Retirement Planning
From the Orange Couch

Hello! I’m Ashley Albertson, your Client Service Associate at Tull Financial Group and the host of this video series entitled, “From the Orange Couch.” We wanted to bring this series to you for all the questions that we get so that we can give you answers and hopefully bring some insight to others.

I have joining me our resident expert, Robin Tull, Founder of Tull Financial Group, with more than 35 years of experience in this profession and as a Certified Financial Planner. And so he’s here to talk about retirement planning.

My first question for you, Robin, is: according to a 2021 study, running out of money in retirement scares most people more than dying. With longer life expectancies, how do you answer the question: will I have income to last through retirement?

0:47
Oh, wow. I’ve been doing this a long time, Ashley, and that’s probably the most common question. Am I going to have enough? Will I live long enough? Why does that happen? The answer is that employers used to have this responsibility through a pension plan. Those pension plans are no longer there so that responsibility is going back to the employee through 401(k)s, 403(b)s, and personal IRA accounts. That responsibility is back on them, and that’s why we’re seeing that concern that you’re saying there today.

1:20
So what I’m hearing you say is have a plan.

1:24
Have a plan. Okay, so what do you do now if it’s your responsibility? You’ve got to have a plan. My professor in college always said if you don’t know where you’re going, any road will take you there. So, you gotta have a plan. With a plan, there’s always assumptions. That assumption is how long you are going to live. That’s so important.

And then the second question is what are your monthly expenses at retirement? They’re going to be different in retirement. Health care is going to be more expensive. You’re probably not going to buy as many clothes because you’re not going to work every day or eating out.

Those are the things that you look at from a standpoint, and then you’ve got to plan how am I going to switch from an earned income to taking money from the IRA, 401(k), and so forth, and that’s where that fear comes in – how do you do that?

Speaking of earned income – Social Security. Another question is when should I start drawing?

2:15
I did a report – but I bet no one has ever heard of Reader’s Digest – on the three-legged stool. The three legs of the stool are your 401(k), your personal savings, and then Social Security. Those legs really are what hold up retirement. Social Security provides that gap between earned income and maybe your IRA or 401(k) not providing enough. Social Security’s got to provide that and fill in the gap for that.

2:44
So the question is when should I start? 62 is when you’re able, but it doesn’t always mean that’s when you should.

2:49
Usually, you don’t want to start Social Security until you’ve stopped working. That’s one key to look at because it’s taxable. You don’t want to be taxed with earned income, too. You at least want to wait until full retirement age.

The thing about it is with Social Security, every year it grows by eight percent. Then it does stop at 70, so you don’t want to go any further than that. But if you can delay it – you’re still working – it’ll benefit you because of that eight percent increase.

3:19
That’s good to know.

Another thing is many people look to downsize or maybe move when they are getting close to retirement. What are some financial planning factors to consider to get ready for retirement?

3:35
I just had this last week where a couple when they retire, they plan to move to be near their children (really, their grandchildren). I encouraged them by saying, you may want to go and rent for a little while because you may not like the neighborhood. I know of somebody a few years ago who moved where their kids were, and their kids got another job in another city. They were there. They bought the cows. And so, there’s things you have to look at. Some people go to these– you’ve heard of The Villages and things like that? The Villages will allow you to go and spend a couple of weeks to see if you like the neighborhood, see if you like the people, and see if you like that lifestyle. And so, those are the things you have to look at.

4:14
What do you say about those first six months in retirement? What does that look like?

4:19
It’s really easy when you think of retirement. Those first six months are pretty easy– what you’re going to do. It’s planning for after that. It’s not just the planning about the money, but it’s the planning of what you are going to do. What are you going to do every day when you get up?

4:32
You only golf five times a week for so long. That’s right. Or take that cruise. You’ve got to have a plan for your time as well as your money. That’s good.

Last question, healthcare. It’s one of the largest expenses most people face in retirement, so how can you plan for those costs?

4:53
I think we do assumptions again of what that increase is going to be. But if you wait until 65, Medicare is pretty much going to subsidize that cost. For clients of ours who retire at age 60, we’ve got to find a way to fund that during those next five years. It can be done, but it takes a little bit of, again, extra planning.

5:14
Planning. That’s what I’m hearing. Well, thank you so much, Robin, for your insights on this. I hope this is helpful to everyone, and if there are other ideas and topics for us to discuss, please shoot us an email, leave a comment, and then look forward to the next video: “Maximizing Employee Benefit Plans.”

5:32
Look forward to it. Stay tuned! Thank you.