Ep. 147 – Wine Down – 5 Retirement Planning Questions

Do you have retirement questions that you’d like us to answer over a glass of wine?

In this episode of the Secure Your Retirement podcast, we answer five common questions that we get over a glass of St. Innocent Crémant d’Innocent wine. We cover questions on saving for retirement, when to take social security, risk exposure, annuities for retirement, and how taxes affect your retirement.

Listen in to learn why some of these situations really depend on your specific situation and should be handled individually.

In this episode, find out:

  • Factors that go into how much you need to save for your retirement plan and why it’s all relative.
  • Why you need to look at your specific situation on when to take your social security.
  • Always be thinking about your risk exposure when planning/managing your retirement.
  • The questions you need to ask yourself about risk exposure when investing.
  • Three reasons why you would look into an annuity for your retirement.
  • When an annuity can be a good option to consider.
  • How taxes affect your retirement plan and what you can do proactively.

Tweetable Quotes:

“You should always be thinking about your risk exposure.”– Murs Tariq

“If you need lifetime income like a pension, then an annuity could be an option.”– Radon Stancil

Below are the links to all of the podcast episodes on the Annuity series.

Annuities – Why Ever Use Them – Part 1

Annuities – Why Ever Use Them – Part 2

Annuities – Why Ever Use Them – Part 3

Annuities – Why Ever Use Them – Part 4

Annuities – Why Ever Use Them – Part 5

Annuities – Why Ever Use Them – Part 6

Annuities – Why Ever Use Them – Part 7

Annuities – Why Ever Use Them – Part 8

Here is the link to the Annuity video blog posts.

Click here to view the blog posts associated with the Annuity episodes


If you are in or nearing retirement and you want to gain clarity on what questions you should be asking, learn what the biggest retirement myths are, and identify what you can do to achieve peace of mind for your retirement, get started today by requesting our complimentary video course, Four Steps to Secure Your Retirement!

To access the course, simply visit POMWealth.net/podcast.

Here’s the Full Transcript:

