According to a recent Federal Reserve analysis, the average person 55 to 64 years of age has around $550,000 saved for retirement. How are you doing? Are you a little bit younger than that? Maybe have a little bit less than that? Maybe have a little bit more than that? It doesn’t matter. How are YOU doing? is the real question that we want to answer today, and I want to give you some real simple steps as to how to revamp your retirement, and let’s do it in a 12-month period where we really focus on it to get it back on track – If you’re not on track.

Step #1 specifically, give yourself an honest evaluation for where you are right now. Do a checkup! Not from the neck up, but a checkup from the financial world that includes your checkbook and everything. Here’s what it includes:

It includes your income, what are you making, what’s coming in? And if you’re in retirement and you want to revamp your retirement, what’s coming in in retirement? It might include social security, it might include pensions. Maybe if you still have one, it might include annuities. I’m tired of apologizing for annuities because so many people are finding such value in having an entity that’s going to pay you something every month of your life for as long as you live. If you’ve got social security, you’ve got an annuity. If you’ve got a pension, you’ve got an annuity, and some people add another annuity to fill that income gap so that their income is taken care of. Where do you stand from a standpoint of income in this? Giving yourself a checkup from the neck up financially.

You also have to ask yourself a question. What’s the budget? What are we spending? What’s going out? And until you write that down, you don’t really see where you are. Like “We’ve got a lot of money going out there and that’s not really a priority, and this up here is a real priority and we don’t have much money going toward that” So do your income analysis and do your outflow or budget analysis.

One more thing in just really assessing where you are so you can get your retirement revamped and on track. You’ve got to look at your debt. Have you not retired yet, but you’re carrying a large sum of debt? Have you retired and maybe you’ve knocked it down a little bit, but you’ve still got that mound of debt that you’re carrying. It’s like carrying a weight everywhere you go, it’s okay for a few steps. It’s okay for maybe even a hundred yards, but over a period of time, over a period of years, over a period of decades in retirement, if you’re carrying debt, it’s going to weigh you down.

So you want to do a 12 hard focus on your retirement? It starts by doing an honest assessment as to where you are when it comes to income, your outflow, and your debt.

Step #2 is a real practical list of things you need to do to revamp your retirement and to get it on track. You got to look at those retirement accounts. If you’re still working you may have that 401k. You say, it hasn’t bothered me. I’ve been able to sleep right by it and it never has bothered me.” You’ve got to get involved in it. You’ve got to get involved in it, and every time you get a raise, you’ve got to add to it. Does it have a Roth component to it where you can actually start putting money away and positioning yourself in a positive way when it comes to tax, you say, “I don’t have a 401k or a 403b or a 457.”

Not a problem. You have the opportunity in almost all cases of having an IRA or a Roth IRA, those individual accounts. In 2025, you’re going to be able to put away $31,000 a year If you’re over 50 years of age in 401Ks, 403bs, all of those four plans. You’re going to be able to put away $8,000 if you’re over 50 into IRAs and Roth IRAs. So where are you in that contribution? And then they’ve got this crazy provision starting in 2025. If you’re 60, 61, 62 and 63, instead of adding the bonus of $7,500 to bring that up to $31,000 total, you’re going to be able to add $11,250. You’re going to be able to put away $34,750 into those 401Ks and 403bs for a four year period if you’re 60, 61, 62 and 63. Don’t ask me why the federal government put it together, but if you’re really serious about doing a 12 month hard focus on your retirement, you got to up as much as you can what you’re putting away and saving.

Step #3, if you really want to focus on your retirement, you’ve got to focus on the risk you’re taking with your investments. Now, I want to tell you how we do it at Mosley Wealth Management when we work with somebody because it will help you know what you need to do. That’s the reason I’m saying this. #1, you need to do a risk assessment of yourself, okay? We call that a riskalyze. It’s a little evaluation we do where you get a risk score from zero to 100. Don’t worry about it. It’s not pass fail, you are who you are, but it tells us your risk level internally as to what your able to tolerate. Some people can’t go to sleep if they’re taking too much risk. Some people can go to sleep if they’re taking all the risk in the world, but where are you?

That’s what’s important when it comes to really doing a focus and a revamp of your retirement, what’s your risk level? Second risk score. You need to take your portfolio that you’re investing in and you need to see what risk level it is at. Okay? If you’re at a 20 and it’s at an 80, you’ve got a problem. You might not even know it yet, and if you’re at an 80 and your portfolio is at a 20, when it comes to risk level, you’ve got a problem. There’s a divergent there, there’s a problem. How do we do that? We send your portfolio to this company called Morningstar. They do an analysis and they give us a risk score and they also give us another score. It’s an alpha score. It tells us if what you’re investing in is performing well, it’s like a performance quota and it tells us that you’re 2% above what the normal alpha would be or 2% below or I saw this week earlier that was 12% below what it should be performing.

