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take out the the annual budget for vacations and then add in inflation. Inflation is probably going to supersede that given enough time. 15, 20 years into retirement, just our baseline expenses is going to be more than today’s baselines plus the travel and vacations that we are doing. And we do go through phases of retirement. The go-go years, the slow-go years, the no-go years. And so >> [music] >> Peter, good to see you. Welcome back, everyone. This one is really interesting. Your peak spending years in
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retirement. I’m going to throw a number at you, a number that may surprise you. 12. This is how long the average healthy 60-year-old has before their mobility, energy, and independence start to decline. That stat is from the Office for National Statistics. Peter, do you think that data would surprise most people? >> Um well, averages never everyone, right? It is the product of extremes. So, some people have 25 and more years. Some people only have a few, but on average, being just a dozen years of active
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retirement. Yeah, I think that would surprise a lot of people. I I see both sides of this though. I see people who think that they are invincible and going to be active and stay that way forever and never plan on a decline in activity. And then I see some people who say, well, I’m I’m only going to travel for, you know, the next three or four years before I start to slow down. And I take a look at them and and I ask, well, is there some health issue that is indicating that to you? Because we are
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staying active for longer than previous generations, certainly. And we’ve got to plan and prepare for those active years a little bit more. And I think we’ll probably talk about some different phases of retirement here and different ebbs and flows of what spending is reflected on each of those. So, but I do agree, Aaron. I think a lot of people would be surprised by this data saying that that average is only a dozen years of active living in retirement. >> Right. And when you know the data, your
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financial plan should reflect it. And your plan should be designed then not to produce a flat income over 30 years, but to support a rich early retirement and a more modest one later because that’s how you will actually live whether you plan for it or not. >> Well, and and here’s where I start to say, yes, but there’s there’s some cloudiness there because that rich living early in retirement, we’ve got to keep that between the guardrails so that we can continue to live comfortably in
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those later years and even if we are not as active in those later years, inflation tells me that they may cost more even for just some of the baseline activities that we do today. Take out the the annual budget for vacations and and then add in inflation, inflation is probably going to supersede that given enough time. 15, 20 years into retirement, just our baseline expenses is going to be more than today’s baselines plus the travel and vacations that we are doing. And we do go through phases of retirement. The go-go years,
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the slow-go years, the no-go years. And so I I talk to people who think that their spending is actually going to decrease over time. Number one, when we do retire and reverse the direction of our money instead of making contributions to our retirement accounts, we start taking withdrawals, I think a lot of people who have been very disciplined savers and investors making contributions tend to tighten up. And so we don’t enjoy those go-go years as much as we possibly could. And and that’s
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just as much of a of a of a travesty is that if we had the ability to do a little bit more spending during those active years and we didn’t do it, think of all of those things that we’re going to look back and say wish I woulda coulda shoulda done this and I didn’t. We want our money to create memories not not not say, you know, oh I I had the money wish I would have done this, not regrets. So that’s part of it. During those go-go years you got to have a plan to give you some guidelines so
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that you are doing the things that you dream about. But on the other hand, during those slow-go years and those no-go years, people think their spending is just going to curtail and go off of a cliff and you might not be doing the active living, but you are doing more expensive living because a lot of times we are hiring people out to take care of things that we once Right. could take care of for ourselves. And comfort and convenience cost money. And so does the the the medical and lifestyle assistance
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that we might require into those later years. So we’ve got to plan for that, but we want to do things while we can do things, but within reason. If we overspend Erin for, you know, one or two years, that’s probably not going to completely change our trajectory. But if we do that for five or 10 average living of of 12 years, like that is going to jeopardize the years thereafter and maybe that’s why we’re seeing some spending slowdown after that period of time. >> Mhm. Well, I know you are a student of
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the numbers, so let’s talk through this white paper, which I do find very interesting. This is on how spending changes through retirement, and according to this study, retirees spending on travel and leisure peaks around age 75 and then drops. Again, not because the money ran out, but because the physical capacity to enjoy it did. Have you found that to be true? >> Yeah, I mean, I I’m seeing this in my own mom’s kind of life cycle here is during her first several years, decade
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of retirement, they were taking bigger trips, they were they were active, and then that’s started slowing down a little bit more closer to home. But but yeah, I think that it probably peaks, and here’s the part of this that I’m not sure was completely accounted for, because people haven’t exercised the spending muscle. They they are almost too conservative often times in the first few years, and so as they get into retirement, 5 or 10 years, they become a little bit more comfortable and and
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realize, oh, I do have enough within my budget to to do a few of these things. Maybe by that point in time they’ve got a paid-off house and freed up all of that money. We talked about that recently and how freeing that can be, Aaron. Um maybe that comes into play and all of a sudden we’ve got a little bit of of comfort and discretionary room within our budget, and so we start spending more, and then the physical limitations, the the the I don’t want to take as long a car trip, I don’t want to fly as far
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anymore, starts to take hold sometime as this paper indicated, sometime in our mid-70s. And again, this isn’t average, it’s not the same for everyone, but I think that we all have kind of those dream trips and and things we want to accomplish, the bucket list, and we should be knocking those out along the way. I mean, one of the the mottoes at Roshan Planning is that someday starts today. We don’t want to wait until >> Right. >> someday and then never accomplish it. We want to create memories, not regrets
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with our money. And so we we need to have a plan. And that’s the thing is going to help us with our spending and keeping it between the guardrails, so to speak. Saying yes, we can do these things and maybe no, we shouldn’t do quite as much of them is a range. It’s not a hard set you have to say no to everything. It’s not a you should do everything you want in the first couple of years, either. Pace yourself. >> Right. And [snorts] you introduced a very interesting topic, which is when we
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first enter retirement, we are so very conditioned to save and scrimp and build up that nest egg that it really can be a difficult transition for people to reverse that, you know, start tapping their nest egg. And that’s why I think a lot of people do spend that first decade of retirement worry that they will deplete their nest egg. And this comes back to what we’ve touched on many times, when you don’t have a plan and you can’t see the numbers in front of you, that hesitation makes sense.
