Unsure, Confident, or Certain: Retirement Planning Next Steps

In today’s episode, we’re going to focus on the three categories that many clients fall into when starting their retirement planning journey: The unsure, the confident, and the certain. Whether you have no idea whether you can retire or if you’re positive that you have sufficient funds to retire, we’ll cover some critical areas of retirement planning that you need to pay attention to.

Important Links

Website: http://www.yourplanningpros.com

Call: 844-707-7381

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Transcript Of Today's Show:

Speaker 1:

Time for another edition of Plan With The Tax Man, with Tony Mauro and myself, to talk about being unsure, confident, or certain in retirement. And really it's retirement planning next steps if you find yourself in one of these three big categories. These are pretty wide, and obviously, you can apply many of the things to all three, but we'll go through and look at some bullet points for items if you find yourself, again, in the unsure category or the confident category. So we're going to break that down a little bit here with Tony this week on the podcast. Tony, what's going on, my friend? How are you?

Tony Mauro:

Doing well, how about you?

Speaker 1:

Doing pretty good. We are right here at the end of May, very beginning of June, so looking forward to the summer months being upon us and enjoying some sunshine and all that good stuff.

Tony Mauro:

Yeah, summer of course, I think, like everybody, it's my favorite time. You get outside and doesn't rain, stops raining, I guess, around here. It gets hot and humid, but most people around here like it.

Speaker 1:

Yeah, yeah. For sure. So it's that good time of the year. So let's keep this one short and sweet this week on the podcast. I got these three blanket categories, Tony, and just give me some bullet points, give some folks some bullet points to think about. If you find yourself, let's say, in this first category, which is, I have no idea if I can retire category, which probably if you say a hundred people are going to come in and see you, I would say, this is my guess. I'd say probably 35% probably fall into this category. Probably 60% will fall into our middle category, and then probably 5% into our last one. And we'll talk about that in a minute. But we'll see.

Tony Mauro:

Interesting.

Speaker 1:

How you feel about it. But anyway, the I have no idea?

Tony Mauro:

Yeah, so in my practice, at least tax clients, I would say the percentages over a long time that I've seen is probably higher in this first category.

Speaker 1:

Really? Okay.

Tony Mauro:

I have no idea. I would say for our clients here, I'd say it's probably 50.

Speaker 1:

Wow. Okay.

Tony Mauro:

Percent. Yeah.

Speaker 1:

People come in for the first time, they're just like, hey, I got no clue. Can I?

Tony Mauro:

No, they used to come in for taxes. And of course, you could see what they've got and you could eyeball what they have for retirement and things and what's coming in for investment income, if anything.

Speaker 1:

Right.

Tony Mauro:

But you can very easily look at their W2s and see that they're not putting anything through their 401k. And so we would ask them, is when are you going to retire and start conversations? And they would say, "I have no idea."

Speaker 1:

Okay.

Tony Mauro:

And so when you fall into this category, obviously, you don't want to be in this category. You've got to get something else, and it's going to take a little work.

Speaker 1:

Sure.

Tony Mauro:

It's going to take some planning either with an advisor or on your own. But really, you have to start with just a few questions of, one would be, well, when do you want to retire? What do you want to do when you retire? In other words, what's it going to look like to you?

Speaker 1:

Right. The lifestyle, right?

Tony Mauro:

Yeah, it's just the lifestyle.

Speaker 1:

Yeah. Do you want to sit on the porch or do you want to go whale watching? I know you and your wife are going to do some whale watching later this year.

Tony Mauro:

Yeah.

Speaker 1:

What kind of lifestyle are you looking at?

Tony Mauro:

That kind of stuff, yeah. And then once they start talking about that and you get an idea, even if you're just talking to them about it is, well, with all that you want to do, and if all you have is social security, and of course, you start asking, well, what else do you have? And many times it's, well, I just have social security. And that's a real eye-opener for them when you just say something like, well, do you know how much your social security benefit is going to be because it's not going to be very much.

Speaker 1:

Yeah.

Tony Mauro:

And then the light starts to go on a little bit that, hey, maybe I need to start thinking about this because you don't want to be here at 65 or ... You know?

