Inflation will affect your retirement one way or another. It’s up to you to create a strategy to manage that risk. On this episode of Retirement Answer Man, you’ll learn how you can build your own strategy to deal with the creeping risk of inflation. In the past two episodes, you learned what inflation is and how it can affect your retirement. Next week you’ll learn how to use tactics to tweak your strategy to optimize it for specific situations, but first, let’s go learn how to come up with your own plan to combat inflation.  Data vs noise It is important to understand the difference between noise and signals when coming up with a strategy. It’s easy to be distracted by the everyday noise that surrounds us and fail to heed the signals that we should actually be watching for.  In today’s overly connected world, we have access to information that is being transmitted instantly. Rather than learning from the signals that can help us create a course of action, we get distracted by the constant noise. As data flow increases, we tend to get overloaded with information.  According to Nassim Taleb in his book, Antifragile, data is toxic in large and even moderate quantities because it increases our tendency to overreact to the noise. This is an important factor to recognize when coming up with a risk management strategy which is what a retirement plan really is.  Strategies start with vision Coming up with a strategy for retirement planning is like checking a recipe before you go to the grocery store. You want to make sure that you have all the ingredients so that you can put them together in the correct portions to create a meal. If you don’t plan before your trip to the supermarket you could come home with plenty of food but nothing that will help you prepare a healthy meal. To ensure a healthy retirement, make sure that your retirement starts with your vision for life. How to create a strategy to manage inflation Now you understand that you need to have a goal in mind before you create a retirement strategy. The two risks that you must balance in retirement are sequence of return risk and inflation risk. Sequence of return risk is a near-term risk that occurs when your stocks go down in value shortly after you begin withdrawing from your accounts. The risk of inflation means that the value of your dollar decreases over a longer period of time.  Your retirement strategy needs to balance these near-term and long-term risks. Listen in to hear how you can manage inflation risk while at the same time considering sequence of return risk. If some of the terminology I use confuses you, make sure to listen in the month of March. I plan to explain the fundamentals of retirement planning in greater detail. You’ll learn about the pie cake, agile retirement planning, and the retirement plan of record. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [3:29] Noise vs. signals [5:35] What is a strategy? [12:57] How to create a strategy to manage inflation LEARNING FROM DONALD’S SITUATION [20:40] Learning from Donald’s retirement plans [25:46] What happened to Donald’s wife [29:15] How Donald’s perspective has changed [33:08] How Donald’s financial plans have changed [35:20] Use the technology you have to record your loved ones TODAY’S SMART SPRINT SEGMENT [36:47] Evaluate your reaction to inflation Resources Mentioned In This Episode LTCI Partners WSJ article - The Trouble with a Stock Market Bubble by Jason Zweig FILM - The Social Dilemma BOOK - Antifragile by Nassim Taleb Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Retirement Answer Man

How Do I Manage Inflation Risk?

Inflation is on everyone’s mind these days. If you have been wondering how inflation will affect your retirement, you’ve come to the right place. This is the 2nd episode in a 4 part series on inflation. Last week we defined inflation, today, we’re discussing the impact of inflation on retirement, next week we get strategic, and in the final episode, we’ll get tactical and answer your questions on inflation. Press play to learn what you need to know about the effects of inflation on your retirement.  Just choose a number Inflation is nothing new. It has been affecting us over the course of our entire lives. This is important to remember when planning retirement so that you don’t overthink how you plan for inflation as you build your retirement plan of record. When building your retirement planning model, you’ll need to assume some number to plan for inflation. This number can be chosen based on history or another method. You don’t need to worry too much about where the number comes from as long as you’ve done a bit of research to get it. The most important thing to remember when choosing a number to assume for inflation is to leave it alone. It’s important to stay agile You’ll be consistently iterating and tweaking your retirement plan of record as your lifestyle changes from year to year. Even though inflation rates will fluctuate over the course of your retirement, leave your assumed inflation estimate alone. You won’t get any more accuracy from your model by tinkering with this number. Instead, you’ll end up tilting the numbers one way or another based on your proximity bias. Iterate based on the reality of your lifestyle rather than some projected assumption. Let your spending habits change based on your life choices.  How does inflation impact your retirement? The best way to understand how inflation can impact someone over time is to crunch the numbers.  If you spend $9,000 per month today and assume a 3% inflation rate, in 15 years your standard of living will decrease by 36%. If you change the inflation rate to 7%, the standard of living will worsen by 64%. Although these numbers can seem scary, you will have a bit of optionality in the way you spend your money. If inflation is high, you may choose to scale back your spending in many areas.  Areas where you can’t scale back There are a couple of areas in life where you won’t be able to scale back spending. A healthcare event is not a choice and will need to be cared for whether you are ready or not. Unfortunately, due to the healthcare renaissance in medical technology, inflation in the medical field has risen by 3 times the average of other goods and services. Healthcare and long-term care are two areas that have higher than average inflation and you have little control over your need for them. Even though inflation will cause prices to rise, you will have a safety feature built into your retirement by way of social capital. Social Security has a cost of living adjustment built into the system based on CPI-W. Listen in to hear how these adjustments in addition to your human capital can help you combat inflation in your retirement.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [3:30] Be careful with your assumptions [10:01] How does inflation impact your retirement? [21:48] How stocks and bonds react to inflation LISTENER QUESTIONS WITH TANYA NICHOLS  [28:40] How Frank can decide if he can continue with his early retirement [35:20] Where can someone with modest means go for retirement advice? [40:02] What is the role of bond funds in a retirement portfolio with a low-interest rate environment? [47:28] Clarification on signature requirements for IRAs TODAY’S SMART SPRINT SEGMENT [51:17] Review your inflation assumptions Resources Mentioned In This Episode Episode 405 - Don’t Let Perfect Be the Enemy of Good Lutheran Social Services Financial Services XYPN Align Financial BOOK - So Good They Can’t Ignore You by Cal Newport BOOK - The Good Entrepreneur by Nick Kennedy Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

How Will Inflation Impact My Retirement?

