Episode 169 – How to Navigate Your First Year in Retirement

On this week’s episode of On the Money with Secure Money, Neil Mager discusses 5 things to expect when you retire and how to prepare for them.

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Radio Show Transcript

Announcer  00:00

Investment advisory services are offered through foundation investment advisors, LLC. an SEC registered investment advisor Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice, as performance is not a guarantee of future results, investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products, they do not refer in any way to securities or investment advisory products, fixed insurance and annuity product guarantees are subject to the claims-paying ability of the issuing company.

Steve  00:39

They welcome everybody On the Money with Secure Money. And we have got a big show planned for you today. And Neil Mager is here. We’ll talk about him in a moment. But you know, you’ve been a good saver, let’s just say that you got a nice portfolio, and you’re gonna be good all the way through retirement. Well, we’re going to talk about your first year of retirement during this segment, is that’s gonna happen, folks, it just does. And we’ve got five things that you might not expect, but really, truly need to prepare for all of that more coming up on the money with secure money. And Neil Mager, if you’d like to call us right away, it’s 800-656-8616 800-656-8616. We’re going to keep pick it up and continue right after this.

Announcer  01:28

And now On the Money.

Brian Quaranta  01:31

Any good retirement plan starts with the foundation,.

Announcer  01:34

Asset protection, tax reduction, holistic planning,

Brian Quaranta  01:37

These are the things that start to move you towards having a retirement plan.

Announcer  01:41

Retirement doesn’t have to be complicated.

Brian Quaranta  01:45

You think that’s the difficult part? That’s just started!

Announcer  01:49

And now On the Money with Secure Money.

Steve  01:56

Hey, welcome, everybody. This is On the Money with Secure Money. And Neil Mager is here today. Brian Quaranta off doing important things but Neil’s doing the most important things. He’s here with me. We’re talking retirement. That’s what we do. Neil, how are you? Very, very well, thanks. And of course, Neil is here and On the Money with Secure Money. Securemoneyadvisors.com is the website, check that out when you get an opportunity. And so all right. We talk about the surprises, we talk about the what ifs Neil, and we’ve got to expect the unexpected. Right. I mean, that’s kind of what retirement is all about.

Neil Mager  02:29

Yeah, absolutely. Steve, I mean, think about sitting down with your financial planner, at the end of 2021. With 2020 to be in your first year of retirement. Yeah, a little bit of a surprise, right? Hello. Not a good one either. Not a good surprise. You know, actually, I just, I just had somebody come in 2022 is their first year of retirement. And in the game plan, the map that the planning firm had laid out for them was just a hypothetical 7% rate of return throughout their retirement. Right. Okay. And, you know, unfortunately, when you immediately hit that bad year, right at the start, that’s something called sequence of returns risk. And so now he’s seeking another opinion, because he’s certainly realizing that that’s not a great way to plan is just to assume that we’re going to get 7% Each and every year, we’re gonna get some years, uh, we get a lot of return. And we’re gonna get some years where we lose money. So, you know, something like that one of these years where the market goes awry on us can really hit us in the face early on in retirement.

Steve  03:30

In that first year, that’s probably the biggest transition that we’re going to make in retirement, don’t you think? I mean, there’s so much going on.

Neil Mager  03:36

Oh, for sure. Quite an adjustment. Absolutely. Yeah. Steve, I mean, even if you have a smart plan for retirement, it’s such an adjustment period, you know, you’re dealing with maybe less guaranteed money coming in. So that can be challenging. You have a lot of habits in your working years, what time you get up, when you do things, you have to figure out how you’re going to spend your free time. Because some people do very, very well with a lot of free time. And I’ll tell you from experience, a lot of people don’t do well, with all that free time. So, I think that’s one of the things that you really need to map out before you retire. Because let’s be honest, I mean, later on in your working careers, probably when you made the most money that you’ve ever made. Now, all of a sudden, you’re gonna have less guaranteed income coming into the house, you got to figure out how to spend your time what you don’t want to do is retire from that job a little too early, and then all of a sudden be looking for a minimum wage job just to pass your time. So, I think one of the most important things retirees can do is figure out what do you do? How are you going to spend your time What are your hobbies? You know, you got to play pickleball Are you going to volunteer? Are you going to exercise walk yet take care of your grandkids? But I think that’s really important step one.

Steve  04:47

Sure. Well, and again, when we’re talking about this, and that adjustment period of getting into retirement, we don’t realize sometimes how difficult it’ll be. But let me ask you this, so is that in the area that you discuss with clients, I mean, just kind of work through that. And you sort of give them a strong hint that, you know, get something going here, so to speak.

