the less you have to do things that take longer in the long run. 

April: That makes total sense.

Erika: Yes. And then also keeping those systems in place, we want to reset or reevaluate things every couple of months. You know, if you have kids, especially, you know, they're growing, they're changing, they're into different things. 

They're into different sizes, so reevaluating every few months. And a good thing to do is make yourself a reminder on your calendar. Whatever kind of calendar you use, whether it's on your phone, paper calendar. Hey, just check in on our systems. Maybe in three months, six months, your kids used to be really into, I was gonna say Beanie Babies.

You know, your kids were into cars, and now they hate cars. So we don't need to hold space for those special items anymore, because they're not special. So your systems have to grow and evolve with your family. But again, if you don't keep up with it and kind of touch base. Every now and then it'll go back to being a mess.

April: So you think, like, every couple of months, maybe at least twice a year? 

Erika: Yes, yes. Again, I don't want this to be stressful like you're just trying to stay on top of it. So it shouldn't be a whole, you're not spending a week doing this. It's just, you know what, oh, I've noticed that this is really piling up over here. Okay, let's change that system. Those types of things that are probably giving you a headache already, it's evaluating those types of things. 

April: Yeah, love that. I think about too, when helping clients, I talk about how we have to get the plan set up today, and then what we're doing is we're just really evaluating and adjusting it as we go. Sometimes use the analogy of we're on a sailboat. So we've already charted out the course. 

We know exactly where we're going, and we're just making those small degree changes. It's not like we're turning the boat 180 degrees. We're not going to a different destination, we're going to the same place, and we don't have to now recreate a new system. We don't have to do all this stuff all the time. It's just kind of keeping up with it and tweaks and changes and what we can do to make it better along the way. 

Erika: Yep, same thing. 

April: Yeah. I love that. Yeah. I love that. Anything else you can think of about maintaining the house? I know we're gonna kind of get into more on, like financial documents, organizing that. That's a lot of questions I get from our clients. I know we're going to spend some time there. Anything else on maintaining or getting started for someone? 

Erika: The only other thing I would say is, if you have kids, I would encourage them to help you with this process. Be a part of it. You don't necessarily need them to be a part of the decluttering and getting rid of things, the purging. But help them to maintain it. Help them to see what goes into it. I mean, my oldest is almost six. She puts her laundry away. 

I may fold it for her, but she's going to put it in her drawers. And that helps her out. It helps her know what goes into these systems. And she likes having that kind of space. She likes having an organized space. I don't know anyone that really doesn't. So just kind of encouraging, whether it's your kids, your roommates, or your spouse, just to help with it. This is the big picture. Make sure everyone is on the same page. 

April: Getting that buy-in, right? That we're all in this together, and doing it together. I just had the boys go through all of their books. I was like, hey, tell me which ones you want to read and don't want to read. Like, if there's something they're not going to read, whatever this book is anymore unless there's sentimental value, there's no reason for us to hold on to it. Now, I did tell them I have veto power. I was like, I have veto power. Like, Where the Wild Things Are. I was like, no, we can't get rid of this book. They're like, why? Because I read this to you when you were a baby.

Erika: It's sweet to me, okay.

April: But that's something I need to pull out and put up somewhere. I want to hold on to it. But maybe it doesn't need to be out on their bookshelf. 

Erika: Yes, for everyday use, it does not need to be in there. So we put them in their keepsake and call it a day. 

April: And I notice how even, I know my boys if you ask them, hey, would you like this? Or would you like that? Having conversations with them. Like the Legos. Hey, do you want us, when you have put them together, do we need a space, like a shelf or something, so that we can display that? 

I think I told you, with my two boys, my older one, he wants to put the Legos together and then never touch them again. He's not touching it, and you better not touch it. Nobody else can touch it. And then my little one, he wants to play with them. And so it's just two totally different styles. So kind of working with both of those well. 

Erika: And along those lines, you may have, even with your spouse, it's maybe not with your kids, but even with your spouse, you guys may have two different styles. And so it's finding that common ground and figuring out the systems that work as a family for both of you. But again, have those conversations. Get the buy-in, compromise where you need to. 

April: Yeah. I love that. I love that. Well, Erika, let's switch over and start thinking about someone's financial documents, paperwork side. A lot of my clients tell me that they're overwhelmed, that they get a ton of mail, a ton of paperwork. Could be digital. Could be emails, could be actual hard copy paper on different, you know, their investments, their retirement accounts, their insurance policies, whatever it is. 

And it tends to stack up, and then they don't really know what to do with it. So we think about what do I keep and what do I shred? How long do I need to keep things? When you think of helping someone get organized with financial documents, what are some ideas that you have there? 

Erika: So I would say, first, understand how you like to store things. Sometimes people really love having paper copies, and sometimes people are really overwhelmed by it. So it's great now, because we live in such an era where most things are digital, so we can access them. If we needed to make a paper copy, we could. But we don't really have to hold on to a whole lot of actual paper copies. 

But first is just knowing. Knowing what you have coming in, and then what you prefer to have. So you don't need a digital copy and a hard copy. So let's decide what we're going to go with, and then let's store them all in the same place so that we know this is where my financial documents are. 

They may be in a folder on your computer, copied onto a thumb drive, anything like that. Or you may have a file cabinet, or you may have just binders, but we want them to be labeled. We want to know where we're going for what we need. If you're married and you have joint things with your spouse, let's put the joint things separate from your personal stuff. 

So basically, it's just trying to know what you have and how you like to do things. Again, it's kind of leaning into those systems, leaning into how you want to do things, but making it makes sense for you. 

April: So what I usually recommend that clients do, and this could be paper or digital, but it's having a folder for each account. If we're gonna have paper, then we've got a file folder with that account. What is it? Whose name is it in? What's the account number, you know, some sort of identifier. 

So you can easily, honestly name it whatever you call it. If this is your emergency fund account, or this is your retirement account, or whatever you call it, make sure that you're naming everything this day. But keep separating them out by account. And then the same thing digitally. If we're going to have that folder with our documents, then let's have folders for each account where everything's not shoved into one place, because then it's really hard to find it. 

Erika: Yes. And along those lines, make sure that other people in your home know about the systems that you're creating. If something were to happen to you, where can they find those documents. Right now, I've got an older couple that I'm working with, and they have kind of like a file to go kind of thing that if something were to happen to them, their kids know, this is where their paperwork for their homes are because they have multiple homes. 

This is their funeral arrangements. This is their bank stuff. So it's in this kind of to-go thing. It's like a go bag or whatever you call it. And that way the kids know where to find it. They don't have a lot of digital stuff, so that's easy for them. It's really just all these hard copies, but communicating with your loved ones where they can expect to see these things. 

April: And I think too, let's talk about thinking about what sort of paperwork should be easy, what sort of documents should we kind of be keeping all in one place. Now, obviously, I just mentioned any type of account statement, bank statements, investment statements, retirement accounts, insurance policies. So think about life insurance or your homeowner’s policy, your car insurance. 

Especially if you want to have things all in an area where you can grab and go if you need it. When we had that hurricane come through last September, well, you can't bring the whole filing cabin with you know. So you need to have a place where you can easily grab those top documents. I'd also add legal documents in there as well. Any of your estate planning documents. 

