Latest / Money In Motion with Klaas Financial / An Important Checklist

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An Important Checklist · Money In Motion with Klaas Financial

0:02
Speaker 1: And we're back live in studio this Thursday, July third. Meaning,
0:05
Speaker 1: if you've got a question for our retirement planning professionals
0:08
Speaker 1: from Class Financial, We've got a line open for you
0:10
Speaker 1: right now. I'd love to get you on the air
0:11
Speaker 1: with us six oh eight three two one thirteen ten
0:14
Speaker 1: at six oh eight three two one thirteen ten. Joined
0:17
Speaker 1: this week by CJ. Closs and Eric Schwartz. As mentioned,
0:20
Speaker 1: they are our retirement planning professionals from Class Financially. You
0:23
Speaker 1: can get to know CJ, Eric and the whole team
0:25
Speaker 1: at Class Financial. Also learn more about their separate division.
0:28
Speaker 1: Sign up for the weekly Market Pulse newsletter. That and
0:31
Speaker 1: so much more all online clssfinancial dot com. That's Coss
0:35
Speaker 1: Klaasfinancial dot com. Tell pH number for the office right
0:38
Speaker 1: here in Madison six oh eight four four two five
0:41
Speaker 1: six three seven. No charge for that initial get to
0:44
Speaker 1: know your appointment at Loss Financial. It will be complimentary
0:47
Speaker 1: to you again their number six oh eight four four
0:50
Speaker 1: two five six three seven And to get on the
0:52
Speaker 1: air this morning, regular telephone number at station six oh
0:55
Speaker 1: eight three two one thirteen ten at six oh eight
0:57
Speaker 1: three two one thirteen ten, as mentioned, joining us this
0:59
Speaker 1: more our CJ Claus and Eric Schwartz. CJ, how you
1:02
Speaker 1: doing this week?
1:04
Speaker 2: I'm doing great. How are you, Sean doing really good?
1:06
Speaker 1: Great to see you talk with you.
1:07
Speaker 3: Eric.
1:07
Speaker 1: How have you been as well?
1:10
Speaker 4: I'm doing great, Sean, happy to be here.
1:11
Speaker 1: It is an exciting day, I think for a lot
1:13
Speaker 1: of us today as a Fridays.
1:15
Speaker 4: Yes, it is.
1:15
Speaker 1: It's a really good spirits so it's always a fun
1:18
Speaker 1: program as well. We've got a really important conversation involving
1:22
Speaker 1: retirement readiness, and of course we're at that midway point
1:25
Speaker 1: through the year, so we're going to get some advice
1:27
Speaker 1: and guidance from CJ and Eric. As mentioned, the phone
1:29
Speaker 1: lines are open for your questions. Also, great opportunity a
1:32
Speaker 1: little bit later on the program to win a fantastic prize.
1:34
Speaker 1: Our friends from Class Financial have provided a twenty five
1:37
Speaker 1: dollars gift card to Texas Roadhouse. How could you win that? Well,
1:40
Speaker 1: you could win that with the Class Quiz question of
1:42
Speaker 1: the week. Give you a little more details on how
1:44
Speaker 1: you can win it later on the program. Little tip though,
1:46
Speaker 1: if you listen closely to the show, oftentimes the question
1:49
Speaker 1: and answer come up during the program. So it's a
1:51
Speaker 1: great opportunity to win a great prize. Let's get some
1:54
Speaker 1: great information and before we get to this week's conversation,
1:56
Speaker 1: let's actually look back at last week's show. I get
1:59
Speaker 1: the question and answer there as well.
2:02
Speaker 4: Eric, absolutely so thank you to everybody for listening as usual,
2:06
Speaker 4: and congrats to our winner from last week. That was
2:08
Speaker 4: Serena from Madison. Last week's question was a tru or
2:12
Speaker 4: false question. In the United States, approximately two point four
2:15
Speaker 4: million funerals take place each year, and again it was
2:19
Speaker 4: true or false and the answer was true. We definitely
2:23
Speaker 4: brought the fun last week Sean with our topic, but
2:27
Speaker 4: Serena got the right answer and it.
2:29
Speaker 1: Was And for folks that missed last week's program or
2:31
Speaker 1: maybe want to get caught up, there was a lot
2:32
Speaker 1: of It's a fascinating topic. Obviously, it's sometimes hard for
2:36
Speaker 1: us to kind of want to talk about those things.
2:38
Speaker 1: It's an important conversation but really really good content as well.
2:42
Speaker 1: So yes, yeah, congratulations to Serena. And of course you
2:45
Speaker 1: two could be like Serena, simply pay cools ten to
2:47
Speaker 1: the program and I'll tell you a little bit later
2:48
Speaker 1: on how you can win that twenty five dollars gift card.
2:50
Speaker 1: To Texas Roadhouse. Great to be back, and of course
2:53
Speaker 1: they were going to be checking in on retirement readiness.
2:55
Speaker 1: Of course halfway through the year and maybe been thinking
2:58
Speaker 1: a little bit about retiring. I'm lucky, lucky either mentally
3:02
Speaker 1: or physically, and I kind of feel like it's time,
3:04
Speaker 1: but of course some suggestions to really make sure we're
3:08
Speaker 1: truly ready to make that decision, right CJ.
