Latest / TaylorMade Retirement with Taylor Demars, CFP® / If You Only Watch One Pre-Retirement Video, Make It This

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If You Only Watch One Pre-Retirement Video, Make It This · TaylorMade Retirement with Taylor Demars, CFP®

• 0:00
  SPEAKER_00: Today's content is pulled from Taylor's YouTube channel.
• 0:04
  SPEAKER_00: If you want to watch the video version or catch more great content, subscribe by clicking the link in today's show description.
• 0:13
  SPEAKER_00: Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life with third generation certified financial planner Taylor DeMars.
• 0:28
  SPEAKER_01: Most pre-retirement advice gives you a list of things to understand.
• 0:31
  SPEAKER_01: Taxes, Social Security, Healthcare, investments, withdrawal strategies.
• 0:36
  SPEAKER_01: And while those are all important, the problem is you can understand every single one of them and still have no clear answer to the question, can I actually retire?
• 0:44
  SPEAKER_01: Now, uncertainty actually keeps people working years longer than necessary simply because they've never had a reliable way to know whether they're truly ready.
• 0:53
  SPEAKER_01: I'm Taylor DeMars, third generation retirement planner and tax strategist.
• 0:56
  SPEAKER_01: And every week I sit down with couples who have saved a few million dollars, read the books, watched the videos, and can even explain things like Roth conversions or sequence of returns risk better than many other people.
• 1:07
  SPEAKER_01: Yet when it comes time to actually retire, many of them still hesitate.
• 1:11
  SPEAKER_01: After hundreds of these conversations, I found that retirement readiness actually comes down to three separate dimensions.
• 1:17
  SPEAKER_01: And most people only have really addressed just one of them.
• 1:20
  SPEAKER_01: So in this video, I'm going to walk you through all three so you can figure out what you've already solved, what still needs attention, and whether anything is actually standing between you and pulling the trigger to retire.
• 1:30
  SPEAKER_01: And if you save two million or more for retirement, the dimension you're most concerned about may not be the one that's actually keeping you from retiring.
• 1:37
  SPEAKER_01: So let's make this simple.
• 1:38
  SPEAKER_01: When someone asks me, Am I ready to retire?
• 1:41
  SPEAKER_01: There are really those three different dimensions hiding inside of that one question.
• 1:44
  SPEAKER_01: The first I find is financial readiness.
• 1:47
  SPEAKER_01: Does the money support the life you want, even if retirement doesn't begin under perfect conditions?
• 1:52
  SPEAKER_01: The second is structural readiness.
• 1:54
  SPEAKER_01: Assuming that yes, the money is there, have you designed how all the moving parts work together once your paycheck stops?
• 2:00
  SPEAKER_01: And then the third is personal readiness.
• 2:01
  SPEAKER_01: Once the first two are checked out, what is the decision that is actually left to cover?
• 2:06
  SPEAKER_01: Because for most people, that comes down to whether just one more year of work is actually worth it.
• 2:11
  SPEAKER_01: And the distinction is crucial because if you misidentify the problem you're trying to solve, you're going to spend years solving the wrong one.
• 2:17
  SPEAKER_01: So let's start by talking about the dimension almost everyone assumes is the entire ballgame.
• 2:23
  SPEAKER_01: Most people begin with some version of, is what I've saved enough?
• 2:27
  SPEAKER_01: But that number means almost nothing until we actually know what job it's meant to perform.
• 2:31
  SPEAKER_01: If your retirement lifestyle costs 140 grand a year, but Social Security and maybe a pension cover around 100 grand of that, then your portfolio isn't carrying the full$140,000 lifestyle.
• 2:41
  SPEAKER_01: Its job is just to cover the gap.
• 2:43
  SPEAKER_01: And even that gap will change from time to time.
• 2:46
  SPEAKER_01: Of course, Social Security may not have started yet.
• 2:48
  SPEAKER_01: Healthcare costs may be more pre-Medicare.
• 2:50
  SPEAKER_01: Maybe you have a mortgage that's going to disappear in a handful of years.
• 2:53
  SPEAKER_01: And you might plan to travel heavily in the first decade of retirement and spend gradually less later.
• 2:58
  SPEAKER_01: So instead of asking, do I have enough?
• 3:01
  SPEAKER_01: We find the better sequence is what does my life cost?
• 3:04
  SPEAKER_01: What dependable income will I have?