Radon Stancil:Welcome, everyone, to our February Wine Down. It’s amazing. February 2022. It’s amazing how fast things are flying. But we are happy to be here with you. We have an exciting show. I think it’s going to be very, very helpful to you. I’ll go ahead and tell you the title. It’s Five Retirement Planning Questions. These are questions that Murs and I get all the time. And so we’re going to have fun with that. But before we get into that, we have to tell you about our wine that we’re drinking. And so we’ll turn that over to Morgan.  
Morgan:Yes. So my husband and I went on a little ski trip to Oregon, and while we were there, I’m really dedicated so I kind of took one for the team. We did some wine tasting so that I could research some wines for Wine Down. And one of our favorites was St. Innocent. It is a Crémant de’Innocent, is what it’s called, which is, it’s like a champagne. They’re kind of made in the same method, which is the traditional method. So the bubbles are a little lighter than like a Prosecco, which is made in the tank method. But super good, light. And it’s going to be awesome for summer.  
Murs Tariq:Yeah. I think it tastes really nice. It is, like you said, lighter than like your standard Prosecco, which is good.  
Radon Stancil:It’s very, very quick, like the bubbles, like really tiny, like fill your mouth up with bubbles, right?  
Morgan:Not big bubbles, make you feel full.  
Radon Stancil:That’s right.  
Morgan:Good bubbles.  
Radon Stancil:Very good. All right. So we’ve got some wine and we’ve got some retirement planning questions. So, Morgan, could you tell us the questions that we’re going to handle and then get us started on our first one?  
Morgan:Sure. So how much should I have saved? When is the best time to take social security? Should I rethink my risk exposure in my retirement accounts? Is an annuity a good option for retirement? And how will taxes affect my retirement? So for the first question, Murs, we can go back to that one, how much should I have saved?  
Murs Tariq:So this question is obviously on the top of everyone’s mind, and it’s also a difficult question to answer. Because the way I say it is every family is different, every situation is different. And so you could have a family that’s saved up a few million and have their retirement plan struggle a little bit, and you can have a family that’s saved up a few hundred thousand and their retirement is just fantastic. And so it’s all very relative. There’s rules of thumb out there that say maybe you should have saved a factor of your highest paid salary or 25 times your highest paid salary. That’s what you should have saved up by the time that you retire.  
 There’s all these different rules of thumbs out there. And we just, quite honestly, we don’t like rules of thumbs. We like working through the numbers because everything is so different. One family may have a pension, one family may have a different social security situation. Another family may have rental income. So there’s all these different factors that go into building out this retirement financial plan. And at the end of the day, we kind of get the answer of, “Hey, do we have enough? Have we saved up enough? Or what is kind of the number based off of our specific scenario?”  
 But the main factors that go into it are what do I have coming in through fixed income sources? And then yes, how much have I saved? What we say is equally important, go back to that family that has a few million saved up for retirement, and they’re going to struggle. What’s equally important is, well, how much are we going to spend in retirement? What type of lifestyle are we trying to have in retirement? And that goes down to really knowing your goals and aspirations in retirement. Is it, “Do I want to travel? Do I want to have those memberships?” Whatever it is, we want to build those expenses into the plan. And then we get to run some numbers and say, “Hey, does this actually work based off of how much we have saved? Or what do we need to do? Do we need to save more? Do we need to cut our budget? Do we need to work longer?” All these questions start to come out from starting and having that basic conversation.  
Morgan:All right. Question number two we have for Radon, is when is the best time to take social security?  
Radon Stancil:So this is probably one of our number one questions. In fact, this podcast we also put on YouTube and our number one YouTube video, as we speak in this recording right now, is over 100,000 views on this particular video. Should I take social security at 62 or 65? And we just kind of picked those ages. But we wanted to talk through this entire scenario. So if you’ve not had a chance to go check out the YouTube channel, go check out the YouTube channel. You just search for Secure Your Retirement.  
 But anyway, this is not what a lot of people think it is. A lot of people have been taught that if I wait until 70, which is the time that social security will stop growing, that that is always the answer. And what we teach is, is that there’s a difference in saying which way am I going to get the most money from social security. Then if I say that, if I answer that question, it will be, if I live to 90, 95, it’s going to be wait till I’m 70. But what we’ve missed on that math is how much of my money did I have to spend to bridge me to 70?  
 So typically, what we say is, is that you want to look at your specific situation. There is no standard answer to this. And the reality comes down to if, and this is a big if statement, you’re going to retire early, so you’re going to retire at 62, 64, 65, and the math says am I going to take social security because if I don’t, I’m going to have to take my own money, then you’re going to be very surprised that taking social security will probably be in your favor, at least equal to go ahead and take it early.  
 Now, if you’re in a scenario where you say, “I don’t need social security,” then it’s obvious it’s better to wait on the social security because you don’t need it. But there’s just you want to make sure you look at this and don’t just look at some article written to everybody and say, “Oh, this is the answer,” because there is no one answer. It is dependent upon your personal scenario. So look at that first before you make that decision.  
Morgan:All right. And should I rethink my risk exposure in my retirement accounts?  
Murs Tariq:This question is always going to come up in troubling times in the market, like we had back in the pandemic of March of 2020, where the market fell significantly in a short period of time, like we’re feeling right now in January. While it’s not significant, we haven’t seen the market fall for a couple years. And so January of 2022 was a little bit of a shock to people. And so our answer to this is, yes, you should always be thinking about your risk exposure. And the way that we handle it is a little bit different than most. You may have taken a risk questionnaire that is very subjective. They’re asking you questions based off of, really, in our opinion, nothing. Like, for example, if you were to go to Vegas, would you bet at all, or would you just be there for the shows? Or would you put it all in on black or would you do this or that? And you’re somehow, after you take this questionnaire, there’s supposed to be some type of risk assessment for you. And we just think that’s a little vague.  
 The way that we do it is we take your numbers. So let’s say you’ve got, whatever it is, 500,000, a million dollars saved up for retirement. We take that number and we say, “Okay, if we’re going to put risk on the money, yes, we can earn money, but we can also lose some money. And at what point do we start to get uncomfortable with a certain amount of loss?” Is it 5%? Is it 10%? But we don’t just say the percentage. We say, hey, now remember, 10% is a hundred thousand dollars if you have a million. And so we start really digging into what is our risk exposure. From there, then we start to construct a portfolio around that type of deal.  