Inflation is quite the buzzword lately. Every news network reports that inflation is on the rise which is apparent at the grocery store, the car dealerships, and even in the housing market. If you are planning on retiring soon, worries about inflation could keep you up at night. This is why over the next 4 weeks, we are going to study how to manage inflation in retirement.  Today you’ll learn what inflation is and how it is measured. In week two of this series, we’ll discuss how inflation affects retirement, the following episode will study how to manage inflation from a strategic level, and our last episode on this topic will explore the investment vehicles that are available to help protect our portfolios against inflation.  What is inflation? Everywhere you look you can see that inflation is on the rise which is why we are studying this topic in depth. Before we can learn how to battle it, we must first understand what it is. Inflation is the decline of purchasing power of a particular currency over time. This means that over time, your dollar will buy less of a particular good or service.  We often reflect on the good ole days when a gallon of gas was less than a dollar, but we can see how inflation occurs across the board. Today a gallon of milk costs $3.59, but in 1995 it cost $2.50. A dozen eggs are $2.80 today, whereas, in 1990, that same dozen was only $1. This is inflation. The way we see inflation from a retirement perspective is that the purchasing power of your dollar buys less over time.  A look at average historical inflation rates Since the 1920s, the average rate of inflation has been 2.88%. However, this does not mean that each year the inflation rate has been the same inflation fluctuates from year to year. The highest inflation rate was in the 80s and was 15.61%.  In the past 20 years, the inflation rate has been lower than that 100-year average at 2.06%. Over the past 10 years, we really haven’t worried about inflation and we have had the added benefit of enjoying excellent return rates from the market, so if you retired in 2011, there hasn’t been much to worry about. But this isn’t always the case.  In the 1970s, inflation was at 7% per year which was coupled with a rough decade in investment returns, this perfect storm could cripple retirements. Inflation risk can be compared to sequence of return risk as you enter into retirement.  How inflation affects retirement planning When you are planning your retirement you want to understand how much things cost so that you can predict how much money you will need each year. If you spend $9000 per month now, in 20 years you’ll need much more to have that same purchasing power.  No one can predict what will happen in the future, but if you study the past and take measures to protect your portfolio, you can hedge against this ever-present risk. Learn how inflation is measured why that is important to plan your retirement on this episode of Retirement Answer Man. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [5:00] What is inflation? [12:10] How inflation affects retirement planning [13:46] What causes inflation? [19:00] How do we measure inflation? LISTENER QUESTIONS WITH ANDY PANKO [26:30] Is it better to do a Roth conversion or take advantage of a 0% capital gains tax rate? [34:55] The difference between Roth conversions and Roth contributions [39:59] How to adjust the Social Security calculator for early retirement [46:45] Is inflation risk higher when one retires early? TODAY’S SMART SPRINT SEGMENT [56:55] Think about your optimization to see if you have enough slack in your system Resources Mentioned In This Episode Taxes in Retirement Facebook group with Andy Panko Tenon Financial Group LTCI Partners Watch the Retirement Plan Live replay here! BOOK - Antifragile by Nassim Nicholas Taleb Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

How to Manage Inflation in Retirement: What Is Inflation and How Is It Measured?

We learned in the first episode of Retirement Plan Live that Joelle and her husband Mike had moved to a new area to pursue their retirement dreams. Joelle and Mike are now learning how to build community and purpose in their new home. Listen in to learn how Joelle plans to make social connections and find purpose in retirement as she creates her new life. The Rock Retirement Club is open The Rock Retirement Club will be open for enrollment for ten days starting on 1/27. If you have been thinking about joining, this is the right time to act.  We have implemented this short-term enrollment window so that new members can make connections with each other while working to build their retirement plan of record. This way, RRC freshmen can come in as a cohort and fully participate in their membership by taking full advantage of everything that the club has to offer. New members will participate in meetups and have access to the masterclass, retirement planning tools, and the private RRC podcast.  Even if you are too late to join this enrollment, fill out the application and get on the waiting list so that you will be first in line when enrollment opens again.  What will Joelle do with her time in retirement? Once you finally reach retirement you have to figure out what to do with all of your time. When Joelle moved to her new home in Washington she knew that she would need to find a way to fill 40 hours of her time that was previously spent working.  Joelle has found a new yoga and pilates class to keep fit and connect with others and through these exercise classes, she was even able to connect with a hiking group.  Exercise and connecting with others are important components of retirement. However, finding a purpose in retirement is even more important. Joelle understands that the success of her retirement hinges on finding a purpose which is why she sought out a nonprofit organization to volunteer with shortly after moving to her new home. Listen in to hear how Joelle found this organization and what she plans to do with her time in retirement. Making friends in a new place Moving to a new place can be challenging and when you do so upon retirement it is important to get involved in the community. Without workplace interactions, making friends is even more difficult than in the working years. Joelle has thrown herself into participating in her new exercise classes and volunteering with the nonprofit organization. Although she still doesn’t have anyone that she can truly call a friend, she has several acquaintances with whom she is looking forward to making a deeper connection. Do you have any strategies for making friends in a new place? How will you expand your friendship base in retirement? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN RETIREMENT PLAN LIVE WITH JOELLE [1:30] What will Joelle do with her time in retirement? [10:18] Making new friends can be a challenge [16:09] Volunteering will give her a sense of purpose LISTENER QUESTIONS [19:13] Greg is worried that the Social Security system will run out of money [25:04] Strategies to improve the longevity of the Social Security system [27:20] How to find a retirement financial planner [29:58] Roth conversions vs. earned income [30:53] Where to find a retirement plan of record template [32:14] Using human capital and financial capital to retire early and receive ACA credits [36:07] Health savings account beneficiaries TODAY’S SMART SPRINT SEGMENT [38:44] Think about your strategy to create community and connections in retirement Resources Mentioned In This Episode RetireAgile.com LiveWithRoger.com BOOK - How to Begin by Michael Steiner Bungay Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Retirement Plan Live: Establishing a New Life