Erika: Absolutely. And have these open conversations. You know, I think a lot of people don't want to talk about some of those documents. They either don't want to talk about their finances, which we know, or they don't want to talk about their living wills or passing away. But this is life, and this is reality. Not only will you be helping yourself to get organized and the people in your household, but whoever you're leaving your things to, you will be helping them. 

I cannot tell you the number of people that I've had say I wish my mom would have done. Or I wish so and so would have done, or I'm not going to do what so and so did to me. And they want to get their things organized. They want to get their things in the right place because it's a headache. And you may think that it's such a headache now. And if you don't do anything, then, oh well. 

But if you don't do something with your estate, especially your finances, you know this, it's going to go to court. And then it's really a headache. So again, you're helping yourself, but then you're also helping that next generation understand what you have and what they need to do about it. It's already hard enough. Losing a loved one. Don't add any stress to it. Make it as easy as possible. And you're never too young to start these things. 

April: And when I talk to clients about this, is like, whoever you have designated as that executor, as that trustee, like whoever that person's gonna be one, make sure that they know that they're the person. 

Erika: Yes, yes, yes. 

April: That's step one. Make sure they know it's them and they're okay with it. Preferably, we have this conversation before we have to visit the document. I like to provide them with a copy of it, if you're comfortable doing so hopefully you are. Make sure that they have read it and that they understand what their responsibilities are going to be, and then where are those documents located. 

Because that's going to be the most important thing. I know we're going to kind of get into this a little bit later. But with the planning software that we use for clients, we have a digital vault, so clients have online access. They have an app they can use. And so we can upload copies of those legal documents. And so that at least we have some sort of record of it. I get that question a couple of times a year of hey, did so and so have a will? We can't find it. 

Erika: Oh, yeah.

April: And that's the most frustrating part. 

Erika: Oh, yeah, of course, of course. I mean, because how many times have you walked into a loved one, I mean, I think most people have had a loved one pass away at this point, and you've walked into their home and you're like, I don't know where to sign anything. I don't know what they had. 

And so I would suggest, the more you can digitalize stuff, I think the better. Again, if you were just so gung ho about your paper, that is okay, but make sure you have backups and make sure people know where they are, right? Because they do just get, they get lost if we don't have them organized. 

April: Absolutely. So along the same vein, a question I get from clients a lot is how long should I keep things for? So I'll talk a little bit about what I recommend on those. Think of the financial instruments. Again, thinking like savings, investments, retirement accounts, and insurance policies. 

I always say, just keep your most recent statement. If that's quarterly, annual, like, whatever that most recent statement is. We don't need to keep 12 year's worth. And you just want to keep the most recent copy of that annual statement or quarterly statement. However, you get those things. That is my recommendation.

Erika: Yes. I love that. I would also suggest that. And I would say with anything that we say, double check with your financial advisor, with your lawyer, with your bank, with any of this to make sure that that's fine. But unless you can get those documents if you need them, you know, think about your bank statements. I had a client recently who she didn't want to cancel her paper. 

She didn't want to enroll for online banking because it was going, she thought it would cancel her paper statements. And I had to tell her, I'm like, you can still have both. Usually, if someone has an online banking, they kind of opt out of their paper statements, but you don't have to. So it's kind of debunking those myths too. So that's why it's good to talk to your specific bank. If you need something that's passed that previous statement, you can usually find it. 

April: Yes. So in full disclosure, I don't keep a lot of those types of statements, because I can pull everything online, and so the less that I can have, the better. Now we'll get into later on some other things. I'll talk about that planning guide that we recommend that people have as some way to have a record of what you do have that helps your loved ones when you've passed away. So I know we'll kind of get into that. And that's what I do, and then I'm using our software system to really keep track and keep everything organized. 

Erika: Yes.

April: So I think we'll get into that for sure. What about if someone's got some old documents that they don't need anymore? 

Erika: I would just suggest taking them somewhere to be shredded. So this is another thing I see all the time. People have boxes of things that they don't necessarily want to keep, but they haven't shredded, because we're using this home shredder. It can only take about 10 pages at a time. Just take it somewhere. It usually does not cost that much, and it is such a relief just to get it out of your home. So shredding it and sometimes you may check with your city, they have events like shred events. So you can drop your stuff off for free. And it's just great. 

April: I was just thinking that there are a lot of banks that do it too, where they'll have an annual shredding event. So you can bring in all those old documents and shred them. 

Erika: There's something therapeutic though about getting rid of some of that stuff. You don't realize, though, and this is with any clutter or excess in your home, you don't realize the space that it's taking up in your brain. And once you get rid of it, you're like, oh, I can breathe a little bit easier. I have more space, physically and emotionally. 

April: One of the questions I get from clients on this is we had a Roth IRA in this one account, and then we transferred it to a new account. Do I need to keep the old paperwork? I usually recommend they don't need to keep it because they don't really need to. It's been transferred to the new institution. Maybe they keep it for a little while, while things are getting transferred over. But once you've passed that tax year, you don't really need to keep those things, because you're going to get all your your tax documents anyway, and you can always go back and get them. 

Erika: Yes.

April: But if someone did want to keep that old paperwork. I say keep very minimal, and then make sure that you have it documented somewhere so that people know that it's transferred. So that you know that it's transferred. Or that someone else coming behind you knows that it's been transferred. 

Erika: And you may just have a folder that says old accounts, but again, then you kind of, the more you dig into it, you're like, why do I really need to? And you probably don't need to keep it. Again, keep it for that waiting period. I'm okay even if you want to keep it for a year. But the problem is, sometimes we don't have those reminders to ourselves to go back and then discard it. So set that reminder in your calendar or something that okay, at the end of the year, this folder needs to be gone through, and I can throw away anything that no longer serves me. 

April: Oh, yeah, that's a great idea. I love that. So that's a great question. So let's say someone has kind of organized their financial life, right? Whether that's paper or digital, what are some things that they can do to kind of help manage, ongoing. So I set it all up today, thinking back to organizing your house, but it's stuff that we're going to continue to receive. So how do we manage that? 

Erika: I think it goes back to what we were saying about at the source. So when, if you are getting the mail from your mailbox, you're deciding then and there what needs to happen with those papers. It's the same thing with the emails that come in. Now, if you're like me, if you're like most of us, we get a ton of emails a day. 

So maybe you block out at the end of the day or the beginning of the day, 20 minutes to go through your emails, but dealing with those things as soon as you can, and not postponing it because otherwise, it does just pile up. But then you're discarding the things you no longer need, and you're filing, either physically or digitally, the stuff that you do want to keep. Yeah, and then it's done. 

April: Love that. Love that. Well, what advice can you give someone who feels overwhelmed by the amount of paperwork they have? You know, a lot of my clients feel that way. They've had accounts for decades sometimes, and we just, we accumulate so much paperwork. So, what are some things we could do to start working on that? 

Erika: Again, I think just start small. If you have boxes of paperwork, start with one box. Start with half a box. Start small, and really be honest with yourself. Do I need to keep this and what for? What purpose is it serving me? You know, if it's because you can no longer have access to that account, you know, I don't know what the reason is, but really have a hard discussion with yourself. Do I need it or do I not? 

April: Absolutely.