3:12
Speaker 2: Yeah, that's right. At the midpoint of the year, it's
3:14
Speaker 2: a great opportunity to kind of hit pause and ensure
3:17
Speaker 2: that you're on the right track, and it gives you
3:19
Speaker 2: time to adjust, of course before the end of the
3:21
Speaker 2: year if you're not. So, Let's walk through a retirement
3:25
Speaker 2: readiness checklist to help our listeners evaluate key areas that
3:28
Speaker 2: could make a big difference down the road. So starting
3:33
Speaker 2: with just basically revisiting your retirement timeline, this is important.
3:38
Speaker 2: One of the first things to consider is your target
3:41
Speaker 2: retirement date. Interestingly, working longer can obviously give your savings
3:47
Speaker 2: more time to grow, delaying portfolio withdrawals and potentially increasing
3:51
Speaker 2: your solid security benefits. So obviously when you think of
3:54
Speaker 2: the retirement date, you do need to be mindful of Hey,
3:58
Speaker 2: if I'm a little off or things are a little
4:00
Speaker 2: bit tight. Working longer, believe it or not, has massive impacts.
4:05
Speaker 2: Eric can attest will work with people say I really
4:08
Speaker 2: want to retire at sixty two, and they get there
4:10
Speaker 2: and it's a little bit tight, and they could, but
4:12
Speaker 2: it might put them in kind of leaner retirement years
4:17
Speaker 2: just one or two years later can be transformative to
4:20
Speaker 2: their ability to retire and have a lot more flexibility.
4:23
Speaker 2: Now some of you are thinking, how is that possible,
4:26
Speaker 2: That's not possible if I've worked for forty years, how
4:28
Speaker 2: could working for forty two make much of a difference?
4:31
Speaker 2: And what you're missing is, well, you want two more
4:34
Speaker 2: years without withdrawing money. You want two more years with saving,
4:37
Speaker 2: and you want two more years with allowing your pensions
4:40
Speaker 2: and social security to grow. Those two years in terms
4:43
Speaker 2: of future kind of sustainability of retirement can be huge.
4:47
Speaker 2: But obviously retirement readiness isn't just financial. It's also includes
4:52
Speaker 2: your health, your lifestyle preferences, and your desire or ability
4:55
Speaker 2: to keep working. So this is important. We address most
5:00
Speaker 2: the quantitative side of retirement planning. It's what people come
5:04
Speaker 2: to us for. We're very good at math, we're cross
5:07
Speaker 2: trained in tax and estate planning and insurance. But we
5:11
Speaker 2: really help people make wise decisions around planning for and
5:14
Speaker 2: executing a successful retirement. But within that we must admit
5:19
Speaker 2: while we are not you're not counselors. Man oh manned
5:23
Speaker 2: that mental and physical health as you enter and execute
5:28
Speaker 2: a successful retirement is just huge. Cannot overemphasize it. We
5:32
Speaker 2: have this phrase, which is, don't retire from something, retire
5:37
Speaker 2: to something. So often people say I just got to
5:40
Speaker 2: stop work and I'm just killing me. I can't do
5:42
Speaker 2: this anymore. That's good, I'm glad you're assessing that, But
5:46
Speaker 2: what are you retiring too, Because just retiring away from
5:49
Speaker 2: a stressful job, I hate to say it, you're not
5:52
Speaker 2: going to be that happy and your body may begin
5:54
Speaker 2: to shut down if you just sit around now. Interestingly,
5:58
Speaker 2: many people end up retiring earlier or later than they
6:01
Speaker 2: would have originally expected. So when you're thinking about your
6:04
Speaker 2: future retirement readiness and that retirement date, one thing we'd
6:07
Speaker 2: say is just remain remain flexible because life can throw curveballs.
6:14
Speaker 2: As a matter of fact, we have ways of quantifying this.
6:17
Speaker 2: So there are studies that are done to say, hey,
6:19
Speaker 2: when you were fifty when did you anticipate retiring? And
6:22
Speaker 2: it's they're actually asking people at fifty and they say
6:25
Speaker 2: sixty five, and then it turns out that they actually
6:28
Speaker 2: retired at sixty two, and then the survey will ask them, then,
6:31
Speaker 2: why did you retire early? And it's often I had
6:34
Speaker 2: a health issue or a parent who you know, I
6:37
Speaker 2: needed to move towards, so I had to retire and
6:39
Speaker 2: move to a new state to support them. Or then
6:41
Speaker 2: other people will retire later and the question is why
6:44
Speaker 2: did you retire later, And it goes, well, I didn't
6:46
Speaker 2: save enough, or my kid was in college longer than
6:48
Speaker 2: I thought they would be and I had to pay
6:49
Speaker 2: for some of that. So the point of this is
6:52
Speaker 2: to say retirement planning and targeting a retirement date critical.
6:58
Speaker 2: But it's kind of like driving a cross the United
7:00
Speaker 2: States if you think you're going to show up, you know,
7:03
Speaker 2: if you're going to drive five thousand miles or two
7:06
Speaker 2: thousand miles across the United States and you're going to
7:08
Speaker 2: show up at an exact time in the future, I mean,
7:12
Speaker 2: that's silly, isn't it. We all know that if you're
7:14
Speaker 2: going to drive two thousand miles, you better have some flexibility.
7:16
Speaker 2: Around your arrival time or you're going to have problems.
