On this episode of the Retire Once Show, Johnathan and Melissa discuss an article from gobankingrates.com, 45 Things Every 50-Something Should Know About Retirement. We discuss whether or not some of these items belong on the list such as a “longevity annuity” or a reverse mortgage.
2022 has been challenging for retirement planning. There has been decade high inflation, a bear market in stocks and bonds, a Fed that is continuing to raise interest rates while the entire market waits for a Fed pivot. There may be more volatility in store for 2023, which is why we also spend time sharing our Top 3 Retirement Tips For 2023.
2022 has been a challenging year to say the least, whether it was the market inflation or any of the other things that went on this year. So the hope is that 2023 will be a much better year. And in this episode we're gonna share our three retirement tips for 2023, and we're also going to touch on what you should know about retirement if you're over the age of 50.
All that and more on today's episode of The Retire One Show.
Hello and welcome to The Retire Once Show Show designed to help you get to retirement, but most importantly, stay retired. I'm your host, Jonathan Rankin. I'm the founder and CEO of the And Wealth Management, and I am joined as always by my lovely cohost. Hi, I'm Melissa Rankin. Thank you so much for joining us.
Thank you for being here. I hope everybody that's was this had a great Thanksgiving and you gotta spend time with family. Eat some good food. You name it. That's Turkey. Yeah, Turkey. A good solid nap after that Turkey. It's fine. I mean, Thanksgiving, let's just face it. It's, it's a matte meal at best. He's not insulting my cooking.
Just so everybody knows I don't make a Turkey. No, but you know, I feel like we should clear that up. No, but no matter what, it's just, it's, there's a reason why we only have it one time a year. So yeah, there's that. Anyway, hope you at least had great. We've got a pack show for you today. But before we jump into what we've got, what do we want people to do?
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You don't wanna miss it. Lots of great content. Absolutely. So today we are gonna be talking about things that you should. When you're in your fifties about retirement, and then later on in the show, we're gonna touch on our three retirement tips for 2023. Um, but first I ran across this article that was originally published on go banking rates.com, but I saw it on Yahoo because I didn't even know Go Banking rates.com was website and it was the 45 things that every 50 something should know about.
We're not gonna go through every single one of them, obviously, cuz you know, we, we know you got stuff to do, but we are gonna go through the top 10, or at least the ones that we found most important. That's right. Starting with the top 10. So with that in mind, number one, have a retirement goal. Age. I think that's pretty straightforward.
I think that if you're in your fifties at some point you probably don't wanna work. So yeah, having an age that you are targeting for retirement doesn't mean things aren't gonna change for the most. It's probably going to change, and it does for most people, but at least have something that you're shooting for.
Okay. So that's a really good place to start. It is. Number two, create a budget. Now, yes, creating that budget is something that hopefully it did earlier, but if you're in your fifties, yeah, you want to start doing that because you don't want to get to the point where you're thinking about retiring and going, well wait a minute.
I don't even know how much I spent today or, or what I've got coming in or going out. So yeah, that's a, that's a good one, which I sincerely hope is not the case if you're already. Thinking about what age you're going to retire and then you're like, oh wait, I should start budgeting for that. Yeah, that's true.
I mean, I hope that's not the case, but we hope not, number one and number two outta the way. Okay. Number three, lengthen your long term plan. Yeah, and this, what they, they meant in the list was, you know, that people are now living into their nineties. So, uh, for a long time we would work with clients and they would say, well, let's only plan for a 20 year retirement.
You know, I had a client one time, Let, I only plan to live till age 82. I just go, I don't know how you came up with that number. Very specific, but we are seeing advancements in medicine. I mean, Elon's announcing that they're gonna start putting chips in people with this Neurolink thing. So, you know, I would just plan for a lot longer than, uh, than what you think.
Stay alive for that, if nothing else. That's right. Number four, automate your savings. I think this one happens now quite a bit with 401ks, don't you think? Once people sign up for, I mean, it truly is. I feel like automated. Yeah. So I think that's happening. But if you don't have automated savings, it just outta sight outta mind and yeah, start that now.
So number five actually goes into I think number four. Number five are kind of the same. Put yourself. . Well, it, it was pay yourself. Pay yourself yourself first. You know, it's okay, Mel, don't worry. I got, well, I just feel like they're so, they are, it shouldn't even be different ones. I feel like Automate your savings.
Pay yourself first. I think this is one of, they're the same thing to me. This is one that the author of the article, no offense to the author of the article, but I think they probably came up with like 42 and were like, how do I squeeze in three more? How we make this a nice round 45? Because yeah, pay yourself first is just another way of saying save.