Neil Mager  05:09

Well, yeah, it’s always one of the questions that we ask, you know, when people are ready for retirement, why are you retiring specifically? And sometimes people say, “Well, I love my job, but I’m 65, I’m supposed to retire. Because I’m eligible for Medicare.” Well, that’s not really a reason. Is it? Steve, Just because you hit a certain age. I mean, we’re, we’re living longer, you could be around for 35 more years, forty more years. Who knows? Right? And, and if you’re not ready, mentally, I don’t know if it makes a lot of sense. And so that’s, it is something that we ask because we want to make sure that if you are going to retire from a $200,000 a year job, when you’ve never made that kind of money before that, all of a sudden, six months later, you’re not working for $1,000 a month. Exactly right, we got to remember to the adjustment of retirement, I always think is kind of interesting, because, you know, as we’re taught to save at a very young age, you know, I don’t know, maybe that’s 8-10 years old, you know, you get some money from your grandparents and your aunts and uncles for your birthday and, and your parents, they put it in your in your savings account. And over time, we save money all these years, 50-60 years of saving, and then all of a sudden, we get to retirement. And that rainy day is here, and we’re supposed to use that money, that can be a little bit of a transition for folks too. So, we have to understand, you know, one, we need a well-designed retirement plan, not an accumulation plan, a retirement plan. And we really want to understand our spending habits, different subscriptions, rates of what we’re paying for different things. I’ll tell you right now, my wife and I are buying in the process of buying a new home right now, one of the first things I did was go through all the different monthly subscriptions that we have that maybe we don’t use as often maybe we shouldn’t be, shouldn’t be paying for any longer. Sure. So, I would think that would be something that you want to would want to prioritize before you hit that retirement age.

Steve  07:02

Well, yeah. Because the little things add up to big things.

Neil Mager  07:05

Absolutely. Absolutely. And all those little things, you know, keep adding up. And, you know, you really want to get a good handle on your monthly expenses, period.

Steve  07:15

Well, that’s always been the key. And that’s something that begins kind of the cornerstone of a good solid retirement income plan is making sure that our day-to-day expenses are covered. Yeah. And

Neil Mager  07:25

that’s our focus. Our focus is on income planning. I’ll give you a story, Steve, I had a couple come in last week. And they had written out all their monthly expenses for me, taxes and utilities and the home equity line of credit. And they came up to $5,000 a month. So, they said, “Hey, Neil, between everything, food, we spend about $5,000 a month, so that is what we need.” Okay. Now, we did some more digging. And what I understood was that their net income was $10,000 a month. And so, I asked him, so you need $5,000 a month and your net income is $10,000 a month? Where does the other $5,000 a month go? Does it go into a savings account? Do you put it into the market? They said no, we spend it, Neil.

Neil Mager  08:18

Yes, it’s fine. But what I need to understand, what I need to help them understand, is that we need to get you as close to $10,000 a month of income as possible. Because you’re going into retirement, you’re gonna have a lot of free time. That’s gonna enable you to do a lot of things.

Steve  08:33

Exactly. And that’s what you want to be able to do. Do a lot of fun things. Well, Neil, I’ll tell you what, we’re up against the clock here. Let’s go ahead and invite folks to call and take up those spots that you’ve got available on the calendar.

Neil Mager  08:43

Yeah folks, pick up the phone, let us help you. We’re offering our complimentary Right Track Financial Review, we will review the five key areas of retirement planning when you come into the office for this complimentary meeting. Those five key areas of retirement planning focus on income taxes, investments, health care and legacy. A lot of people right now, 2022, focus on their investment performance. We want to put you through the tests, do you have the right risk-reward ratio, but you got to do your part. Pick up the phone right now to schedule your complimentary Right Track Financial Review

Steve  09:17

800-656-8616, 800-656-8616 Get that comprehensive financial review, see where you stand today. But more importantly, you’ll walk out with a roadmap that can help get you to where you need to be 800-656-8616, 800-656-8616 Quick break we’re coming back lots more right here On the Money with Secure Money and Neil Mager.

Neil Mager  09:40

Heading into retirement? Expect the unexpected.

Announcer  09:49

Are you fighting for financial knowledge? Don’t let bad advice be a punch in the gut to your retirement. Take advantage of a complimentary no cost, no-obligation consultation with a local trusted financial coach. Call Brian Quaranta and his team at Secure Money Advisors 800-656-8616, 800-656-8616.