 A lot of times when, for a lot of investors, especially in 401(k)s and in a buy and hold type of situation, you really don’t know what your risk exposure is. Say, you’re in a 60/40 type of portfolio and my advisor says that’s a conservative portfolio, or that’s appropriate for my age, a lot of times we don’t realize that that 60% of the portfolio has a lot of risk to it. So if the market falls 50, you could fall a significant chunk of that, 60% of that, or 30%. And you got to ask yourself, “Am I okay with that type of risk exposure?” especially as we approach retirement. So I would say always be asking yourself are you comfortable, do you know what your risk exposure is and how you’re currently invested, and are there other better options out there for you?  
Morgan:And is an annuity a good option for retirement?  
Radon Stancil:So I would say of all the things that we ever talk to people about, annuities probably have the most questions. I ask that question all the time if I’m ever talking to or teaching a group of people. I say what’s the most complicated thing, or the thing that people have the most questions about when it comes to where to put money? And an annuity is always the answer. So I’m not going to be able to go in through a ton of detail, but Murs and I did an entire series of podcast on annuities. And we’ll make sure that in these show notes, all of those are there listed in order with all of the links so that you can make sure you go click on all those and watch those if you want. But they’re in order and it’ll break down annuities in a great detail. But today is the simple version.  
 So here’s the three reasons why I think somebody, if we’re going to break it down into the most simplistic manner, three things why you would look at an annuity. First, I want to build an income that will last my lifetime. That’s a big one. So if I need lifetime income, like a pension, then an annuity could be an option. The second one is I don’t want to go into bonds necessarily without having some extra layer of protection. So we can look at annuities as a safe bond alternative. Do not compare a safe form of an annuity to the stock market. That’s a wrong comparison. Compare it to cash, compare it to money markets, compare it to CDs, compare it to bonds. And that’s a good comparison. And then there’s a third area and that is tax deferment. So that is talking about money that I want to invest in the market, but it’s not an IRA, it’s not in a 401(k), so I want tax deferral. That’s a third reason.  
 For the vast majority of our clients, it’s number one or number two. And that is I want either lifetime income, or I want a bond alternative. I want something different than a bond. And we all know right now, bonds are not doing very well because as interest rates go up, bond yields go down. And so we’re having that going on in the environment right now. So the answer to the question is if you want a part of your portfolio to either produce your lifetime income, or to be very, very safe, then an annuity is a good option to consider. And so it doesn’t mean that you should. Just it is a good option to consider.  
Morgan:All right, something that’s always on our mind, how will taxes affect my retirement?  
Murs Tariq:Yeah, this is a big one because there’s so many different things that can turn the knob on taxes for you, especially as we approach retirement. That’s why we try to take as best of a proactive approach when it comes to tax planning and overall tax strategy. But just, say, from an account level perspective, and Radon, you can chime in here if I leave anything out, but just from an account level perspective, those are all taxed differently. You could have your 401(k) IRA, that’s all pre-tax money. You could have a Roth account, that’s tax-free money. And then you could have brokerage accounts, which are taxed based off your gains and losses and dividends throughout the year. So three major buckets there that are going to be taxed differently as we take withdrawals.  
 Then you’ve got social security and you’ve got potentially some pension income. So that can have some impact on what your taxes are going to be, especially if you take social security early, before your full retirement age, and you are still earning an income, still working, that could actually affect you negatively. So that’s another knob that we need to think about before we turn that on. And then we have, as we approach age 72, something big to think about is what is called required minimum distribution. So that is even if you don’t need the money, you are forced to start taking withdrawals out of your tax-deferred your buckets, your IRAs. You’re forced to start taking them by IRS guidelines, and that can throw you into a whole other tax bracket.  
 And so how will taxes affect my retirement? The answer is yes, no matter what you do, they are going to affect your retirement. But there are things that we can do proactively. A big one that we talk about quite regularly, because the threat of taxes going up in the future, it seems like we don’t know what the answer is, but the leaning is that yes, taxes are going to go up in the future. In 2026, there’s already one thing set up to increase some taxes. And then going forward, we just have no idea but there’s a strong opinion that taxes could be higher in the future.  
 And so these things called Roth conversions are very, very powerful. While they’re not something that could apply to everyone, it is something to think about in the sense of while you are maybe in a lower tax year, you could start pulling out from your IRAs, paying the taxes, even if you don’t need the money, and convert it over into a Roth, which is a tax-free bucket. That’s just one idea to help alleviate some of the tax burden that you may have in the future.  
 But like I said, there’s a lot around taxes that we need to be thinking about. I didn’t even mention Medicare. That’s always a sensitive one. If you have too big of a tax year, that could increase your Medicare premiums for a year or two. So all these different things, as we turn one knob, another knob turns. And that’s what we have to be thinking about very proactively throughout the year pre-retirement and every single year in retirement.  
Radon Stancil:So I think about these five questions, and these are questions that Murs and I handle all the time. And we answer all of these questions with this. A retirement focused financial plan. So if you’re one of our clients and you’re listening to this, then you know we’ve taken you through all these scenarios. If you’re a person who’s not a client, maybe you’re listening to this and you’re getting more information and you’re thinking what would this look like, we’re glad to do what we call a retirement analyzer on you, where we basically look at your situation. It answers all of these questions. It allows you to be able to have it in a document.  
 So if you want that, and you’d like to find out how that can work, then go to our website. At the top right-hand corner, you’ll see a button that says 15 minute complimentary phone conversation. You click on that. You’ll see our schedule pop right up and you can schedule a call, and myself or Murs will have a 15 minute phone call with you at no obligation, no cost to you, and we’ll walk you through what it would look like. Many times, people call us on these phone calls and we just say, “Look, here’s what we can do for you.” We tell you how to get us the information. And then we do either a Zoom or an in-office meeting, whichever ones works the best. And it is amazing what people get out of this, the peace of mind they get out of having that. So do that if you would like to have it.  
 I’d like to say thank you, Morgan, for asking your questions so nicely.  
Morgan:You’re welcome.  
Radon Stancil:And for making sure that we had good wine.  
Morgan:All my research that went into this.  
Radon Stancil:All your wine research is great. So thank you very much for listening. We’ll talk to you again next Monday.