There is a lot to consider when planning for retirement, like when to take social security, and how much you need to retire. There are so many questions surrounding Social Security, like if Social Security will go bankrupt or if you can count on Social Security to be there for you. If you wonder whether or not you should include Social Security in your retirement plan you will want to check out this episode. Today we'll be covering those topics and more. All that and more on this episode of The Retire Once Show. A Retirement Podcast designed to help get you to retirement and stay retired.
Submit questions to the show at Retire@theoremwm.com
- Johnathan Rankin CRPC® CEPA®, Founder & CEO,
- Melissa Rankin - Wealth Management Advisor
- Theorem Wealth Management, Financial Advisor Dallas Texas
- Retire Once Show - 2022 Retirement Podcast Series
1:58 - How much do you need to retire?
6:17 - How long retirement lasts
9:10 - When do we take social security?
13:34 - What is a successful retirement?
15:53 - 3 skills every retiree needs.
Welcome to the retire. One show the show designed to helpyou not just get to retirement, but most importantly, stay retired. We've got ajam-packed show for you today. We're going to be talking about how much do youreally need to retire and how do you actually define a successful retirement?And lastly, we're going to touch on the three traits that we believe that everyretiree should have in order to have a successful.
I'm your host, Jonathan Rankin. I'm the founder and CEO oftheorem wealth management. And this is the retirement. I am joined by my lovelycohost, Melissa Rankin. Hi there. And you look great today. Thank you. It's thethree-year-old sleep progression. Our daughter is going through extra makeuptouch up. Well, if you, uh, if you're just listening to this on apple or Spotify,you can check us out.
We are, uh, we are putting these on YouTube as well, sohopefully you're able to watch us as we do the. No matter what makes sure thatyou subscribe wherever you're listening to this or watching this. If you're onYouTube, subscribe, apple, Spotify, wherever you listen to this, hit thatsubscribe button. Also be sure to head over to retire once show.com.
Uh, that's gonna have all the show notes and retirementresources that we've got. So make sure you head over there once again, that'sretirement or I'm sorry, retire one show.com. And uh, so yeah, here we go.Episode, what does this three. Yes, w of our episode numbers, you know, that,uh, that intro episode that we do do, we did for the audio only really kind ofthrew me off, but I guess that's episode, that was a preempt.
So, so technically this is episode two. So a very excited.So in conclusion, oh, welcome to episode two. So to kind of jump right intoepisode two, um, after our last episode, we did get a ton of questions, but oneof the questions that we always get that I'm actually pretty excited to talkabout is how much money do you need to write?
That is a great question. We get that question all the time.How much do you really need to retire? And obviously with rising inflationright now, I think everybody is, you know, has been questioning that number ifeven if you retired a year and a half ago or two years ago, you know, is thatnumber that you needed then still valid today, but, uh, you know, so I thinkthat is a valid question, especially one that.
All the time. And it's probably the most, uh, the most askedquestion that we get. But when you look at some of the different guidelinesthat are out there, those are my favorite, you know, fidelity has theirguideline, which is, you know, you should have one times you're earning yoursalary by the time you're 30 saved.
And then by the time that you're 60 or 30, by the timeyou're 30. Yes. You know, so if you're making a hundred thousand dollars, bythe time you're 30, you should have a hundred thousand dollars since. Okay. Andif you're very realistic here. Yep. And if you're a, if you're 60, you shouldhave eight times your salary saved.
And so obviously your salary is going to increase over time,but, uh, you know, by the time you're 67, they actually suggest that you shouldhave 10 times the 10 times your salary in retirement savings. Now that is just,that's just a guide. So I just a blanket guideline that's out there. Nice hopeif you will.
Yeah. I mean, I don't think that, I don't think you couldput anything as a hard line. I mean, if I just said how much you need to retireand I just had a million dollar show over the goodbye and we just stopped.Wait, does that mean that it's all about money? Is that what we're getting at?It's all about, oh, you have to have this number on this piece of paper.