7:19
Speaker 2: So in a similar way, when you're planning for a
7:22
Speaker 2: life of retirement, you better have some flexibility around when
7:26
Speaker 2: you think you're going to retire, because as you get
7:29
Speaker 2: closer to that, there may be some curve balls to assess.
7:32
Speaker 1: Really important things to remember as you plan for that retirement.
7:35
Speaker 1: Talking this morning with our retirement playing professionals from Class Financial,
7:38
Speaker 1: CJ Class and Eric Schwartz. If you've got questions, I've
7:40
Speaker 1: got a phone line open for you right now six
7:42
Speaker 1: eight three two one thirteen ten. That's six poh eight
7:44
Speaker 1: three two one thirteen ten, No, I forget. You can
7:47
Speaker 1: learn more about Colass Financial on their website Coss financial
7:49
Speaker 1: dot com. That's Coss k l as Financial dot com.
7:53
Speaker 1: So Eric, you know, I think about you know, you
7:56
Speaker 1: kind of begin the year with a certain amount of
7:59
Speaker 1: money set can contribute into your retirement accounts. Should folks
8:02
Speaker 1: be looking to maybe make some adjustments at this mide
8:04
Speaker 1: your point.
8:06
Speaker 4: Yeah, it's a great opportunity to evaluate that you don't
8:08
Speaker 4: necessarily have to make an adjustment, but keep in mind
8:12
Speaker 4: your contributions that are going into your employer sponsored retirement plan.
8:16
Speaker 4: Your four oh one K or your four oh three
8:18
Speaker 4: B for example, those those have a December thirty first
8:21
Speaker 4: deadline for getting any contributions in those have to come
8:25
Speaker 4: out of your payroll, right, so iras give us a
8:27
Speaker 4: little bit more flexibility where we can make contributions until
8:31
Speaker 4: you know the tax deadline the following year. But now
8:34
Speaker 4: is a good time if you want to actually make
8:36
Speaker 4: some changes to the amount you're contributing that you can
8:38
Speaker 4: actually you know, make an impact by the end of
8:41
Speaker 4: the year. So you want to look at whether or
8:43
Speaker 4: not you are contributing enough to first of all your
8:46
Speaker 4: four one K or your four oh three B, and
8:50
Speaker 4: separately even you know, even your IRA with those longer
8:53
Speaker 4: contribution deadline, still a good idea to start looking at that.
8:57
Speaker 4: Keep in mind that this year's maximum contribute levels for
9:00
Speaker 4: four toh one ks or four h three b's for
9:03
Speaker 4: twenty twenty five it's twenty three thousand, five hundred if
9:07
Speaker 4: you're under age fifty. Now, if you're over the age
9:09
Speaker 4: of fifty, you get a catch up contribution of seven thousand,
9:12
Speaker 4: five hundred. And if you're in that very special category
9:16
Speaker 4: of individuals between sixty and sixty three, your additional catchup
9:21
Speaker 4: contribution is eleven thousand, two hundred and fifty. Now that
9:24
Speaker 4: is if your plan allows, but again sixty to sixty
9:28
Speaker 4: three you get those special additional catch up contributions. Iras
9:34
Speaker 4: for this year are at seven thousand dollars for contribution limits,
9:37
Speaker 4: and then you do get that extra thousand if you
9:39
Speaker 4: are over fifty. So just take a pause now here
9:44
Speaker 4: a little more than you know halfway through the year
9:47
Speaker 4: and start thinking about things like, hey, did you receive
9:50
Speaker 4: a raise this year, or maybe you got a larger
9:53
Speaker 4: than normal bonus and you have an opportunity to increase
9:56
Speaker 4: the amount you're contributing, cause these small changes will will
10:00
Speaker 4: add up to big, big impacts over time. So just
10:06
Speaker 4: take a pause. Make sure that you are maximizing those
10:08
Speaker 4: employee employer retirement options, which includes your employer match, So
10:14
Speaker 4: don't forget about that. That is free money that your
10:16
Speaker 4: employer is offering to give you. Make sure you are
10:19
Speaker 4: contributing enough to actually get the full match, because that
10:23
Speaker 4: is free money and we don't want to leave it
10:25
Speaker 4: on the table. Another really really impactful employer benefit, or
10:32
Speaker 4: in this case, an employer benefit that people don't always
10:34
Speaker 4: think about, is a health Savings account or an HSA,
10:38
Speaker 4: So if you're eligible, are you contributing to it. Hsas
10:42
Speaker 4: offer what we call triple tax advantages, and what that
10:45
Speaker 4: means is the amount that you put into an HSA
10:49
Speaker 4: you get to deduct on your tax return, so you
10:51
Speaker 4: have to lower your taxable income. The dollars that go
10:54
Speaker 4: into the account, they grow tax free, and then when
10:58
Speaker 4: you draw the funds out, they are as long as
11:01
Speaker 4: they are used for an approved expense, they are tax
11:04
Speaker 4: free distribution. So we have three levels of tax benefit there,
11:09
Speaker 4: and the allowable contribution level is this year forty three
11:12
Speaker 4: hundred dollars for single individuals and eight thousand, five hundred
11:16
Speaker 4: and fifty for families. You do also get an extra
11:19
Speaker 4: thousand dollars for those over fifty five. Again, these are
11:24
Speaker 4: these are small changes and small steps you can take,
11:27
Speaker 4: but over time they can add up to a big,
11:30
Speaker 4: big impact. So take a pause and make sure you're
11:32
Speaker 4: maximizing these options.