Erika: Because odds are you don't, like we've mentioned multiple times. Odds are you probably don't need most of the paperwork you have in your home now. Truly you don't, and the more paperwork you hold on to, it gets overwhelming. Even if you have it organized, it just becomes a lot. 

April: And one of the caveats I will mention would be around taxes. 

Erika: Yes.

April: And you mentioned earlier about talking with those professionals. You definitely want to talk with a tax professional about what documents you need to keep for how long. Especially if someone is filing for capital losses. There are different situations where we want to keep tax returns for all of that. So obviously there's other situations where we've got to keep it. 

Erika: Yes.

April: But by and large, for most things, it's probably going to be okay.

Erika: And the kicker too is so paperwork, receipts fall into this too. I have lots of clients who struggle with receipts. Yeah, I have very few receipts, and I very rarely needed them. So unless you're writing things off for your business, of course, you want to keep those. You want to do your taxes with them. You want to do all of that, but then you can let them go after that. 

You get that digital copy. And especially now, if you hire someone to help with your taxes, they're going to give you, most of them these days, they're going to give you a thumb drive or a CD or just a booklet of your stuff. You're good to go. That's all you need to keep. 

So I would just really encourage people, the less they could hold on to paper wise kind of the better. And I know that is an uncomfortable shift for many, many people. It makes you feel a little anxious, right? But again, just sit down and really have those honest conversations with yourself, of like, what am I going to do with these? 

April: And I think about making it easier for yourself as time goes on. Making it easier for your loved ones as time goes on. I can't tell you how many times I've had someone come in where someone's passed away, and there's a lot of confusion about what did this person have or not have in their financial world. Because they've got paperwork for years now we just don't know. And unfortunately, when someone's died, you can't call them and ask, hey, do you still have this bank account? 

Hey, do you still have this IRA? And if you've got all this paperwork that's just kind of floating around, it's hard sometimes to make heads or tails of that. So what advice would you give for people to help family members in that situation? Family members, beneficiaries, like someone's passed away. What are things that we can do now to be prepared for that? 

Erika: Well, that's exactly what I was just gonna say. Help them now versus waiting until something happens. So you're never too young, like we mentioned to start doing these things. Get your life in order, get your estate in order, your finances in order, your home in order and organized. And then communicate with your loved ones. 

Setting those things that I think sometimes, and you probably come and you probably see people that say this too, it's like, I don't have a lot. So do I really need a trust or a living will, or this, that and the other and I, and I'm sure you say, yes.

April: I do! If you have to have anything, you need those things. So this is not something that is reserved for millionaires, for billionaires. I have people say, well, we don't have any children. Well more important that we figure this out and have a plan, and we have a place to do all of these things. 

Because we do have a certain court order that falls into place if someone doesn't have those documents. And when we if we're not married, if we don't have children, it becomes a little bit more gray, so important for us to do some of that planning. I always recommend that we again, we talked about this earlier, but having one place where we can kind of quickly, easily see everything. 

Erika: Absolutely. 

April: So I know the software system that we use with clients is a great tool. Really helps people get organized. In the beginning, when we first start working with someone, but then helps them stay organized. Because as we're meeting with clients, doing annual reviews, we're updating everything. Oh, I met with a client last week. They changed banks. Great, let's make sure that we have all your correct information here now. Which banks do we not have anymore? Where's the new bank? So we can have that information. 

Erika: And if you're not working with a financial planner like yourself or an organizer like me, you just want to make notes. Again, schedule something in your calendar to review these things. So until it becomes kind of natural and routine to update whatever spreadsheet you're working with, or anything like that, just make notes for yourself. Oh, hey, here's a reminder. I need to update my paperwork. I need to go through this paperwork. I need to make sure that I get that account off the account list because we don't have it. So it's just setting those reminders if you don't have someone else reminding you. 

April: Absolutely. And we also even have a paper version, called this personal planning guide that we created years ago for people to start collecting that information for people. They could use it digitally as a PDF, or print it out and have hard copies of it, but that's something we'll put a link to that too in the show notes if someone wants that. But I think that's also like a helpful starting point, just at least start getting the information together but then making sure that we're updating that as things change. 

Erika: Yes. And I think this is on that worksheet as well. But you know, we keep talking about all these digital accounts. Having those passwords written down somewhere for you know, again, you're not leaving this on your desk so that someone can, you know, peek into your windows and see all your passwords. But this is so that your husband, your partner can know, oh, well, I've never paid the cable bill, and now my loved one has passed. 

I need to know how to get into this account. You know, simple things like that. Or for yourself. I have so many clients that are like, I don't remember the passwords. And then, of course, they've written it down somewhere and we can't find the paper. So having it all in one place is very helpful.

April: Absolutely, absolutely, I would 100% agree with that. Love it. Great. So are there any comments, we're going to wrap up here, any other last-minute tips or advice that you have for people as they’re starting to think about just organization in general? 

Erika: I think it's never too early to get started with any of this stuff. Whether it's financial organizing, home organizing, get started. And it may seem like you are climbing a mountain to begin with, and it may be very difficult, it may be emotional. There are reasons why we hold on to things. Sentimental value or just different things that you know, maybe we don't want to make those choices. It may be difficult, but it is so worth it in the end. 

The freedom you will feel knowing what you have. You know, that's the biggest thing. I never come in and say, we have to get rid of all your things. Just like you. It's not like someone's gonna come in and you're like, oh well, you're not rich enough. We can't work together. You know, it's like all these misconceptions, right? It's just about knowing what you have and having a calm peace in your life and understanding it. So it may be difficult in the beginning, but it's very, very, very worth it. 

April: Yeah, I love that great advice. And then, where can people find you? So if our listeners want to connect with you in some way, like, how can they find you? 

Erika: Yeah, so I have a website, which I'm sure we can link in the show notes, and that will have everything. I've got a YouTube channel, and it's got all sorts of steps I use for every organizing project. I've got stuff about tidying. I've got all sorts of stuff. So you can find that on my website. You can find just different rates if you want to hire me in person. I also have virtual consulting. So if your listeners aren't local to the Tallahassee area, they can work with me on a virtual basis as well. So it can be found at organizewithe.com and again, that will be in the show notes. 

April: Yeah, we'll make sure we add that there. Erika, thank you so much for coming on the show today. 

Erika: Oh, absolutely. 

Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities, LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation, or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com, or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian, or North Florida Financial and the opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address 1700 Summit Lake Drive, Suite, 200 Tallahassee, Florida 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities, member of FINRA and SIPC. April is a financial representative of the Guardian Life Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

2024-178408 Expires August 2026.

Retirement Success Made Simple

Are you truly ready for retirement, or are you headed for a retirement disaster?

In this episode, April Schoen and Matthew Wallat share their insights on creating a comprehensive retirement plan to avoid common pitfalls and ensure a worry-free retirement.

In this episode, you'll discover…

• The surprising similarity between an adventurous trip and retirement planning

• The crucial step that brings relief and excitement to clients nearing retirement

• How to adjust your investment strategy as you approach your golden years

• The key to unlocking a successful retirement through systematic saving

• The often-overlooked aspects of retirement planning that could derail your dreams

Mentioned in this episode:

• https://curryschoenfinancial.com

Transcript:

April Schoen: Hello, and welcome. So glad you could join us today. My name is April Schoen, and I'm sitting here today with Matthew Wallat.