Steve  10:20

Welcome back, everybody, this is On the Money with Secure Money. I’m consumer advocate Steve, Neil Mager is here, in for Brian Quaranta today, and so we’re just going to pick up where we left off. We’re talking about the adjustment period. And, you know, the unexpected things that can happen, even with the best-laid plans, there’s always something, right.

Neil Mager  10:41

Yeah, we talk about a lot of different things.

Steve  10:42

Yeah. Roseanne, Roseanna. Danna, it’s always something, right?

Neil Mager  10:45

It’s always something that’s right. You know, especially with the start of 2022 with all the volatility and, and not only that, but the volatility in stocks and bonds. So typically, we were taught as we get closer and closer to retirement to invest in safer investments, like bonds. And obviously, what’s happening right now, as the Feds continue to increase interest rates, your bond positions are going down in value. So that becomes a real challenge that there’s really no safe place to hide right now. And so, a lot of people are really dealing with the pain of losing, you know, 15, 20, 25, 30% in their portfolios, and maybe early on in retirement, which isn’t a great way to start.

Steve  11:23

Right. So, getting back to all of this, we talked about prioritizing our expenses, we kind of touched on that in the last segment. But it’s important to keep saving, even in retirement or once we hit retirement. Are we done with that?

Neil Mager  11:36

Well, yes and no, Steve, it all depends, right? I mean, we know one of the biggest concerns and why the Fed is increasing interest rates is because we’re also concerned about inflation. And we don’t expect that we’re going to continue to see the significant costs and increase in goods, we hope not. Or nobody’s gonna be retired. For sure, you know, so when you start to think about oftentimes, you know, what we’re seeing at secure money advisors is about 85% of the people coming into the office, do not have pensions from their employers, right, they have retirement accounts, 401, KS, four, three B’s 457 plans, and they need that money to help them generate cashflow in retirement, so they’re leaning on that money to help them generate an income stream. Okay? Now, it’d be nice if we didn’t need any extra money. And I do see that from time-to-time people that have nice pensions, or, you know, really low cost of living need. Yeah, they can save. But I would say for the bulk of folks, you know, now is the time, it’s the rainy day, this is what you saved it for. Yeah, and retirement is really a way to prioritize the bucket list that you’ve set out to accomplish throughout your working years, you know, doing the travel that you want to do visiting the grandkids, maybe the luxury trip to Europe, or to Italy or wherever you might want to go. Hawaii, you know, that’s what we hear a lot of. So, it’s pretty tough for people to save. Now, the challenge for folks is, because the bulk of people that we’re seeing don’t have these pensions any longer, they’re left to figure out how to generate the cash flow that they want in retirement from the savings and what most people what we’ve learned is most people have no idea how to do that. They have no idea how much they should pull out. They have no idea how and where to invest their money now that they’re in this distribution phase. So, challenges galore. And that’s why, you know, we feel it’s so important to sit down with a fiduciary like ourselves, who focuses on the retirement and the cash flow distribution.

Steve  13:50

Well, I’m again, I think you touched on this a little bit, but I mean, it’s the “nice to haves” versus “the need to haves” it’s a big gap, there’s a big gap there.

Neil Mager  13:57

Yeah. And that’s what we want to do. We want to sit down identify, you know, what, what pays your monthly bills, what do you need in terms of utilities, food, taxes, insurances, all that car payments, mortgage payments? And then we have to figure out, okay, what kind of play check money, we need a paycheck. But what kind of play check money can we give you? And it really starts with developing and understand the cash flow distribution strategy, right, figuring out when to take Social Security. You know, a lot of people think about Social Security. And you know, the, obviously the first time were eligible, is at the age of 62. But we reap a better reward if we take it at a later date. And so, what if we delay it? If we do delay it? Where are we going to generate the cash flow that we’re going to need in the interim, we got to think about the opportunity cost, the breakeven points. So, there’s really a lot to think about. And I think that’s why it’s so important to sit down and work with a financial planner that focuses on retirement planning.

Steve  14:57

Oh, I completely agree, folks, if you want to get ahead Start. It’s 800-656-8616. Neil, I’d love to hear from you. So, you’re touching on Social Security. And I, what I got up what I, my takeaway from what you were just talking about is we need to have a strategy for Social Security as much as we need a strategy for our other income.