11:33
Speaker 1: Talking this morning with Eric Schwartz and CJ. Closs are
11:36
Speaker 1: retirement planning professionals from Class Financial. If you've got questions
11:38
Speaker 1: for Eric and CJ. Love to get you on the
11:40
Speaker 1: Airtelphale number six eight three two one thirteen ten. That's
11:43
Speaker 1: six soh eight three two one thirteen ten and Bill
11:46
Speaker 1: joins us. Bill, Welcome to the program. You're on the
11:47
Speaker 1: air with CJ. Closs and Eric Schwartz of COSS Financial.
11:51
Speaker 3: Good morning, guys, how we doing?
11:53
Speaker 2: Good morning?
11:54
Speaker 4: You know.
11:55
Speaker 3: I so my situation is, I'm walking up on thirty
11:59
Speaker 3: seven years federal service, but I'm only fifty eight and
12:04
Speaker 3: my mortgage. I paid off my mortgage. I really don't
12:07
Speaker 3: have any major outstanding deaths. I don't have credit card
12:10
Speaker 3: deaths or anything like that. And I'm sitting there thinking,
12:13
Speaker 3: you know, how far are down the road I want
12:15
Speaker 3: to go? And the one thing that kind of I
12:18
Speaker 3: found interesting when you said, what was your retirement date? Well,
12:21
Speaker 3: I'm two years beyond my retirement date now when I
12:23
Speaker 3: planned on retiring at fifty six because that's when I
12:26
Speaker 3: was eligible now. So the quandary that I have is,
12:31
Speaker 3: so do I hang on doing what I'm doing because
12:34
Speaker 3: I don't mind my job. It's like every other job is.
12:37
Speaker 3: You know, sometimes you like the job that you don't
12:40
Speaker 3: necessarily care for the people you work for with, you know, anyway,
12:45
Speaker 3: So if I if I taken, if I pull the plug,
12:48
Speaker 3: and draw my pension and stuff. You know, if I
12:52
Speaker 3: get a part time job work in three days a week.
12:55
Speaker 3: I mean, I don't want to have to work, but
12:56
Speaker 3: I'm not against it just because I'm kind of a
12:58
Speaker 3: social person. So I have no problem, you know, getting
13:01
Speaker 3: a part time job. So what is what is your
13:03
Speaker 3: thoughts of that? I mean, do you think it's better
13:05
Speaker 3: to stick it out and keep bank rolling or to
13:08
Speaker 3: take and when you're ready to just go and if
13:11
Speaker 3: you need to or want to get a part time job.
13:14
Speaker 2: Such a great question, Bill, Thank you so much for
13:16
Speaker 2: calling in and asking it on the air. So I'm
13:19
Speaker 2: gonna I'm going to kind of reframe your question a
13:21
Speaker 2: little bit to the listeners and then then we'll answer it. So,
13:24
Speaker 2: so Bill is saying, hey, I knew, being a federal
13:27
Speaker 2: employee that I would have the option of claiming my
13:30
Speaker 2: pension at a certain time after a certain number of
13:33
Speaker 2: years in age, and it would be one hundred percent vested,
13:36
Speaker 2: so to speak. And so I knew I had this
13:38
Speaker 2: option retiring early, but now I'm here a couple of
13:40
Speaker 2: years beyond it and just evaluating whether or not I
13:44
Speaker 2: should just go ahead and do it. So great question.
13:47
Speaker 2: We run into it with state employees. Eric works with
13:50
Speaker 2: a lot of our State of Wisconsin Department of Employee
13:53
Speaker 2: Trust Funds recipients, and similar questions abound there, which is like,
13:58
Speaker 2: I'm young, but I could retire because I've got the
14:01
Speaker 2: full pension here. And here's what I'd say you could.
14:05
Speaker 2: You could retire and do exactly as you said, just
14:07
Speaker 2: get a part time job somewhere else to maybe get
14:09
Speaker 2: some benefits or whatnot. But what you're going to find
14:11
Speaker 2: is exactly what you just said, which is like, well,
14:14
Speaker 2: can I retire and be done? And that gets tricky
14:18
Speaker 2: because it's like what are you going to do for
14:20
Speaker 2: health insurance? And is it going to be expensive or cheap?
14:24
Speaker 2: And is the Affordable Care Act giving you subsidies or
14:26
Speaker 2: not giving you subsidies? And how significant tire those? And
14:29
Speaker 2: now that you're retiring at fifty eight, if you live
14:32
Speaker 2: to ninety, we got a lot of years of an
14:35
Speaker 2: ARC to try to have you live comfortably and travel
14:37
Speaker 2: and do all the things. Plus you're young and healthy
14:40
Speaker 2: enough that you might actually get a little bored. So
14:42
Speaker 2: there's some complexity to these. I'll call them super early retirements.
14:46
Speaker 2: I would define super early as anything before sixty. Some
14:49
Speaker 2: of the complexities can be financial. Some of the complexities
14:52
Speaker 2: can just be I'm young and healthy enough that I
14:54
Speaker 2: want to be a contributing member to some sort of job.
14:57
Speaker 2: So what we'd say is, I would, really, it's going
15:00
Speaker 2: to sound silly, but I would sit down with some
15:02
Speaker 2: financial advisor, Bill, just to evaluate that, to determine can
15:06
Speaker 2: you actually fully retire and not need any other sources
15:10
Speaker 2: of income. I do realize your federal pension would be significant,
15:14
Speaker 2: but is it significant enough to allow you the flexibility
15:17
Speaker 2: to do what you want to do without having any income?
