Surprising Research: Retirees Can Spend More Money in Retirement
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- เผยแพร่เมื่อ 23 มิ.ย. 2024
- In this episode of "Retirement Made Simple," we delve into the fascinating world of guaranteed income and its profound impact on retirement spending. We explore why many retirees, despite having sufficient funds, often underspend in their golden years. We discuss the findings of the Health and Retirement Study (HRS) and how it reveals that households with more wealth in guaranteed income spend significantly more each year than those with more wealth in investments. We also touch on the concept of annuitization and its potential to increase retirement spending.
Furthermore, we examine the role of annuities in retirement spending and how shifting non-annuitized wealth into an annuity can lead to increased spending. We also discuss the ways annuities are abused by sales people for a commission.
Website // foundryfinancial.org
Facebook // https// retirementpodcast
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ABOUT ME
I’ve always been passionate about personal finance, investing, real estate, and helping people find the freedom to live their life with purpose. But when my dad died in 2015, I tried to help my Mom find an advisor to sort out her finances. Instead of a helping hand, I found an industry of financial advisors dominated by glorified salespeople working on commission - pushing products that were not in my mother’s best interest. Or advisors with minimums that shut-out all but the ultra wealthy.
Disappointed with the options, I took matters into my own hands and launched Foundry Financial, a wealth management firm with transparent pricing that specializes in helping provide clarity around money - so you have the confidence to make smart decisions.
My goal is to help a million people retire without worry!
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📅 THE BASICS OF RETIREMENT PLANNING
The 5 steps of retirement planning
Retirement planning has several steps, with the end goal of having enough money to quit working and do whatever you want. Our goal is to help people master retirement and retire without worry.
Step 1: Know when to start retirement planning
When should you start retirement planning? The earlier you start planning, the more time your money has to grow.
That said, it’s never too late to start retirement planning. Even if you haven’t so much as considered retirement, don’t feel like your ship has sailed. Every dollar you can save now will be much appreciated later. Strategically investing could mean you won't be playing catch-up for long.
Step 2: Figure out how much money you need to retire
The amount of money you need to retire is a function of your current income and expenses, and how you think those expenses will change in retirement.
Step 3: Prioritize your financial goals
Retirement is probably not your only savings goal. Lots of people have financial goals they feel are more pressing, such as paying down credit card or student loan debt or building up an emergency fund.
Generally, you should aim to save for retirement at the same time you're building your emergency fund - especially if you have an employer retirement plan that matches any portion of your contributions.
Step 4: Choose the best retirement plan for you
A cornerstone of retirement planning is determining not only how much to save, but also asset allocation. It can make a massive difference in your retirement plan.
Step 5: Select your retirement investments
Retirement accounts provide access to a range of investments, including stocks, bonds and mutual funds. Determining the right mix of investments depends on how long you have until you need the money and how comfortable you are with risk. It’s often helpful to talk with an adviser to discover the right mix of stocks and bonds.
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❣ SPONSORED:
No, this video was not sponsored.
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⚠️ "DISCLAIMER:⚠️
This is not financial or investment advice. This Channel is meant for EDUCATIONAL AND ENTERTAINMENT PURPOSE only. None of this is meant to be construed as investment advice, it's for entertainment purposes only.
Do you think you could be spending more money in retirement?
Some great ideas. One of the big problems is that I've seen very little growth in the Financial Planner mindset over the past 20 years. Monte Carlo simulations and the 4% rule are still a major part of the industry's mantra, yet we all know intuitively that people don't live according to a straight line on a spreadsheet. Watching your parents age helps show that the "smile" graph you talk about really is the way people live and age in retirement. Thanks for stepping out of the crowd and helping people like me feel more confident about the journey of retiring.
Thanks! I do think more advisors are catching up, but you’re right - the industry is way behind.
I've taken a blended approach to retirement income. Last year I bought a deferred income annuity. Plan to start lifetime income payments in 7 years at 65. Will defer SS until at least that time as well. Will retire in August a couple months before my 58th birthday. I'm very excited to start my next stage on life.
Congratulations on the next stage of life!
I've watched literally hundreds of retirement videos and this is one of the best regarding struggling to spend. I'm single, retired 13ish months ago at 59.4, and am fortunate to have more saved than most (but most in pre-tax). My big broker has been pushing annuities, but I'm not biting. That said, with today's higher MM rates, I am considering placing most of my pre-tax funds in a MM fund to create my own pseudo-annuity (thought being I mitigate sequence of returns risk). If/when rates go back down, then I dollar cost average back into equities. I'm thinkin' this plan might help me spend more.
Thanks, Rick! That strategy has inflation risk. If you want to create your own annuity I’d look into a TIPS ladder, but it has its own issues. Actually, there’s interesting new product built on top of TIPS that might be a good option, especially since you’re single. It functions similar to an annuity without the commissions.
@@foundryfinancial I would argue that sequence of returns risk is potentially much more devastating than inflation risk...but thanks for the TIP. 😜
Time in market has proven reliable in growing a portfolio. Timing the market has been proven to almost always underperform the market.
@@fialee8ca132 Agreed, but retirement (time running out) can change one's investment strategy.
Great video. I’ve always heard that annuities are not the best investment (which you confirmed), but you make some great points about the emotional side of investing. Having at least some portion of your retirement income coming from an annuity sounds like a good idea.
Thank for sharing...really good information.
Thanks!
My wife and I have been practicing our retirement budget for the past 5 years.
Spending $5,000 per month but our health insurance is not included because I have a health plan at work.
So when we retire we will have a $6,000 budget to include Medicare coverage and a little more monthly fun things like eating out.
I will be retiring on May 31 2024 at 67 1/2 and will be taking SS at 70.
Once we start getting SS we will still have a budget of $6000 per month but will also have a special big fun budget of $20,000 per year.
The $20,000 is for big fun things like trips, extended family parties etc.
This way if we need to cut back we just stop doing the big fun things.
What about folks who retire with a low amount of money in their nest egg, no guaranteed income.
The idea is people underspend relative to what they could potentially spend.
Waiting until 70 for SS is a poor gamble. Many will get nothing if you wait, thats what gubmint is betting on. If you wait until 70 you will still get same amount but in fewer but larger payments in inflated dollars and then only if you live a long life. Do you feel lucky?
Annuities are great for people that sell them 😂