Are you making the right moves to secure your financial future?
In this episode, April Schoen delves deep into how to construct a bulletproof retirement framework aimed at ensuring you won't outlive your money.
In this episode, you’ll discover…
The critical element you might be missing in your retirement spending plan.
How to identify potential income gaps before it’s too late.
The role of regular reviews and adjustments in a dynamic retirement plan.
Why a retirement rehearsal could be the key to your financial success.
Actionable steps to define your retirement goals and build a sustainable plan.
Mentioned in this episode:
Transcript:
April Schoen: Hi everyone, I am April Schoen a financial advisor with over a decade of experience in helping guide my clients to and through retirement. I've helped hundreds and hundreds of clients at this point in my career, realize their goals, and overcome their concerns and their challenges when it comes to how do they not only prepare for retirement, but make sure you know, all their i's are dotted, all their T's are crossed, and they're really ready for that next stage of life.
So welcome to our channel. We are kicking off a five-part series on retirement planning for people over 50 on your path to having that secure future. Excited to share with you guys over these next five episodes. And we're going to be starting today by talking about how do you create that retirement framework. How do you make sure you have a good foundation, and you're set and you're ready to go for whenever it is that you're going to retire?
So as we're going to be going through this series, we're really looking to address some of those key components, concerns, and questions that you might have about retirement planning. Because here's what I've realized in the last 10 years is that most people have the same questions when it comes to retirement. And these are big decisions that we have to make. And sometimes we're not quite sure how to make those decisions, are we making the right ones? How do we test-drive it and make sure that we're doing the right thing for ourselves and for our families?
So our goal for this five-part series is really helping you think about those questions. And how do you answer them to make sure that you're ready? So today, we're going to be talking about how to create that retirement framework. Then next episode, we're gonna talk about how do you maximize your retirement income. We're gonna talk about Social Security.
Navigating Social Security benefits. Because let's be honest, when to take Social Security and structuring how to take Social Security is going to be one of if not the biggest decisions that you're going to make when it comes to your retirement. We're going to talk about investment strategies. What do we need to be thinking about with our investments, when it comes to getting ready to retire? Because it's very different. It's very different when we're in our working years, and we're saving money, and we're taking our income and putting it back on our balance sheet, to now we're stepping off into retirement. These are two totally different aspects to our world. And we have to make sure that we're investing properly for that.
And then we're also going to talk about how do we restructure that withdrawal plan, because that's also one of the biggest questions I get is okay, April, I'm done all of this. I've saved money in retirement accounts and investments. I know I have Social Security, I might even have a pension. But now what? How do I actually put together this retirement income plan?
So in today's episode, we're going to be focusing on setting retirement goals, assessing where you are today, and then also how do you create that comprehensive retirement plan. Okay, so again, we're gonna be focusing in on a few key areas here is really setting some goals around retirement, and then looking at our current situation to make sure that we've got a solid foundation to build your retirement plan. And then we're going to talk about understanding what are those steps involved. What do we need to do to start creating that retirement plan?
So the first step in building this framework is to set some goals around retirement. And the first question that I'm going to talk about here is why set goals for retirement? Why is this even important? Well, I find that this is actually an area that people overlook, that we don't think about it enough. So when I ask questions to clients, like, hey, when do you want to retire? Some people don't know. What are we going to do in retirement? What's retirement going to look like for us? And we don't have answers to those questions.
So if that's you, the first thing I would say that we do is we set up with let's think about it. Let's think about when do we want to retire. In an ideal world, if you could have it any way you want it? I don't want you to think about the how. That's the one we get hung up on. We get hung up on the how. How am I going to retire? But I want you to think about in an ideal world, when do you want to retire? And then from there, we can think about what do we want retirement to look like.
So when you've stepped off into retirement, now every day is like Saturday and Sunday. What do you want that to look like? What are you going to do with your time? Do you have travel plans? Are there hobbies that you want to get involved with? Do you want to work on your golf game or pickup pickleball? Or maybe there are some organizations that you want to volunteer with. So I want you to think about what is your retirement going to look like.
And there are some key things in that. One, I would think about where do I want to live. Am I going to stay in my current house? Am I going to move? Some people may downsize, we may move to be closer to children and grandchildren. So this is all part of what does my ideal retirement look like. And of course, when do I want to retire? I would say for most people what I find to be typical, in my practice, is people are saying, hey, I want to retire at 65. I want to retire at 70. Those are probably the most two common ages that I hear, but that doesn't mean that has to be for you.