Speaker 1:

What are my income streams and is it only social security ... that definitely there's problems. Right? So ...

Tony Mauro:

There's problems. Yeah. So hopefully, you can get to this before you get too far or too close to retirement, so you've got time to fix it.

Speaker 1:

Okay. All right. How about category number two here? And really, I'm surprised, but I guess every situation or every advisor is a little different depending on where they're at in the country. But I would think that most people fall into this category, which is, I think I have enough, but I'm really not sure because ... I think if most of us, if we go to work and we do the basics of ... If you just do the, it's not that hard to save for retirement, Tony, if you start working when you're in your 20s and you're working at a job and you are putting in the minimum into the 401k, even the two or 3% or whatever it might be, and you get that free money from the company match, and you do that for 40 years, you're probably in better shape than you realize. But again, people hear, well, I need a million dollars, or I need $2 million. And so they think: Do I have enough money to retire?

Tony Mauro:

Yeah. And I would say for us, this is probably a close second. I'd say 40% of our clients.

Speaker 1:

Okay, okay.

Tony Mauro:

Probably are in this. But they think they do. And then we always ask them, "Well, what makes you think that?" Give me some reasons why. And if they can't tell us with any certainty, some of the things you just mentioned, then we start asking them some questions, basically is like, well, okay, what do you have? What are going to be your income sources? Where's this going to come from, type of thing? What rate of return are you going to be able to earn when you're in retirement?

Speaker 1:

To make it go, right? To make the whole retirement ...

Tony Mauro:

To make it go. And if they can't quite give us any types of answers, then we start to say, "Well, you really don't know if you have enough." You probably are closer than most, but you might need some help with really trying to put a plan together and making sure that you know you have enough with the time you have left.

Speaker 1:

Yeah. I think more often than not, people are pleasantly surprised when they come in to see a financial advisor to find out ... Whether you don't have an idea if you can retire or you think you're close or whatever, I think most of the time people are pleasantly surprised to find out that they're in better shape than they realized. We tend to be more negative about it than we give ourselves credit for, I suppose, right? It's like going to the dentist. You don't go to the, you're like, oh, I know he is going to tell me bad news. I just know it. And then you get there and you're like, oh, it wasn't as bad as I thought, kind of thing.

Tony Mauro:

Yeah, I think, with a lot of clients for us, they do. They're very negative. And once we run through numbers, we tell them, "Well, it's not that bad." You're going to be able to, for example, live on, you're going to have about 60, 70% of the income you have now. And while that's not a hundred percent, depending on what you want to do and other parts of the plan, you're going to have money to ... worst case scenario, to live the rest of your life and you're not going to have to worry about ...

Speaker 1:

Well, and I think the great news about that, so if you say, okay, 60, 70%, you can go, okay, well cool. What tweaks do we need to make while we're still working? Or I'll work a few more years. I'm okay with doing a few more years if we can make some tweaks and get this up to 90, right, or whatever.

Tony Mauro:

That's what makes it fun is when they know that and they say, well, gosh, that sounds all right, but I want to be at at a hundred percent.

Speaker 1:

Yeah, let's make some changes.

Tony Mauro:

We need a little more. What do we need to do?

Speaker 1:

Yeah, exactly.

Tony Mauro:

That's what a plan will help you with.

Speaker 1:

Yeah. And that's a great point that you made. What kind of rates of return do you need to make it work? Do you have that emergency fund? Is it proper for the time of life that you're in? Lots of little things that you can start to tweak upon if you're in this category. And then we'll finally, we'll just go to that last broad one, and this is the person that's like, I know I have enough money to retire. Clearly, it's pretty obvious. They're confident. They know that they've got enough, but they're still looking for some extra help. They're still looking for, okay, how can I be even more efficient? Maybe they are already in that 90% category of my lifestyle's funded. I'm lucky enough to have two pensions, the wife and I, plus social security, plus we've saved a decent amount, that kind of thing, Tony, but they're looking for some extra icing on the cake, if you will.

Tony Mauro:

Yeah. A lot of things will have them contemplate if they are in this area once we really verify that we think they do. We agree with that.

Speaker 1:

Right, you know for certain, right.

Tony Mauro:

We know for sure. But then we start if they want help, a lot of it has to do with tax planning as rates.

