I’ve been in this industry almost 30 years. Today I’m going to talk about 10 really huge things you need to make sure that you’ve got into place when it comes to having a retirement plan that’s going to survive downturns, upswings, elections, and changes of power so you can have a contentment and peace making sure that your retirement portfolio can weather those things. I’ve seen just about everything –  until next week, when somebody comes in with something new –  But I’ve seen upswings like the dot-com boom and the housing boom. I’ve seen downturns like 1994, like 2000 to 2002, like 2008. I’ve seen elections, eight different elections. Four of them changed power from one party to the other, and there’s so much fear and trembling as somebody heads toward or comes out of an election like that. What’s the future hold? What kind of changes are going to take place? And you know what? As I recall, as I can see, as I can evidence by being here, we have survived every single one of those experiences.

The #1 thing you need to do to create a financial plan that survives the ups and downs of life in retirement is know what your goals and what your needs are. I think of the guy who walks across the street in the familiar movie Pretty Woman when he says, “What’s your dream?” Everybody’s got a dream. I would ask you to start with number one is, what is your dream of retirement?

Now, if you’re in retirement, your question to ask yourself is, “Are we living it? Am I living it? Am I doing what I really want to do in retirement?” If you’re leading up to retirement, the big question you need to ask before you do anything else is, “What does your retirement look like? What does your dream of retirement look like? And are you going to be able to live it?” Because when you go to build a financial plan, you got to know how much travel is involved. Is the travel to Glamis or is the travel to Greece, if you understand what I’m saying? Is it long-term travel? Do we need a motorhome, or do I need airline tickets? All of those things are involved in dreams that people have had for their retirement that I’ve dealt with in the past 30 years. Let me make sure you understand something. Your dreams are your dreams. They’re not somebody else’s, and you need to have your dreams for retirement because everything that you build in a financial plan hinges, bases foundations on what are your dreams and what are your needs in retirement.

#1, get your dreams and goals written down. #2, know what Social Security is going to do for you. It’s huge. It’s foundational. It’s income. The average American now gets 41% of their income from Social Security. It’s cardinal for you, and it’s really crucial for you. If you are a couple to know and to work on your Social Security, you need to know your benefits. You need to know what happens if I turn it on at 62, 65, 67, you name it, what happens if I turn it on here? How is it going to impact me? And for those of you who are married, you also have to ask yourself the question, “How is it going to impact your spouse?” There are ways that you should be coordinating both social securitys together to make the bigger pot, the bigger pie for both of you throughout the rest of your life.

3rd, you want to survival plan for retirement through whatever comes? Then, for goodness sakes, get all your stuff together. So many people have 5, 6, 7 retirement accounts each, and if you’re married, multiply that by 2, 10, 12, 14 retirement accounts. It needs to be all pulled together. You don’t necessarily have to consolidate. Most people do, but even if you don’t consolidate, you at least need to pull those things together. It’s not unusual. It just happened about two months ago. A couple was sitting in my conference room talking to me, and they said, “Didn’t you have a 401(k) when you work for that other company?”

Two weeks later, when they came back in for a second appointment, he brought me a statement, and he said, “I thought I had $47,000 in a 401(k) at that company I quit 18 years ago.” And he said, “Now I’ve got $184,000 in that 401(k).” So for goodness sakes, gather all of your stuff together, get it all together. It’ll help you if you really want to build a plan. For those of you who say, “I don’t know if I want to build a plan or not.” Fine, it’ll help your heirs once you’re gone to have all of that pulled together in a file drawer on a flash drive, in a notebook, however you want to do it, but you need to gather all of your financial information.

Okay, #4. So you’ve got your dreams, and you’ve got those in your mind, and you’ve written those out. You’ve seen what your Social Security is going to do for you, and you’ve gathered all of your documents on all of your other accounts. #4 is you need to go into your spending habits and you need to create a budget. Don’t treat that like a four-letter word. It’s not a constraint. It’s a spending plan in retirement. What are you spending your money on? And you say, “Well, I’m not retired yet.” Well, very correct, but you have to know what you’re spending money on right now, and then you can create a budget for what’s going to change when you go into retirement because that spending plan budget is also a target.

People come in and they say, “Do we have enough money to retire?” Well, they can tell me what’s in their lump sum, but I need to know how much income they have for the rest of their life and how much is coming from Social. We’ve already mentioned that, how much they need to fill in a gap, in addition to that, that they’re going to have to draw from their lump sum every single month to make ends meet for the rest of their life. So you have to have a budget to know what you’re spending. You say, “Well, what are those like?” I’ve had people come in that had a budget of $783 all-time record in 30 years. I’ve also had people that have come in, and they have a budget of $32,000. So if you’re anywhere from $783 to $32,000, you’re in good shape. We just need to find out where you are and what your target is. You have to know your budget.