As you embark on your retirement journey, life’s question changes from what can you do to what will you do? You have so many choices that are available to you that the question of what to do next can be daunting. I explore these questions with Michael Bungay, author of the new book, How to Begin.  Michael’s interview isn’t the only thing that’s in store for you today on the Retirement Answer Man show. This is the third installment of Retirement Plan Live with Joelle. Last week Joelle shared her dreams for retirement, so today we crunch some numbers to see how she will create her retirement paycheck. Make sure to sign up for the webinar on January 27 to see whether Joelle’s retirement will be feasible.  What will you do next? Often in midlife, you reach a crossroads where you have to decide what’s next. At this age, you have experience, contacts, and resources which opens a wealth of opportunities. So, how can you figure out what you should focus on in your next chapter? Think about what will bring out the best in yourself. Should you create You+ or You 2.0? Michael likes to compare this process of reinventing yourself to technology. You have the choice of creating You+ or You2.0.  You+ is like getting a new app on your phone. It will improve your life for a while, but then you begin to plateau and you have to think about what is next. You 2.0 is like getting an entirely new operating system that can last for decades. Take this time to think about what your You version 2.0 will be.  Michael’s book, How to Begin, lays out the process to help you figure out how to create You 2.0. You’ll learn how to set a worthy goal and make a difference that lights you up all while moving you towards the edge of what is possible.  How to begin the process with fresh eyes? Systems start breaking down once you reach the next level in anything that you do. The same holds true for reinventing yourself. To begin again you need to start by thinking about who you are so that you can set a worthy goal. Your first guess won’t be the best one, but as you work through the process it will help you to polish and refine your goal.  The next step is to commit. Before you commit yourself to your goal, you’ll want to weigh your choices. Think about the prizes and punishments for completing or not completing your goal.  Finally, it is time to make progress on your worthy goal. Goal setting is a challenging process, that is why it is important not to waste your time on the wrong goals. Your goals should be important to you and make the world a better place. What impact do you want to make on the world?  If you are trying to figure out who you will become in the next phase of your life, check out How to Begin by Michael Bungay to help you get started.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN RETIREMENT PLAN LIVE WITH JOELLE [3:37] Joelle feels content with her retirement dreams [7:18] Looking at Joelle’s social capital [12:40] Joelle won’t have any human capital [16:16] Let’s look at Joelle’s financial capital MICHAEL BUNGAY INTERVIEW [25:25] Who is Michael Bungay? [29:36] Michael’s second mountain [32:50] The difference between Michael+ and Michael 2.0 [35:38] How to begin the process with fresh eyes TODAY’S SMART SPRINT SEGMENT [53:46] Challenge yourself to see whether you are improving yourself or can you reimagine a new operating system Resources Mentioned In This Episode BOOK - How to Begin by Michael Bungay BOOK - The Coaching Habit by Michael Bungay PODCAST - 2 Pages with MBS  BOOK - The Second Mountain by David Brooks BOOK - From Good to Great by Jim Collins Erin Weed - The Dig Retirement Plan Live Webinar January 27 LTCI Partners Social Security Detailed Calculator Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Retirement Plan Live: Creating Our Retirement Paycheck

Welcome to the second installment of Retirement Plan Live. This is the episode where we run the initial numbers for Joelle’s retirement. We’ll walk through the 3 categories to define Joelle’s base needs, wants, and wishes and put number values to each of these areas.  In addition to the interview with Joelle, you’ll hear listener questions about how to feel comfortable about retirement, converting 401Ks to Roth IRAs, and how my personal journey finding health insurance has turned out.  As a bonus, you’ll hear an interview with Joe Saul-Sehy from the Stacking Benjamins podcast who has written a new book called Stacked. Listen in to hear if it is worth the read.  Check your email this weekend to receive a free retirement planning worksheet If you are following along with Retirement Plan Live and creating your own retirement plan, make sure that you are signed up for the 6-Shot Saturday weekly newsletter. In this Saturday’s newsletter, you will receive a link to a simple worksheet that will help guide you through your own retirement plan the way that I am walking through Joelle’s retirement plan.  6-Shot Saturday is full of tips, news, listener questions, and more, straight from the Retirement Answer Man to your inbox. Simply head on over to RogerWhitney.com, scroll down to the bottom of the page, and enter your name and email address to sign up.  Financial behavior is at the heart of all money management issues Have you ever listened to the Stacking Benjamins podcast with Joe Saul-Sehy? If so, you’ll want to check out his new book, Stacked. If you haven’t heard his podcast, check it out on your favorite podcasting app. Joe joins me today to discuss why he wrote his new book, how he wrote it, and why it’s important.  Did you know that 150 million Americans have cried about money? This number doesn’t only include people who live paycheck to paycheck, people who earn more are also concerned about money. These people aren’t crying about the loss of the mega backdoor Roth or cryptocurrency. They are crying about their financial behavior. Many people who are educated about money and finances still struggle with their financial behavior. Mastering your finances isn’t about what you know, it's about what you do.  Stacked helps readers take action to improve their financial situation Traditional finance books often overcomplicate finances or hype certain complicated financial strategies. Stacked helps readers understand what they should be thinking about when it comes to financial matters and why they should think about them. Since Joe discovered that people need actionable items to complete to successfully change their financial behavior he decided that his book should help readers change their financial behavior through action. The book is based on achievements that are built on micro-actions. Its format is award-based, similar to the way that many educational apps gamify learning.  Joe begins financial planning with the end in mind Joe’s book begins with the end in mind. It is goal-based and helps readers create a timeline to put their goals in perspective. Since most of us are visual learners, the book helps to plot things visually so that readers can begin to work on their financial problems.  As you read, you’ll be able to visualize your goals so that you can put a list together to understand what you truly value and how that applies to your financial plan. Check out Stacked if you are interested in a light-hearted approach to a serious subject matter that gives you actionable items to get you closer to your financial goals.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN RETIREMENT PLAN LIVE WITH JOELLE [3:04] Joelle’s base spending needs [8:50] Joelle’s future expenses [20:25] Budgeting will be a new experience for Joelle and her husband [23:49] Joelle’s aspirations [29:35] They plan to age in place LISTENER QUESTIONS [34:25] A 401K to Roth transfer question [38:39] How to help Tracy’s husband retire again [43:04] My health insurance journey [46:10] Reverse mortgages JOE SAUL-SEHY INTERVIEW [47:09] Money management can be stressful [51:22] How Joe wrote his book [59:23] Begin with the end in mind [1:07:00] Joe’s goals for his book TODAY’S SMART SPRINT SEGMENT [1:10:19] What will you wish you would have done at the end of this year? Resources Mentioned In This Episode BOOK - Stacked by Joe Saul-Sehy BOOK - How to Begin by Michael Bungay Stanier BOOK - Half Time by Bob Buford BOOK - The Second Mountain by David Brooks PODCAST - Stacking Benjamins with Joe Saul-Sehy NeuYear.net Powell’s Books