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>> I have seen people physically uncomfortable after a very short time into retirement just because they are now taking withdrawals from those accounts. Um it leads to stress and stress is is a health factor, right? Stress kills. Um but once they have a plan, I have seen that physical reaction change. Uh shoulders get a little easier, a sigh of relief. You mean I can do this spending and I I don’t have to be so concerned. Yeah, that’s what you’ve saved for for all these years. But it’s an it it it’s
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a muscle, it’s an exercise that you have not been working on. And you know, we we all have uh seen the the the gym rat that always forgets leg days, right? And things are completely unbalanced. Their upper body is massive, but their lower body sticks for legs. Um we we we only build in the areas that we work on. And so, when we have been a saver making contributions and have not exercised the spend the money and have fun and enjoy it muscles, we’re not really very good at that. And we’ve got
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to develop those muscles. >> Mhm. >> So, again, the plan is what is going to give us the space, the permission, the freedom to do some of that spending that we dreamed about envisioned. And ultimately, it is the reason that we saved so so so aggressively and put that as such an important part of our financial progress and had that discipline. And that’s why again, I think that it all comes down to planning. You should have a plan all along the way for the goals for the future, but especially as we get into
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that red zone, 5 to 10 years out from retirement, 5 to 10 years into retirement, like that plan needs to be revisited pretty often to make sure that we are keeping it between those guardrails, doing some of the things that we always dreamed about, hoped for, and envisioned, but not overdoing it to where we’re jeopardizing future years. >> Right. Now, that the biggest takeaway I found after, you know, looking at that white paper, retirement planning isn’t so much about saving money, it’s also
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reconditioning, reprogramming, and learning when to spend it, too. >> Well, we are not promised tomorrow, and he or she who dies with the biggest pile of money is not the winner, but ultimately, we want that pile of money to last as long as we need it to. And that’s where planning is vitally important. So, again, it’s something that we talk through with our clients, and and as much as we talk about the money, especially as we are formulating the plan, we also talk about the time. What
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do you want to do with your time? What is going to fill your time? What do those kind of activities cost and how do we work that then into the financial plan to be able to accomplish those things comfortably and confidently? Um but again, your your money is a tool. It’s a tool to support what is important to you and we are not promised forever health to be able to do those things forever and ever. So, let’s pace ourselves and do some of those things along the way and we shouldn’t save all
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of them for retirement, by the way. If we’ve got younger listeners listening today, like you can’t recreate those family trips and those memories forever. So, do some of those things along the way, but have a plan to make sure that you are putting yourself in in good shape for the future, as well. >> Well said. Peter, somebody would like to get a hold of you to create that plan, create peace of mind. What’s the best way to reach you? >> You can call at Roshan Planning, 919-300-5886.
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919-300-5886. Let’s have a conversation about your goals, your hopes, your aspirations, what’s important to you, then make sure the money is aligned to help you achieve and accomplish those good things. We call it the optimized retirement plan and again, it is a complimentary courtesy service to put that together and just start with a conversation by calling 919-300-5886. You can text that number, as well. Just text your name to 919-300-5886. We’ll get in touch. >> Great. Peter, thank you for your time
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today. I appreciate it. >> Thanks, Erin. Hey folks, Peter Roshan here with Roshan Planning. So glad that you are enjoying the [music] podcast Planning Matters Radio. You know, one of the tools that we’ve put out there that people really seem to appreciate and really are are finding of value is at 919retire.com. [music] It is your retirement tax bill calculator. If you’ve got any kind of retirement [music] account, your tax deferred 401k or IRA, this is the website, this is the resource where you
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can go, you can plug in your own numbers, your information, you can slide the [music] the the tool calculator up and down for your tax rate or your amount of savings >> [music] >> and see what your tax bill is likely to be if you default and defer to the IRS’s plan versus what you could potentially bring that tax bill down to. A lot of times it is a very significant saving. So, if you have not yet, go to the website 919retire.com, run your numbers on the retiring tax bill calculator.
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>> This has been Planning Matters Radio. >> The content of this radio show is provided for informational purposes only and is not a solicitation or recommendation of any investment strategy. You are encouraged to seek investment, [music] tax, or legal advice from an independent professional advisor. Any investments and or investment strategies mentioned involve risk, [music] including the possible loss of principal. Advisory services offered through Brooks Own Capital Management, a registered investment
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advisor. >> Fiduciary duty extends solely to investment advisory advice and does not extend to other activities such as insurance or broker-dealer services. Advisory clients are charged a quarterly fee for assets under management while insurance products pay a commission which may result in a conflict of interest regarding compensation. >> Peter Bashan and Bashan Planning are not affiliated with nor endorsed by the Social Security Administration or any other government agency.