15:20
Speaker 2: And if the answer is no, then you're right. You're
15:22
Speaker 2: going to have to evaluate part time working income or
15:24
Speaker 2: just staying a few years longer in the federal job
15:27
Speaker 2: so that when you do retire, you know definitively that
15:30
Speaker 2: you have no financial needs. So I know, I'm not
15:33
Speaker 2: really answering your question, but I'm kind of reframing it
15:36
Speaker 2: through a slightly different lens. And I'm just so thankful
15:39
Speaker 2: you asked the question, because there's others out there who
15:41
Speaker 2: are thinking the same thing.
15:42
Speaker 3: So thanks, Bill, awesome, thank you you too.
15:45
Speaker 1: Great to hear from you, Bill, Thank you for calling
15:47
Speaker 1: you too. Could be like Bill, if you got a question,
15:48
Speaker 1: love to get you on the air six oh eight
15:49
Speaker 1: three two one thirteen ten. That's six soh eight three
15:52
Speaker 1: two one thirteen ten. Can you continue our conversation with
15:55
Speaker 1: CJ and Eric as Money in Motion with Coss Financial
15:57
Speaker 1: continues here on thirteen ten, WIBA, don't forget out the
16:00
Speaker 1: website costs Financial dot com. That's coss k l a
16:03
Speaker 1: A S Financial dot com and they're telephone number six
16:06
Speaker 1: oh eight four four two five six three seven. More
16:09
Speaker 1: of Money in Motion comes your way next here on
16:11
Speaker 1: thirteen ten WYBA doing a mid year check up with
16:15
Speaker 1: our retirement planning professionals from Class Financial, CJ. Closs and
16:18
Speaker 1: Eric Schwartz. Of course you can learn more online the
16:20
Speaker 1: website coss Financial dot com. That's Coss k l a
16:23
Speaker 1: A S Financial dot com and they're telephone number six
16:26
Speaker 1: o eight four four two five six three seven. So
16:29
Speaker 1: Eric has excuse me, pardon me, CJ. You know, as
16:32
Speaker 1: we talk about about this topic this week about retirement readiness,
16:37
Speaker 1: how do you kind of quantify or begin to understand
16:39
Speaker 1: how much you really need in retirement.
16:44
Speaker 2: That's a great question, Sean, and what I'd encourage people
16:47
Speaker 2: to think about Obviously, you can outsource the answers to this,
16:50
Speaker 2: right you can. You can meet with people like us
16:52
Speaker 2: or others in the community or in the communities in
16:55
Speaker 2: what you live and just say, hey, I don't know
16:57
Speaker 2: how to do all this math. Can you help me
16:59
Speaker 2: consider it? Cause they're there are a lot of considerations.
17:01
Speaker 2: Now we're going to go through a fifty thousand foot
17:04
Speaker 2: view here of some of the basic considerations. But I
17:07
Speaker 2: will I will remind you these are not comprehensive. But
17:10
Speaker 2: at the high level again thinking from a really high
17:14
Speaker 2: fifty thousand and thirty thousand foot view, is what are
17:17
Speaker 2: the major considerations around you know, understanding how much money
17:23
Speaker 2: I will need? Do I have enough? Have I saved enough?
17:26
Speaker 2: And we would say it's two core elements. Element number
17:29
Speaker 2: one is what are your expenses? Got to quantify that.
17:34
Speaker 2: An element number two what are your available income sources,
17:37
Speaker 2: both now and in the future. Let's take Bill who
17:40
Speaker 2: called in earlier. If Bill is still listening, you know
17:43
Speaker 2: one thing I didn't mention is you know, does he
17:45
Speaker 2: have a Social Security benefit? Was he was he contributed
17:49
Speaker 2: to any Social Security? If he had non federal employee income,
17:52
Speaker 2: Does he have a spouse does a spouse have social Security?
17:55
Speaker 2: You get the idea, like, because if he's fifty eight
17:58
Speaker 2: and he has a spouse's who's god a soci security benefit,
18:01
Speaker 2: that spouse may or may not be old enough to
18:03
Speaker 2: start drawing on soci security until some point in the future.
18:06
Speaker 2: But start with your expenses. So a common guideline that
18:10
Speaker 2: you'll often hear in the industry is that you'll end
18:12
Speaker 2: up needing about eighty percent of your pre retirement income
18:17
Speaker 2: in retirement to live the same lifestyle. We would say, whatever,
18:22
Speaker 2: that's a really dangerous number to use. That's a good
18:27
Speaker 2: rule of thumb, But my gosh, we have people who
18:30
Speaker 2: get to retirement, they pay off a mortgage and it
18:32
Speaker 2: turns out they need fifty percent of their pre retirement income.
