Advanced retirement planning strategies can help optimize your plan. Scot Landborg, host of the weekly podcast, Retire Eyes Wide Open, shares his top advanced planning concepts. They include the restricted application, the backdoor ROTH, charitable strategy and more.
Welcome to Episode 9 of Retire Eyes Wide Open. I’m Scot Landborg. On today’s episode: advanced planning concepts. When you’re entering retirement what are the top advanced planning concepts you need to be considering? And how can they help potential optimize your retirement picture?
We’ll review the week’s news in the Money Rundown. We’ll talk about the best thing I saw this week. And our Scot Strategy Segment and Listener Questions are all about advanced strategies for retirement.
Buckle up. This is Retire Eyes Eide Open!
Today…advanced planning concepts. What are the top advanced retirement planning concepts and strategies that you need to be aware of to make sure you have your eyes open in retirement? We’ll go through our top tips today.
Many of our shows deal with digging into one topic or another. Today, we’re taking more or a shotgun approach. We’ll talk briefly about a number of the advanced strategies that you need to consider and in future episodes we’ll dig a little bit deeper, but today, in our first season of our show, that you know some of the most critical and advanced planning strategies and concepts that can help you in your retirement.
What are some of the top advanced planning concepts?
Those are our top advanced planning strategies. I packed a lot into today’s session. If you want to talk more about any of those individual strategies, because they’re pretty complicated and pretty complex, I encourage you to go to our website and click on “Schedule a Consult”. I’m happy to sit down with you one-on-one and talk about how some of these strategies might be able to help you and your overall financial picture. And that’s the money monologue.
Our Money Rundown segment is where we cover the week’s news. There are a lot of media sources out there that are going to help give you updated information about the economy and the markets. My job is to help summarize and synthesize – help pick out a few stories that are most important for you, as a retiree or investor.
Story #1 – Election News – split decision. Democrats successfully took the house and Republicans expanded margins in the Senate as Wall Street rallied.
What does that mean for you? It’s good news when the market does well, right? Any time you see the market go up, you’ve got to be happy about that. It doesn’t matter to me what your political beliefs are, what your political background is, which party you like or which candidates you like, everyone is happy when they see the market go higher. I think the market went higher because it was essentially status quo. It was essentially what the market expected to happen. Not a lot of big surprises and not a lot of big changes that are going to happen inside of a divided government. I think it’s interesting how many people make investment decisions based on elections. In the future we’re going to do a whole episode on elections. But for now, I think it’s very interesting how much people think elections affect the markets. There is some impact but it’s only one of many different sources of information that you need to look at if you’re making decisions about when and where to invest. There’s a lot of other criteria to think about that is just as important as US mid-term elections.
Story #2 – Under Armour under increased scrutiny after they changed a long standing policy of allowing executives to expense visits to strip clubs.
Really? Think about the companies that you’re investing in and their culture. We live in this digital age and there are no secrets anymore. If you’re going to invest in a company or a stock make sure you understand the corporate culture of the business. I can’t believe that Under Armour would have this type of policy this late in the game with everything that’s been going on with the “me too” movement and everything that’s going on in our culture today, they just finally, this year, started to take action on it. Regardless of what company you’re dealing with, when we see headlines about companies every single day, you want to make sure you’ve got a decent picture on their culture. What is their culture and is it going to bode well for making money in their business in the future.
Story #3 – Corporate earnings might be slowing with over half of S&P 500 companies reporting earnings. Earnings are up 24% from the same period last year. 2019 earnings are set to rise by only 6%.
What does that mean for you? I would expect corporate earnings to slow this next year because they were so meteoric the year before. You can’t expect 24% growth on earnings year after year. I think 6% is pretty healthy if they maintain the earnings that they’ve already locked in. It doesn’t necessarily mean that GDP is going to slow dramatically. It doesn’t mean that companies are less healthy. It means the rate that they’re growing, of course they’re going to grow more when they get a big massive tax cut. Of course that’s going to happen and I think the market already has that priced in. I wouldn’t be so concerned with growth slowing. I think there are still a lot of things in this economy that continue to move the economy higher and continue to be positive for US companies.
And that’s our money rundown for the week.
Best Thing I Saw This Week:
And now for the best thing I saw this week. Just a quick reminder, the best thing I saw this week isn’t necessarily the best, it’s the most interesting and the most thought provoking.
Wall Street Journal this week had a full page on retiring at 40. It highlights a woman at 38 who wants to be done working at 40 years old. To get there she is willing to live in a 400 sq ft apartment. She pays $0 for cable as she freeloads Netflix logins and visits the library. She pays $75 per month for groceries and sets aside $3 for a 5 pound bag of oatmeal. Oh and she has $2 million saved. Does that sound like the life you want to live?
Not me! I’m all for living the life you want and if you want to radically change your life and your work, more power to you. But retire at 40? If you retire at 40 you better have sold an internet company or an app and retire rich. No one wants to retire on just enough or retire on a little! You have to keep living your life! And it can be expensive.
But a couple of observations:
This is a problem I see with people of all ages.40, 50, 70.They live their life one way and think once they retire everything changes.That’s not a way to live!Live the life you want now!Put the things in your life today that you want to happen.Maybe cut back on work a bit and develop some good hobbies or habits. I see plenty of unhappy retires that thought it was going to be all bliss.They take a year’s worth of vacations and they wonder what’s next.It’s the journey, not the destination.That doesn’t change in retirement. Of course, retirement can bring more freedom, more fulfillment.But don’t sacrifice everything to get there.