Another thing it gives you is a drawdown quotient, and that drawdown quotient tells us how far that portfolio would go down percentage wise. If we had a massive downturn, like we’ve had two since the year 2000, just this past week I had a potential client in, and they were sitting there and they had $2.4 million, but they had a potential drawdown because of the risk they were taking in their portfolio of 56%. Oh my goodness. If that downturn comes before that person retires instead of 2.4 million, they’re going to go down to 1.1, a little less than 1.1 million. Most people can’t afford that. So you want to revamp your retirement. Talk about three things, give an honest assessment as to where you are right now, where you are. Start contributing as much as you can and know where you’re contributing and the risk level of what you’re contributing to.

Step #4, there are a lot of other things I could address, but I have to address taxes. How are you putting your money away from a tax standpoint? Now, let’s go back to what we talked about in your individual retirement accounts or your 401Ks. Most people have a regular option, which is a 401k, 403b, 457, and they have an IRA option, a regular IRA. On the other hand, a lot of people and growing, more and more people are having a 401k Roth option and a Roth IRA option. There are some limitations there based on income. Now, here’s the difference. Taxes. There is a big Gulf between those two. Here’s why, everything you put into a regular 401k or IRA has not been taxed. You save the tax on it right now and it grows and there’s no tax on it as it grows. But once you begin to take money out in retirement, it’s all taxed at regular income forever. As long as you’ve got money in a regular 401k or an IRA or a 457, every penny that comes out adds to your income, could put you into a higher tax bracket, and how long does it last? Forever. The other side, once you put money into a Roth 401k or a regular Roth IRA, you pay the tax before it goes in. Now, here’s the secret, it grows without tax. It comes out not at age 73 because there’s no required minimum distribution in your lifetime. You can leave it to a spouse if you’re married, no taxable event there, or you can leave it to your children. Now, they do have to take the money out over a 10-year period, but without any tax there.

So once you put the money in a Roth 401k or a Roth IRA, it’s never taxed again. So if you’re going to revamp your retirement, you’ve got to pay attention to the overall tax burden you might be avoiding or creating. You are creating that tax burden in the regulars and you are avoiding that tax burden in the Roth because you’re already paying it before it goes in. Can I do all Roth? You can, but you might not be able to afford it. This is where you need to talk it out and to work with somebody who’s been through this before with other people to help you decide how much goes into the Roth already.

When I think about it, I might’ve raised more questions than answers.

#1, when we’re talking about knowing your income and knowing your expenses, your budget, a lot of people, 27% of the people have a budget that means 73% of you don’t, and it might be just a knowledge problem of how to put it together. That’s where a professional can help. How do I get out of debt? What do I tackle first? That’s all in that first segment of assessing where you are right now. Second segment, we talked about getting involved in your 401k, and we tied that in the fourth segment when we talked about taxes, you may be saying, “Whoa, wait a minute, Tom, do I go in the regular or do I go into the Roth and how much do I put here and there and what’s that going to do to my taxes?” What’s your risk level? What about Riskalyze, Morningstar, Alpha, and your drawdown?

All of those things are things that we could run a report and show you where you are, so I understand you could still be in the dark and then that balance of tax, do I pay the tax now? Do I pay the tax in the future? Question might be, do you think taxes will be higher ultimately in the future or lower in the future? If you think they’re going to be higher in the future, you want to pay ’em now, if you think they’re going to be lower in the future, you probably need to hold off and pay them later. Only you know that and only you can make that decision, not whether taxes are going to be higher or not, but whether you feel like they’re going to be higher or not. A lot of questions there, and that’s where you need to have the wisdom.

If you really want to revamp your retirement, let me just say this kindly, if you’re in the ditch in retirement, you got to assess where you are. You’re in the ditch and somebody got you there and it’s either your previous advisor or your current advisor or you, your self-advisor. If you’re in the ditch and you need a revamp, you might also need to re-up with a professional who could help keep you out of the ditch going forward. So do you need a retirement revamp? Are you in the ditch and you need to get out? There’s never a better time. Don’t call it a resolution, just call it a revamp. There’s never a better time to start getting your act together, but you’re going to have to make some decisions, and if you’re in the ditch, you’re going to have to make some changes to get out of the ditch.

There’s never a better time than when we turn the leaf on a new year, 2025. You’ve never made a mistake financially in saving for retirement in 2025. Get your act together so that you can still say that three months, six months, nine months, give yourself 12 months of hard work on your retirement. You’ll never be happier. Hey, this is Tom Mosley. I promise you every week, if you’ll give me a few minutes, I’ll do my best to increase your financial knowledge, and 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 we’ll see you next time where I’ll try my best to increase your financial knowledge.