18:36
Speaker 2: We'll have other people get to retirement and move from
18:38
Speaker 2: say Rockford, Illinois, where we have an office, where it's
18:42
Speaker 2: very inexpensive housing in terms of the cost high property taxes,
18:46
Speaker 2: by the way, but low cost of home acquisition. They
18:49
Speaker 2: then move to be near their kids and say some
18:52
Speaker 2: part of Florida or Arizona or Tennessee, and the cost
18:56
Speaker 2: of housing skyrockets and suddenly they need one hundred and
18:58
Speaker 2: twenty percent of their prevoittiytirement income. You get the idea,
19:02
Speaker 2: don't just rely on rules of thumb. Be aware of
19:06
Speaker 2: your expenses. Am I planning to downsize? Am I planning
19:09
Speaker 2: to move somewhere else? What will my expenses look like
19:13
Speaker 2: in retirement? It is very often, very very very often
19:17
Speaker 2: you don't need anywhere near one hundred percent of your
19:21
Speaker 2: pre retirement income. One core reason for that because some
19:25
Speaker 2: people they can't they can't figure this out in their brains.
19:28
Speaker 2: They're like, what are you saying? That makes no sense?
19:30
Speaker 2: If I'm living off of if I'm making one hundred
19:32
Speaker 2: thousand dollars a year, I'm going to need one hundred
19:34
Speaker 2: thousand dollars a year in retirement to live the same lifestyle.
19:36
Speaker 2: And I go, Nope, there's two things you're missing. In
19:39
Speaker 2: most circumstances. You're saving into a four or one K
19:41
Speaker 2: plan when you're working, so you're not going to need
19:44
Speaker 2: that portion of your income. And secondarily, you're paying this
19:47
Speaker 2: little thing called a fyke a tax. FIKA is Social
19:49
Speaker 2: Security and medicare combined that account for about seven and
19:52
Speaker 2: a half percent of your income. Your employer typically picks
19:55
Speaker 2: up the other half unless you're self employed and you
19:57
Speaker 2: pick up all those payroll taxes, but the the idea
20:00
Speaker 2: being you don't pay FIKA taxes in retirement. So right there,
20:05
Speaker 2: there's a seven and a half percent savings of what
20:07
Speaker 2: you will not need in retirement. So very often you
20:11
Speaker 2: do not need anywhere near one hundred percent of your
20:15
Speaker 2: pre retirement income. But it is critical for you to
20:18
Speaker 2: go down through the list. What will I actually need
20:20
Speaker 2: to spend money on? Okay, so that's that's half the equation.
20:24
Speaker 2: What are my expenses? The other half of the equation
20:28
Speaker 2: is what are my income sources? Right, simple concept, so
20:32
Speaker 2: you know, it's is it. Do I have Social Security?
20:35
Speaker 2: Or like Bill, was I a federal employee and I
20:37
Speaker 2: didn't save in a social Security system? Or maybe I did?
20:40
Speaker 2: What pensions do I have available to me? What part
20:44
Speaker 2: time work will be available to me? Do I want
20:46
Speaker 2: to work part time? How large is my portfolio? Do
20:50
Speaker 2: I have pensions from an old, old employer that I
20:53
Speaker 2: need to you know, get my arms around and understand.
20:55
Speaker 2: Do I have a spouse who's going to still work?
20:58
Speaker 2: Does that spouse have Social Security? Once you've evaluated all
21:02
Speaker 2: of what will be available to you into the future,
21:05
Speaker 2: it does start to help you to hone that age,
21:08
Speaker 2: right Like, oh, let's say I'm not Bill and I
21:11
Speaker 2: don't have a federal pension, and I'm not a State
21:13
Speaker 2: of Wisconsin employee and I don't have an ETF pension. Well,
21:17
Speaker 2: then it's probably going to be mostly what you have saved.
21:20
Speaker 2: And Social Security it's going to be pretty simple. And
21:23
Speaker 2: you can't even draw Social Security till sixty two under
21:25
Speaker 2: most circumstances. So right there, you got it kind of
21:29
Speaker 2: a minimum age to think about. And then most people
21:32
Speaker 2: it's somewhere between sixty six and sixty seven is when
21:34
Speaker 2: they get their full unreduced Social Security, So boom, right there,
21:38
Speaker 2: there's another kind of demarcation line. And then you don't
21:42
Speaker 2: get Medicare, which is kind of like senior healthcare for
21:46
Speaker 2: or I'm sorry, healthcare for seniors here in the United States,
21:48
Speaker 2: that doesn't come in until sixty five. So you get
21:50
Speaker 2: the idea. You need to kind of figure out when
21:54
Speaker 2: these income sources and health insurance for seniors are going
21:58
Speaker 2: to start to become available to you and evaluate those
22:02
Speaker 2: income streams because that'll help you understand when you find
22:05
Speaker 2: the match between what your expenses will be and enough
22:08
Speaker 2: income sources to offset that. And then finally within that evaluation,
22:13
Speaker 2: this is where it gets more complicated and you might
22:15
Speaker 2: need some help. Do you understand what a sustainable withdrawal
22:20
Speaker 2: rate from a portfolio is? Now? If you're a State
22:23
Speaker 2: of Wisconsin employee or a federal employee and you say, no, no, no, no no,
22:27
Speaker 2: My pensions and social security are going to cover all
22:31
Speaker 2: of my expenses and more, will God bless you? That
22:36
Speaker 2: is fantastic, And we work with a lot of people
22:38
Speaker 2: like that. That is great, But that is not the
22:42
Speaker 2: majority of people listening to me right now. The majority
22:45
Speaker 2: of people listening to me are going to go, well,
22:48
Speaker 2: the pensions and social security cover some, but I'm going
22:50
Speaker 2: to need some from my IRA or four oh one
22:52
Speaker 2: K or four oh three B. And then the question becomes, okay,
22:56
Speaker 2: if that's you, what is a sustainable withdrawal rate? And
23:00
Speaker 2: are you accounting for inflation adjustments between now and when
23:03
Speaker 2: you die? And will that money last? And have you
23:06
Speaker 2: invested it appropriately? You get the idea. This is where
23:09
Speaker 2: it's it's art and science combined, because we don't know
23:12
Speaker 2: what the future holds for markets, and so you've got
23:15
Speaker 2: to got to generally build a portfolio that can sustain
23:19
Speaker 2: volatility in the future. So those are the two parts
23:22
Speaker 2: of it. It's both income and expenses. You're going to
23:25
Speaker 2: want to sit down either on your own or with
23:26
Speaker 2: your spouse or with a financial advisor.