#5, from the things that you’ve gathered and the things that you know already, then you start building a comprehensive plan. The income is the foundation. Let’s call it a house. I like to refer to it as that, that the foundation of that house is income. We’ve already talked about Social Security. We’ve already talked about the gap you’re going to need to make sure that you meet your budget every single month. See how it fits together like Legos? Then your income is going to have to be adjusted for inflation through the years. That’s #2. #3, the rest of your investments are going to have to probably put a little bit safer than they’ve been when you were 25 years old because if you’ve got enough money made, you definitely don’t want to lose it in a market downturn.

#4 on that house is as you get up in the levels of the house. You’ve got to consider taxes because if most of your money’s in an IRA or a 401(k), it’s not all your money. You’re going to have to pay taxes on all of that. So it’s really important to calculate that, and then health care. Doggone it, most of us get sick when we’re going through retirement, so you got to calculate that cost. You can’t stop it. Then finally, the 6th thing is legacy. You say 6 things: income, inflation, investments, taxes, healthcare, and legacy. That’s what we mean with a comprehensive plan.

#6, I’ve mentioned this, but you can’t just leave it alone and not give it its own slot, healthcare. It’s going to be really, really big when it comes to 65. You’ve got to make the right decision on Medicare. Do I get a Medicare advantage? That’s like an HMO if you’re pretty healthy and maybe you don’t travel that much. Do I get a Medicare supplement or call it a Medigap policy? That’s like a PPO that you can go to any doctor anywhere in the United States and you can get coverage, and you have flexibility if you get sick. Then there’s also long-term care. “Oh, Tom, won’t Medicare take care of long-term care?” No, not yet. They’ve talked about it. You’ve still got to decide how you’re going to handle things. If you need home healthcare or if you need a nurse’s assistant to come in and help you, particularly when there’s only one of you alone, or if you need to go into a long-term care facility, a nursing home, or assisted living, those things have to be considered in building a comprehensive plan.

#7seven, we’re building you a retirement plan. Based on what I’ve learned in 30 years, you have to consider your risk. If you’re 25 years old, 35 years old and the market goes down 50% and you lose half of what you’ve got saved for retirement, no problem. You’ve got time. But if you’re 65 years old and you just walked out of that powerful job that you had and you’re living off your lump sum and your lump sum goes down 50%, big problem because you cannot necessarily go back to work, get that kind of job, and you don’t have that four-letter word T-I-M-E, time, on your side.

So you really have to reassess, and I think from helping people through retirement for 30 years, constantly reassess your risk factor because you’re up there and you say, “Well, I can take risks because I’ve got time.” Like a football team. You can throw the ball in the first, second, and third quarter because you’re not close to the end of the game. But for goodness sakes, if you’re ahead by two touchdowns at close to the end of the game, you don’t need to throw deep. You might want to, you might choose to, but you don’t have to throw deep. You just need to let the thing run out and play out. Most people have enough money to retire, but they’re still as risky in the market.

This is a problem with working with a broker who understands accumulation and maybe has done a great job for you through the accumulation years, but they don’t understand retirement because in accumulation, you’re putting money in, market goes down, you’re buying cheaper. In retirement, you’re decumulating what you’ve got, and if the market goes down 50%, you’re just pulling money out. You’re pulling out twice as much money to get the same amount of dollars. You need to really be working with a retirement specialist, not just a broker that you like.

#8, in a good retirement plan, some things that so many people mess up is their required minimum distribution. Right now, the age is 73. That means if you were born, I’m making this podcast in 2024. 73 from that is, if you were born in 1951 or before that, you have to take a certain amount of money out of your IRAs, 401(k)s, simple IRAs, 457s, TSPs, almost anything else that you’ve got a name to it because it’s a qualified plan. You haven’t paid the tax on it. A lot of people throw up their hands and they say, “But we don’t need the money.” Well, guess what? Your relative in Washington, Uncle Sam, does need the money. So they’re going to force you to start at 73 to take a little bit out each year.

By the way, that little bit, even though most people’s expenses go down through those years of 70s and 80s, the amount you have to take out for RMD gets larger and larger and larger through your 70s and 80s. You need to know about RMDs before 73. RMD is required minimum distributions. You have to take the money out. It’s a hard to understand thing. It’s a difficult to calculate thing, and the rules continue to change. They’ve changed the age three times in the past four years, so you need to be working with somebody who’s willing to work with you on your required minimum distributions, because if you don’t do it the right way, there’s a 25% penalty for what you don’t take out.