• 3:06
  SPEAKER_01: And then what remains for the portfolio to provide?
• 3:08
  SPEAKER_01: And then we unpack, can it do that for as long as I may need it too?
• 3:12
  SPEAKER_01: And that's the first half of this first dimension.
• 3:14
  SPEAKER_01: The second half is where I think financial readiness becomes much more useful.
• 3:18
  SPEAKER_01: Asking, what happens if retirement starts badly?
• 3:22
  SPEAKER_01: And I'm not talking catastrophically or a doomsday scenario, just imperfectly, like life happens.
• 3:28
  SPEAKER_01: So suppose markets fall early.
• 3:30
  SPEAKER_01: Your monthly spending actually comes in a little higher than expected, or maybe there's a single large expense that wasn't in the original spreadsheet.
• 3:36
  SPEAKER_01: Of course, you can't plan for every possibility.
• 3:39
  SPEAKER_01: So the goal is to have a plan that holds up across the most likely and probable ones.
• 3:44
  SPEAKER_01: So here's that first diagnostic.
• 3:46
  SPEAKER_01: Do I know what my retirement lifestyle costs?
• 3:48
  SPEAKER_01: And have I tested what happens if retirement starts badly?
• 3:52
  SPEAKER_01: If your answer is no, then dimension one is where your work begins.
• 3:55
  SPEAKER_01: But if the answer is yes and the plan continues to hold up under reasonable stress, then another year of saving may not be the real problem anymore.
• 4:02
  SPEAKER_01: Because now we have to ask the next question.
• 4:04
  SPEAKER_01: Even if the money works, have you designed how retirement works?
• 4:10
  SPEAKER_01: And this is the difference between financial readiness and structural readiness.
• 4:14
  SPEAKER_01: The first dimension was can I retire?
• 4:16
  SPEAKER_01: Structural readiness answers how is this going to work?
• 4:19
  SPEAKER_01: The easiest way I know how to picture this is when I worked back at Boeing's Everett facility, the largest building in the world by volume.
• 4:26
  SPEAKER_01: There, every part of the largest planes on Earth gets brought to the assembly line.
• 4:31
  SPEAKER_01: You have the engines, landing gear, hydraulics, fuel systems, wings, etc.
• 4:35
  SPEAKER_01: And every single one of those pieces may be excellent on their own, but just because you have a hangar full of excellent parts doesn't mean you have an airplane.
• 4:42
  SPEAKER_01: And even when those parts are assembled, you don't decide whether the aircraft is sound by asking if each component is good in isolation.
• 4:50
  SPEAKER_01: You gotta know whether the whole system works together.
• 4:52
  SPEAKER_01: And I found that retirement planning works the same way.
• 4:54
  SPEAKER_01: Your investments can be well managed, your tax strategy can look intelligent, and your social security choice can be ideal.
• 5:01
  SPEAKER_01: And even your healthcare decision may look good on paper.
• 5:04
  SPEAKER_01: Yet the plan can still be structurally unsound because each decision was made in a silo.
• 5:09
  SPEAKER_01: And I see this fragmentation compound in two places.
• 5:12
  SPEAKER_01: The first is across time.
• 5:15
  SPEAKER_01: People tend to want to plan one calendar year at a time.
• 5:18
  SPEAKER_01: What should we withdraw this year?
• 5:20
  SPEAKER_01: Should we convert anything to Roth this year?
• 5:22
  SPEAKER_01: What do we do with Social Security this year?
• 5:24
  SPEAKER_01: And the second area I see is across subject matter.
• 5:28
  SPEAKER_01: Perhaps they have an investment advisor handling their portfolio.
• 5:31
  SPEAKER_01: Their CPA is handling their taxes.
• 5:34
  SPEAKER_01: Maybe they have another advisor helping them manage their insurance and Medicare decisions.
• 5:38
  SPEAKER_01: And maybe they're looking at another tool that's there meant to optimize their Social Security timing.
• 5:42
  SPEAKER_01: On the surface, this feels very organized.
• 5:45
  SPEAKER_01: And retirement is complicated, so it feels natural to break it into smaller pieces.
• 5:49
  SPEAKER_01: The problem with that is that retirement is going to reconnect those pieces, whether you intend them to or not.
• 5:54
  SPEAKER_01: And a decision about income affects taxes, taxes affects healthcare, healthcare will influence your investment strategy, and the list goes on.