Well, I think it's not, in my opinion. I don't think it'sabout a number. I think it's more about the income, you know, and I, I mean,that's like saying. At what point at what age should you have kids or, youknow, my favorite guideline is sleep when the baby sleeps. Remember that one,something we're still trying to do now?
Yes, but that's the same guideline as the same type ofguideline is saying you need X amount by your, by this age to have a successfulretirement. So I think it really comes down to the income. Most importantly,understanding. Your expenses. For example, if you know you needed it, if youhad a million dollar saved, but you needed to make $150,000 in retirement.
Well, you know that and you're pulling it all from that, uh,that nest egg. Well, that's a, that's a large, large draw down every singleyear, even if you're taking absolutely well, even if you're taking 5% from thatmillion dollars, that's $50,000 a year. Now, if your income needs. Is 45,000.Okay, well then maybe a million dollars is what you need to retire.
But if you, if your income need is 150, well, maybe you needmore than that million dollars to retire. So I think understanding yourexpenses is the first key to really figuring out what that number is to beginwith. And then, you know, it's also also a factor. When do you retire if youretire before 59 and a half?
Well, now you have to think about the different retirementinvestment vehicles that you're using. You know, things like, you know, an IRAor 401k, you might have penalties if you dip into those before 59 and a half.So then you're looking at after tax savings or other forms of income that youcan use to bridge you until you actually hit that 59 and a half age, are peoplestill retiring before 59?
Just hearing that number. I feel like you don't hear that asoften anymore. I think a lot of people, I think there's, there's two camps thatI've seen. I've seen. Uh, 59 and a half and above, I've seen a few in that 55range. And then you have that whole fire movement, which are people our agethat say, you know what, I'm good living off of, you know, a 30, $40,000 ayear.
And I'm going to save and pay, pay off everything. I'm goingto live retired in their, uh, in their thirties and retired in your thirties. Idon't know. I a dream. Is that a religion to me it's not, I couldn't imagineyou're a workaholic. I couldn't imagine what we do if we were retired rightnow. But, uh, you know, I think that there are people that are retiring before59 and a half, but I do see that the majority of people that we talk to arelooking at 59, 59 to really 65 or 67 is kind of that key age.
But, you know, so factoring in, you've got understandingyour expenses. That's one key to kind of figure out that number when you'regoing to retire. And then also looking at how long retirement's going to last.I mean, really you have to just be realistic about kind of all facets there.Yeah. Because I know American century did a study and they talked about how 30to 40% of the surveys participants believe that they were, they were actuallyworried that they're going to outlive their money.
You know, historically everybody talked about a 20 yearretirement planning for a 20 year. Now people are living, you know, 30, 40years in retirement. So that money that you have has got to last you a lotlonger. So if you started doing a retirement plan and you only feel for 20years, exactly, you did it for 20 years.
And then all of a sudden it's year 21 and you go, well, nowI'm not exactly. If we do that, I would hope that our kids would take care ofus. But most people who go into retirement, aren't hoping that their kids aregoing to take care. Yeah, it's, it's funny because, uh, I show you the resultsfrom that longevity illustrator that I did or that, you know, I think it wasthe yeah.
Longevity do it. So I did this and I, uh, you can choose, soyou rate your own health. Now you can choose between excellent and average. NowI started looking at choices and then you can do poor. Oh, okay. I just want toknow average. Okay. Who chooses? Excellent. It was the kind of, when I lookedat. I don't, maybe I is because I don't go to the doctor as often as I probablyshould to know of I'm in excellent health, but I always feel like I'm in goodhealth.
So I, I did average and average said that I've got a 23%chance to live to 95 and a 9% chance to get to a. You're going to live to ahundred. It gets even better. So if I, if I'm an excellent health, so I've gotto figure out how they define that, but go to the doctor. Then I would actuallyhave a 32% chance of living to 95 and a 15% chance of living to 100.
So you've got to deal with reframe a long time. Hey kids,mom and dad, ain't going nowhere. So, you know, it's a, we're going to link tothat tool, uh, in the show notes. So you can check that out. It was a funfunding to look at. You know, really looking at how long you might live it. Ithink that's excellent or average, there is poor there.
