Transcript

Intro: [00:00:00] Welcome to Retirement Unlocked with Larry Heller, your life, your way, unlimited possibilities. Join us as we explore how tailored financial planning and investments can help you navigate life transitions with confidence. Let’s dive into this week’s episode

Bill Tucker: And welcome back to Retirement Unlocked with your host, Larry Heller Retirement is something most people spend years working toward, but feeling confident when you get there isn’t just about having a certain amount of money saved or reaching a specific age. It’s about knowing that your plan is built around the life that you want to live, and that the important pieces are all working together.

On today’s episode, we’re gonna walk through a retirement confident checklist, six areas that are important for anyone approaching retirement or already enjoying retirement to review from time to time. [00:01:00] The goal isn’t to create more stress or to give you another thing to worry about. It is simply a way to step back, take a look at the big picture, and make sure you’re headed in the right direction.

That seems like a really reasonable thing to do, Larry. How are you?

Larry Heller: Yeah. How you doing, Bill?

Bill Tucker: I’m good, thanks. I’m good. So where do we start?

Larry Heller: Yeah, so I, I, I tho- I thought today would be a good idea just we’re gonna co- kind of cover the high level, you know, six areas, um, that you should kinda have as a checklist.

Yeah. We’ll delve a little bit down into them. But we’ve al- we’ve also have done a lot of podcasts on some of this material, so I’ll reference some of the podcasts as we go along if you wanna kinda take a deeper dive in some of the areas. So-

Bill Tucker: Beautiful …

Larry Heller: but I’ll start with the first one, ’cause the first one is, is really o- one of the ones that we, we talk to people about all the time, and that’s spending.

Mm-hmm. And, you know, some people, you know, they, they, they’re concerned are they gonna have enough money. Yeah. [00:02:00] Um, but others, um, and a lot of people, um, spend too little in retirement. Hmm. So how much should you spend in retirement? So th- that’s really kind of a, a big factor when people are looking to retire.

So really what, what we kinda do and what y- we kinda suggest is starting with identifying all your retirement income, your pension- Yeah … Social, if you have, you’re lucky enough to have Social Security, and seeing what your fixed, um, amount is gonna, is gonna be. And then you can kinda say, what, what are your expenses are gonna be, and then you kinda know what the difference is and how much you have to pull out of your plan.

Of course, don’t forget about inflation because especially with people living longer, um, so and now you can kind of back in about what do, what do you need on a monthly basis, but also factor in some big time ticket items. So creating that cashflow analysis-

Bill Tucker: Mm-hmm …

Larry Heller: um, is so critical, and so [00:03:00] many people have no idea and they just shoot from the hip and they take money out when they’re, when they need it, and then they’re always worrying about, “Am I spending too little?

Am I spending too much?” So one of the things that we do is we, w- we recommend creating a paycheck, a retirement- Yeah … paycheck, right? Just like you are when you were working.

Bill Tucker: Sure.

Larry Heller: Um, and we find, Bill, that- You know, people just feel a little bit more better that when they’re s- when they’re receiving the same amount of money between whatever their fixed income, fixed income that they’re receiving plus, uh, this paycheck.

Um, and they get used to that, and they don’t feel like they’re spending down their portfolio. It’s psychological, but it seems to

work.

Bill Tucker: Well, no, no, no, it’s totally understandable. You know, ’cause for years, most of us, if we were fortunate, collected a paycheck every couple of weeks. We could see what it was. We knew how to plan on it, and it was like, okay, and now we’re retired. And there isn’t that paycheck. So, you know, it makes a [00:04:00] lot of sense that you consolidate your sources of income and in- redefine them basically, and saying, “Yeah, you’re still getting a paycheck, and this is what it looks like.”

So, uh, y- yeah, I can see how it’s psychological and emotional actually, you know, Larry. And part of creating that sustainable paycheck has to do with the next item on the checklist, which is investments.

Larry Heller: Yeah, but before we go that, th- there are two podcasts if you wanna kinda dive a little deeper. Um- Okay

Episode 197: From Net Worth to Cash Flow, and Episode 169: Mastering Retirement Withdrawals, Expert Tips for Smart Distribution Planning. So check those out as well. But yes, the, the next area is really, how do you create an investment, you know, you know, investment portfolio? How do you make sure your allocation matches to your retirement need?