So it's. You know, kind of goes into some of the other ones are on the list. So I do feel like that was a filler one. Okay, so with the filler ones in mind, number six is put extra money towards retirement savings. This is another one of those filler ones. I feel like these are all the same, four, five, and six I I agree with that.
So yes, put more money away towards your savings, because now you can also do the catch up contribution when you're in your fifties. So maybe that's what they mean. But either way, I do feel like those are the same. So here's one with a different. Number seven, figure out your retirement income gap. Now, we've covered this before.
This is just figuring out what is your expected income in retirement? What are your expected expenses that you're going to have? And then figure out how much do your assets need to cover from there. So that's what they mean by the income gap, and it is important to know that going into retirement, you don't wanna find that out when you are retired.
Yeah, you don't wanna find that out when you're in the gap. No, , I mean, that seems pretty unfortu. Number eight, consider a longevity annuity. Yeah, I was, I was surprised that this was in the top 10, you know, as if you've been watching this channel or in this show for, uh, since we started this listen or listening.
If you've, if you've tuned into us. If you've been following along, that's right. If you hit that subscribe button, uh, then you know that we're not anti annuity, but we're also not annuity proponents. You know, these have a time and a place, and they really are meant for a specific purchase. And they have it.
It's gotta be something that is built into your long term plan. So it's not saying that this is a bad thing, but for every 50 something to know about in retirement. I don't know if it's applicable to every single 50 something. I think that is, you know, to me I would just say, uh, proceed with caution. With things like that, you wanna make sure that it fits into your overall retirement plan, and if it does, great, but don't just buy it just because some list will be because you think you should.
That's definitely not a one size fits. Absolutely. Those are very, very specific and they really should belong in a specific place within your overall financial plan. Number eight. This one I think is great news. 70 is the new 65 for everybody who's aging. This is great news. Yeah, this was interesting. 70 is the new 65.
I think this is kind of the same thing as that, uh, you know, lengthen your long term plan. You know that hey, people are living longer. I think this is. Maybe this list was really like 22 and a half or 23, and they're like, how can we get it to 45 and 45 is a long list. I'm gonna say 45 is long list, especially with the top 10.
And we've already found three that basically are the same. Now this is another one kind of saying the same thing. And so let's go through that last number 10. Again, we're not knocking the list at all. No. And with that in mind, yes. Here is number 10. Don't dip into your FI retirement. Hold on, let me start that over.
We're not gonna edit that out just so you. Don't dip into your retirement funds early. Yeah. So this is just this, I feel like that's self-explanatory. It is, but you can look at this two ways. You know, there are ways you can tap into your retirement funds and avoid the early. Withdrawal penalty. But really this is looking at not just the fact that if you dip into 'em early, you could see a 10% penalty depending on your age, but also this takes away from that long term compounding growth.
So really there's two facets there that if you're dipping into your retirement funds, you've gotta make sure that it is for a very, very specific need and not just a additional savings account. So that's the top 10 in the article. Again, there were 45, so there's a few other notable. In no particular order, but these were ones that stood out.
Resist the urge to check your portfolio. Yeah. This one I found interesting in the way they phrased it. They advise only checking it once or twice a year or emotions might kill your investments. Now, we talked previously that this was likely the year of the ostrich where everybody that you're saying, yeah.
I don't think that you should only check your portfolio once or twice a year. Yes. Do I think checking it daily and stressing out over daily movements is not productive? Absolutely. But once or twice a year, you want to know what's in your portfolio. At least that's just my opinion. You wanna know what's going on, that there's an overall strategy.
And if you are working with an advisor, hopefully they're at least keeping you ab. What's going on? How are you positioned? Because the market's changed quite a bit this year. Absolutely. So there's kind of a sweet spot, not every single day, but not the, you know, ostrich approach. Yeah, exactly. So I was just in, I was just, uh, fascinated that was in there at all, especially at that frequency, once or twice a year.
I think you want to do it a little bit more frequently, especially if you're in your fifties. Someone reading this, everybody, it says 50 something. So that could be a 59 year old planning to retire at 60. You might wanna check your portfolio more than once a year if retirement's a year away. So with that in mind, here's another one that really just stood out to me as kind of like a, I dunno how this made the list in the first place, but it's pay for healthcare with a reverse mortgage.
Yeah. This I am just, I would love to talk to the author of the article to say, Like, why is this on the list? Because one interest on reverse mortgages is higher than a traditional mortgage. You know, there's statistics out there that show that one in five people with a reverse mortgage go into default.
