Don't forget to eat right and exercise! Remember, if you don't have your health, you don't have anything. Stay healthy and active for as long as possible and you will be able to enjoy your retirement.
Agree, but you need to do more than just exercise; if you want to avoid the pitfalls of age-related sarcopenia and general deterioration of balance and strength, you need to do some serious resistance and cardio. Moreover, not being active throughout the day essentially nullifies whatever exercise routine you do, so you need to be moving throughout the day.
@@brute_force_and_ignorance Facts. I experienced the same - jobs where I was sedentary was not offset that much by regular exercise. Thankfully now I can afford to take a lower paid job where I can move more.
Once I projected a monthly retirement amount needed, I instituted living off that budget in the last year I was working (everything earned above the amt. went to savings). After a one year trial, I was fully confident in pulling the trigger. Five years later the budget has not changed.
I would suggest a couple honorable mentions: Will, Living trust, POA's as needed, and review of beneficiaries on accounts. Not necessarily within 5 years of retiring but at least good to reiterate.
Start purging excessive clutter and junk likely you have been in the same house for a long time and accumulated a lot of stuff. Pretend your moving and start reducing and removing as much as you can. I think you'll feel a lot better moving into the next phase without tons of stuff holding you back
Thanks Rob, excellent list! The only things I would add are non-financial items. Communicate with your significant other and be sure they are buying into the plan. Have a plan for what your new priorities will be or you want them to be. Visualize what your “workday” will become ahead of retirement. You still need goals and fulfillment to take the place of work duties.
Invest judiciously, keep a stop loss figure. Shuffle between debt and equity wherever the ratio goes too off your target. As for the target, I recommend a Ratio like this Debt % should be equal to your age in years. If you are 20, debt is 20%, reset in equity. If the market falls or rises drastically, your debt % will change, which you should rebalance to 20% and bring back equity to 80%. Thus you would have bought low or booked profit depending on if it was a crash or a bull run.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
1 am retiring next year but the thought of retirement gives me weakness. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you never imagined to happen. It’s so difficult for people who are retired and have no savings or loved ones to fall back on."
I would add doing any known big upgrades/purchases while you're still working, whether that's a new roof/hvac/remodeling, etc or new(er) vehicles, getting any promotional financing will be a lot easier to get if you have income from a job.
If you have a vacation home or other property that is not your primary residence that you intend to sell one day (and the taxable income is high), then sell before the 2 year look back for Medicare enrollment, or you may have an IRMAA expense that could have been avoided.
Great list! I will be retiring in four to five years at 70. Both my wife and I have set up binders with critical docs e.g paid-off mortgage, car titles, social security and pension information, DD 214 etc. Also have letters of instruction for each of our four kids and my wife. Trying to make the handling of our estate as easy as possible for the next generation.
HELOCs are kind of meh. The banks can close them whenever they feel like it, so you can't count on them in an emergency. That's what they did in 2008. The only way to get a guaranteed line of credit out of your home is a HECM. The higher costs of a HECM mean getting one is a decision that requires careful consideration.
I've been retired almost three years and couldn't agree more that Fidelity is the best for the de-accumulation phase. I am hesitant to rollover all of my 401K accounts because of the ERISA protection from creditors and lawsuits that IRAs seem to lack. Do you take this into consideration?
You're not wrong about that protection, but *rollever* IRAs from 401k's have some protections from creditors that regular IRAs do not. Varies by state. But do NOT mix the two.
...interesting. I googled "Is ERISA a reason not to do a rollover IRA" and the answer said what you said.: "Yes, ERISA can be a reason not to do a rollover IRA because it generally does not protect IRA funds, meaning that rolling over money from a 401(k) plan covered by ERISA to an IRA could result in less creditor protection for your retirement savings; therefore, if creditor protection is a major concern, you might choose not to rollover to an IRA."