That’s the question you should be asking. It takes time to answer. Don’t wait until retirement to find what it means to you.
Saving and being thrifty is one thing… but $3 for a 5 pound bag of oatmeal is a little extreme. I had a thrifty client that literally pulled food out of the trash to save money and it drove her partner insane. Improve you skills, work a little harder, make a little more and enjoy life AND enjoy your retirement. A scarcity mindset-- living on a little just so you can get to retirement and you’re going to live on a little in retirement sure doesn’t sound like a lot of fun to me. It’s going to fit for some people. Some people that type of lifestyle works.
Retire at 40? I’m sorry but most careers take decades to master. Are you telling me at the peak of your productive capacity you are going to just stop? A lot of people make their max earning money from 40-60. It took them all the way to 40 to make real money. Maybe the answer isn’t retiring at 40 but finding more meaningful work? Do something that makes you feel alive and that gives you purpose.
One of the happiest couples I ever met—they’re in their 70’s—have a restaurant business. Now they’re not active in the restaurant anymore. Other people are managing it for them. But it’s their pride and joy. Figuring out what you want to do in retirement is just as important as getting to retirement. What are you going to do? How are you going to spend your time? Are you going to pick up a hobby? Are you going to pick up a part time job? Are you going to continue in your career or maybe a different career that you maybe didn’t think about?
Enjoy the ride! None of us are guaranteed anything. We’re not guaranteed tomorrow or next week or next year. Are you going to live off a $3 oatmeal bag for 10 or 20 years to hope that you get to retire and never have to work again? That is not a lofty goal. That is not what we should be going after. Get the most out of every day. Get the most out of every month. Get the most out of every single year. Don’t just be looking down the road and be sacrificing everything for it. Get the most out of today. Of course you still need to plan for retirement. You need to be reasonable about putting money aside, but just planning for tomorrow could be a big mistake.
And that’s the best thing I saw this week.
Scot Strategy Segment:
Earlier in the show we talk about some advanced planning strategies. Here are a few more:
And that’s our Scot Strategy Segment for the week.
Now for our Listener Questions. If you want some your questions answered on our show, go to our website RetireEWO.com and click “Submit a Question”. We’ll do our best to get your question answered during the show.
Joining us is today our producer, Angela, who has some questions from some of our listeners. Angela, take it away!
[Angela] Thanks so much, Scot. Our first question is from Lois in Rancho Santa Margarita, CA.
Hi Scot. I wanted to do the restricted application but my birthday is February 3rd 1954. Do I qualify and if not what can I do about it?
Lois, thanks so much for the question. Because you’re born in 1954, you do not qualify for a restricted application. But look at your husband or look at a spouse. Maybe they qualify. You could turn on your benefit and they qualify for the restricted application. Also, understand that the restricted application principles still apply. That principle is, if one of you can wait and defer your benefit and get that higher benefit amount, it’s for both of your lives. Not just one of you. So make sure you’re thinking about different ways to take your social security and how to maximize and optimize your benefits.
[Angela] Our next question is Aaron in Escondido, CA
I’ve heard terrible things about annuities. Why would I ever want to consider one?
Aaron, thanks for the question. I’ve heard this before. There’s someone out there in the news that says they’d rather die and go to hell than buy an annuity. It’s a question I’ve heard many times before. There are good annuities and there are terrible ones. Even the best tools can be misused if you have too much in an annuity. I think what’s most important is to understand a couple of the different annuity concepts and see if they fit for you. Looked at a fixed annuity. Look at an indexed. Look at a variable. See if they fit for you. And if they don’t, discard them. You can just use managed accounts. There’s no problem with that. But they can be appropriate for certain people. We did a full episode on annuities, that I’d encourage you to go to our website and look at it. We talk about who they’re for and who they’re really not for and give some clarity that I think would be really helpful.
[Angela] Final question is Carol in Yorba Linda, CA.
What’s wrong with just wanting to retiree and play golf everyday and travel? Sounds like a pretty good retirement to me, Scot.
Carol, thanks for the question. There’s nothing wrong with golfing every day. There’s nothing wrong with traveling. There’s nothing wrong with having a retirement filled with leisure and filled with fun. More power to you. If that is what your retirement is filled with and it’s good for you and it works for you, then God bless you on your way and I’m happy for you. I would venture to say that you have other things in your life that bring you purpose and bring you value. Maybe it’s family. Maybe it’s friends. Maybe it’s those relationships that you have. Right? It doesn’t have to be work. It doesn’t have to be being productive in retirement but for some people that stuff is important. I think it’s important for people to understand that golfing every day and the travel isn’t enough. They need some other things in their life. Some other areas of fulfillment to really have the retirement that they’re going to love and enjoy. I encourage people—it’s a journey. It’s experience. Do the best you can on that journey to help maximize your retirement lifestyle.
That’s our show for this week. If you want your questions answered during the show. Go to our website retireEWO.com and click on “Ask a Question”.
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We’ll see you next week where I’ll show you more how to retire with your eyes with open.
Don’t go into retirement with your eyes closed, go in with your eyes wide open. I’m Scot Landborg. See you next week.