Retirement Plan Live: Dreams for Our New Home

A new year means a new Retirement Plan Live! Over the course of the next 4 episodes, you’ll hear about Joelle and Mike and their plans for their recent retirement. Then, at the end of the month on January 27, we’ll wrap RPL up with a live webinar that you can participate in. Head on over to LiveWithRoger.com to register. On this episode, you’ll learn about Joelle and Mike’s thought process on moving to a different state for their retirement. You’ll also hear from Kevin in Coach’s Corner as he explains his Zero Based Budgeting process. This episode is jam-packed with information including one correction to an answer that I recently gave to a listener question. Press play to listen now.  Coach Kevin’s Zero-Based Budgeting process Creating your financial plan in retirement shouldn’t only include dollars and cents. It is important to build a plan that encompasses your life goals. Most people tackle their retirement budget from the wrong direction which is why Coach Kevin came up with his own budgeting process. Step 1 - Start with 2 major retirement questions. Where will you live? Will you work or generate an income? Both of these questions can drastically change your retirement budget. Think about whether you’ll move somewhere new or whether you’ll stay local and how that decision will affect your budget and your retirement plans. If you choose to work a bit in retirement, that choice won’t simply change your budget; it will also change how you spend your time. Step 2 - What activities will you do? Think about 3-5 activities that bring meaning and purpose to drive your life in retirement. Which activities would you like to build your life around? Set yourself up to do the things that you love to do.  Step 3 - What would make retirement special for you? This is where you get to think big. What are your retirement dreams? Would you like to travel to distant lands, buy a boat or RV, or maybe renovate your home?  Once you work through these 3 steps then you can begin to create your retirement budget. It is important to start with these steps rather than the money first so that you can ensure that you are making the most out of your retirement.  Step 4 - Continue creating your retirement budget by planning your day-to-day activities in retirement. These activities could include gym memberships, golf fees, sporting event tickets, theater tickets, and other areas where you will spend your time in retirement. Step 5 - Finally, you can add in all the other expenses like food, utilities, household expenses, and healthcare. Leaving your comfort zone is always a bit scary Remember that the type of life change that retirement brings can be scary. Any time you disrupt the status quo you leave your comfort zone. The good news is that if you start acting out your retirement plans and they don’t measure up to your vision, you can always change the plans. The trick is to develop a plan where you can pivot. With this Zero-Based Budgeting process, you can iterate as needed rather than being stuck with the same plan over the next 30 years. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN A CORRECTION [2:20] An HSA question correction COACH’S CORNER [3:52] How to create a retirement financial plan that encompasses your life goals RETIREMENT PLAN LIVE WITH JOELLE [19:50] Why Joelle volunteered to be the new Retirement Plan Live subject [24:24] Joelle and her husband have different money styles [29:38] How Joelle’s life was different living in L.A. TODAY’S SMART SPRINT SEGMENT [37:42] Give yourself grace about beginning again Resources Mentioned In This Episode Register for the Retirement Plan Live webinar on January 27 at 7 pm CST LTCI Partners Retirement Manifesto Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Relocation for Retirement: Why We Moved