• 6:02
  SPEAKER_01: It's deceptive because a choice that may look smart today may actually remove a better option that you didn't know about three years from now.
• 6:09
  SPEAKER_01: And this is what encapsulates structural readiness, understanding cause and effect across your entire system and across the timeline of your entire retirement.
• 6:18
  SPEAKER_01: I saw an actual very clean example of this recently with a client.
• 6:21
  SPEAKER_01: They came in to start working with us with a portfolio that on paper looked very sophisticated.
• 6:25
  SPEAKER_01: The taxable brokerage account was generating healthy dividends meant for retirement income.
• 6:30
  SPEAKER_01: They even have municipal bonds in there for tax efficiency.
• 6:33
  SPEAKER_01: And these were very intentional moves.
• 6:34
  SPEAKER_01: But once this client actually moved from their peak earning years into retirement, the whole environment changed.
• 6:40
  SPEAKER_01: Those dividends may feel good, but they're actually creating taxable income whether the client wanted it in that year or not, which would reduce some of the control we have over their income for things such as Roth conversions and before Medicare, potentially being qualified for ACA healthcare subsidies.
• 6:54
  SPEAKER_01: And the municipal bonds made more sense when the client was in their 24 or even 32% plus tax bracket.
• 7:00
  SPEAKER_01: But once they're in retirement and that bracket lowers dramatically, the tax break was worth less, but they were still giving up the yield to get it.
• 7:07
  SPEAKER_01: And then the part that no one tells you is that even that tax-free interest on municipal bonds still counts as income on paper when you're trying to get those healthcare subsidies.
• 7:15
  SPEAKER_01: Both of these moves were intelligent and their own.
• 7:17
  SPEAKER_01: They had just become wrong for the entire system to work together.
• 7:21
  SPEAKER_01: And again, retirement is exactly when that system needs to be re-evaluated and integrated because now the rules of success have changed.
• 7:28
  SPEAKER_01: You're no longer accumulating around a paycheck.
• 7:30
  SPEAKER_01: You're now decumulating and coordinating between the income, taxes, and withdrawals, healthcare, and portfolio decisions around a life that has to be funded from the assets you've been saving all along.
• 7:40
  SPEAKER_01: And that's why we find these first five years matter so much.
• 7:43
  SPEAKER_01: These early years can contain more transitions than almost any other period of your plan.
• 7:48
  SPEAKER_01: Your paycheck stops, the withdrawals begin, healthcare changes, social security decisions arrive, and then those tax opportunities may appear that simply didn't exist while you were earning in your peak earning years.
• 7:58
  SPEAKER_01: So what you do early on can create options later or eliminate them before you even have a chance to take advantage.
• 8:04
  SPEAKER_01: As you can imagine, we find good retirement decisions compound, but poorly coordinated ones do as well.
• 8:10
  SPEAKER_01: So let's make this more concrete with an ordinary month.
• 8:13
  SPEAKER_01: For decades, your paycheck probably showed up automatically.
• 8:16
  SPEAKER_01: Money was coming in, bills went out, and savings are happening in the background.
• 8:20
  SPEAKER_01: And then retirement arrives and someone says, Hey, don't worry, you've got$3 million.
• 8:24
  SPEAKER_01: But what does the next month actually look like?
• 8:27
  SPEAKER_01: What's going to land in my checking account?
• 8:28
  SPEAKER_01: Where does that money actually come from?
• 8:30
  SPEAKER_01: And does that cover the amount of spending that I think I need to be doing?
• 8:33
  SPEAKER_01: So for this dimension, here's your structural diagnostic.
• 8:36
  SPEAKER_01: You gotta ask yourself, can I answer those questions for any month in my first five years of retirement?
• 8:41
  SPEAKER_01: Do I understand how the decisions I make early on create or eliminate options later on?
• 8:46
  SPEAKER_01: This doesn't mean that you have to predict every detail.
• 8:49
  SPEAKER_01: In fact, I find that when we get too precise, the plan breaks because life doesn't cooperate perfectly.
• 8:55
  SPEAKER_01: What's more important is you need to have a plan that can adapt.
• 8:58
  SPEAKER_01: There's a big difference between an adaptive plan and a reactive one.
• 9:01
  SPEAKER_01: An adaptive plan shows which decisions are coming and how they connect.