Wonderful content as always Rob. I am planning to retire in 11 years and literally have made a plan based on all points you mentioned. Also have Bold-in already and eyes are set on the target. Thanks 🥳. One thing I would add in list is - Make sure you and your spouse are on same page and in case you are planning to retire abroad, plan to rigorously research a good international tax advisor who understands tax treaty laws between nations etc. etc.
How do I go about finding someone to handle the finances in retirement if 1 spouse dies and the other is not capable. Someone who can pay the bills, etc
Robs advice would be to hold fixed income like bonds in the ROTH IRA due to all interest from bonds being ordinary income tax and you can avoid that in a Roth IRA.
I don’t know why. Rolling it into an IRA gives you complete control over your investment choices. Staying in your employer plan limits your choices to what they will allow. Rolling it gives you more flexibility.
@@bigjohnny5280 If you retire at 58, roll over your 401k to an IRA, you won't be able to withdraw without penalty from that IRA until your 59.5. At 58, you can withdraw from that 401k without penalty. Rule of 55
Another excellent video, but it’s time to update your video description. Under Financial Tools you list your retirement plan coming from New Retirement (instead of Boldin) and the link points to their old URL. It still redirects, fortunately, but maybe won’t sometime in the future.
Excellent video. One note of caution with a home equity line of credit, commonly known as a HELOC - most loan documents provide that the lender can freeze or substantially reduce the amount of the line in their sole discretion for any reason, or if they believe your financial situation has changed or the value of the home has gone down, thus leaving you without access to the line during an emergency. This actually happened quite often during the “great recession.”
You talked about vanguard and fidelity giving $$ to switch your money to them. Is there a percentage they use is it arbitrary? How and where do I find out this info? I’ve searched online but can’t find anything. Vanguard used to have an office by me but I think they closed all their offices.
My biggest pre-retirement challenge is modeling my spending accurately. I have a very good grasp of my monthly expenses from 8 years of detailed tracking. It's hard to budget though for the bigger-ticket unknowns: car replacement, major home repairs. Right now I'm using my best guess - regression analysis on top of my monthly expenses, which incorporates a lot of big ticket outliers from recent years. This puts my projected monthly spend about 15% higher than my average monthly spend, which seems like a decent, conservative buffer. Curious how others do it?
I have a budget for those thing each year. Some years I don't use it. Others I do. "House maintenance", "car maintenance", stuff like that. When I don't use it, it goes to reserves.
...interesting topic / question. While I DON'T budget long-term unknowns and probably should, I'd do it the same as I do my annual expenses. For ex., property taxes, AAA, Quicken subscription, TurboTax, etc.; I divide the 1-time annual expense by 12 and put the result in my monthly budget spreadsheet. So with longer-term expenses, like a car, I'd divide the 1-time cash purchase by 120, assuming I want the car to last at least 10 years.
Rob, are dividends and interest income that I take out of my investments annually to fund my retirement included in my 4% sum that I might withdraw in the first year of retirement?
I would add: Educate yourself on how IRMAA works at least 2 years before you start Medicare to see if you can avoid IRMAA fees based on your MAGI. Things like Roth conversions can push you into paying IRMAA fees.
These are all great recommendations. Unfortunately, I find it next to impossible to estimate expenses with any accuracy. I retired a little over two years ago at 50. Since then, my property taxes and home insurance have increased dramatically. I have three daughters (14, 19 and 21). Unanticipated expenses are far higher than I expected (e.g. 19 yo tore her ACL on a recent family ski trip requiring ER visit on the mountain as well as $3k MRI!). My post-retirement spending has been significantly higher than my pre-retirement spending. Predicting health insurance costs over >10 years seems impossible. The laws associated with the ACA are always changing (subsidy cliff etc.). Rather than an accurate spending estimate, I'm relying on flexibility and having accumulated far more than I expect to need. I'm also not ruling out returning to work.
You don't really have to track every individual expense to know what you're spending right now, just take total revenue minus savings and that will give you your total expenses including taxes.