Matthew Wallat: Hi, everyone. How are you guys doing today?

April: So we're really excited to have you join us today as we're going to be talking about retirement success made simple. And I want to focus on a key word there, which is success. Retirement success. So as we're going through this talk today, I want you to think about what does that mean to you? What would it look like for you to have a successful retirement? 

And just start jotting down some ideas about really thinking about what do you want retirement to look like? And what would be some of those key components where you would know, hey, this is a successful retirement or as I'm getting ready, I know that this is going to be successful. Here's what we're gonna be talking about today. 

We're going to talk about some step by step strategies on how to help ensure that you can have a confident and worry free retirement. That's what I want to ask you today is for you being on this talk today, who would like to have that? Who would like to have a successful retirement? Do you want to have a retirement where you feel confident? 

You know your money's working for you. You know, what your income is gonna look like now and in the future, because if that's you, then I'm glad you're here, because those are the things that we're gonna be talking about today. And, as we're gonna get into this, I first just want to tell you just a little bit about Matthew and I. 

What we do, who we are, and how do we help clients. So Matthew and I work with a wide range of clients from those that are at retirement's doorstep, meaning they're about to step off into retirement. It could be that you're a few years from that. So you're thinking, well, I'm not there yet, April. 

But maybe I'm in this five to eight year timeframe for retirement. And if that's you, then I'd be thinking too, as we're going through this, what are some things that I should be doing now, to make sure that I'm gonna be in the best position possible when I get there? And then what if that's not you? What if you're like, well, April, I joined this because I want to make sure that I'm doing the things I need to do today to retire. 

But it's a long ways off. It's, 10, 15, 20 years away from now, and I really want to know, what are the things that I need to be doing today so that I can have a successful retirement. Again, if that's you, I'm glad you're here, because we're going to be talking about a wide range. And you're going to know exactly how that applies to you and which pieces are going to be most impactful for you. 

So as we get into this today, Matthew, one of the things I thought about was last year how I went on a trip with my boys, and I wanted to talk a little bit about that trip that we took, because it was a point of interest. So I have two boys. When we went on this trip last summer, they were seven and 10. And this was their very first flight. 

They were so excited. I know they were a little bit nervous as well. It's fascinating to kind of think about I'm going on a trip with someone when it's their first time and all of these new experiences. So like if you've been on a flight before, you know what it's like to go through security. You know how it feels when the plane takes off. 

You know how to handle that bathroom situation on a plane. But for them, this was all new. New experience. And we were prepared as we possibly could be for this adventure. We talked about it. We watched YouTube videos. We had our bags packed, we got to the airport super early. We had plenty of time between our connections. 

So  was ready to do this. And this trip we took it was just me traveling with the two boys. My husband was, actually he was out of town as well, for a family wedding he was attending. So anyway, so as life often does, it definitely threw us a curveball, because our first flight out of Tallahassee was delayed. And so we were delayed getting to Atlanta. 

And the longer we sat there waiting for this plane to take off the more nervous I became because I knew that that window for us to catch our next flight was getting shorter and shorter and shorter. And if you can believe this or not, the reason for the delay was a paperwork issue of all things. Paperwork. Some of you can resonate with me on on that and seeing paperwork issues in other parts of our lives. 

So here we are waiting for this flight to take off height, all I could think about was like, what's going to happen when we get Atlanta? Are we going to make our next flight? I'm running through all the contingency plans. But what if we don't. So when we get bumped to another flight, will we be able to actually all still sit together. And that was my next main concern, because I didn't want us to be separated on some other flight. 

But let me tell you about the boys, they were super excited. They thought this was super fun, because like I said, when we got to Atlanta, we had five minutes to reach our next gate. Five minutes, which is not a lot of time. And what I did is I told them. Hey, give me your backpacks. And we're just going to run to this next gate. 

We just have to hold hands and keep up with each other. And we took off. And what was great is we did make it who were the last ones on the plane, but we did make it to our next flight. But what made me think about this from more thinking about today's talk and conversation is I know, we've all been there. 

We've all had these times of uncertainty. And so if you are thinking about retirement, depending on how close you are, there's definitely some uncertainty around that too. And we can really think about the importance of being resilient, being adaptable. Being prepared as we can be. And that's really going to help you when you're helping get ready for retirement as well. 

And the other thing is, is having someone with you to go alongside you and help. Because as nervous as I was, the boys didn't feel any of that. And that's because they had me as their guide. They knew that someone had been through this before, that I knew what to expect, that even if our flight got delayed, or we had to change flights that I've done that before. 

I had navigated those challenges, and I could help them do it as well. Just like us taking this flight last summer, I want you to think about this journey to retirement, it could also be filled with some unexpected delays, uncertainty, even paperwork issues. But being well prepared, being adaptable, getting help and guidance can really make all the difference for you. 

And here's what we're going to be talking about today. We're gonna start with the end in mind. We're going to talk about how do you create that comprehensive retirement plan? And we're going to start with the end in mind. We are going to cut to the chase, so you know exactly what needs to go into that. We're gonna talk about how do you then build a financial roadmap around your retirement plan? 

And then how do we also avoid some common pitfalls? So let's get into this today of talking about how do we create a comprehensive retirement plan? Well, the first step is to understand when do you want to retire? And that might seem like a simple question. But I know Matthew, when we're working with clients, a lot of times people haven't actually thought about that piece. 

About when do they want to retire? So I encourage you today to think about that. When do you want to retire. Again, what I found here, some people get caught up in the how. How am I going to retire? But we don't want to get caught up in the how, we just want to focus first on in an ideal world, when would you want to retire? 

Another way I may ask this question is if we could wave a magic wand and have it any way you wanted it to be, what does that look like for you? And not just when do we want to retire? But what do you want your retirement to look like? Now that we're retired and every day is Saturday and Sunday, what are we going to do with our time? 

It's so important that we have a plan that we're retiring to something and not just from something. So here are some ideas. Are we going to be focusing on a hobby that we want to spend more time on? Is it golf? Is it pickleball? Is it some sort of collectibles items that we have that we want to focus more on? Are we going to be traveling? 

And if so what type of travel are we're going to be doing? How often? What sort of plan that we need to have for that? Are we going to be volunteering? There are certain organizations that we now want to spend more time with because we weren't able to do that in our working years. But now we're able to have a bigger impact from volunteering. 

Are we going to stay in our current home where we currently live, or are we going to be moving somewhere? So these are all the things that we really want to focus on when we think of not only when do we want to retire, but at the same time, what do we want retirement to look like? 

And Matthew, if someone said, if we asked them this question, and they said I don't know. What would you say would be some guidelines that we would give them, as far as like a typical retirement age? What do we see is like most typical when people retire?

Matthew: So most typical in the United States is about age 65 to 70.

April: Absolutely. That's not for everybody. That doesn't mean that you can't retire early. Some people don't really want to ever retire, and they want to continue working in some capacity. But if we're not quite sure, then that's a good starting place, I would say would be age 65. 

A lot of people want to work to age 65, for health care reasons, because at 65 is when you can go on Medicare, so you've got health insurance. So that's always if we're not quite sure, that's a good starting point for us is to say age 65. Now, you may have some benefits through work, that would kick in at a certain age. 