So again, think about when do you want to retire, so that you can build your framework around that. We've got to have a starting point. It might mean that we adjust it. I'm not saying if we say today, you know, hey, I want to retire at 62, that that's the end all be all. And we're gonna write it in stone. But it is helpful. If we have some end date in mind. That we have some time frame. Because we've got to have a way to measure it.
We've got to have a way to say, okay, here I am today, I'm 52. I'm gonna retire in 10 years when I'm 62. What does that look like for me from an income standpoint? Can I retire at 62? That's gonna be the next question. But we need to start with a timeframe so that we can have something to measure it by. And then when we're thinking about these retirement goals, one of the things that we want to do is we want to create a spending plan.
Now, I do not like the term budget, I think budget is like a four-letter word. It's actually more like a diet. It's that restrictive diet that we just don't stick to very well. And then we tend to like binge eat afterwards. I think of a budget that way, too. So I don't necessarily want you to create a budget. But I do want you to have a spending plan. I want us to have an idea about what is that income needs and wants gonna look like for us in retirement. And we're going to talk about that a little bit more today.
And then, of course, you guys have all heard of SMART goals. We want to have when we're setting these goals, we want to make sure that they're specific, that they're measurable, achievable, relevant, and they're time-bound. So thinking about your retirement, it's easy for us to craft some smart goals around that. We know when we want to retire, it's in 10 years. We have a spending plan and a rough idea of a spending plan. So we know what we need. We know where we are today. And then we know if there are any sort of gaps or adjustments that we need to make between now and then.
So this is what we want to think about when we're thinking about these retirement goals. So when do we want to retire? And what do we want our retirement to look like and creating that spending plan for retirement. So once we have that, once we have an idea of what our goals are, what do we want life to look like in the future? The next step is we want to look at where are we today. Because we can really assess and say, okay, here's where we want to be in the future. Here's where we are today. Are those two things in alignment?
I like asking the question, if we keep doing what we're doing today, for the next 10 or 15 years, are we going to reach our goals? Or are some tweaks needed? I find for a lot of people that we need some tweaks. We need some adjustments. And what's great about once you have this plan is it's easy, then to make those adjustments. Think about if we're on a sailboat and we're sailing in this direction, we're not making big changes once we have our destination set. We're making these small, little minor changes along the way.
And we want to do the same thing with your retirement plan. We first got to get it crafted and created and get the baseline for it. But then it's really just about making some small adjustments along the way. So how do we start by assessing where you are today? Well, we're going to look at two key areas on your balance sheet. We're first is how to buy your assets. Assets. This is everything you own that hasn't value. Think cash, savings accounts, money markets, investments, real estate, retirement accounts, and personal property. This is everything that you own own is going to comprise your assets.
So we want to take stock of that. We want to take an inventory, and say, what do we have, as far as assets are concerned? So to get started with that, if you don't have this created somewhere already, what you want to do is you want to gather your financial statements and your documents, and you want to create a comprehensive list of all of your assets, and their current values.
I encourage you to do this anyway, even if you're not really thinking about retirement yet. Because just so you can know what you have. We got to know what we have today. So we can look at it and see do we need to make any changes. I was just doing this last night actually, for my family. I typically do this on a quarterly basis where I sit down and do an overall update and review about where we are from an assets and liability standpoint.
So what you're gonna want to do is just grab those account statements, and you may have to log in to a few places, you want to check out how much do I have in checking and savings, money market, and CDs. Do I have any sort of taxable investment accounts? A brokerage account. What does that look like? Do we have retirement accounts through work, or IRAs, or Roth IRAs? So you want to take an inventory of all the assets.
And then we want to take a look at the other side of the balance sheet, which is the liabilities. So this is what do you owe? So we think what do you own? And what do you owe? So when we think about the liabilities, mortgage, car loans, credit card debt, student loans, and personal debt. And you want to do the same thing here, you want to do an inventory of I want to think of current balances, minimum payments, interest rates, so you can take a look at what do you have. And what's the payoff date? When are these liabilities going to be paid off?