You know, some people say, “Well, you know what? I just wanna live on the interest.” Mm. “I don’t want to go into my principal.” Well, y- you know, well, two things a- [00:05:00] about that. If you, you know, just kinda wanna do that, you may spend less than you can during your, during retirement.

Bill Tucker: Yeah.

Larry Heller: Um, plus, you know, you don’t wanna just look at things that produce i- interest income because that may not protect against inflation, so you may need to invest something that’s gonna protect against inflation.

And people are living longer and may have a illness, so you wanna balance your growth with obviously preservation and an income to create the right investment strategy and portfolio that’s gonna provide during your retirement lifetime.

Bill Tucker: I have a question in here because, uh, it, some, th- some, I think a lot of the ideas about how to invest when one retires have changed recently, you know.

Am I wrong about that or, you know, is it, are we no longer, like, looking at just pure straight interest instruments but [00:06:00] w- you’re encouraging people to stay some, stay invested in the market to some degree?

Larry Heller: Oh, sure. So, um, a- again, to, to protect against in- inflation and, um, and, and a longer life expectancy than people that were retiring, you know, decades ago.

Bill Tucker: Yeah.

Larry Heller: You know, there’s always, there’s been this, the studies, this 4% rule study. Right. And now there’s been some revisions to that, and that’s a good rule of thumb, but that may not be perfect for, for you. And it’s also different, you know, if you’re- Retiring at 60 between, or you’re 90 that, you know, it, it could be a little bit different.

So, uh, so that’s a good r- you know, good rule, rule of thumb. So, but yes, you, you wanna make sure that you have a diversified portfolio. Um, you wanna make sure that you rebalance along the way, and that you’re properly planning for a market volatility so you’re not withdrawing the, from your portfolio, um, in the equities or [00:07:00] stock market when they’re down.

So having enough proper cash reserves a- as well. And, you know, adjusting your, your mindset from accumulation mode to retirement mindset. It takes a little bit, you know, a little bit of time to do that.

Bill Tucker: Yeah. It’s a weird, it, uh, speaking as somebody who recently retired, yeah, it’s a, it is a weird, uh, it’s a weird thing to get used to.

It’s like, “I’ve got this money, now, oh, you want me to spend my money away?”

Larry Heller: Yes. Now, n- yep, exactly. Some people have an easy time doing it, some people do not.

Bill Tucker: Yeah. Well, and that’s understandable. And this next, uh, topic on the checklist, you know, we’ve covered many times over multiple podcasts, but it comes down to one of those facts in life you can’t get away from, taxes.

Larry Heller: Yeah. I mean, this is so crucial and we spend so much time in looking at this and trying to, you know, create a retirement strategy [00:08:00] because taxes make a, a big difference if you’re retiring and all your money is in a qualified account, 401and IRA. When you withdraw that money you’re gonna pay a lot of taxes on it versus if you have significant amounts of money in non-qualified accounts.

So you wanna be able to create a tax-efficient withdrawal strategy. So, uh, you know, which accounts to draw from, when to draw it from, knowing what tax bracket you’re gonna be in now, but also planning for what tax bracket you may be in, uh, later in life. As we’ve talked about before, the required minimum distributions have been pushed back to some people 73, and for a lot of people born in 1960 and later, it’ll be 75 that they don’t have to withdraw.

So really managing that. And there’s a few different ways of trying to make that work, but you wanna kind of plan not just for year by year, but you wanna plan in the f- in the future

Bill Tucker: So how do we do that? I mean, I, you know, I, uh, we [00:09:00] have covered most recently in episode 194 why taxes often go up in retirement planning and how, how, how proper planning for that can, can make a big difference.

But what are some other things that we can do? And remind me some oth- other episodes that our listeners could check into if they wanna go take a deeper dive.

Larry Heller: Sure. One that’s really crucial, especially if you retire and you’re not taking your Social Security yet, um, you may be in a really low tax bracket.

So, uh, so doing a Roth conversion may be beneficial for, for you. So that, that means taking money out of your IRA, paying the taxes now, converting it into a Roth where it will continue to grow and you won’t pay taxes down the road when you, when you withdraw the money. How do you know how much you should do, how much you should put in?