23:28
Speaker 1: Important factors there for sure. As we talk this morning
23:31
Speaker 1: with CJ. Closs and Eric Schwartz, they are our retirement
23:33
Speaker 1: planning professionals from class financial website cossfinancial dot com that's
23:37
Speaker 1: coss k l aas financial dot com. Del for number
23:40
Speaker 1: six oh eight four four two five six three seven.
23:43
Speaker 1: No charge for that initial get to know you appointment
23:45
Speaker 1: tech Loss Financial. It will be complementary to you again
23:48
Speaker 1: their number six oh eight four four two five six
23:50
Speaker 1: three seven. We'll do the Closs Quiz question a week.
23:52
Speaker 1: We'll also button things up about some other things you
23:54
Speaker 1: should be reviewing mid year. We'll get those details next.
23:57
Speaker 1: As Money in Motion with Coss Financial continues right here.
24:00
Speaker 1: You're on thirteen ten WYB. I don't forget. If you
24:03
Speaker 1: miss any part in today's program or you'd like to
24:05
Speaker 1: share it, you can always head on over to classfinancial
24:07
Speaker 1: dot com. That's coss k l a as Financial dot com.
24:11
Speaker 1: Subscribe to the podcast right at the website telphon number
24:13
Speaker 1: six O eight four four two five six three seven.
24:16
Speaker 1: No charge for that initial get to know you appointment
24:18
Speaker 1: tech costs financial. It will be complimentary to you. So, Eric,
24:21
Speaker 1: as we're kind of sitting at the mid of your point,
24:23
Speaker 1: what else should we be reviewing right now?
24:26
Speaker 4: Yeah, to wrap things up for us today, Sean, I
24:28
Speaker 4: want to just start by touching on tax efficiency and
24:32
Speaker 4: then we will we will end our show today by
24:35
Speaker 4: just touching on a few other kind of kind of
24:38
Speaker 4: random topics that will pull together. But starting with with
24:41
Speaker 4: tax efficiency. This is not something that we see people
24:45
Speaker 4: thinking about a whole lot before they get close to
24:47
Speaker 4: the end of their career. So we want to we
24:50
Speaker 4: want to be evaluating whether or not your your retirement
24:53
Speaker 4: assets are diversified across what you'd call taxable, tax deferred
24:59
Speaker 4: or ROTH account. So what this has to do with
25:02
Speaker 4: is how you will be taxed when you draw the
25:05
Speaker 4: dollars out in retirement. So the most common type of
25:09
Speaker 4: retirement account we see are tax deferred accounts. That means
25:13
Speaker 4: that the dollars in there have never been taxed before
25:16
Speaker 4: and they are growing tax deferred. So when you draw
25:18
Speaker 4: the funds out they will all be fully taxable to you.
25:22
Speaker 4: We also see wroth accounts, which are a newer type
25:25
Speaker 4: of retirement accounts, so they generally folks have less wroth
25:29
Speaker 4: dollars than they do tax deferred. But these are dollars
25:32
Speaker 4: that have already been taxed and they are growing tax free,
25:36
Speaker 4: so when you take the dollars out, there will not
25:38
Speaker 4: be any tax due on them. Then finally, taxable taxable
25:42
Speaker 4: assets are generally dollars that are in an account that
25:47
Speaker 4: does not have any sort of tax qualification. So basically
25:52
Speaker 4: it's an investment account. You're paying taxes on any interest
25:56
Speaker 4: in dividends or capital gains on an annual basis, and
26:00
Speaker 4: when you draw the funds out, you will you will
26:02
Speaker 4: pay tax on any of the gains that you've made
26:05
Speaker 4: over time. So that's just a general investment account, not
26:08
Speaker 4: really receiving any sort of tax benefit. So those are
26:12
Speaker 4: the three kind of large or high level types of
26:16
Speaker 4: dollars we see. We want to make sure that you have.