Do you own any cryptocurrency? First introduced in 2009, Bitcoin and other cryptocurrencies have exploded in popularity over the past few years.  On this episode of Retirement Answer Man, we’ll discuss what cryptocurrency is, how it is revolutionizing the banking system and the drawbacks of this new type of currency. Listen in to learn whether you should add a bit of crypto to your retirement portfolio and you’ll also hear the answers to listener questions about IRA contributions and IRMAA surcharges. What is cryptocurrency? Nan is curious about whether Bitcoin or other cryptocurrencies would be good investments to add to her retirement portfolio to hedge against inflation. Before we get into the answer to that question, we need to understand exactly what cryptocurrency is.  Stemming from the word cryptography, the word cryptocurrency means it is a currency that is encoded. This digital currency is secured by cryptography technology which prevents it from getting hacked.  Why is cryptocurrency such a big deal? Cryptocurrency is separated into denominations called coins or tokens which are actually cryptographically protected codes. These new currencies are atypical in that they are issued by non-centralized networks or entities and not issued by any government.  The value of a cryptocurrency coin or token is stored digitally and managed by a blockchain network that facilitates transactions. Blockchain is basically a digital bank replacement that is virtually frictionless. Transactions are instantaneous and can be confirmed quickly.  The promise of cryptocurrency could revolutionize currency transfers and remove the need for a banking system. With encrypted digital currency there is no need for a bank. Transactions bypass the third-party gatekeepers that are typical of traditional banking transactions, so there is no need for any extra fees.  How could cryptocurrency help combat inflation? Inflation occurs when a currency loses value over time. We have seen the inflation rate spike over the past year and the more money that comes into the system the less value the dollar will have. Since the US government is printing currency faster than ever, many people are worried that the dollar will continue to lose its value. New crypto coins or tokens can only be released by mining, so the value of the currency is based on a degree of scarcity. The finite supply of the currency’s structure is designed to retain its value over time. What are some concerns over cryptocurrencies? With all the benefits that come with this revolutionary financial technology come some drawbacks. Since it is so new, cryptocurrency has become a craze with new currencies being released each day. Much like the internet craze of the early 2000s, no one knows which currencies will come out on top.  The novelty of this new trend has also created volatility in the values of different cryptocurrencies. Currency values can spike up or down 10%-20% in one day. Investing in cryptocurrency is a bit like heading out to the wild west to pan for gold. Since it is so new, there is little to no government regulation which, paired with the anonymity that these currencies provide, can attract bad actors and lead to money laundering and tax evasion. Listen in to hear whether I recommend adding cryptocurrency to a retirement portfolio to hedge against inflation.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS [5:05] Is investing in cryptocurrency a good way to combat inflation in retirement? [11:51] Why is cryptocurrency such a big deal? [17:01] What are some concerns over cryptocurrencies? [22:10] Contribution limitations in the year that you retire [24:41] Appealing the IRMAA surcharge [26:27] What counts as income when calculating ACA credits? TODAY’S SMART SPRINT SEGMENT [28:16] Finalize your 2021 net worth statement Resources Mentioned In This Episode Episode 300 - Medicare and IRMAA Form SSA-44 - Medicare Income-Related Monthly Adjustment Amount - Life-Changing Event Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Is Cryptocurrency a Good Investment for My Retirement?

Do you have a system for estimating what your future RMDs will be? Should you keep a mortgage or pay off the balance of your house in retirement? What should you do with the money that you withdraw to fill up your tax bracket? These are just a few of the questions that will be answered on this episode of Retirement Answer Man. Press play to check it out! My word of the year The end of the year is always a good time to think about beginning anew in the next year. I’m not big on celebrating New Year, but I enjoy the renewal process that comes with the start of the new year.  If you have listened to the show in the past, you have heard me discuss my word of the year. I choose a word each year as part of my own process of renewal. I try to use my word of the year as my guiding light to help me stay focused on my goals for the year ahead. Have you ever chosen a word of the year to help you focus on your goals? Listen to this episode to hear what my word is this year.  How do you calculate what your future RMDs will be? You know RMDs are coming at age 72, but how can you estimate what they will be? To calculate your RMDs you can create your own spreadsheet to get an estimation. Once you have a feasible retirement plan in place and you know how you will fund your retirement you can use this fantastic exercise to help you optimize your retirement plan.  To estimate future RMDs, I set up a simple spreadsheet with these columns: your age, the year, the RMD ratio, the end of the year account value for the prior year, estimated withdrawals, and the year-end value. Once you have these values in place you can take the total and divide it by the value provided by the IRS uniform lifetime table to estimate your future RMD.  How estimating your RMDs could benefit your retirement plan One way that this exercise can benefit you is by allowing you to project the risks that you might encounter in retirement. You may realize that you won’t need this much money to live on and decide that it is a good idea to fill up your tax bracket by withdrawing from your IRA sooner so that you can lower your RMD in the future.  What to do with the money that you withdraw from your IRA to fill up your tax bracket  If you do decide to withdraw from your IRA or 401K to fill up your tax bracket you will have the benefit that you know what your tax rate will be, but what should you do with the money? The way I see it you have 5 options. You can spend it, save it, give it away, invest it in after-tax vehicles, or convert it to a Roth IRA. The most important thing to do when making these arrangements is to think through your process in an organized way. What would you do if you decided to fill up your tax bracket? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN? [1:30] My word of the year LISTENER QUESTIONS [6:55] How do you calculate what your future RMDs will be? [15:33] Is it a good idea to keep a mortgage in retirement? [21:34] What do you do with the money that you withdraw from your 401K? [26:20] A suggestion from Mike [28:21] The efficacy of using balanced funds TODAY’S SMART SPRINT SEGMENT [36:18] What will be your word of the year next year? Resources Mentioned In This Episode LTCI Partners  Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

How Will I Estimate What My RMD Will Be at Age 72?