• 9:05
  SPEAKER_01: The reactive one says, we'll figure it out when we get there.
• 9:08
  SPEAKER_01: And I have to say, if you're working with an advisor, there are two more questions I'd ask if I were you.
• 9:12
  SPEAKER_01: First, pose to them what specifically changes in my strategy when I retire?
• 9:16
  SPEAKER_01: And also, show me how a decision we make this year affects the other parts of my plan and the options we'll have several years from now.
• 9:24
  SPEAKER_01: If the response you get is simply we're gonna make the portfolio more conservative, you deserve more.
• 9:30
  SPEAKER_01: Because once the paycheck stops, the job of your plan changes dramatically.
• 9:33
  SPEAKER_01: And that leads to the third dimension because even when the money works and the system works, there can still be one more decision left over that neither of the first two can make for you.
• 9:42
  SPEAKER_01: But first, if you've never seen your first five years mapped out as one whole system, I put together a gift for you I call the sample plan of our retirement readiness roadmap.
• 9:50
  SPEAKER_01: You can grab your copy of it in the link in the description.
• 9:52
  SPEAKER_01: I've built it around a fictional couple so you can see our entire seven session, three-month planning process from start to end before you have to ever talk to one of us.
• 10:00
  SPEAKER_01: But before you do that, there's one final dimension, and this is the one that I have yet to see a financial model fully answer for you.
• 10:09
  SPEAKER_01: Because here's what I see the best savers I work with often surprise me with.
• 10:13
  SPEAKER_01: We'll first run the numbers, the lifestyle works.
• 10:15
  SPEAKER_01: We'll stress test the portfolio, it may still hold up.
• 10:18
  SPEAKER_01: Then they'll ask the question, what if the market drops 30 plus percent?
• 10:22
  SPEAKER_01: We test it, and if the model still holds, they might ask, well, what if healthcare costs twice as much?
• 10:27
  SPEAKER_01: And if the model still holds up from there, they may still may not be satisfied.
• 10:31
  SPEAKER_01: And the reason for that is the issue is we may be asking financial planning to eliminate something it can only reduce.
• 10:38
  SPEAKER_01: Uncertainty.
• 10:39
  SPEAKER_01: I find that's a very different problem from not having enough saved.
• 10:42
  SPEAKER_01: It's hardest for people who have saved this well because building the money and using the money take completely different skill sets.
• 10:48
  SPEAKER_01: And this is what I meant when I mentioned at the beginning that most people with 2 million or more think their weak spot is the money, but it usually isn't.
• 10:56
  SPEAKER_01: My take is that personal readiness asks something much more practical, which is once these first two dimensions check out, what's keeping you at work?
• 11:04
  SPEAKER_01: Because a retirement plan can tell you that one more year isn't financially necessary, but that doesn't mean clients of mine who continue to work anyway because they love what they do are wrong.
• 11:13
  SPEAKER_01: Or maybe there's a project that you want to see through.
• 11:15
  SPEAKER_01: Maybe one more year gets you to a pension milestone or an RSU milestone, or maybe continue to work will help them keep you on employer health coverage while your you or your spouse are still going through a medical event.
• 11:26
  SPEAKER_01: No matter the reason, a good retirement plan gives you the clarity to know when work has become optional.
• 11:32
  SPEAKER_01: So pulling the trigger is a decision you can then make on purpose.
• 11:35
  SPEAKER_01: If you can't identify what one additional year of work is buying, then one more year can become a default answer to a question that you have yet to define.
• 11:44
  SPEAKER_01: And this is where the need for certainty gets people really stuck.
• 11:47
  SPEAKER_01: People will often say, I just want to feel certain.
• 11:50
  SPEAKER_01: But you have to ask, okay, good, but certain about what?
• 11:53
  SPEAKER_01: Retirement will never be completely certain.
• 11:55
  SPEAKER_01: So a better question I find is what specific finding from additional analysis could change your retirement date?
• 12:01
  SPEAKER_01: If you can name it, great.
• 12:02
  SPEAKER_01: We can run that analysis.
• 12:04
  SPEAKER_01: But first, ask yourself the second half of this issue, which is if the answer comes back reassuring, will you then set a date?
• 12:10
  SPEAKER_01: If the honest answer is no, we know that the analysis was never what was holding you back.
• 12:15
  SPEAKER_01: And don't forget, working just one more year has a price.