Um, so we, we use, there’s definitely software that he- that helps us, guides us to run the analysis and to see how much does it make sense to, to convert and, uh, how much to do each year and you, you kinda look at it [00:10:00] year, year by year. Because also there are some other impacts on that. If you’re doing a Roth conversion, you’re kicking yourself up.

One of the things that, uh, that it could impact is your, uh, your IRMAA

Bill Tucker: Mm.

Larry Heller: Your supplemental Medicare, uh, premiums and, uh- Yeah … they could go up in price, and we just did an episode recently, 199, we’ll … If you wanna get into that a little bit more on, on IRMAA. Um, and there’s also capital, you know, gain tax planning.

So if your non-qualified assets, um, ha- have a lot of growth in them and you, w- if you do wanna pare that down, there is, you know, capital gain tax. And, um, so how much you sh- should use for that? If you keep that for your life and you die, then your heir is gonna step up in basis. So now you’re planning for your lifetime, but sometimes you’re also planning for the next generation.

So there’s a lot of different, lot of different, um, things to do. And you mentioned that we … There’s a couple other podcasts. 185, uh, how to avoid a tax [00:11:00] time bomb in retirement. Mm. So, uh, so you ch- check out some of those if you wanna dive in a little bit more in that. I think that we mentioned ma- uh, managing sequence of returns, so, um, episode 171.

Bill Tucker: Yeah.

Larry Heller: So there’s a few different podcasts there which will dive a little bit more into taxes and retirement.

Bill Tucker: Yeah, and one of the things I think a lot of people often overlook because m- maybe simply because they don’t know about it, but, you know, charitable giving can be planned, and there are very tax efficient ways to do that, too, right?

Larry Heller: Yeah. So, you know, pe- a lot of people that do do charity, you know, cash may not always be the best solution for you. Uh, you know, c- can you, you know, distribute appreciated stock? Should you use appreciated stock betw- i- into what’s called a donor advised fund? And being able to group, um, charity in, in a year that you may have a high, uh, income tax or, um, um, qualified charity, the, uh, donations through your IRA once you’re in required minimum distribution [00:12:00] mode.

So there’s a lot of different ways of also im- i- improving and minimizing some of your taxes if you’re charitably inclined.

Bill Tucker: Yeah. A real quick question about that. A, a QCD, a qualified charitable distribution, doesn’t count as income, right? If it, if it’s, if it’s handled properly, that, that doesn’t affect the IRMAA and everything else that, uh, that you get into.

Larry Heller: Yeah.

Bill Tucker: What about if you’re, you’re taking some of those appreciated stocks and moving them into a, a donor-advised fund? Is there a tax advantage to that?

Larry Heller: Yeah, so again, you know, instead of, um, if you wanted to pare back on some of your, your, your e- equities and your investments that have grown, if you sell it, you’re gon- and then use that cash to, to do charity, you’re gonna pay capital gains tax.

So, uh, so you could just gift the appreciated, um, investment a lot of times directly to the charity. That’s one i- one idea. Mm. Or if you wanna do a, a large amount in one year, it’s, rather than spreading it over into a, a year where you may be in a lower tax bracket, you [00:13:00] can actually open up a donor-advised fund.

You can do it with cash, but you can also fund it with appreciated stock. So that’s the way of, of being able to gift and, uh, minimizing some of your income taxes if you wanna reduce some of your exposure to your, uh, to your investments.

Bill Tucker: We gotta talk about life insurance. I know this is on the list, uh, and, and other insurances as well.

What, what should we be looking for and be aware of, Larry?

Larry Heller: Yeah, so, uh, uh, again, in retirement, you, you have these life insurance policies. Do you need them? Do you still need them? Is it you need the death benefit requirements? Do you wanna give it for the next generation? Should you, uh, should you keep it?

And if you’re at a high estate tax, maybe does it make sense transferring into an irrevocable trust? So you wanna kinda check out your, your life insurance there. And of course, you know, there are a, a lot of other types of insurance that you wanna make sure you’re on top of, you, you know, your Medicare and your understanding of that and your different options.