Do you have a net worth statement that you update regularly? Whether or not you do, you’ll want to learn about the psychological benefits that this exercise can create. In this episode of The Retirement Answer Man show, we’ll discuss what a net worth statement is and how you can gain from creating one regularly.  You’ll also hear several listener questions that range from inherited IRAs to I-bonds, to SPIA annuities. If you are interested in rocking retirement, you’ll need to arm yourself with the knowledge to help you navigate this change in life. Listen in to get started on your retirement education journey.  A Rock Retirement Club announcement If you are looking to join the Rock Retirement Club you can sign up for the waiting list until we open enrollment again in late January. We closed enrollment in early December to restructure the club a bit and introduce periodic enrollment so that new members can be a part of a cohort. This will help freshmen members to take full advantage of their membership as they work their way through all the benefits that the club provides. If you are interested in checking out the Rock Retirement Club, head on over to the website and join the waiting list to receive the latest email updates.  What is a net worth statement? If you have listened to the Retirement Answer Man show in the past, then you already know that a net worth statement is a statement of the resources you have accumulated with your wealth.  Your net worth statement lists all of your assets and their values and your debts and their values. Assets like your retirement accounts, investment accounts, or property are listed on the left side of the net worth statement. These assets can be categorized by whether they are tax-deferred, after-tax, or tax-free accounts. On the right side is the debt column. Total each column up to see the value of each. Once you do that you’ll subtract the debts from your assets and have your net worth.  Creating this valuable financial tool is a way to understand the cumulative impact of the financial decisions you have earned. Do you have a net worth statement that you update regularly?  The 5 ways you can use your income Since there are only 5 things that you can do with your income, your net worth statement reflects those financial decisions that you have made. These are the 5 ways that you can use your money: Spend it.  Pay down debt Give it away. Save it as cash in an emergency fund. Invest for the future. For every dollar you have earned you have made a decision (whether consciously or unconsciously) to do one of these 5 things, so your net worth statement is a reflection of these choices.  Creating a net worth statement provides a psychological impact By updating your net worth statement periodically you’ll be able to compare how your finances reflect your values and whether you are using your finances to stay in line with your goals. If you identify any incongruencies then you can address the behavior before it gets out of hand.  Have you ever put together a net worth statement? When was the last time you updated it? As a rule of thumb try revisiting it every 6 months. Make sure to listen to the next episode to hear my word of the year! OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [1:56] What is a net worth statement? [4:50] Creating a net worth statement provides a psychological impact LISTENER QUESTIONS [11:21] You can work with LTCI Partners directly [14:45] Mike asks if I-bonds are a no-brainer [20:12] Examples of how people have blended retirement with meaningful work [24:28] A comment about SPIA annuities [32:25] Alternatives for the fixed income portion of assets in retirement  [35:27] Navigating the changes to the inherited IRA RMD rules TODAY’S SMART SPRINT SEGMENT [37:51] Consider creating experiences rather than giving gifts for the holidays Resources Mentioned In This Episode BOOK - Retirement Planning Guidebook by Wade Pfau Wade Pfau - Retirement Researcher TreasuryDirect.gov LTCI Partners Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Are I-Bonds a Smart Investment for My Retirement Portfolio?

You have probably heard me refer to a retirement plan of record in the past few episodes, but you may be wondering what exactly this is. I have had several listeners reach out and ask me to define this term, so in addition to hearing listener questions, today you’ll learn exactly what a retirement plan of record is and how it can help you plan your retirement. Press play to check it out. What is a plan of record? The retirement plan of record is something that I work on with my clients and I am in the process of developing a template that will be available in the Rock Retirement Club masterclass. This plan of record will help you create a current representation of your decision-making framework so that you can walk through a decision-making process in an organized way.  Why is it important to have a plan of record There is so much to consider in retirement planning--asset allocations, withdrawal rates, Roth conversions, IRMAA, taxes, not to mention who your friends will be and what you’re going to do all day. With all of these considerations, it is easy to become overwhelmed by the choices if you don’t have an organized way to make decisions. Without a clear direction, your decision-making process could have you bouncing around like crazy.  The 3 pillars of the agile process When creating a retirement plan of record, it is important to organize your financial goals into 3 pillars so that your plan can remain agile. First, develop a feasible plan, then, make it resilient, and lastly, optimize your plan. If you can arrange your decisions under these 3 pillars, then you can think through the process in an organized way.  A retirement plan of record can ensure that your decisions reflect your values and goals. You’ll be able to create feasible spending goals based on your resources. Your plan needs to be resilient so that you can manage risks.  Once you have your plan of record in place then you can work through each decision while referring to your plan. You’ll be able to see the changes you are considering within your organized process and create a what-if scenario by making a copy of your plan of record and adjust accordingly. This way you’ll be able to flush out the implications of this new variable so that you can examine the decision in a thoughtful way.  The plan of record is a useful tool to accomplish organized thinking that you can execute in a consistent rhythm so that you can stay agile and make the most of your life regardless of what happens. Your plan of record allows you to focus on what you can control. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN? [3:50] What is a plan of record? OUR SPONSOR [12:22] Check out LTCI Partners for your long-term care insurance needs LISTENER QUESTIONS [13:31] Lee is worried about inflation--should she work longer? [22:05] Thinking about Social Security claiming strategies [28:18] How IRMAA surcharges work each year [33:26] How to deal with switching from an HSA to Medicare [35:32] Filling up tax bracket buckets TODAY’S SMART SPRINT SEGMENT [39:03] Review your retirement contributions to make sure you are hitting the numbers you want Resources Mentioned In This Episode Episode 385 - The 4% Rule Episode 395 - Retirement Risk Basics Check out LTCI Partners for your long-term care insurance needs Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

What Is a Retirement Plan of Record?