That could be 62, 65, 70. So there might be some of those considerations. I also find clients will make decisions about when to retire based on their Social Security benefits. So thinking about am I gonna wait till my full retirement age to retire? And Social Security is actually a topic that we can talk about, for the entire webinar, for the entire talk. And so we actually give an entire presentation just on Social Security. 

So if that's something you're interested in, let us know, we'll make sure that you get invited the next time we have one of those webinars. But when we're starting to build this comprehensive retirement plan, we have to know what our goals are. Where do we want to be in the future? What are those financial goals that we have? 

Because we've got to have a measuring stick. We've got to have a some sort of timeframe in mind to know we're working towards retiring at 65, for example. That doesn't mean we can't change it. But we got to have at least a starting point. So once we know when you want to retire, and what that's going to look like, the next thing that we want to do is we now want to understand your current financial picture. 

So think about this. Where are we today? And I always say if we know the goal for the future, we know where you want to be in the future financially, and then we take a look and say, well, here's where we are today, we can easily look to see if those two things are in alignment. Meaning if we continue doing what we're doing today, for the next 5, 10, 15 years, are we going to wake up in the future and reach our goals? Or are some tweaks needed along the way?

Matthew: April, one of the things that I really love about joining this firm, it's the planning software that we use with our clients, from just starting out, graduating all the way close to that door towards retirement. Whatever stage of life you are currently in. 

It's really the first time a lot of people get this ahh, like this light bulb in their head where they see their whole financial world where there's these four domains, and they work interdependently. And these four domains consist up your assets, which are something that we want to help you guys grow, as well as taxes, the liability section, taxes and debt. 

We talked about cashflow how money moves on and off the balance sheet where we spend a lot of time with our clients. People feel like money comes in the front door and out of the back door. As well, as we talked about protecting. Protecting your today, making sure you're secure in retirement.

April: Absolutely. Protecting where we are today, but also having things in place to protect our future and beyond. Absolutely. And yeah, you want to have a way to understand where are you today? What are those financial pieces that you have in your world? And and how's that working? 

One of our clients that I met with recently, we were going through and she actually found an account she didn't know she had. And I know that might sound funny. And you might be thinking how is that possible, but it's actually very common. And we see it a lot where something got set up a long time ago, and we just forgot about it, or we haven't really been getting statements on it. 

And we kind of lose track of some of those things. So part of it is just understanding exactly what we have, how it's working, and what sort of tweaks may be needed on that. And specifically, I know Matthew, you were just mentioning assets. 

So one of the things that we do in our work with clients is we do an investment analysis, where we take a look at here's what I currently have from like an investment retirement account standpoint, we peel back the layers of that onion to say well, what are we exactly invested in? First and foremost, so that they understand that. 

And then is that how we need or want to be invested? One of my clients I met with earlier this year he had an investment account and when we did our analysis, we discovered he was 95% stocks and 5% bonds. That was very ultra aggressive. And that's not how he wants to be invested. I've been working with him for years. 

And so I know he's he's actually more on the conservative side. And this is an account that just hasn't been looked at in a long time. It's done well, but it's gotten out of balance for him. So that's one of things that we want to look at is do an investment analysis, and really be thinking about our accounts in different types of buckets, and how should they be positioned for that?

Matthew: Especially positioned towards retirement. Those changes. If you don't touch an account for four years, and you're really close to retiring, there's things and tweaks that need to be made to make sure you have that secure retirement.

April: Absolutely. Or I was just thinking about someone else, where we had to flip some things. Where she had some retirement accounts that were very aggressive, that now they're going to be taking money out of them, we needed to pull back some of that risk and not be so growth focused. Because like I said, she just retired this year, she's starting to take money from those. 

But then there were other assets that were invested too conservatively. And now we need those to be growth focused, because we're not touching those. And we're being very strategic about which accounts we're tapping into, and not for taxes, liquidity, growth, all those things. So sometimes it's just about looking to see what we currently have. 

And then talking through, does that make sense? Or do we need to make some some changes in that regard? Now, one of things that we do for our clients is we do what's called a retirement rehearsal, or a retirement baseline. So it depends on where you are in your stage of career, how long we have until retirement. 

As we get closer to retirement, it's easy to do this retirement rehearsal. So think of it a dress rehearsal, where what we're going to do is we're going to fast forward you to retirement, say, hey, I'm stepping off into retirement today, what is my income going to look like in retirement? What are all the different streams of income that I'm going to have? 

Maybe I have Social Security? Maybe I have a pension? And then what are those other assets we have? Investment accounts, retirement accounts. How are we actually going to pull money from those, withdraw money from those to create an income? 

And this is where we get into the granular details. I know, Matthew, for a lot of our clients, this is where we have a lot of confusion. Where clients have done a good job saving throughout their careers. Like I said, maybe they even have that pension, they know they're gonna have Social Security. But there's a lot of questions about what is this actually going to look like for me? 

Matthew: Yes. 

April: Or how do I actually start to structure this income? What's involved in that? How much should I be pulling out? What do I need to do about taxes? There are just lots of questions and decisions that we have to make around this piece. But the retirement rehearsal for me is, is very fun. Becuase for us, it's like a financial puzzle. We get to throw all the pieces on the table, all your financial pieces on the table and say, how do we put this together in the best way possible for someone?

Matthew: And for a lot of our clients that we meet with, a lot of them, just uncertainty of the unknown of what retirement really looks like. Now actually looking at it. And once people actually look at it, once we do this, it's just that awe of relief that you see in their faces. Like, wow, this feels amazing. Like, wow, this is actually what my retirement is going to look like. 

I can live off this and have a great retirement. Because that's what we want our clients to do. Enjoy retirement. You've worked, 40, 50, 60 years for most of you people and you just want to enjoy retirement.

April: Absolutely. You know, I was just thinking about a client I met with a few years ago, and she came in for our retirement rehearsal meeting. And later, she told me, she was so nervous when she came in, because she thought I was going to tell her you can't retire. That's the fear. I think for most people, the fear is I can't actually afford to retire. 

Or it's yeah, I can retire now, but I don't want to have to go to back to work when I'm 80. So those are some of the issues, some of the big concerns that people have. So that's why we want to look at these numbers in black and white. And I remember going through the retirement rehearsal for her and it looks really good. 

She's gonna be it's such a great position she still has a few years before she retires. And she walked out of there on cloud nine. She said, April, this is the best meeting we've had. This looks way better than I ever thought that it could. And to your point, Matthew, it gave her like, you could just see it. 

You could see the stress off of her shoulders, and how she felt more relaxed and knew exactly what this plan was going to be. And then one of the things we did is not just talk about, okay, here's what your income is going to be. 

But then it's like, well, now how do we make it better? How do we tweak it and make it better between now and then? What are those things, those key components that we need to be focused on between now and retirement to make it even better?

Matthew: And also, if you want to tweak like retiring early, there are tweaks that can be made as well to shorten that time horizon. Not retiring at age 65, maybe at 60 for some people.

April: Yeah, absolutely. And so when I'm thinking about another client, too, we did a retirement rehearsal. And she really wanted to be able to retire. And we looked at it, like the numbers just didn't quite match up. Meaning she had an income goal that she wanted. She had a goal of this is how much money I want to have coming in to do the things I want to do. 