Because this is going to really help you determine, again, going back to that thinking about creating a spending plan for retirement. If we have debts, we need to know what will be paid off before we retire. So let's do a deep dive of different types of assets. So when we think of assets, now, this isn't a comprehensive list, you're gonna see I'm just kind of keeping it high level here. But we think of cash. So again, checking savings, money market, and CDs. Cash on hand. Any sort of cash equivalent.
We think of investments. Now when I say investments here, what I'm meaning is non-retirement investment accounts. Nothing that's a 401k through work or an IRA or Roth IRA. These are taxable investments, non-retirement investments. What about retirement accounts? Do we have an employer-sponsored retirement account? And that thing goes by a bunch of different names. It could be a 401k, a 403b, a 457. You've got SIMPLE plans, and lots of different names, but do we have a retirement account? There are IRAs and Roth IRAs. Did you set up an individual retirement account on your own?
One thing that I find here sometimes for clients is that we've got things in multiple places. That's not necessarily bad. But sometimes it's hard to keep track of right? How do we know exactly what we have? And is it all working for us? I was working with a client recently, and they have multiple Roth IRAs. And they just set them up sporadically over the years, and in fact, one of their Roth IRAs, it wasn't even invested. It was like sitting in cash. So that wasn't their intention. That's not what they wanted to have happen. It's just been that way because we weren't checking up on it.
So take an inventory of those accounts, see if there are some changes and tweaks that need to be made there. We also have real estate. Primary home, do we have rental properties, vacation home, second homes. What do we have as far as real estate? And then think about retirement, too, for those. Does that mean that we've got liabilities attached to those or we have expenses that are attached to those retirement accounts? Or excuse me, tied to that real estate. So again, thinking about these assets, cash investments, retirement accounts, and real estate?
If we start thinking about different types of liabilities, well, the most obvious one is your mortgage. And so the question here is, will that mortgage be paid off by the time you retire? Or do we need to work on a plan to have it paid off? I'm not saying you do. I'm just saying we need to investigate that we need to analyze that to see if that's a decision that we need to make. Car loans. Do we have any car loans today? Will we be buying a new car before we retire? We want to make sure that we have plans for that.
Do we have any credit card debt? And if we do have any credit card debt, how do we put a plan in place to pay that down efficiently and effectively? We think of credit card debt, like that anchor that you pull with you through life. It's not something that we want to carry indefinitely. So if you have credit card debt, it's not necessarily a bad thing to have. But we just want to make sure that we've got a plan for that. And I can tell you, my clients that step up into retirement that have already resolved the credit card debt issue, they're much much happier. Less stress in their lives.
What about student loans? This may surprise you or may not, but I'm actually seeing more people today who are retiring with student loans. These are people who went back to school, at some point in their career, maybe they had a career change, or they wanted to continue their education to look for a promotion, or some sort of job change. And so they're now we're stepping off into retirement, and we have student loans. Or maybe we were planning to work till 70. But life happened.
And now we have to retire much earlier than that, that we planned. Because we've had some sort of health issue or something along those lines, or we got to step out of work to take care of a family member. And then now we have these other things in our financial world that we weren't really planning on having that. So I think it's always great for us to have a plan, but we also need to have some exit strategies. And we got to work on the what ifs, the contingent. What if something like that happens, what are we going to do?
So once we have this inventory of your assets and your liabilities, then we can work on understanding our net worth. So your net worth calculation is pretty simple. Net worth equals total assets, minus your total liabilities. So we think about when we're working, when we're in our working years, our primary goal is we're saving money. We're taking income that we're earning today, and we're turning that into net worth because we're saving it somewhere back on our balance sheet.
So we take money from our job, and we systematically save it, invest it to build up those assets. And I want you to think of your income while you're working as the fuel for your financial engine. So by saving a portion of your income, and investing it wisely, we're building wealth. That's how we're going to build those retirement accounts, real estate, stocks, bonds. And over the years, these assets, they grow, they compound. And that's really what's growing your net worth over time. And I really think of net worth as being just this snapshot of your financial health. It's really just a picture of all the financial decisions that you've made.
And when you retire, this focus is going to change. It's going to change from now I'm earning and saving money, to now I'm going to be taking income. I'm going to be withdrawing money from my assets. And so now the opposite happens. Now what we're going to be doing instead of taking our income and converting it to net worth, we're now going to take our net worth and we're going to convert it into income.