Rocking retirement doesn’t mean getting your Roth conversions right, it means minimizing your regrets. At the end of your life, you don’t want to think “yay, I paid fewer taxes!” you want to think “wow, my life was awesome!” Overcoming the frugality that stems from a lifetime of saving is one way to live a life free of regret in retirement. To ensure that you can live life to the fullest, create a retirement plan that can iterate as life unfolds. When you have a feasible, resilient retirement plan that utilizes the resources you have you’ll be able to build the life you want. You’re already well on your way to rocking retirement by listening to the Retirement Answer Man show.  On dialing back Recently I committed publicly to publishing 2 episodes per week in an effort to improve the show. However, very shortly after making this change, I realized that it wasn’t a good change for me. For this reason, I decided to pivot back to one episode per week. I realized that it is important to live my life true to myself rather than base my choices on the expectations of others. Have you ever made a decision that you quickly had to undo?  Should Gene pay off his house from a pretax retirement account? Gene is considering paying off his house from his 401K account. He owes $200,000 at 2.5% on a 25-year loan. He would like to know what the best course of action would be in his situation.  As with any major retirement planning question, my recommendation is to refer to your retirement plan of record. (To get a more detailed understanding of the retirement plan of record, make sure to listen to the next episode!) After walking through that plan with the mortgage in place, then you can create a what-if scenario in which you pay off the mortgage. This way you can compare each choice side by side to see which one would best serve your overall goals. Listen in to hear why I wouldn’t take the funds from my 401K to pay off my house and hear what I would do instead.  How to move from accumulation to distribution phase of life You have saved for decades, so when the time comes to start spending that savings it can be a challenge to loosen the purse strings. Retirement is not simply about spending money: it’s about living your life to the fullest.  Think about why you chose to save your money and act frugally for so many years. Chances are, you did so to achieve financial security and to pay for the best retirement lifestyle that you could afford. Achieving financial security means that you feel comfortable with your retirement plan. If you don’t have faith in your plan, consider having a professional look over your plan to bolster your confidence so that you can rock retirement.  How to improve your life and overcome frugality If you are a naturally frugal person, you may think that you have everything you need at this point in life, so there is no reason to spend more than you do. However, there are many ways that you can improve your life by spending money. Consider whether these activities would enhance your life. Eating out with friends more frequently Attending physical therapy Getting regular massages Hiring a personal trainer to improve fitness Hiring a nutritionist to help you plan meals Overcoming frugality can help you live your life to the fullest and rock retirement. Think about how you could increase your spending to maximize your life.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS [4:00] A correction on QLACs [5:05] Social Security and Cola [9:25] An urgent inherited IRA question [12:30] On dialing back [15:08] Whether or not to pay off the house from a 401K [20:48] One listener appreciated learning about Roth conversions  COACH’S CORNER WITH KEVIN LYLES [26:18] On overcoming frugality [29:42] Spending guaranteed income is much easier [31:26] How you can improve your life by spending [34:25] 3 tips to incorporate to spend your money TODAY’S SMART SPRINT SEGMENT [42:55] Look for ways to enhance your life today Resources Mentioned In This Episode Start here to listen to the Retirement Tax Management series with Andy Panko Brian Johnson’s Optimize.me Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Overcoming Frugality

How do you pivot from a moderately aggressive portfolio in the accumulation stage of retirement planning to the decumulation stage? In today’s episode, we tackle two listener questions about the mechanics of decumulation in retirement planning. You’ll also hear a question about using QLACs to reduce RMDs. If you are wondering about the details on how exactly you are going to make this retirement thing work then be sure to press play.  Retirement plan live is coming soon to a podcast near you!  In January we’ll be hosting the next edition of Retirement Plan Live. Retirement Plan Live is an extremely popular series that we run each year where I walk out the logistics of creating a retirement plan over the course of 4 episodes with a listener. At the end of the series, we host a live webinar where we analyze whether that particular plan is feasible. Our last Retirement Plan Live series dealt with Trish and her unexpected retirement.  If you would like to be the next subject of RPL, make sure you are signed up for the 6-Shot Saturday newsletter so that you can access the link to the application form. We’ll choose one listener from the dozens of applications we receive. We will make sure to change the name and details of your situation while at the same time keeping the generalities in check. Listen in to hear the details.  How to get the most bang for your buck in your retirement portfolio Steve has invested moderately aggressively, but as he turns 65 and enters retirement he is looking to become more conservative while at the same time getting the most bang for his buck. He is trying to figure out how to structure his portfolio conservatively while providing a bit of growth and income through dividends. The best way to approach this or any retirement planning question is to take a top-down approach. If you start at the bottom and work your way up you miss out on how your question fits into the big picture.  Retirement planning starts with your overall goals for retirement. Then you need to understand how this particular question fits into your retirement plan. Once you have a feasible plan, then you can build a cash flow model which plans out your spending over the next 5 years and beyond. Once you have this cash flow model in place then you can make that model resilient. This is where your question comes in. How would you make your plan resilient?  Do you want to optimize your portfolio for more money and higher returns or do you prefer to have a high level of confidence in your spending no matter the market? Rather than getting the most bang for your buck, consider what kind of outcome you would prefer to secure.  How to simplify retirement accounts without taking a huge tax hit Karen is planning on retiring at age 61, but before she does she would like to simplify her retirement accounts. Currently, she has over 50 different investments. She wants to simplify the accounts into as few funds as possible and rebalance them without taking a huge tax hit.  Once again, we must approach this problem in an organized way. When you consider what you are trying to accomplish by simplifying your accounts then you can see how this exercise will fit into your overall retirement plan. How would you approach this question?  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [1:30] News on the show LISTENER QUESTIONS [6:25] Using QLACs in retirement planning to reduce RMDs [11:35] Rita is interested in another series on long term care [12:46] Steve’s question getting the most bang for his buck during decumulation [30:20] Karen’s question about simplifying her portfolio TODAY’S SMART SPRINT SEGMENT [40:14] Go beyond the normal thankful things--think about the things that warm your spirit Resources Mentioned In This Episode Retirement Plan Live 2021 - start here Decumulation series - start here Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