26:19
Speaker 4: You know, we want to be as balanced as possible
26:21
Speaker 4: among these because there are there are different times in
26:24
Speaker 4: your retirement when when different types of dollars will be
26:27
Speaker 4: beneficial for you. This is also a good opportunity to
26:31
Speaker 4: check in on something called a Wroth conversion, which we've
26:33
Speaker 4: talked about on the show before, and that's a way
26:36
Speaker 4: of maybe balancing out some of those some of those
26:40
Speaker 4: different retirement assets you have, because generally tax deferred assets
26:45
Speaker 4: are the highest balance for folks, So you can consider
26:49
Speaker 4: a Wroth conversion to move some of your tax deferred
26:52
Speaker 4: dollars to the Wroth side of the column. And we
26:56
Speaker 4: also want to be thinking about how how future required
26:58
Speaker 4: minimum distributions and Social Security taxation will be affecting your
27:03
Speaker 4: retirement income. So remember required minimum distributions or rmds are
27:08
Speaker 4: are most important as it applies to tax deferred assets,
27:13
Speaker 4: and it's a it's a minimum amount that eventually you
27:16
Speaker 4: will need to take out of that taxable account. So
27:20
Speaker 4: when you're taking dollars out, you're you're paying full income
27:22
Speaker 4: tax on them. So this again was going to loop
27:25
Speaker 4: back to that being diversified across the three different types
27:29
Speaker 4: of investment accounts. And finally just to kind of wrap
27:35
Speaker 4: up tax here, this can get really complex, really fast.
27:38
Speaker 4: So this is a space that we would encourage you
27:41
Speaker 4: to speak with a tax specialist or a financial advisor
27:44
Speaker 4: on because not only is it complex, but it is
27:47
Speaker 4: changing all the time. So so take that, take that
27:51
Speaker 4: information to an expert, and and talk through that. A
27:56
Speaker 4: few other items here I just want to wrap up
27:59
Speaker 4: with it's a good opportunity to evaluate the progress you've
28:03
Speaker 4: made on paying down debt. I think oftentimes people have
28:07
Speaker 4: very lofty goals of eliminating debt really quickly throughout the year,
28:12
Speaker 4: and then life happens. So just take stock of where
28:16
Speaker 4: you are with that. Make sure that you're thinking about
28:19
Speaker 4: where you're going to get health insurance from. If you're
28:22
Speaker 4: planning to retire before age sixty five, so we can
28:24
Speaker 4: go back to our color bill earlier, this would be
28:28
Speaker 4: a big consideration for him thinking about retiring prior to
28:32
Speaker 4: age sixty five when he's eligible for medicare. We want
28:36
Speaker 4: to be making sure that we're keeping the estate plan
28:39
Speaker 4: up to date, so this includes your wills, your powers
28:42
Speaker 4: of attorney, and your beneficiaries. Great time to stop, pause
28:46
Speaker 4: and evaluate that. And then finally take a look at
28:52
Speaker 4: your emergency savings and make sure you have that as
28:55
Speaker 4: a level at a level that you are comfortable with.
28:58
Speaker 4: Because inevitable, plea, something unexpected comes up, and we want
29:04
Speaker 4: to make sure you are ready.
29:05
Speaker 1: For that really full show this week for sure with
29:08
Speaker 1: a lot of really good information. Don't forget if you
29:10
Speaker 1: messaged any part today's program or you want to listen back,
29:13
Speaker 1: just head on over to class Financial dot com. That's
29:15
Speaker 1: colss k l aa as financial dot com Artell for
29:18
Speaker 1: number six oh eight four four two five six three seven.
29:21
Speaker 1: No charge for the financial get to know your appoyment
29:23
Speaker 1: deck colss Financial. It will be complimentary to you again
29:26
Speaker 1: their number six oh eight four four two five six
29:28
Speaker 1: three seven. Time now for the class quiz question of
29:31
Speaker 1: the week. It works like this, just a moment, I'll
29:32
Speaker 1: ask you the class quiz question of the week. You
29:34
Speaker 1: will then have thirty minutes for today's program. We call
29:36
Speaker 1: the Class Financial Office right here in Madison at six
29:38
Speaker 1: oh eight four four two five six three seven. If
29:41
Speaker 1: you are the first car correct answer, you win this
29:43
Speaker 1: week's prize, which is a twenty five dollars gift card
29:45
Speaker 1: to Texas Roadhouse. This week's class quiz question the week
29:49
Speaker 1: is this. If you are under fifty this year, the
29:51
Speaker 1: year twenty twenty five, what is the maximum you can
29:54
Speaker 1: contribute to your four oh one K or five O
29:57
Speaker 1: three B is it twenty thousand or twenty three eight thousand,
30:00
Speaker 1: five hundred dollars. Telephone number six oh eight four four
30:03
Speaker 1: two five, six three seven. First call correct answer to
30:06
Speaker 1: win that prize. This week's prize, of course, that's Coss
30:08
Speaker 1: Financials office right here in Madison again the number six
30:11
Speaker 1: h eight four four two five six three seven. CJ.
30:14
Speaker 3: Eric.
30:14
Speaker 1: It's always great to talk with you guys. Have a
30:16
Speaker 1: great fourth and we'll do it all again in a week.
30:18
Speaker 3: Thanks yous.
30:19
Speaker 1: Don take care guys. Doctor Greer comes your way next
30:21
Speaker 1: right here on thirteen ten Wiba. This is Money in
30:24
Speaker 1: Motion with Coss Financial Asset Advisors, LLC, a registered investment
30:29
Speaker 1: advisor registered with the SEC. The contents of this show
30:33
Speaker 1: are for informational purposes only and should not be considered
30:36
Speaker 1: individual investment advice. Coloss Financial does not offer tax or
30:40
Speaker 1: legal advice. Any opinion offered during the course of this
30:43
Speaker 1: show is the opinion of that particular investment advisor representative
30:47
Speaker 1: and not necessarily the opinion of cost Financial News comes
30:51
Speaker 1: your way next right here on thirteen ten Wuiba