That's really what that retirement plan is, is how do we take all of these assets that we've accumulated over our careers, and how do we now turn that into an income that we can live off of for the rest of our lives? So you know, your net worth, which is again, savings, investments, assets, it's now going to serve as one of the sources for your retirement income, which we're going to get into later in this series.
And so this might mean we're going to start taking money from retirement accounts. We're receiving dividends from stocks and bonds. Maybe we're getting rental income from properties. Maybe we've got a pension. We're going to have Social Security most likely. So really taking a look at all the pieces to that retirement puzzle, but your net worth is definitely one of them.
So once we have an idea again thinking back, we've looked at and thought about our goals for retirement. So we know when we want to retire, we know what we want retirement to look like. Then we take a look at okay, where are we today? So we know where we're going in the future. And then we know where we are today. And we can do some analysis to see how to create that retirement plan. And, you know, are we on track? Are we going to be able to retire in 10 years or five years, whatever that looks like for you? Or are some tweaks needed?
So we really want to start by creating a comprehensive retirement plan. And again, we're gonna make tweaks, it's not written in stone, but I always recommend, we've got to have a baseline. We've got to have a starting point. The first thing we want to do, again, is when we're creating this retirement plan is when do we want to retire? So for this analogy, let's just assume that we want to retire in 10 years. That’s our goal. Our goal is setting, we're gonna walk off into retirement 10 years from now.
So once we have a time in mind about when we're gonna retire, the next thing we want to do is we want to create a spending plan. And what I really recommend that we do is, because this can throw people off, because most people at this stage don't have a budget, they haven't budgeted in quite some time. And honestly, they don't really even know how much they're spending on a day-to-day basis for a lot of people. So we start here. It's not perfect, I don't need it to be perfect. It doesn't have to be like granular down into the details.
But we just want some idea of what this spending plan needs to be for retirement. So what I would tell you to do is look at your current spending today. Do an analysis. Take a look at your spending habits or the last three to six months. And take a look at those and we want to break those spending habits down into what's essential spending and what's discretionary. What are those basic living expenses that we need to continue living our life? And then what are some more of those discretionary items that make our life feel like our life?
So we just want to have an idea of what's essential, what's discretionary. And then when you're also looking at this, depending on how far away from retirement, you are, again, you want to ask the question, am I still going to have this need in retirement? So think back if you have some debt. Will the mortgage be paid off? Will the car be paid off? Are there certain things that we have in our world today that we're not going to have in retirement?
But the opposite is also true? Are there things that we're going to need in retirement that we don't have today? The first thing that comes into my mind is health care. We've got to have a plan for what our healthcare going to look like in retirement. So that's one of the things that you want to think about and consider. So once we have this spending plan, we have a rough idea about what that income is going to look like. We then want to analyze what are our future income sources.
Let me give you some examples. We want to think about when am I going to take Social Security. Do I have a pension of some sort? And what is that pension going to be? And then looking at our other like investments, and retirement accounts, thinking through and creating that withdrawal plan for how am I going to take money from those accounts? What's the best way to structure that income? So I have the income that I need today to live my lifestyle, but that I also don't run out of money before I run out of time.
So we want to make sure that we don't outlive our money. And so when we're thinking about looking at these income sources, so we say, okay, great, here's where my income is going to be in retirement, here's my spending plan, then we can see, do we have a gap? Or do we have a surplus? If we have a gap, then we need to go back. And we need to create a savings and investment planning to start bridging the gap. What are the strategies that we could put in place today to start getting those two numbers closer and closer together?
And we're going to be talking a lot more in detail about creating this retirement plan because it's I say, comprehensive here, but it's complex. I think about a retirement plan. And I think of all the puzzle pieces that you have in your financial world, and how do we put those together and structure it in a way to put you in the best possible position. And so what we want to do is after we look at those income sources, we want to identify are there any income gaps. And if there are, how are we going to develop, change, and tweak our savings and investment strategy?
So I love it when someone is 10 years out because we've got time. You don't have all the time in the world. But we've got time to make some tweaks and adjustments. We got to start now. But we do have the time to make some changes to get you there. And that's one of my favorite things I love doing with clients is say, okay, great, we want to retire in 10 years, here's where we are today. And what we do with that is we'll do what's called a retirement rehearsal, where we say, based on everything you have in your financial world today, this is about what your income is going to look like in retirement.