#9, and things I want to tell people that I’ve learned in 30 years, you really have to stay on the ball with taxes. If you’ve saved money, it’s been a good thing in a 401(k) or an IRA, because you’ve put money into those things and you’ve avoided paying taxes as you’ve been in your higher earning years, in most cases. Now that you’re retired, you say, “Well, I want to do away with all of those taxes. I’m not earning anymore.” The problem is, every penny you take out of an IRA, 401(k), 403(b), 457, you’ve got to pay tax on that, and it comes out as regular income. Do you know your tax bill? Do you know the tax bill that your 401(k) or IRA is going to cause you through your retirement?

You can go to one of our URLs we have. It’s called easemytaxbill.com. Let me say it again, easemytaxbill.com. You can put in how much you have in your 401(k) and your IRA, and it’ll show you, depending on the income that you put in there and the tax bracket that you enter into there, it’ll show you what you’re going to owe in taxes on your IRA and your 401(k), and this comes with a warning. You need to make sure you’re sitting down and possibly even have somebody else in the house that watches you when you get shocked by how much you’re going to pay in taxes on your retirement plan. So you’ve got to consider that when it comes to building a solid retirement plan.

#10 of the things that I want to convey to people that I’ve learned in 30 years, I’m out of breath almost because there’s so many of these things, and I could probably go 10 more, but I tried to narrow it down to the most important ones, and I have to bring up estate planning. In a six-level retirement plan that we talked about earlier in one of the stages, legacy, how are you going to leave it? To whom are you going to leave it? Are you going to leave it to a nonprofit? You say, “My kids have always been nonprofit for me.” No, they don’t count. If you leave it to your kids, they’re going to have to pay tax on it.

A nonprofit might not have to, but leaving it to the heirs you want to leave it to instead of the heirs that are living in Washington that we mentioned earlier, Uncle Sam and Aunt Iris, the IRAs, you need to be very careful to have a good consolidated estate plan. For most people, if you own a house or you have a lot of non-qualified stuff outside of IRAs and 401(k)s, you’re probably going to need a trust that allows you, they call them a living trust for a reason, that allows that entity to continue to own what you have and not go through probate. Probate court’s going to force your heirs to sell it, to distribute it all, but an estate planning that includes a trust might allow you to avoid that.

I’m not recommending a trust for you. I’m not an attorney, but we do have attorneys. We recommend people to go see and talk to, and we work hand-in-glove with them to make sure that your estate planning is everything it needs to be to not amass all of this wealth in your lifetime and then leave it the wrong way, and it all goes away. It all goes away to people and things you don’t want it to go away to. An estate plan allows you to dictate what you have and where it goes even when you’re not here.

30 years of helping people have great retirements. I’m really happy with what God has blessed me with the opportunity to do and be in the past 30 years. We can help you too, but if we are not the ones you choose to get help on it, get help from somebody. I’ve mentioned 10 different things that you need to be aware of. They’re probably the most important things, but for you, it may be a different one, two, or three things that are most important to you. Do you have a special needs child that you’re going to want to take care of? I didn’t mention that, but that’s something that I run into with people, and I could go through an even longer list.

Remember, I’ve been doing this 30 years, but here’s the point. You need to get this act together, and once you’re gone, you can’t step back into this life and get this act together. It’s got to be something that you do while you’re still here, and I say this, having had a mom who passed away of Alzheimer’s, you need to do it while you still have your faculties and your cognitive ability to make solid decisions. You need to get your financial house in order, not just to pass away in the right way, but to get to that point and to live through a fantastic retirement.

That’s my goal for all my people. We can build that end plan immediately, but what happens from now to then? That’s what a plan will allow you to do. It’ll allow you to go say, “I’ve got things taken care of. I can go spend this money and enjoy it.” And that’s what we want. You know the sad thing? I have so many people come in. I just, as I’m making this podcast, got back from a 17-day trip to Italy, Germany, Prague, you name it. We went there, and I spent a lot of time planning that. But the sad thing is some people come to see us or some people pass away their loved one away and they come to see us and they bring an estate to us to help them work through it, and the sad thing is people have spent more time planning a 17-day trip to Europe than they do a 17, 25, 30-year retirement. That’s a shame, and that’s what we’re trying to stamp out. That’s what we’re trying to help you avoid.

Hey, I promise you every week, if you’ll give me a few minutes, I’ll do my best to increase your financial knowledge. If we can help you, particularly about a situation, a question, anything you’ve got, go to the website, get an appointment, give us a call. Hey, you like this information? Like and subscribe. We’ll see you next time, where again, I’ll try my best to increase your financial knowledge.