Uh, you've got additional costs and fees that come from, you know, actually doing that reverse mortgage. And it can also impact your eligibility for needs based retirement income. Income like Medicaid, or supplemental security income. There's not really many reasons why I, that's a good idea. And so I don't think that should be on the list, should you know that it's an option.
Yeah. But is it something that everybody should know and everybody should do, is to earmark their reverse mortgage asset for healthcare? Healthcare? No. If you. Are in dire straight and you need a access to capital, then yeah, maybe you could look at that. But maybe big. Maybe big, maybe you'd have to exhaust all other options first.
That's right. I, I, this is, I am, I'm shocked. This is on the list. Let's just say that. So, in keeping with the shocked theme, here's the, the biggest one that stood out to me. Don't let your children ruin your retirement. Yeah, they, they say, and this is a quote article, saving for retirement should come before paying for your adult kids, college, tuition, mortgage, or other expenses.
Remember, your children can always take out loans for college, cars and houses, but you can't do the same for retirement. Don't let your kids become a financial burden in your golden years. Now, let's just say I think that, I think that's obvious. I do too. But the problem is, is that they contradict themselves because they say you can't take out a loan for retirement, but yet they just say, I just talked about it, taking a reverse mortgage to pay for healthcare.
So yeah, you wanna make sure you're putting yourself first. And I know a lot of parents, they don't want their kids to go into college with this, you know, massive or come outta college with this massive financial burden of a loan. But there's gotta be a balance. And unless your retirement plan is your kids going to college, and unless you already have that built in somewhere, I mean, well, but maybe some people's retirement plan is they're going to make sure their, their kids are taken care of them.
I don't know. Maybe that is their investment, but I don't think that's like, I really hope they're smart. I Yeah, I, I really do too. Um, but that's not, I, we're gonna put ourselves first before our kids. I'm just letting you. . So before we go too far down that rabbit hole of, uh, children and paying for them in retirement.
Yeah, because we differ a little bit on that. We're gonna save y'all from that argument. We'll do that off. Let's switch gears a little bit. Let's talk about our retirement tips for 2023. Yeah, it's, uh, it's been a year, hasn't it? 2022 has definitely been a challenging year. I don't think anybody would argue that.
Yeah, so let's see. We had, uh, record high inflation. Obviously we had a bear market in stocks. Don't forget Russia, Ukraine's going on, and the slap hurt around the. Will Smith. Oh, that's right. I mean, poor Chris. That's a really big deal. That was, we had Elon, all this stuff going on with Twitter that's still going on, right?
That hold debacle right now with, uh, Sam Bank, freed and ftx. So a lot of things happen this year, but let's face it, every year has its issues and no matter what, one thing doesn't change, people still wanna. Absolutely. So with that in mind, here are some of our top tips. Number one, reassess your spending.
That's right. This is very important, especially because of what happened in the market. The, the pullback in the market has really made what's called sequence or return risk. A real thing right now, and if you don't remember, we've touched on this in previous episodes, but this is a risk of experiencing a market drop in the early years of retirement.
And you know, here's a chart from Charles Schwab and this chart. What happens to, uh, what happens to two investors who start with a million dollar portfolio? They take an initial withdrawal of $50,000 with a 2% inflation adjustment every single year after, but then they experience a 15% drop in portfolio value.
The investor who faces a decline earlier in retirement runs outta money far sooner than an investor who does so. . So really what this is showing is that if you experience a major loss in the first few years of retirement, you're more likely to run outta money if you don't adjust your spending. because really retirement spending should be flexible.
It shouldn't be. I mean, you should have an idea in mind, like we've talked about goals and a budget. Mm-hmm. , all of that is very important, but at the same time, you have to be flexible. You do it. Having that flexibility, knowing that retirement spending is not like a salary. It's not like a straight line every single year where you get that steady increase of cost, of living adjustment like you built in your retirement.
Life doesn't operate like that and retirement does need, unfortunately. So this is where that bucket strategy comes into play. Uh, and we've talked about this before, but keeping that one to two years of cash reserves on hand and then three to five years in short term investments will be important. But really use this time, especially early next year, to reassess how you're spending is in retirement.
And tip number two, be prepared to retire early. That's right. So the Employee Benefit Research Institute, they constantly do surveys, and what they found is that a significant percentage of American retirees leave the workforce earlier than they planned. Now, according to the survey, they say that over 30% of the people had to quit because of health problems.
Uh, 30% say they expect to work till age 70, yet only 7% make it. Which is shocking because what did that other article say that 65 is the new 70. 70 is the new, yeah. Or 70 is the new 65. It's so either way you get what we're trying to say there. I really do think that other list they were trying to squeeze into that 45, chop it down to 10
Yeah, maybe 15. Maybe 15. Uh, another one, 25% say they were forced into early retirement by their companies. This is the important one I think you really want to prepare for because there is a lot of discuss. About a potential recession. I know we've talked about it quite a bit. Right now, the entire yield curve is inverted, which is typically a leading indicator of a recession.