Um, and then, you know, a, a [00:14:00] long-term, you know, care illness. Um, do you have a long-term care insurance policy? If you don’t, you know, do you have enough to self-fund a, uh, an illness? So really, that, that’s another part of the planning that’s going in retirement that could throw a wrench into, uh, i- into your plans.

And of course, making sure that you continue ma- having the proper, you know, property and liability protections.

Bill Tucker: Yeah. No, totally understandable. Which leads us into the next item on the checklist. estate planning. Um, and I, I know that we’ve done an episode fairly recently, the number escapes me, but review this for us.

Larry Heller: Yeah. So, um, again, w- w- we’re not gonna dive into it, like Bill said, we just did, uh, the episode before this one was, uh, we talked about estate tax planning. Yeah. But just making sure that, you know, now y- you’re, you’re older, you’re retired, we’re all not gonna live forever, so just double-checking and every so often making sure that your, your wills [00:15:00] and your estate planning documents are up to date, your healthcare proxies, your power of attorneys.

Especially if you’re moving and you’re retiring to a different state. Mm-hmm. Uh, there may be some things that need to, need to be changed. And, and just checking on your beneficiary designations and making sure that they’re up to date, and whether you’re in a high probate state and whether a revocable trust makes, makes sense, or if you have an estate tax issue and, and see ways of protecting that.

So, uh, so that, that’s number five on my list of out, out of sex.

Bill Tucker: Yeah. You know, and somebody once said to me something in, in, in regards to estate planning wh- which I’ve, has stuck with me and I’ll, I’ll say it for our listeners’ benefit, if you don’t decide what you’re gonna do, if you don’t do your own estate planning, the government’s happy to do it for you.

Larry Heller: Absolutely.

Bill Tucker: You would like to avoid that. What, what else should we be aware of?

Larry Heller: Well, and the, the last thing is really not the non-financial part of, of retirement. You know, [00:16:00] are you retiring s- to something? Yeah. Your lifestyle goals. A lot of people, you know, they, they’ve worked their entire lives and their, part of their being is what they did in their c- their crea- career, their business, and creating a purpose and a structure.

And we find a lot of people sometimes have a difficult time transitioning into that. Yeah. So really kind of thinking about that before you’re gonna retire a- and what are you g- what are you gonna do? I mean, some people say, “Oh, I’m just gonna play golf, you know, all year round.” But yeah, and what happens if you, you know, can’t play golf after a while?

So really trying to, trying to find that and, and trying to align what you’re gonna be doing in retirement to, to give you some type of purpose.

Bill Tucker: Exactly. Retirement is a new destination. Retirement is a new place, right, Larry? You, y- you need to, and you need to look at it really differently because- It’s not a job anymore.

Uh, but you are retired and, and, you know, as we’ve talked [00:17:00] about many, many times, remember to create a purpose. Remember to, uh, structure it a little bit ’cause your whole life prior to that was structured, right, Larry?

Larry Heller: Yeah, and, and, and like we mentioned before, you know, people are living longer. You may have 30 years in retirement if you’re lucky enough.

So, so really planning for that, you know, for that long-term, you know, timeframe is important. Uh, th- keeping your mind sharp and, um, you know, having purpose when you’re getting up every, every day i- is important.

Bill Tucker: And stay socially engaged. I’m just gonna throw that in as a non-financial piece of advice.

Absolutely. Stay… You know, as we wrap up today’s episode, remember that retirement confidence doesn’t come from having a perfect plan. It comes from having a plan that is reviewed, updated, and aligned with the life that you want to live. Retirement planning isn’t something that you do once and put up on a shelf.

Life changes, markets change, and, you [00:18:00] know, sometimes your goals may change, too. Taking the time to revisit these areas can help you stay prepared and make adjustments along the way. Wanna make sure your retirement plan is on the right track? Check the episode description, where you’ll find additional resources and the option to schedule a complimentary 20-minute call with our team.

We’ll see you next time on Retirement Unlocked, and please note that Heller Wealth Management is now a part of Savant Wealth Management. Savant is a registered investment advisor. This content is provided for informational and educational purposes only, and should not be construed as personalized investment advice.

We’ll catch you next time.