We are retiring in 2027 and currently on a five year plan. We started doing Roth Conversions in 2024. We only have to pay Federal taxes because IL is tax free for IRA distributions. So we are normally in 22% tax bracket so we max. It is easier doing conversions while working helps pay the tax bills. Where we are retiring to taxes IRA distributions so we are saving 7-8%. The goal is to be fully Roth before taking SS @ 67. That is our tax planning to min. taxes in retirement.
A suggestion for those getting ready to enter their recurring expenses in Boldin- I think you should leave out your Medicare costs (premiums for Part B, Supplement Plan, and Part D). Also, leave out any estimated tax payments. All of these should be calculated and accounted for elsewhere within the software.
Don't forget to eat right and exercise! Remember, if you don't have your health, you don't have anything. Stay healthy and active for as long as possible and you will be able to enjoy your retirement.
Agree, but you need to do more than just exercise; if you want to avoid the pitfalls of age-related sarcopenia and general deterioration of balance and strength, you need to do some serious resistance and cardio. Moreover, not being active throughout the day essentially nullifies whatever exercise routine you do, so you need to be moving throughout the day.
Health is wealth!
@@brute_force_and_ignorance Facts. I experienced the same - jobs where I was sedentary was not offset that much by regular exercise. Thankfully now I can afford to take a lower paid job where I can move more.
Once I projected a monthly retirement amount needed, I instituted living off that budget in the last year I was working (everything earned above the amt. went to savings). After a one year trial, I was fully confident in pulling the trigger. Five years later the budget has not changed.
I would suggest a couple honorable mentions: Will, Living trust, POA's as needed, and review of beneficiaries on accounts. Not necessarily within 5 years of retiring but at least good to reiterate.
Start purging excessive clutter and junk likely you have been in the same house for a long time and accumulated a lot of stuff. Pretend your moving and start reducing and removing as much as you can. I think you'll feel a lot better moving into the next phase without tons of stuff holding you back
Absolutely! "Minimalism" is a good lifestyle to research.
Consider any major healthcare procedures / surgeries before you retire. You may have much better healthcare coverage prior to retirement.
None of these great 13 steps were a total surprise.... Because I watch Rob Berger! Thank you RB!
Thanks for watching!
Thanks Rob, excellent list! The only things I would add are non-financial items. Communicate with your significant other and be sure they are buying into the plan. Have a plan for what your new priorities will be or you want them to be. Visualize what your “workday” will become ahead of retirement. You still need goals and fulfillment to take the place of work duties.
Invest judiciously, keep a stop loss figure. Shuffle between debt and equity wherever the ratio goes too off your target. As for the target, I recommend a Ratio like this Debt % should be equal to your age in years. If you are 20, debt is 20%, reset in equity. If the market falls or rises drastically, your debt % will change, which you should rebalance to 20% and bring back equity to 80%. Thus you would have bought low or booked profit depending on if it was a crash or a bull run.
Effective personal finance management is more important than the amount of money saved, regardless of whether income is earned through job or investment. Individuals can seek counsel from a certified financial advisor to optimize financial outcomes, who can provide specialized advice and methods to decrease expenses and maximize income.
1 am retiring next year but the thought of retirement gives me weakness. My apologies to everyone who have retired and filing social security during this time after putting in all those years of work just to lose everything to a problem you never imagined to happen. It’s so difficult for people who are retired and have no savings or loved ones to fall back on."
I would add doing any known big upgrades/purchases while you're still working, whether that's a new roof/hvac/remodeling, etc or new(er) vehicles, getting any promotional financing will be a lot easier to get if you have income from a job.
Agree totally. Trying to get most of that stuff done before I retire. Good feedback!
If you have a vacation home or other property that is not your primary residence that you intend to sell one day (and the taxable income is high), then sell before the 2 year look back for Medicare enrollment, or you may have an IRMAA expense that could have been avoided.
Excellent tips. Thank you for the content.