I didn't do poor. I would hope that I'm not in poor health,so I couldn't do that one, but you are doing the illustrator. So I would thinkthat you're already a step ahead of, you know, try, you know, I think that if Idid pour and it said I had a zero chance live to a hundred, maybe I would starttaking. So now that we've looked at, we've got your expenses.
We talked about, you know, when, how long retirement couldlast, when you're going to retire. I think the other thing is you're factoringhow much you actually need in retirement is also when do you take socialsecurity? Hang on. Should you even include social security anymore in aretirement plan? Now we get that question a lot.
Don't we? That way, that's why I feel like that needs to beaddressed. So I think the concern with social security is that there's thisheadline out there that everybody sees that, you know, in the social securitytrust is going to be insolvent. It's going to be bankrupt is what they say orinsolvent by 2034 now while that's well, part of that is true.
It's terrible. It's a click baity type thing. You know, the,the social security is not just going bankrupt and your benefits are gone. Ithink there are, there are issues where it is underfunded and. As you'veprobably been aware, this is not a political show. We're not going to getpolitical. I don't care if you're left center.
Right. I don't care what direction this isn't a politicalshow, but ultimately social security is going to come down to some sort ofreform, some sort of political action. That's got to happen. Reform sounds alot better than insolvent hemming. Yeah. It's so there is a, there's actuallya, although I guess I wouldn't stop and read a headline if it's.
You know, reform reform likely. Well, there is a, a, there'sactually a sign out there. The committee for responsible budget said that, uh,they're they've got a site that talks about potential reform that socialsecurity might see. So we'll link to that as well. So you could check that out,but they talk about getting to 2034.
You might see a 22% decrease in benefits at that point. Idon't think social security is going away. I think that there's going to besome adjustment to what that looks like. Uh, whether that's, you know, like Isaid, whether that's some sort of means testing or some sort of legislation todetermine, you know, payroll taxes going up, something's going to happen there.
They're going to make some changes, but, uh, should it beincluded in your, in your retirement plan? I always say include it and then runa scenario where you don't. So Brian both run both and see if you're fully, ifyour retirement. Solely success and it was solely dependent on the need forsocial security.
Well, maybe you cause you need some help. Well, yeah, Ithink part of that, but I also think that what you want to do is make sure to,you know, to have a buffer there so that if for some reason, social securitydoes go down by 22% or your benefit goes down by more because there was some sortof reform. Now that's the negative side.
That's the, is social security guard. On this fun and lightshow, but I think in, okay, so in today's environment, I think that we've gotto play by the rules that are out there right now. And that is if you delaysocial security, the longer you delay, the more you get until age 70 right now,if we're already talking about people living longer, I mean, I've got apossibility, cause I'm an excellent health.
As we talked about of living to a hundred. The odds arethat, you know, taking social security later and delaying it is going to bemore beneficial, especially because from the time you hit full retirement agetill age 70 every year that you delay, it's an 8% guaranteed growth rate inthat benefit. Hence the reason for reform well, that's part of it, but in, inthe rules, we're in today in the, in the game we're playing today and 8%guaranteed rate.
Is is unheard of. We need to be guaranteed. You know,obviously there are things that perform better, but 8% guaranteed to yoursocial security benefit. And that benefit is going to, you know, should lastthe rest of your life. And also if something happened to you and you have aspouse, they might get a spousal benefit.
That'll also be increased. So I think delaying that benefitas long as possible because social security for some reason is the only thingthat I've seen, where an 8% guaranteed rate of return is considered small.Which is crazy because I hear 8%. I'm like, well, that sounds great. Where do Isign up and sign me up?
If well, and that's the thing. If we, if we talk to mostclients and we said, we're going to guarantee you 8% on this investment.Whereas social security is doing that. But a lot of people don't take them upon it. So I think that that's something to get to really, when you're startingto put together your financial plan.
Social security, making it one part of it. And then two,what does it look like when you delay it? And then also running a scenariowhere let's just assume it's not there. So you can kind of have that worst casescenario of what returns I'm not even including it. Exactly. Okay. So let's sayyou, you figure this out, you run all these plans.