To continue living my same lifestyle in retirement. And she was hoping she could retire the year. This is years ago. This was in 2022. So she was hoping she could retire then. And the numbers just didn't quite match up. Now that might sound a little defeating or disappointing. 

But what was really good for her is then we asked the question, okay, well, if I can't retire today, then when can I retire? How much longer do I have to work to be able to hit those goals? And for her it two years. So it's this year, 2024. And she was like, oh, I can do that. That's no problem. 

I can work two more years. But for her, it was just not knowing. It was actually I think, more stressful for her in not knowing how much longer that she needed to work to hit those goals. But when she had a plan, and she knew, okay, here's exactly what I need to do. Here's my plan. Here's what this is going to look like, it gave her that confidennce. And she said, oh, I can definitely do that. 

So one of the things you want to do, too, is part of this retirement rehearsal, this is something that we do, but I encourage you to do this, something you can do on your own, is start analyzing your retirement income. And so start thinking about, first of all, what are those guaranteed sources of income that you're going to have in retirement? 

Right off the bat, you're going to have Social Security. And then if you have a pension. Those would be two sources of guaranteed income. And that's going to be your retirement baseline. That's going to be the baseline or you can call it the foundation for your retirement income. And then from there, we really need to know how much more income will we need to continue living the lifestyle that we want to live. 

And when we think about this for clients, we think about having discretionary income. So we need a bucket that's going to be discretionary income. This is going to be an account that's invested that we're pulling money from on a regular basis for not just our basic living needs. Hopefully a lot of that's covered by our guaranteed income. 

But these discretionary things. I'm taking a trip, I'm remodeling the house, it's to enhance my lifestyle, whatever that looks like for you. But it's to have discretionary income. And then the other thing you want to have too, is you want to have growth buckets. So you want to have buckets that are continuing to grow on your balance sheet. 

Because we all know you're needing more income tomorrow than you do today. This idea of inflation, we've got to have a way to combat that. And in fact, I was just thinking about another talk that we give, that's all about the risks that people face in retirement, and inflation is one of those. So we got to make sure that we've got a plan for that. 

So once we're starting to think about this comprehensive retirement plan. When do I want to retire? What do I want to look like? Now I know where I'm currently at today. And I've run a calculation, I've run an analysis of what would my, based on today's facts, based on today's financial information, I have a rough idea about what my income is going to be in retirement. 

What we can do then is to decide, again, those tweaks are needed. Are we on track? Are we on track to reach our goals? Do we need to make some changes? And when we are looking at this plan, we think about building your financial roadmap. And this is for really anyone who's on the path towards retirement, but thinking through how do we build that financial roadmap? 

Well, the first thing that we want to start with is how much are we saving? And how much money from our income are we putting back on our balance sheet? Now, I am not a huge fan of rules of thumb, because I always ask, well, whose thumb are we using? Are we using my thumb, are we using your thumb, are we using Matthew's thumb? 

So I'm not a huge fan of rules of thumb. But a lot of times we got to have some sort of baseline. So if you were just to ask me broadly, how much should someone be saving for retirement, I would tell you that you need to be saving 15 to 20% of your gross income. 

Now, Matthew, let's talk for a few minutes about where that fits in? Or does that apply to everybody? What are some times that we would adjust those numbers either up or down, depending on their situation?

Matthew: So a lot of it has to do with if you're in the private sector, or you're in the public sector. Some people have pensions for the state of Florida, for example, where you don't really have to give that 15 to 20% becuase you have those guaranteed streams of income once you step off into retirement. Just starting small, as little as, if you are in the private sector a little bit more above this 20% would be better.

April: Absolutely. Well, and I think too, I think you bring up a great point there is thinking about those that have a pension. That probably means we don't need to save 15 to 20%, because that pension is going to be part of your overall savings plan. I think what we also have to take into consideration here is when are we starting to save? 

Because if we're starting to save in our 20s, that's a very different calculation than someone who's just starting in their 50s. So if we're starting in our 20s, we have a much longer time horizon, we have a longer time to be saving money for our money to be working and growing for us. So we can save a smaller percentage. 

If we didn't start then and we're starting in the later, now we have to catch up. So we might have to actually saving more than 20% to catch up depending on where we are and assets that we already have. 

Now, one thing I want to comment here is you may hear that, this save 15 to 20%, and it might scare you. That might seem very daunting. You might think well I'm nowhere near saving that amount. Yeah, Matthew, what's the average savings rate in America today?

Matthew: So according to the US Bureau of Economics in May, it was 3.9%, which is extremely low.

April: 3.9. 3.9 is the average savings rate in the US today. So if your average, and I'm telling you 15, you're like there's no way, April, that I can get there. And what I would say to that is, and Matthew said this earlier, but we just want to start where you are. Start small, start where you are today. And let's get a plan to get you to 15 to 20%. 

So how do you get there? Well, again starting where you are today and making some adjustments. But as incomes increase, maybe as debts are paid off and cash flow is freed up, and we're able to save more back on our balance sheet, there might be some things that we can actually restructure in that regard to give us more freed up cash flow to save more. 

But it doesn't mean that we go from if you're saving four or 5%, that we're gonna just go automatically to 15 to 20. That's a really hard thing to do. I think about it as like ripping off a band aid. So here, it's more about just having a plan in place for how are we going to strategically over time get to that point? 

Matthew: Yes. 

April: I just don't want that number to frighten you, or make you even feel discouraged by it. There's always a way that we can work towards that. Now when we're starting to save, the first thing that we want to do is build an emergency fund. I'm sure you've heard this all before. And we harp on it too. 

But you've got to have liquidity. You've got to have money on your balance sheet that you can tap into if you need it or you want it. So we always recommend building that emergency fund. Making sure you've got six months of expenses in savings for that, or at least six months of expenses in like liquid assets that you can tap into if you needed it. 

Now from there, the next question becomes is where do I begin saving at? So two of the most common questions that I get from clients is how much should I be saving? And where should I be saving at? We've already talked about how much, now let's talk about where. And there's really only three places that we can save money. 

And we think about those from a tax standpoint. Meaning what type of tax status accounts are they? And we think of taxable, tax deferred, and tax favored. And what we want to do here is we want to diversify our savings. We want to have our ongoing savings going into multiples different types of accounts. 

So why don't you want that? We want that because we want to have more choices and options when we get to retirement about where are we pulling money out of. And that's going to give us more control from a tax standpoint. Okay, so let me walk through these three, and then we'll talk about that more in detail. 

The first one is a taxable account. This would be like a non retirement brokerage account and investment accounts. You can also think of CDs, savings accounts, those are taxable too. But the big thing here is these are non retirement accounts. So they're ones that we put money in today that we've already paid tax on. 

And then we most likely are going to be receiving a 1099 at the end of every year to pay taxes on interest, dividends, and capital gains. So one of things that we like about the taxable accounts is we don't have as much red tape from the IRS. There's not as many rules and regulations, which we'll get into a little bit on these other two accounts. 

But definitely gives you more flexibility and control. Okay, so that's taxable. The next is tax deferred. And this is probably the one that you've heard the most of. Think of it like a 401k, 403b, a 457 plan. These are mostly employer sponsored retirement accounts. But traditional IRAs fall into this category as well. 