Neil Mager  15:14

Absolutely. Absolutely. Our strategies focus on those five key areas Steve in number one starts with income. And income is really focused around a starting point is what are guaranteed sources of income. And for all of us, it’s going to be a social security check. For some of us, it’s going to be a social security check and a pension check. But we have to sit down and figure out what’s the right strategy for all of those? And how are we going to get you the additional income? You know, it’s funny, Steve is I had a guy that came in last week. And, you know, it was obvious, they needed some help. And the wife was really interested in having some help. And, you know, they started to ask about fees. And, you know, obviously, we, as a professional, we get compensated for our work, of course, right. And I said that I’m, you know, to be honest, Dave, in today’s world, with YouTube, and everything else, information’s at our fingertips, and, you know, I could go and fix my own car, if I wanted to sit down and learn and understand exactly how to fix my car, through watching a bunch of videos and stuff like that. But that’s not my choice. No, right? My preference would be to pay somebody to help me to ensure that I’m making the right decisions, right, I could watch a YouTube video that maybe then apply to me fixing my car. And now I have more problems in the future. So, I think, especially as you get to retirement, and what we always say these little mistakes end up causing big headaches, you want to make sure that you’re able to put it all together in a well-devised plan.

Steve  16:50

And again, I think in the big picture, I think statistics prove out that those who work with an advisor are more successful than those who don’t.

Neil Mager  16:57

They really do. The statistics don’t lie. And I think when you, when we sit down with people after you know them listening to us on the radio or watching our television show or coming to one of our educational events, I think they really appreciate the time that we spend, how we explain things to them. And I think they get a lot out of the meeting, whether they end up becoming clients or not.

Steve  17:16

Let’s go ahead and invite folks to call right now.

Neil Mager  17:19

Folks, let us help you out. Give us a call today for your complimentary Right Track Financial Review, we’re gonna follow and review the five key areas of retirement planning in this meeting. Number one: income, number two: taxes, three: investments, four: healthcare, five: legacy. I know a lot of folks concerned about market performance this year, let us do an MRI on your investments to see if you have the right risk-reward ratio

Steve  17:46

800-656-8616, 800-656-8616. A quick break, we’re coming back, we still have more to talk about right here On the Money with Secure Money, we’ll be right back.

Neil Mager  17:56

2023 is less than two months away. The good news is there’s plenty of time to make some financial moves that can help your retirement savings, reduce your tax bill and even benefit your community. Let’s dig in.

Announcer  18:11

He’s letting the clock run out on his social security at age 70 for maximum benefits. And here comes the Roth conversion. He’s got some outstanding coaching with that lifetime income plan. He’s created his own pension as well! And it looks like he’s going to go All! The! Way!

Play your best retirement game call BrianQ 800-656-8616. Or text BrianQ to 800-656-8616. Call or text BrianQ to 800-656-8616.

Steve  18:45

They welcome back everybody this is On the Money with Secure Money. And Neil Mager is here. And yep, like he just said, we’ve got some questions. So, you talked about the website. But in addition to be able, again, the background you said all of the seminars are listed on your website. So, folks, if you know, or want to see an in, you know, an in-person seminar. That’s really where they can find out and register to get there.

Neil Mager  19:11

Absolutely. And we think it’s a great way to start to you know, we know that it’s a big decision, asking someone to help you with your retirement life savings. And oftentimes people will listen to us on the radio, they like our message, they’d like what they’re hearing, but maybe they’re not totally ready to commit. And maybe they want to take another baby step. And they’ll come to one of our educational events. And they’ll listen to us talk there and then they want to sign up and come in and sit down and talk with us. Other folks, you know they’ve listened to us numerous times on the radio, watched our television show, navigate our website, and they’re ready to sit down and talk and they want the individual attention that this Right Track Review offers them.

Steve  19:52

800-656-8616 That’s the number folks. All right, let’s jump into some of these questions here, Neil. Patrick is up first. Patrick says “I lost my job seven months ago and need to care for a sick parent, I’m 58 years old, and I have to take money out of my retirement to do it. I don’t want another circumstance to arise where the only way I can receive my money is by paying a hefty fine. For the record. My money is primarily in standard IRAs with a small amount in a Roth IRA. Is there any way to do this without serious penalties? And where should I invest my retirement going forward?” Wow, that’s, that’s complicated.