You know, the Fed's still raising rates. I don't care if they're going from 75 down to 50 like they're talking about. It's still raising rates and companies are now starting to lay off employees, and we're starting to see this outside of mega cap tech. So, so what should people do, Mo? So the general theme there is kind of, To plan for the unexpected as best you can.
I mean, we've gone into detail about that in previous episodes quite a bit. Kind of stress testing your retirement portfolio, things like that. But if you're unprepared to retire and you're being forced into it, again, that kind of goes back to being flexible with your retirement. You have to be well, and this gives you the opportunity to realize, okay, if something happened to me and I had to retire, you know, January 1st, 2023.
Am I financially able to do that or would I need to start looking for a job immediately and then really start going through those worst case scenarios? I know it's not fun. Everybody wants to have everything be rainbows and sunshine out there, but well, naturally it's just not always that, you know, that's not always the case.
And I've seen it so many times over the past 15 plus years of doing this, where people who are, who've been in working at a company for 35. They get pushed out and then they have a hard time finding a job after that. So it's really making sure that you're looking at all those different scenarios now and planning for kind of the worst case scenario.
Absolutely. So with that comes tip number three, maximize new saving limits. So the irs, they increase how much you can save by almost 10% into your 401k. So next year you can save more than ever before. Yay. Uh, this year it was 20,500. Next year it'll be 22,500. Every little bit helps. It does. And if you were over the age of 50, you can now save up to $7,500 in a ketchup contribution, which is up a thousand dollars.
If you're over 50, you can save $30,000 into your 401k, and that's not even including a match. So you can really, if you haven't started saving, you can really start making up some ground over the next couple years because, you know, it looks like they're trying to get more aggressive in how much people can save and, and allowing for more there.
Uh, and also the Roth IRA income phase out. That range also increased. So for singles and head of household, it used to be, so in 2020, A hundred twenty five, a hundred twenty 9,000 to 144,000. Now the new range for next year is gonna be 138 to 153. And then for married couples filing jointly, uh, that range was 204,000 to two 14.
It's going to two 18 to 228,000. So that's a nice increase. Yeah, it is. And it's great to be able to save more when the market's down. I know everybody wants to shy away from it. I know there's the thought of, well, you know what? I don't want to save money and just watch it go. But this is still in a long term period of time, it's still the best time to save because asset prices are lower.
And at some point, what do we always say, Mel, at some point the market will go back up. It'll reach a new high at some point. When is that gonna happen? We have no idea. No idea. Please. We just know. We have no idea. Um, so I think honestly though, this, our tips a little bit play back into the, the top 10 at least.
I mean, very much. Granted they had three that were the same. Pay yourself first start saving all of that. But that is one of the best things you can do. I mean, definitely take advantage of these new limits that are going to be coming out. I mean, and get automated. Mm-hmm. . But number one, stress test. Check it out.
Right? Make sure you're saving enough. I mean, you, you can't prepare for something that you're not even thinking. Yeah, that is true. And so just before we, uh, before we recap, we wanna make sure, make sure you hit that subscribe button, right, Mel? Absolutely. Uh, follow along with us. Yeah. Because we're doing these once a week.
We love coming together and doing these things where we're not, you know, arguing about our kids' college fund. Um, so thank you for joining us on that. But we just wanna recap for you the top three retirement tips for 2023. Mel, what do we got? So we've got assess your spending, prepare to retire early.
That's right from your choice or, or not, um, maximize your savings. And then we've got a bonus one. We do have a bonus one. We haven't talked about investing really that much. No. And so you wanna make sure that your portfolio is aligned with your goals and not just some strategy that's thrown together. Uh, make sure that every investment in your portfolio has a purpose to help you achieve your.
And this is one that yes, you want to do more than once or twice a year, but really as we're getting ready to come upon your end, some people get to take some time off. Reassess how you're allocated. Are you taking the appropriate amount of risk based on your individual goals and not just some general, Hey, I'm gonna put this in there and throw a bunch of funds into my four.
Make sure it really aligns with what you're trying to accomplish, so, so those are our top three retirement tips for 2023. And make sure you check out the video that we recently released on why I am finally optimistic on retirement. You don't wanna miss it. He's never optimistic, so you definitely wanna check that out.
Yeah, so check that out. We're linked to that right here. So thank you for watching this, and we'll see you in the next.
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