Develop an excel spreadsheet to track all your expenses. You gotta know what you spend and where. Then plug in an inflation factor for the essentials.
Great list! I will be retiring in four to five years at 70. Both my wife and I have set up binders with critical docs e.g paid-off mortgage, car titles, social security and pension information, DD 214 etc. Also have letters of instruction for each of our four kids and my wife. Trying to make the handling of our estate as easy as possible for the next generation.
HELOCs are kind of meh. The banks can close them whenever they feel like it, so you can't count on them in an emergency. That's what they did in 2008. The only way to get a guaranteed line of credit out of your home is a HECM. The higher costs of a HECM mean getting one is a decision that requires careful consideration.
I've been retired almost three years and couldn't agree more that Fidelity is the best for the de-accumulation phase. I am hesitant to rollover all of my 401K accounts because of the ERISA protection from creditors and lawsuits that IRAs seem to lack. Do you take this into consideration?
You're not wrong about that protection, but *rollever* IRAs from 401k's have some protections from creditors that regular IRAs do not. Varies by state. But do NOT mix the two.
@ Can you elaborate on what you mean by not mixing the two? Thanks
...interesting. I googled "Is ERISA a reason not to do a rollover IRA" and the answer said what you said.:
"Yes, ERISA can be a reason not to do a rollover IRA because it generally does not protect IRA funds, meaning that rolling over money from a 401(k) plan covered by ERISA to an IRA could result in less creditor protection for your retirement savings; therefore, if creditor protection is a major concern, you might choose not to rollover to an IRA."
Evaluate your assets that could be at risk, and add an umbrella policy to your insurance for that amount. That could help protect against lawsuits.
Wonderful content as always Rob. I am planning to retire in 11 years and literally have made a plan based on all points you mentioned. Also have Bold-in already and eyes are set on the target. Thanks 🥳. One thing I would add in list is - Make sure you and your spouse are on same page and in case you are planning to retire abroad, plan to rigorously research a good international tax advisor who understands tax treaty laws between nations etc. etc.
How do I go about finding someone to handle the finances in retirement if 1 spouse dies and the other is not capable. Someone who can pay the bills, etc
Rob, I’m nearing retirement with only a Roth IRA and a Taxable brokerage account. Which account would be better for my bond holdings?
Robs advice would be to hold fixed income like bonds in the ROTH IRA due to all interest from bonds being ordinary income tax and you can avoid that in a Roth IRA.
@MRk Thanks.
If I'm under 59 1/2 when I plan on retiring, I should probably think twice about rolling my 401k into an IRA right?
I don’t know why. Rolling it into an IRA gives you complete control over your investment choices. Staying in your employer plan limits your choices to what they will allow. Rolling it gives you more flexibility.
@@StateParkSteve If you're under 59.5, you'll be penalized if you remove funds from a traditional IRA. Rule of 55 on 401k's
A rollover is not considered a withdrawal so no penalty if under 59.5
@@bigjohnny5280 If you retire at 58, roll over your 401k to an IRA, you won't be able to withdraw without penalty from that IRA until your 59.5. At 58, you can withdraw from that 401k without penalty. Rule of 55
@@bigjohnny5280 Which is why I said "remove funds".
Another excellent video, but it’s time to update your video description. Under Financial Tools you list your retirement plan coming from New Retirement (instead of Boldin) and the link points to their old URL. It still redirects, fortunately, but maybe won’t sometime in the future.
Thank you! This was great.
Excellent video. One note of caution with a home equity line of credit, commonly known as a HELOC - most loan documents provide that the lender can freeze or substantially reduce the amount of the line in their sole discretion for any reason, or if they believe your financial situation has changed or the value of the home has gone down, thus leaving you without access to the line during an emergency. This actually happened quite often during the “great recession.”
Great Video! 😊
You talked about vanguard and fidelity giving $$ to switch your money to them. Is there a percentage they use is it arbitrary? How and where do I find out this info? I’ve searched online but can’t find anything. Vanguard used to have an office by me but I think they closed all their offices.