So these are accounts that I put money in today that I have not paid tax on. So I get a tax deduction today on that. But then that account grows tax deferred, so I'm not paying taxes on it while it's growing, but every dollar that comes out in the future is taxed at your highest marginal rate. And that is a big key. It is taxed at your highest marginal rate. 

You do not have as much flexibility, you actually have zero flexibility on how this account is taxed. So what I can tell you from working with clients that are in retirement, this is their least favorite place to pull money from because of the taxes. They don't want to pull money out of these accounts to have to pay the tax. 

But the other thing we see, Matthew, is this tends to also be where everyone has the most amount of their money saved. And we joke a little bit about this sometimes, but the 401k has actually been the most successful financial tool in recent history. 

And the reason it has been the most successful is that it is a payroll deduction. Because you've checked that box for this enrollment into this retirement plan. They started deducting from your paycheck, and you never have to make another decision about it.

Matthew: It's systematic and automatic.

April: Yeah, absolutely. Which we like that part of it. And we want to take that same idea of things being systematic and automatic, but putting it in other areas of our life. So tax deferred, again, put money in today, you haven't paid tax on it, grow tax deferred, take it out, it's taxable in the future.

Matthew: So April, if you could elaborate on like tax deferred, like stepping into retirement. A lot of people that I talk to think that they're going to be at a lower tax bracket, when they step off into retirement. Can you elaborate on that?

April: I'm so glad you brought that up, Matthew. You're right. A lot of people do think that I'm going to be in a lower tax bracket in retirement. But I can tell you from our work with clients is that they're not. Most of our clients are not in a lower tax bracket when they retire. They're in the same if not higher. 

Again, they're in the same if not higher tax bracket. I also want you to think about this. Do we want to be, sometimes when we think about being in a lower bracket, that means we have less income coming in. And we don't have less income coming in. We want to have more income coming in. 

At least the same, if not more, because we want to have the same lifestyle that we have today. Maybe we will actually do some travel. But no, I do not see that people are in a lower tax bracket in retirement. Okay, so that's why we definitely want to have some tax diversity. 

The other type of account that we talk about are tax favored. And these are accounts that you pay tax today, you put the money in the account, but then it's going to grow tax free, and you can take it out tax free in the future. 

So when we think about here on the tax favored, I'll give me some examples. Roth IRAs, municipal bonds, HSAs, cash value life insurance. Those are the big ones that we think of in this tax favored or tax free bucket. But again, these are things that yeah, we pay tax today. It grows tax free, and then again, if it's all structured properly, we can take it out tax free in the future. 

So I'm gonna ask you a question. And that is, if you had the choice between here you are getting into retirement, and would you want the majority of your income to be taxed at your highest marginal rate, to be taxed at long term capital gains rates, which are typically lower, or to be tax free? Which one would you want to have more in? 

Matthew: Tax free.

April: Tax free. I think that's a pretty simple question. If given the choice, which one would I choose to have more of my assets in, and it's going to be in that tax free, that tax favored bucket. So we really would encourage prioritizing these tax favored assets, such as Roth IRAs, and cash value life insurance in your overall plan. 

Now, this is when I give you my disclosure that Matthew and I are not CPAs. Nor are we tax attorneys. So we always recommend that you work with a tax professional who can help guide you through some of these pieces. But when we're building these financial roadmaps, we think of how much should we be saving? 

And then we think about where should we be saving out of our balance sheet? And that's really when we want to have diversity so that we don't have everything in those, especially those tax deferred vehicles, where we're paying taxes and all of that. We want to have some of that diversity. 

So now let's talk about how do we avoid some common pitfalls. And again, one of the things I love about the work that we do with clients is that our firm has been around since 1970, which is a very long time. And there's a lot that's changed in almost 55 years. But there's also been a lot that we've learned in working with our clients over that time about what works and what doesn't work for our clients. 

And so one of the things that we help coach and guide our clients on is how do we avoid some of those common financial pitfalls that we see. So we want to talk through that with you. One of the first things that we see as a common pitfall is lack of protection. 

Meaning that we've just never met with someone, taken the time to really look through all the different protection components on our balance sheet. So Matthew do you want to talk for just a few minutes here about what we look at in that protection domain?

Matthew: So in the protection domain, we talked about checking your homeowners insurance, making sure you're properly covered. As we look at your car, and auto insurance. I don't know where you guys are located, but if you're in Tallahassee, if you drive down Apalachee Parkway, I mean, I couldn't even count on both my hands, the amount of personal a property casualty, personal injury attorneys there are. 

As well as we talk about looking at disability insurance. Make sure that you're properly protected if you were to get sick or injured. Then we look at legal documents. A lot of clients come in they don't have legal documents yet.

April: Yet, being the key word.

Matthew: And then we also look at life insurance, that tax favored account.

April: Yeah, you know, one thing too on the the life insurance, we find, again, kind of one of those pitfalls is that a lot of times when we're relying on those group benefits, we're relying on that life insurance we have through work, and we just haven't looked at or thought about, well, when I retire, I'm gonna lose all that coverage. 

So then what do I do? So we want to make sure that no matter what happens, you've got the protection that you need, and want in those kind of core key areas. And we talk about what happens if you get sued, what happens if you get sick, legal documents, and then also life insurance. We also recommend clients maintain their liquidity. 

And again, this is just something I see that people overlook. But we want to make sure that we've got cash on our balance sheet that easily accessible if we need it or want it. And I understand why we don't, because a lot of times, we want to make sure that every dollar is working for us. 

But we've got to have this buffer first. And I think of liquidity being that moat around your castle. It's really your first line of defense to any threats. So always want to make sure that we've got liquidity, both while working and as we're getting into retirement. And then another piece that we want to work on is managing and reducing debt and taxes. 

So again, this isn't something we necessarily can just take care of all today. It's not like it's just going to magically go away tomorrow. But we want to have systems in place to strategically be reducing debt and taxes over time. Sometimes there are things that we can do right up front. Restructure, reposition accounts, things like that. 

So sometimes we can get some really quick wins in this area. And then other times it's having again that plan for how do you really manage and reduce debt and taxes over time? Now, one of the things that comes up a lot for clients is how do I know that I'm making the right decision for me and my family? The right financial decision? 

Because let's be honest, you have a lot of choices, right? There's a lot of choices that we have, there's a lot of information out, especially on the internet or on social media. So how do you sift through all of that to know that you're making the right decisions financially?

Matthew: So one of the things we do with our clients, through the planning software that we use is testing, test driving. It's like test driving a vehicle. We the four domains that we look at is the cash flow.

April: Yeah. So let's talk about that test driving financial decisions and what we mean by that. Before we make the decision, we want to see what sort of impact is this going to have on our balance sheet and cash flow income? We want to have a way to know what is the impact of this financial decision going to be? Because I know when we meet with a lot of clients, they are like, hey, I'm doing all these things. 

I heard I should be maxing out my 401k, I heard I should be putting money in a Roth IRA. I actually heard I should have a stock account. I have all these things that I'm doing. But I may not know how this is actually going to look for me later, or am I doing the right things? Right? So we really want to have a way to test drive those decisions before we do it. But yeah, that's kind of what we mean there.

Matthew: And then we also want to evaluate impact.