And then we need to ask the question, hey, how does this look? Is this achievable? How does this look from an income standpoint side? And we've got to make sure that we have enough income coming in today, or I say today, but meaning when you first retire, to satisfy that income that you need and want. But we also have to make sure it doesn't stop there. We also have to make sure that you've got more income coming in later. Because we know with inflation, that you're going to need more income tomorrow than you need today.
So we also have to take that inflation piece into consideration, which we're going to definitely talk more about in this series. But once we really have this retirement plan, again, think about this retirement rehearsal having a baseline, then we want to do some regular reviews and adjustments. This plan does not stagnant. Just because we set it up today doesn't mean it's going to be the same for the next 10 years. We have to meet regularly to review, and make adjustments, how are things? Are we ahead of schedule? Are we behind schedule? And really updating those numbers.
And I love doing this with clients because we update those retirement rehearsal numbers. I love how we get closer and closer to retirement, that that picture becomes clearer and clearer. And it really helps my clients have more confidence because they know what the income side is going to look like for them. They can see it in black and white. We've done all the analysis, we've done the what if. We've said, what if we retire early? What if we retire later? What if we get sick? What happens when a spouse passes away? We've done the kind of ins and outs and so they know what they need to do now, to put them in a better situation.
They know what's working, they know what tweaks need to be made. And it really does give them more of that confidence for them to be excited about it, and not stressed and worried about it. And honestly, now they're kind of looking forward to retirement more than they were before. It's pretty neat. So I want to go through and recap what we've discussed so far today. And so to recap, we discussed how do you set some goals and priorities around retirement. We've talked about how do you take an inventory about where you are today, both your assets and your liabilities. And then we talked about creating that comprehensive retirement plan.
So I want to give you some action steps because I always want you to leave being able to know this is my next best step, this is the thing that I need to do next to move myself forward. First, I want you to take some time and define those retirement goals. Use the framework I talked about earlier with having some smart goals. But go and think about it, define, and prioritize what those retirement goals are going to look like for you. Gather your financial statements. Take an inventory. Grab those statements, grab those documents, and create a detailed list of your assets and liabilities.
We have a planning software that we use for our clients that helps our clients get organized, stay organized, and it's a great place for them to see everything that they have in their financial world in one place. Okay, so I encourage you to have something similar like that. And then the next thing we want to do is we want to start working on that retirement plan. Think about your goals. Think about your current financial situation. Do that spending plan. Forecast what your income is gonna look like in retirement. So you can know, is there a gap or not? That's a very crucial piece of information for you to know. So again, key action steps, define your retirement goals, take an inventory of where you are today, and then start building that retirement plan.
Now in our next episode coming up, we're going to talk about how do we maximize that retirement income. So again, we're gonna think about having that baseline that first run-through of our retirement rehearsal, and then how do we make it better? How do we maximize the retirement income? So be sure to tune in to our next episode, as we get ready for that. And, you know, as we're thinking through this, as you're thinking through this and you might be saying, hey, I need some help with this.
Maybe I need some help thinking through and someone to ask you questions so that you can create your retirement goals. Maybe you need help with figuring out assessing, hey, where am I today? I've got things in different places, and I'm not sure how they all work together. Or maybe the idea of creating that retirement plan is very daunting and scary. And you would love to have someone who can help you with that to make sure you're dotting your I's and crossing your T's, and that we're not leaving any stone unturned.
So if that's you, and you'd like to schedule a time for a complimentary consultation with me or someone on our team, I'd recommend that you go to our website, which is www.curryscheonfinancial.com. And you're going to see a link that's going to say book a call. And you can click that link, it's going to take you right to my calendar, you can schedule, you can click on a 30-minute phone call, and you can pick a time on my calendar that works best for you.
So again, I'm gonna give you that website that is curryschoenfinancial.com. And what we do in this complimentary call is we're going to talk through again your goals, your concerns, and then we'll be able to give you some tailored advice, where you are today. And what are some of those key action items that you should be working on in building your own retirement plan? And then we'll also discuss more about what we do and how we help clients and if it makes sense for us to work together in some capacity. So as we're wrapping up here today, I just want to say thank you for joining me today. I hope you found this impactful and I look forward to seeing you in the next episode. 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 or their own. April and John are registered representatives and financial advisors of Park Avenue Securities LLC. Address 3664 Coolidge Court, Tallahassee, Florida, zipcode 32311. 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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