Fidelity is $1k per $1M. Wouldn’t make that the deciding factor. They won’t advertise it and it can change. It’s an ‘offer’.
My biggest pre-retirement challenge is modeling my spending accurately. I have a very good grasp of my monthly expenses from 8 years of detailed tracking. It's hard to budget though for the bigger-ticket unknowns: car replacement, major home repairs. Right now I'm using my best guess - regression analysis on top of my monthly expenses, which incorporates a lot of big ticket outliers from recent years. This puts my projected monthly spend about 15% higher than my average monthly spend, which seems like a decent, conservative buffer. Curious how others do it?
I have a budget for those thing each year. Some years I don't use it. Others I do. "House maintenance", "car maintenance", stuff like that. When I don't use it, it goes to reserves.
...interesting topic / question. While I DON'T budget long-term unknowns and probably should, I'd do it the same as I do my annual expenses. For ex., property taxes, AAA, Quicken subscription, TurboTax, etc.; I divide the 1-time annual expense by 12 and put the result in my monthly budget spreadsheet. So with longer-term expenses, like a car, I'd divide the 1-time cash purchase by 120, assuming I want the car to last at least 10 years.
Rob, are dividends and interest income that I take out of my investments annually to fund my retirement included in my 4% sum that I might withdraw in the first year of retirement?
Generally, yes.
I would add: Educate yourself on how IRMAA works at least 2 years before you start Medicare to see if you can avoid IRMAA fees based on your MAGI. Things like Roth conversions can push you into paying IRMAA fees.
I believe Bolden does this for you, if you mess with their Roth conversion explorer.
These are all great recommendations. Unfortunately, I find it next to impossible to estimate expenses with any accuracy. I retired a little over two years ago at 50. Since then, my property taxes and home insurance have increased dramatically. I have three daughters (14, 19 and 21). Unanticipated expenses are far higher than I expected (e.g. 19 yo tore her ACL on a recent family ski trip requiring ER visit on the mountain as well as $3k MRI!). My post-retirement spending has been significantly higher than my pre-retirement spending. Predicting health insurance costs over >10 years seems impossible. The laws associated with the ACA are always changing (subsidy cliff etc.). Rather than an accurate spending estimate, I'm relying on flexibility and having accumulated far more than I expect to need. I'm also not ruling out returning to work.
You might be the perfect candidate to go part-time for 5-6 years. I wish you well.
You don't really have to track every individual expense to know what you're spending right now, just take total revenue minus savings and that will give you your total expenses including taxes.
...but I'm too anal NOT to track the expense detail. Pry my Quicken subscription from my cold, dead hands! 🤣
We are retiring in 2027 and currently on a five year plan. We started doing Roth Conversions in 2024. We only have to pay Federal taxes because IL is tax free for IRA distributions. So we are normally in 22% tax bracket so we max. It is easier doing conversions while working helps pay the tax bills. Where we are retiring to taxes IRA distributions so we are saving 7-8%. The goal is to be fully Roth before taking SS @ 67. That is our tax planning to min. taxes in retirement.
I would have liked to see this video 7 years ago.
Regarding 401k and rollovers, consider that 401k money is better protected legally than IRA.
ThkU ! That is my plan.
Perfect timing I’m seven years out
A suggestion for those getting ready to enter their recurring expenses in Boldin- I think you should leave out your Medicare costs (premiums for Part B, Supplement Plan, and Part D). Also, leave out any estimated tax payments. All of these should be calculated and accounted for elsewhere within the software.
If you're not over the age of 59 1/2 transfer your 401k or 403b to your current employer sponsored plan. See the Rule of 55.
Are we all just supposed to trust the 'rules of thumb' for retirement spending? 🤔
You're 1 step away from asking "What is the meaning of life?"
First
Thanks Rob - I'm a year out. I picked up a few idea's. How do I send you an email ? I have a question for you.