You've got the one with, without, with some sort of reformwith it, or however you're going to go about it. So what do you actually needto be successful in retirement? That's funny. Cause I actually looked at whatis a successful retirement because I wanted to see what other people that helooked up the actual definition.
So here's a couple of the FAA magazine says a successfulretirement is defined as the ability to replace current income in retirement.Okay, well that seems kind of general, uh, employee benefit research Institutesays that a combination of social security income and 401k savings thatreplaces 80%. Of your preretirement income after adjusting for inflation isconsidered successful.
It's kind of a wordy one. So, so those are the, those arethe technical definitions of what you'll find out there of a successful retirement.Okay. So is it, I don't know all about the money. See, that's where, when I,when I first, when you first asked me this question, uh, you know, you said,what is a successful retirement?
I've had clients ask this to me very rarely. Do I eventhink. Nearly about the way I think it's, there's so many other factors that gointo I, to me, a successful retirement is really the ability to find a balancebetween your health and being able to do the things that you want to do withouthaving to work, not worrying about money.
So I actually feel like, you know, the, on the, on thefinancial part, if you don't have to worry about money, that is that's successand whatever that may be, that's not. I'm not saying you're wanting to live aluxurious lifestyle. It's just maintaining your lifestyle and being able to dowhat you want with the people that you love and finding fulfillment and joy inretirement.
That to me is what I find is a successful retirement. Now,granted, I'm not retired, but in the clients that we, that we talked to themost that are, that seem the happiest in retirement, those are the things thatI've typically found is that their health. They, they typically don't worryabout their money.
Um, and it's not because they're overly wealthy. It's justbecause they live within their lifestyle within their means. And they've foundstuff to do to be fulfilled and find joy in retirement. And those are typicallythe happiest. Okay. So you've talked about the people that we know that we'vehelped in, that you think are successful in recovering.
Would you say that anybody has kind of like, uh, a certainskill set or are there things that would make you more likely to be successfulin retirement? I do. I actually, I, you know, I've thought about this. I thinkthere are three skills that every retiree should have in order to have asuccessful retirement.
I really do. I think that the ability to be comfortablebeing uncovered. Uh, I can't hold on. Anything about that? Comfortable beinguncomfortable. Look, retirement's gonna throw a lot at you. It's if we didn'tknow if someone were to tell us that raising our two kids is, you know, thesame thing every day, and it's going to be the static line where they're goingto grow up from zero to age 18 to go.
And it's this, it is absolutely not the case. And foranybody who is not a parent, no, it is not it's. Every day is crazy. Every,every night is crazy, you know, trying to get them to eat all those differentthings. There's a lot of periods where it's like, we don't know how I'm doing.You know, every, I think everybody, who's a parent.
You who's a, you, you do it for the first time. And it's anew experience, same thing with retirement. You know, there are going to beperiods where you're going to be uncomfortable, whether that's a marketpullback, whether that's a health scare or, you know, family dynamics, there'sgoing to be periods of some sort of uncomfortableness.
And you've got to be okay, knowing that there are. A script.There's not a one size fits all of retirement. Everybody's going to have adifferent version of their retirement life. And so just know that it's gonna,it's gonna roll in ways. That's, that's the word I was looking for. I alsothink that you need to have the ability to trust now whether that's trust too,trusting either the advisor that you, that you're working with, or if you'redoing it yourself, trust yourself.
And the plan that you've put together for yourself. Do allthe work before you retire, you know, I think that's the important part. Youmake sure you, you put all the work in the very beginning to get yourselfcomfortable with what that retirement looks like, and then trust that plan.Trust them.
Essentially treat retirement. Like it's, it's your rewardfor being prepared? Not necessarily, yeah, kind of a reward. It, I mean, Ithink it is a reward for decades of hard work, but I also think that what youwant to do is make sure that you have, you have confidence in whatever thatplan is. If you do you, do you have designed.