Speaker 1:

That's big one.

Tony Mauro:

Might fluctuate.

Speaker 1:

Yeah. Yeah.

Tony Mauro:

That's a biggie. Is the returns you're earning now or want to earn in retirement going to keep up or be a little ahead of inflation? And I think the biggest one that most clients would love to do if they're able is can they ... especially if they want to leave money for family, do they have enough to hit their goals and only live on the income sources and maybe not the principle?

Speaker 1:

And then that way that's going to the legacy?

Tony Mauro:

And that's going to the legacy because then that's the best of both worlds. But I'll get clients say, that's not important to me-

Speaker 1:

Sure.

Tony Mauro:

And I do want to spend some of my principle and that's fine too.

Speaker 1:

I want to buy all the Tonka toys.

Tony Mauro:

Yeah, yeah.

Speaker 1:

I want the RV and the boat and whatever. Right?

Tony Mauro:

Yeah. And really at that point, with any of them, we try to use, again, some modeling software based on what they have now, some reasonable rates of return, and then longevity so that we can give them those percentages of, if you lived to 95, you've got a 90%, a hundred percent, whatever that percentage is, chance of not running out of money. And if you can get that into the 90s, people feel very confident and secure that, okay, I'm all right now. And it's been explained to me, and as long as I keep on the plan and keep doing what I'm doing and make tweaks along the way, I'm going to be set.

Speaker 1:

That's a good point. And no matter where you're at from a financial number, whether you are like, I've got 500,000 saved and I don't think that's enough, or I've got a million saved and I wonder if that's enough, or I've got $10 million and I know it's enough. Well, your lifestyle will also ... could put you into any of these categories. So that's why you need a strategy because you might have $10 million and somebody would say, 'Well, there's no way you couldn't enjoy retirement." But if your lifestyle is really extravagant, well, maybe $10 million is a problem.

Tony Mauro:

It is. I actually have a client like that.

Speaker 1:

Well, there you go.

Tony Mauro:

The lifestyle is so extravagant. He's going to end up having about $20 million, but we really have to tone him down because if left to his own devices, he would go through it and then some.

Speaker 1:

Yeah.

Tony Mauro:

Which is ... And so yeah, it does depend on lifestyle. Yeah.

Speaker 1:

Absolutely.

Tony Mauro:

Because most of us, oh boy, you have $10 million, you could get ...

Speaker 1:

Oh, if I, yeah, I'd be set, I'd be right as rain.

Tony Mauro:

Yeah.

Speaker 1:

But my lifestyle's pretty easy, right? So if ...

Tony Mauro:

Yeah, your lifestyle's a lot different.

Speaker 1:

Right. And there's nothing wrong with whatever category you find yourself in. It's just a matter of, okay, so once we've identified it, now let's get a good strategy in place to make sure that we lock it in, right? So if you're in the I have no idea, let's find out, let's run the strategy, and then let's get you to the I know I can retire, right? And if you're in the I think I have enough category, then let's just find out, make certain, so that we're putting, tweak and making some tweaks to guarantee that you have the lifestyle that you want through retirement. And then, of course, again, if you're in that I know I have enough, well, then let's just figure out how we can do the icing on the cake.

And maybe that's leaving a bigger legacy or leaving something to your community, charity, whatever the case might be. Lots of different options, whether you're unsure, confident or certain. It's always good to sit down with a qualified professional like the team at Tax Doctor Inc., Tony Mauro and his team, and get started with some of those conversations. So reach out to him. Your planningpros.com. Your planningpros.com. You can subscribe to us on Apple, Google, Spotify, or whatever platform you like using. Just hit the heart button, I believe, on most of those, and that way you catch future episodes as well as you could check out some past episodes. And Tony's been helping families get through retirement for 27-plus years. He's a CPA, a CFP and an EA. Tony, thanks for hanging out with me, buddy. I appreciate it.

Tony Mauro:

All right, we'll see you next time.

Speaker 1:

Yeah, I always appreciate your time, my friend, and have yourself a great couple of weeks. I'll see you a little later in June, and we'll catch you next time here.

Tony Mauro:

Yes.

Speaker 1:

On Plan With The Tax Man.

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