• 12:19
  SPEAKER_01: That year will come off the front of your retirement when your health and energy are at their best.
• 12:24
  SPEAKER_01: And here's a question I can encourage you to consider.
• 12:27
  SPEAKER_01: If, hypothetically, don't want to jinx you, if your healthy years turned out to be shorter than you were planning on, what would you stop putting off?
• 12:34
  SPEAKER_01: One of the simplest ways to make that decision more concrete is to stop thinking about retirement as an abstract concept and picture what an ideal life looks like.
• 12:43
  SPEAKER_01: So let's skip the first month and the trip that you're planning.
• 12:46
  SPEAKER_01: Let's just fast forward to an ordinary Tuesday in retirement, maybe six months in.
• 12:50
  SPEAKER_01: Can you picture for yourself what an ideal 9.30 in the morning looks like?
• 12:54
  SPEAKER_01: What responsibilities do you still want throughout that day?
• 12:56
  SPEAKER_01: How much time do you want to spend with your spouse?
• 12:59
  SPEAKER_01: Do you want to be doing some part-time work or consulting?
• 13:02
  SPEAKER_01: Do you want to double down on family time, investing in your health, travel experiences, or are you just looking for a simple homebody routine?
• 13:09
  SPEAKER_01: There is no right or wrong answer, but I find that you should have some inclination of what that looks like before you pull the trigger.
• 13:15
  SPEAKER_01: And if you're married, there's one more question worth asking separately, which is to answer what does each of us need this decision to protect?
• 13:22
  SPEAKER_01: For example, one spouse might be thinking, finally, we get our joint time back.
• 13:27
  SPEAKER_01: The other spouse may be thinking, oh my gosh, we're walking away from the biggest paychecks we've ever made in our lives.
• 13:32
  SPEAKER_01: We may be looking at the same financial plan, but a completely different perspective and experience.
• 13:37
  SPEAKER_01: So for this third dimension, here's your personal readiness diagnostic.
• 13:40
  SPEAKER_01: Can I describe an ordinary Tuesday, six months into retirement?
• 13:44
  SPEAKER_01: And then do I know what one more year would cost me?
• 13:47
  SPEAKER_01: Because once the questions become life decisions rather than just financial ones, you got to stop asking the spreadsheet to make them for you.
• 13:53
  SPEAKER_01: So now we can come back to the question we started with.
• 13:55
  SPEAKER_01: Am I ready to retire?
• 13:57
  SPEAKER_01: One thing I see over and over is people mistake sophistication for readiness.
• 14:02
  SPEAKER_01: You can have a seven-figure portfolio, multiple investment strategies, tax projections, estate documents, a great CPA, an advisor, social security analysis, and so on, but still be stuck because you keep applying the wrong tool to the problems that are left.
• 14:16
  SPEAKER_01: If your numbers don't work yet, of course, fix those, and then maybe working another year or two might actually be the right call.
• 14:23
  SPEAKER_01: If the numbers do work, but your parts are in the proverbial hanger, coordinate the structure of it so it can be integrated and actually work for you.
• 14:31
  SPEAKER_01: But if both of these dimensions are already solid, the only question left really becomes whether a one more year of work is worth it to you.
• 14:38
  SPEAKER_01: And another projection, I unfortunately I don't feel will settle it.
• 14:41
  SPEAKER_01: So if you can't name what one more year is buying, it may be worth asking whether you're simply delaying retirement or delaying the decision.
• 14:48
  SPEAKER_01: No single YouTube video, unfortunately, will tell you whether you can retire.
• 14:52
  SPEAKER_01: But your planning goal should be whether you can retire this year, next year, or three years from now and understand why.
• 14:58
  SPEAKER_01: So if these three dimensions helped you identify where the gap might be for you, the next step isn't learning everything there is to know about retirement.
• 15:05
  SPEAKER_01: It's just focusing on that next dimension that's still unresolved.
• 15:08
  SPEAKER_01: If you've run the numbers over and over and still feel like you're not making any progress, that's exactly what I'll work you through in your retirement readiness roadmap.
• 15:16
  SPEAKER_01: The link to book a call with me to see if we're fit is in the description below.
• 15:20
  SPEAKER_01: Because you made it this far, I know that you'll benefit from watching this next video that talks about building the integration between your 401k, Social Security, and a pension if you have one.
• 15:29
  SPEAKER_01: Click on the video now and I'll see you there.