Neil Mager  20:27

That’s tough. Yeah, for sure. Well, I’m sorry to hear about that, Patrick, I know, that’s got to be really challenging to have to be faced in that circumstances, right, you’re, you’re only 58. So, you’re not probably ready to retire. And, you know, you feel the need to,- God bless you for, you know, taking care of a sick parent. Right, the challenge for you is going to be you know, where your money is at. To care for a sick parent, you are going to be hit with some penalties. As far as a traditional IRA, it doesn’t sound like you have a significant amount and a Roth IRA, that can be used as an emergency fund. But unfortunately, 59 and a half, when you’re in IRAs, is kind of the magic number, what you’ll see too, and if this money was in a 401K, you would be eligible to do something called a 72T, that would enable you to get some money in your hands. But unfortunately, being in the traditional IRAs, you’re going to, you’re going to have a little bit of a challenge on your hands 59 and a half. That’s the magic number. That’s why we see a lot of folks that are currently employed, who want to get situated for retirement, maybe they’re 2, 5, or 10 years out from retirement, and they want to move their money over to an IRA to make sure they’re positioned properly for retirement. But unfortunately, Patrick, you know, you got to do what you got to do things like this happen. And it’s also important to have an emergency fund available to you. Yeah, and, you know, that’s, that’s bank savings. That’s, you know, money and after-tax accounts that is available to you before the age of 59 and 1/2. So those are important savings to you know, some people come in and they have very little in the bank, some people can get carried away at the bank and have way too much money. And we know that we’d like to call it losing money safely. Because, you know, you’re not keeping pace with inflation, no matter what, huh.

Steve  22:25

All right, Patrick, give us a call 800-656-8616 It really just starts to you know, you just got to take a step and see what can be done. All right, on we go. Max is wondering, “when I buy during dips in the market does it matter which type of funds to purchase? For example, should I buy just stocks, just bonds, stocks and bonds or other types of funds? I’m 61 years old, I plan to work to 67. I have other resources in case of a market drop to help sustain losses.”

Neil Mager  22:57

Wow, another good one there, Max? That’s a good question. You know, I typically will lean towards building out a solid foundation and plan first, right? Before I answer this question. Now, he did say that he has other resources in case of a market drop to help sustain losses, I would want to know how much if it was one of my clients, based on how we plan and how I would help them is I would be really focused on making sure that they have a bucket of safe money that’s going to enable them to spend and use as income over a 15 to 20 year time period. And then I would probably suggest to them that we would be a little bit more aggressive in what we’re buying in the future because we’re doing something called dollar cost averaging. And that would be money that would be designed for long-term growth. So that would be my answer to that question, Max. But if you want to some help to make sure that you’re on the right track, I want to take a look at our complimentary right check financial review, we could answer that a little bit more specifically for you.

Steve  24:02

Sounds great. 800-656-8616. Max, there you go. Let’s go to Jean. Jean says, “what are my options if I’m locked into a variable annuity contract?”

Neil Mager  24:12

Well, Jean? That’s a good question. You probably have two options. One, you want to understand exactly how that variable annuity works. I would recommend utilizing a financial planner to call the institution directly with you and ask a question, a list of questions to completely understand it. We have what’s called a variable annuity escape questionnaire here at the office where we ask the institution all about contract values, fees, income, death benefits, all of that. Once we determine and understand exactly how that works. Sometimes we utilize them to maximize the use of the contract and sometimes you might decide that as you would want to pay a penalty and get out of it, I don’t know if that would make any sense. I’m not suggesting that but the first and foremost option for you, Jean is going to be to make sure that you understand that contract in its entirety. And you might have some really great options in there that you want to utilize.

Steve  25:16

Neil, let’s wrap it up with one more opportunity to get up and fill up that calendar.

Neil Mager  25:20

Yeah, folks, let us help you understand your retirement with our complimentary Right Track Financial Review. We’re going to review the five key areas of retirement planning with you. They focus on income tax planning, investment planning, health care and legacy planning. Are you on the right track? When would you want to know? You got to do your part though, folks, pick up the phone, the next 10 callers, this complimentary Right Track Financial Review is available to you at no cost, no obligation.

Steve  25:48

800-656-8616 again, 800-656-8616. Neil, pleasure, always a pleasure and certainly fun, great information today as always.

Neil Mager  25:59

Yes, Steve, I appreciate your time and hope the viewers got a lot out of that.

Steve  26:02

Me too. Well, folks, we do appreciate your listening and we’re going to come back next week with new topics and questions all of that right here On the Money with Secure Money.

Announcer  26:17

Investment Advisory services are offered through Foundation Investment Advisors, LLC, an SEC registered investment advisor. Brian Quaranta and his guests provide general information not individually targeted, personalized advice and are not liable for the usage of information discussed. Exposure to ideas and financial vehicles should not be considered investment advice or a recommendation to buy or sell any of these financial vehicles. This information should also not be considered tax or legal advice. Past performance is not a guarantee of future results. investments will fluctuate and when redeemed may be worth more or less than when originally invested. Any comments regarding safe and secure investments and guaranteed income streams refer only to fixed insurance products. They do not refer in any way to securities or investment advisory products. Fixed insurance and annuity product guarantees are subject to the claims paying ability of the issuing company.

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