April: Absolutely, right. Same thing. It's like, okay, if we're going to make some changes, whatever that looks like, I'm just gonna throw something out. If let's say we're looking at converting pre tax accounts to Roth's right, we're looking at converting maybe our retirement account to a Roth IRA. I know, you and I were just talking with someone last week about that. Well, we got to know what that impact is going to be. 

What's that taxable income and impact going to be? What's that future income going to like and compare and contrast to decide should we do that or not? That's not something we want to do in a vacuum. We want to make sure that we're test driving it, that we're evaluating that impact. So we know not just the impact now, but later. Does that make sense?

Matthew: Also looking at making sure all these, all these four domains that I've mentioned previously about cash flow, liability, assets, and protection. They're all four interdependently connected. If you make one decision, let's say, in your 401k, in the asset domain, it has a rippling affect into the other four domains. Into taxes, into cash flow, into protection as well.

April: Absolutely. And that's one of the things that we look at is when we make a decision in one area, it ripples through the rest of our financial world. So we want to make sure that we are looking at as pieces. And we just encourage you to have a way to manage that and analyze that. 

Doesn't mean that you have to work with us and use our software. But just make sure that you're analyzing that and you're using something to test drive those decisions and analyze as well, as you progress. And speaking of progress and tracking how we're doing. Let's talk about how do we track our progress. 

So how do we know if we're on track? So again, today's talk we're really centered around getting ready, thinking about retirement, and how do we make this retirement successful, and make it easy. One of things we got to know is we need to track our progress. So again, as we talked about earlier, we want to have that financial roadmap first. 

So we want to know when do we want to retire? We want to know where are we today? We want to know what are some of those things that we need to be doing between now and then to put you in a better position. And that's really going to be your roadmap. 

Think about your roadmap towards retirement. And from there, we really want to be able to access our plan, adjust it, and we want to make sure that we're tracking our progress as well, which we're going to talk about. 

I think about this roadmap, and how important it is for us to know where are we today? Again, thinking about where are we going? I know Matthew, you've mentioned too about detours, right? Sometimes there are some detours along the way and how do we adjust for some of those things?

Matthew: Yeah, with detours. It's like you left, let's say, take a family vacation, and you're going to New York, and you're driving, starting here in Tallahassee and you make the wrong turn and you go to when do you want to have those detours, when do you want to have those check in points where you make sure you don't just end up in Houston.

April: Right, right.

Matthew: Oh man, I missed the exit.

April: That puts you way off track. Absolutely. So we want to make sure that we've got some ways to do that. So you really want to regularly assess and adjust your plan. I was just meeting with some clients last week, and they're about 15 years away from retirement. And so we looked at a retirement rehearsal baseline for them. 

And we know we're working on some things, what they're going to be working on between now and then which is great. But we're talking about how often do we need to be readjusting, reassessing this plan. And I was telling them that we really need to be looking at this again, at least every other year. 

Meaning every year, we need to come back to the drawing board. Pretend that we've never done this before. And relook at, hey, how's our progress? And how are we really tracking towards our goals? And do we need to make any changes? And then as we get closer to retirement, we need to be doing that more often. 

So what I think of here is like I said, these clients were 15 years out. So while we put a plan in place today for them, we really need to be relooking at that plan at least every other year. That doesn't mean that we're not meeting on an annual basis, of course, but we just need to be relooking at that retirement plan, at least every other year. 

Now, as you get closer to retirement, and I would say if you're less than 10 years, we need to be doing that on an annual basis. So every year, we need to be relooking at your retirement projections. That means we're getting new numbers from Social Security, that means we might be getting new pension numbers, we're updating account values and saving rates and looking at all those components. 

But we're relooking at that on a annual basis. And then once you get really close to retirement, I would say we're one year out, really, we want to have all of that fine tuned, I would say at least six months before retirement. That's going to alleviate stress for you. 

Because my clients as they get closer to retirement, they tell me there's a lot of stress at work. They're trying to finish projects, they're trying to close everything out, they're trying to train new people. So they already have, they are already a little bit anxious and nervous about retirement anyway. So really as much as you can do ahead of time way to alleviate the stress for yourself, the better that it's going to be. 

So having some tools and methods for how to track your progress. Okay. So let's talk about some key points and action steps as we just kind of recap what we talked about today. So first of all, one of the things I encourage you to do is if you don't have it already, but is to work on having that roadmap towards retirement. 

And so that's really going to be building your comprehensive retirement plan. Looking at and analyzing what are those streams of income going to be for you? What are the things that we need to be doing between now and then to make it better, so that you're as well prepared as possible? 

So one of the things I would encourage as you're listening to this, and you're saying, well, there's a lot that goes into that, I'm not sure where to go next. What I would tell you is to schedule a 30 minute discovery call with me and Matthew. This is a 30 minute call, where we're going to talk about your goals, your concerns, get some clarity. We're obviously gonna get clarity about what is retirement going to look like for you. 

We're going to identify what are those key areas that we can be working on? Usually, we've got a couple of tweaks we can share with you. Like have you thought of this? Doing some brainstorming on some things. Really getting clarity and so that you also know exactly what you need to be focused on first. 

So here's what you're gonna get with this call. Like I say it will be a 30 minute call. They are complimentary. We don't charge for the calls. Because I'll be honest, I don't know if we're a good fit to work together. So we don't charge for the call. It's a way for us to get to know each other a little bit and decide by the end, does it make sense for us to work together in some capacity? 

So this call is really for you if you're motivated, you're an action taker, you are open to new ideas and you're willing to learn. The call is not for you if you're not motivated, and you're not willing to listen or hear some new ideas. But what I would say for those who would be interested would be to schedule a time for a call. You can do that a couple of ways. 

We've got a QR code that you can use. That's gonna take you to my calendar, and you can book a 30 minute call. You can also go to our website, which is curryschoeninancial.com. And you're gonna see a button that says schedule a call. 

So again, that website is curryschoenfinancial.com. And then you're gonna see a button for schedule a call. And so as we're wrapping up here today, I just want to again, commend you for listening to this, and really taking the time to learn about this important topic.

Matthew: Thank you guys for coming out with us.

April: Absolutely. So thanks for tuning in today. We hope you enjoy the rest of your day and I look forward to talking with you all soon. Bye now.

Voiceover: This material is intended for general public use. By providing this content, Park Avenue Securities LLC and your financial representative are not undertaking to provide investment advice or make a recommendation for a specific individual or situation or to otherwise act in a fiduciary capacity. If you'd like additional information about our services, you can visit our website at curryschoenfinancial.com or you can call our office at 850-562-3000. Again, that number is 850-562-3000. This podcast is for informational purposes only. Guest speakers and their firms are not affiliated with or endorsed by Park Avenue Securities, Guardian or North Florida Financial and opinions stated are their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address 1700 Summit Lake Drive, Suite 200, Tallahassee, Florida, 32317. Phone number 850-562-9075. Securities, products, and advisory services offered through Park Avenue Securities. Member of FINRA and SIPC. April is a financial representative of the Guardian Life Insurance Company of America, New York, New York. Park Avenue Securities is a wholly-owned subsidiary of Guardian. North Florida Financial is not an affiliate or subsidiary of Park Avenue Securities or Guardian.

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