Or you work with a financial advisor that put it togetherfor you and you know, working together and you said, okay, here's the plan thatwe're going to use for retirement. We know that the market's going to go up anddown, but that's already planned for in this retirement plan and beinguncomfortable comes in.
Exactly. So it's just, it's being able to trust that plan.Well, because the worst thing that we know you can do is make major rashdecisions during down markets to knee-jerk reactions here. Those are whatreally are the biggest detriment to retirement. So I think trusting that planis going to be important.
And lastly, I, you know, I think that the, the mostimportant skill, if any, is really the ability to find passion or fulfillmentin retirement, finding something that, you know, makes you want to wake upevery day, because you think. A lot of people, they, you know, their career tofind them, you know, especially if you do it.
So it's a huge part of your life. You do it for 30, 40years, if not longer or shorter, you know, however long you're spending a lotof time. And that, that allowed you to have the lifestyle that you've had forthe majority of your life. It allowed you to possibly raise a family, save forthis retirement becomes part of your identity.
Exactly. So when you leave that there's actually beenstudies that have found that people who leave their job. They, you know, they,they find that there's less of a purpose that they have. And there's actuallybeen studies that have done say that, you know, people without a purposeactually have a 15% lower risk, or I'm sorry, people with a sense of purpose,have a 15% lower risk of death compared to those who said they were moreamiable.
And it's 15%. So finding something that you're passionateabout, that, that, you know, makes you want to wake up, you know, we've alsoseen, you know, studies show that, you know, people who actually stick it outat a job working till age 67 versus retiring at 55 or 66.
If you wake up every day, hate your job. Just stick it out.Now, if you're w you know, I think what the study was saying is if you are, ifyou're 67, if you're able to make it there, if you retire at 55 or even 66,that what studies have shown is that it can actually ward off cognitivedecline. And people who've developed Alzheimer's disease.
So know if this is you
who've been waiting. That is my favorite sound soundbite.And it's from, if you're, if you're not familiar with this from happening. Verytimely reference, very tiny logic. But I think about that all the time whentalking to people who are working at their job, and I hear them frustratedthat, you know, they want to retire.
They're trying to get out of there, whether it's the nextsix months, year, five years and every time. As they're talking about thestruggles, I hear that this is what I hear. And so if we don't want that to be,you know, if you, if you hate your job, there is, it has been shown that peoplewho work unpleasant jobs and retire actually find a higher sense of purpose inlife because they left an unpleasant job.
So I think that a new sense of self, if you will. Exactly.So I think, you know, the, the moral of all, this is retire with purpose. Yeah.So if, if you could give one piece of advice to somebody nearing retirement, oris that what it would be? I think it, well, you know, me, I like calm. I, youknow, there's not a one and one short answer.
I think, I think yes, retire with purpose or find a purpose,find something that fulfills you. I think that, uh, know that you're going todeal with uncertainty. You just be comfortable with that. And that includes,you know, finances, health. We we'll find something to be held. I mean, do you,would you recommend if someone who's, uh, you know, near retirement, would yourecommend they start F 45?
No, no, I don't even recommend that for myself in there. Weused to see the, about a sweat when she walks it after those classes, it isbeet red. So, but you know, on lastly, I think it's important to be confidentin your plan, whatever that plan is that you develop. And if you don't haveone, obviously we would be happy to help you develop that retirement plan or atleast stress tests.
The one that you've already put together and make sure thatbefore you retire or even if you're in. With the market near all time highs.And obviously we've seen a little slight pullback here over the past couple ofweeks, but it's, you know, now's a better time than ever to really re reassessthat retirement.
Absolutely. So with that coming to a close, thank you somuch for joining us today. And just a reminder again, um, subscribe, if youlike, uh, listening to us or watching us if you're watching on YouTubesubscribe. And also if you're on apple, Spotify, whatever podcast platform,without all those other ones, because if we're just in your ear and we're notin your face right now, and you're just listening to us, subscribe whereveryou're listening, uh, support the show.
You can also head over to retire one show.com for all theshow notes. We'll link to everything as well in the description in the shownotes below, but do us a favor head over there. We've got a number ofretirement resources that you can grab as well.
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