The Mechanics of Decumulation

We often have monthly themes to guide the topics of this show, but this month on Retirement Answer Man we are doing a bit of a mishmash. Today I want to share some thoughts I had on retirement in general and answer a few retirement questions. As you listen, think about which topics apply to you and your situation and see if you can come up with actions that can get you closer to your retirement goals.  Overcoming frugality can be a challenge After decades of saving your money and delaying gratification, suddenly letting loose to spend money on the things that make you happy may not come easy. If you have been a diligent saver over the years, you may find it challenging to shift from a saving mindset to a spending mindset especially when that mindset shift is timed with the loss of income from your human capital.  The good news is that shifting to a spending mindset doesn’t need to happen like flipping on a light switch. This is a gradual change that can occur slowly. One way to help yourself become more open to spending is to construct a framework to help you make decisions. Becoming a new version of yourself takes time. Give yourself grace and time to make change happen.  Retirement planning is complicated If anyone ever tells you that they have all the answers to retirement planning, run in the other direction. This is because no one can ever have all the answers to something so complicated as retirement planning. The way I like to go about planning is by organizing decisions under 3 separate categories.  Are your dreams feasible? Consider the life you want and whether it is feasible given your resources. This means that you need to consider your values and what you really want. Next, you’ll want to discuss it with your spouse if you are married and run the numbers to see if your dreams are truly feasible. Is your plan resilient? The winds of change will come and they could take many forms. They could come in the form of inflation, uncooperative markets, death, or healthcare bills. Having a resilient plan will help you stay the course that you set. Ways that you could make your retirement plan resilient could be through cash flow planning, matching your assets, and managing your risks in an organized way.  Can your plan be optimized? Optimization is a way to enhance your journey. Tax planning, asset allocation, Roth conversions, ACA credits, and Medicare decisions all fall under the category of optimization. These are ways that you can enhance your plan to improve it. However, it is important to remember that these are the extras, not the plan itself.  Organize your retirement planning to stay on track By organizing your retirement planning under these 3 pillars you can ensure that you aren’t letting the tail wag the dog. Having an organized way to deal with your retirement plan will ensure that you aren’t missing out on an aspect of retirement that could have a major impact on your life.  Make sure to stick around for the listener questions segment of the show. You’ll hear me answer questions on how to calculate modified adjusted gross income to include capital gains and I’ll even respond to a recent critique that I had from one listener.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN REFLECTIONS ON RETIREMENT [4:35] Overcoming frugality is a challenging thing for many recent retirees [6:50] Retirement planning is complicated LISTENER QUESTIONS [13:07] Modified Adjusted Gross Income  [16:33] My response to Janet’s critique [18:57] Otto’s comments on a recent question I answered TODAY’S SMART SPRINT SEGMENT [22:28] Think about something that you need to undo Resources Mentioned In This Episode Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Reflections on the Retirement Scene

Ever since listeners enjoyed our Retirement Tax Management series with Andy Panko we have received an influx of questions surrounding taxes. I’ll answer several questions today about filling up your tax buckets.  I’ll also respond to queries about planning when to take Social Security when you will have excess RMDs and how to incorporate balanced funds into your asset allocation. Don’t miss this episode if you still have burning tax questions left over from last month’s series on retirement tax management.  The Rock Retirement Club has so much to offer The Rock Retirement Club recently hosted the Retirement Rodeo Round-Up in Fort Worth, Texas. I was so impressed by the levels of motivation and excitement that I saw from the participants. Everyone who attended was excited to share their knowledge and learn from each others’ journeys so that they could make the most out of their retirement.  Have you considered joining the Rock Retirement Club? If so, or even if you just want to learn more about it, check out the virtual open house that we’re having on November 16. At the open house, you’ll get a sneak peek of the Club’s Retirement Master Class and preview member tools like Everplans and the New Retirement Planner Plus calculator. The open house will be a great way to decide whether the RRC is right for you. Register for this event at LiveWithRoger.com. Are you having trouble overcoming frugality? One common concern from the participants at the Retirement Rodeo Round-Up conference was the challenge of overcoming frugality. Like many Retirement Answer Man listeners, RRC members are amazing savers, but after saving and delaying gratification for so many years it is hard to break the habit.  There is a mental shift that must take place to switch from saving to spending and shifting your mindset can be difficult. Instead of watching your accounts grow, you now see them stay stagnant or decrease over time and this can set off alarm bells in your mind. Have you experienced difficulty navigating this change? What did you do to shift your mindset from saving to spending? When should Jenny claim Social Security? Jenny has been a diligent saver and will end up having excess RMDs. This issue has caused her to think about the most beneficial time to claim Social Security. She is considering taking Social Security at age 62 to lower her income, but I have another strategy for her to consider. Listen in to hear my thoughts on what you should do if you have substantial projected RMDs.  How to fill up your tax bracket bucket in retirement One of the strategies that Andy Panko and I talked about last month in the Retirement Tax Management series was filling up your tax bracket. When filling up your tax bracket you'll want to take funds from your IRAs or other tax-deferred accounts and either spend that money, invest it in after-tax assets, or convert it to a Roth IRA. Work out the best situation for you by creating a retirement plan of record and then test different outcomes. Have you created a retirement plan of record yet?  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN LISTENER QUESTIONS [2:40] It takes a big mental shift to stop saving and start spending [4:01] How much to allocate to asset allocation if you have balanced funds in your portfolio? [7:05] How Social Security works with RMDs [13:10] How to fill up the tax bracket bucket [15:15] What to do with the money that you fill up your tax bracket with [16:26] Scott really enjoyed the episodes with Tanya Nichols TODAY’S SMART SPRINT SEGMENT [17:10] Calculate your projected income for 2021 Resources Mentioned In This Episode Register for the Rock Retirement Club’s virtual open house at LiveWithRoger.com Tanya Nichols with Align Financial Check out Tanya Nichols in the Women in Retirement series - Start Here Rock Retirement Club Roger’s YouTube Channel - Roger That BOOK - Rock Retirement  by Roger Whitney Work with Roger Roger’s Retirement Learning Center

Listener Questions: Which Account Should I Withdraw from to Fill Up My Tax Bracket?

This is NOT your typical retirement show focused only on saving and investing. It’s about making the most of your life today and in retirement. Retirement isn’t an age OR a financial number. It’s finding that balance between living well today and feeling confident about your retirement. It’s about gaining more freedom to pursue the life you want. In each episode of this award-winning show, Roger unpacks topics like investing, insurance, IRAs, pensions, healthcare expenses, building wealth, creating income, being happy, and much more. Roger Whitney shares practical wisdom on retirement planning learned over 27 years as a financial planner walking life with clients into retirement. Head over to rogerwhitney.com/about to learn more and sign up for the free Retirement Learning Center. An online resource full of checklists you can use to work towards your ideal retirement.

hubhopper

Retirement Answer Man

hubhopper