Will your retirement savings be enough to last your lifetime? Find out what to do before and after retirement to make sure it does in the latest #YouandYourMoney podcast featuring Jim Zahansky, AWMA®.
- Subscribe to the You and Your Money podcast
- Follow us on Facebook, Instagram, LinkedIn and YouTube
- See how we can help you create a tailored strategy to help you Plan Well, Invest Well and Live Well: whzwealth.com
Welcome to You and Your Money. Empowering you to reach your goals with tips to help you Plan Well, Invest Well and Live Well. I'm Jim Zahansky, principal managing partner and chief goal strategist at Weiss, Hale and Zahansky Strategic Wealth Advisors. Now on to today's topic. Let's get to today's topic, retirement funds and longevity. Go ahead. What's on your mind? Longevity. I mean, this is this is the key word. I mean, so many people think about how do I get to retirement. Right? And they say when when I get there, I need this amount of money. And they often forget about a few things. One of them we're just talking about, which is inflation. And and a lot of the listeners have to think through how long you might live. It's sort of uncomfortable at times, right? Like, well, my mother lived to this or my father lived to this, and you don't really know. Right. But for for sure, when you stop working and maybe you should be planning out 20 to 30 years for income planning. And during that time, there's a lot to consider when you consider your own longevity and how long you might live. Because you can't just say if you're retiring at 67, I need $50,000 a year and my Social Security is giving me 30 and I'm going to make up the other 23 part time work, or maybe my investment portfolio. If you just say that and you stop there, you certainly don't need 50,000 in 20 years. You need 50,000 plus inflation. Yeah, exactly. So that really puts into perspective how long we have to make our retirement funds last, right? Yeah. I mean, and, you know, the Social Security Administration, they have people that look at that all of their had longevity in life and they say you're likely to to live to 84 if you're a man, 87, if you're a woman. These are just, you know, tables that actuaries look at. But nonetheless, you know, you have to keep in perspective how long you might live. And people are living longer. And they're also, I would say, more apt. There's greater medicine's, more conscious health, folks. The longer you live, the more you have to think of this timetable of longevity for your money. So other factors, too, for example. Yeah, I mean, one of the things that clearly as you live longer, you have to consider is what sort of health care needs do you have? Right. And and and when you think about health care, the inflation there is actually quite a bit higher. And, you know, we have a medicare program that many people join in at 65 to get health care. There could be long term care in your future. You know, these sorts of things as you consider your expenses upon retirement, you certainly have to factor in. The longer you live, potentially, the higher your health care costs into that into that retirement income need that you're planning on. But also, you have to factor in things, things you want. You don't just want to survive. There's you know, while you're working, hopefully you get a little mad money, little things you want to do vacations, and you want to have that, too, right? Yeah. I mean, and this gets to the point of when you're thinking and hopefully before you thinking about retirement, you clearly you've got what you need for basic living expenses, food, rent, mortgage, cars, you know, whatever it is that you're normally living on and health care. So that's a plus. And to your point, we call it living. Well, you know, what is it that you do to live well? And, you know, many people it's travel or it's just maybe just having some fun with family, whatever that is. It's in addition to your base expense. Right. And you have to factor in that plus inflation plus health care, plus your normal living expenses. When you think about retiring, because you have to really think about what makes you happy in retirement. Just don't walk to the finish line. You want to run through it. Yeah, exactly. Is there a good way to calculate how much in savings you're going to need? Because obviously that's what it all comes back to, though. How do we do it. We also think about, you know, what the need is. So what's your normal need is plus health care, plus what you want to do. And we have a on our website, a retirement planning calculator. So if you go to whzwealth.com there is a retirement planning calculator. It consider these sorts of things what do you need plus what do you want? Plus health care. And you know we often use 4% rule. So if you have if you need 50,000 to live on and Social Security's providing you with 30,000, then maybe pensions, a pension might be giving you another ten and you've saved some money in your 401k and say that's a couple hundred thousand dollars, you know, or $100,000. If you taking 4% of that $100,000, you know, that's for extra $1,000. And you can do that math. Yeah. Now, you know, I don't say that we're absolute believers in that 4% rule at WHZ You know, I think what we think is what is your risk profile for your investment portfolio? And the greater the risk you take, the more it should give you on that withdrawal rate. So it isn't a steadfast rule. It's just sort of a guidance for the listeners this morning for investment portfolio income. If you if you took out 4% a year, you're probably not draining that. Versus what it's making. What if you're on the doorstep of retirement or already retired? I mean, can you do anything here at this point? Well, you know, there are always options. I mean, you have to adjust your budget and think through it. You know, if you're just getting into retirement and you've only figured in the basic living expenses and maybe health care and you want to do something a little bit different, I mean, many people are not just stopping work, but they're maybe doing something they like in retirement for a lot less period of time. So they might work 10 hours, 15 hours, a part time job, keep your brain engaged, keep yourself motivated. So a lot of people are doing that for a little extra income if they need it. That helps fund their goals and dreams beyond just the basic living expenses. You know, hopefully you've saved. You could look at your risk profile in your investment strategy, make sure it aligns to what you want. Are you taking the right amount of risk and how much money are you taking out of that portfolio that might support those goals and dreams beyond your other income needs? Your normal income needs that might be satisfied by Social Security or something like that? All right. So these are all good ideas, particularly adjusting your budget. And they are the things we can do to help stretch retirement savings. Any other ideas? I mean, you know, we often think about tax efficiency as it relates to your investment portfolio. And if you've saved in a general IRA or a401k, you know, we might think about how do you how do you use your required minimum distributions that you have to take from that at age 73 in a tax efficient way. You know, should you be taking them early or do you need to take them earlier? Would you do some sort of Roth conversion for them if you need to? That might give you more income strategies later on. So these are things we actively work with, with clients. Clearly, the most important thing for you to get when you're retiring is a peace of mind for the amount of money that you have, you know, investment strategy, plus your Social Security, plus maybe you've had a pension, maybe there's some other savings. So all of those things equaling how much income you're replacing in retirement, not only at the time you retire, but for the longevity of your life, which should be, you know, somewhere in the neighborhood of 20 to 30 years, depending on when you stop working. All right. Always a great sit down, Jim. I appreciate your time. Thank you so much for joining us. Thanks for having us. That's it for today. As always, thanks for listening to You and Your Money. Find even more episodes, videos and other resources at our web site, whzwealthcom. Be sure to come back next week for more tips to help you live fearlessy and pursue your financial and life goals. Until then, live well. Weiss, Hale and Zahansky Strategic wealth Advisors offer securities and advisory services through Commonwealth Financial Network member FINRA/SIPC, a registered investment advisor. Fixed insurance products and services offered through CES Insurance Agency. They practice at 697 Pomfret Street, Pomfret Center, Connecticut, 06259 and can be reached at 860-928-2341. Weiss, Hale and Zahansky Strategic Wealth Advisors do not provide legal or tax advice. The tenured financial services teams strive to support clients in achieving their financial life goals. For more information regarding wealth management and customized financial planning with Weiss, Hale and Zahansky Strategic Wealth Advisors, please visit. www.whzwealth.com.