Episode 07 | Stages of Retirement Planning: Pre-Retirement
0:00:01.2 Speaker 1: Welcome to the Bradford Financial Center podcast about pre-retirement planning, where your wealth journey is always at the top of our ongoing financial planning agenda.
0:00:13.6 Shallon Weis: Hello, and welcome to the Bradford Financial Center, Small Changes Can Turn Into Big Results Podcast. We're your hosts and part of the Certified Financial Planning Team at Bradford, Shallon Weis and Jim Tausz. And today we're going to talk about retirement planning, covering all of the stages from pre-retirement planning and goal setting, to the smart saving strategies and estate planning over our next few podcast episodes. So we'll focus on the pre-planning part of retirement here. I think it is often overlooked by blogs and planners, but we always think of the road to retirement as being the last five to 10 years before we retire, but it's important to plan so much earlier, so whatever your retirement date is, this podcast is for you. Don't worry, we'll get to all the phases and stages, but today, let's talk about pre-pre-retirement, make sure you stick around for our five in five segment in the last five minutes of our podcast, to get our five key steps to getting the retirement planning right.
0:01:08.8 SW: So Jim here's a few statistics that are kind of jaw-dropping for our individuals, like you have been in the financial planning industry for over 50 years, and me who has 22 years of experience working with clients on their wealth journey. So in 2021, only 56% of workers were enrolled in a workplace retirement plan, and 72% of workers had access to retirement benefits, and that leaves about 28% have to navigate it on their own. But here's what's interesting about the optimism that's just for those in their 20s and 30s. According to a Gallup poll study, when 18 to 29-year-olds were interviewed about retirement, younger people expressed optimism that they'll be able to retire early, closer to their 60s, but once they hit 30, their optimism falters possibly because the realities of making a living and being able to save what they'll need catches up with them. So Jim, do you recall what your attitude was toward retirement in your younger years?
0:02:03.5 Jim Tausz: Well, my grandfather, once he graduated from high school, started out becoming a janitor and a bank teller for his first occupation, and then he became the president and owner of the bank down the road. My father lived paycheck to paycheck, then became self-employed and went bankrupt at retirement age. First, decide what you want. Me, I set my sights on one piece at a time and motivate to work hard, so do what you like, do what you love and want to do, and while you're doing it, have fun.
0:02:39.9 SW: Yes, I agree, Jim, that's definitely action step one, setting your goals for where you want to be and when. So let's dig into this retirement planning phase. No matter where you are on the journey, setting a goal is always the best way to set your attentions and your focus, and honestly, keeping an eye on your goals helps you sustain momentum. This is a key benefit when you are in your 20s and retiring seems like such a far off finish line. So at Bradford we have a playbook that helps our clients determine what retirement looks like for them. Do you want to travel in retirement? Have time to volunteer? Is your vision to leave a legacy through a foundation or a trust with your family? Now, do good while you are alive and see what you can do. They're the best gift that God will give you. These are important to assess because it looks different for everyone. We all have the anticipation of good health, but a change in that can impact what you are able to do, and it might cause you to adjust your retirement date. But the most important thing to note is that your goals may evolve over time as life changes and life events occur. So in your 30s, you're thinking of yourself on a beach, but in your 50s grandchildren might arrive on the scene and your priorities could shift. We see this happen frequently with clients; health, life recessions, they all affect our end goal.
0:03:51.6 JT: That's true Shallon, so looking at the realities of what's on the horizon and planning the best we can for that is where we usually begin the discussion. We take an inventory of where you've been, where you are, and where you want to be, and then we create a plan of action for you. We take into consideration your feelings about risk, we customize your portfolio so that you can sleep well at night knowing that we've invested according to how conservative or aggressive you might be.
0:04:20.0 SW: Life changes, and we help you along the way to help you save enough. And then post-retirement one must focus on how to figure out how to fund your retirement, where you're at for income, the income method, which is dividends, interests and rental, and the value method is a 5% of total value of assets or the guaranteed income method, which is income that you can't outlive such as an annuity, social security or a pension. So these are all great ways to start your plan for retirement. So if you're needing a financial plan to help you set these goals, assess your risk, and devise a formula for building the savings you need to get to retirement, reach out to Bradford Financial Center. Our financial advisory team has helped countless individuals, couples and businesses prepare for all the important stages of their development. And we're experienced and trusted in our approach, and we've been successful at managing wealth journeys for over 50 years. Now, let's jump right into our five in five segment now. Today we're going to keep our focus on the early stages of retirement planning with tactical ways to get retirement planning right from the onset. So let's talk about five tips for getting retirement planning right.
0:05:23.3 JT: Remember, at this early stage of retirement planning, you're in your earlier income earning years. So I like to always remind younger clients that your income potential should improve with age, and the more experience that you have in your industry or profession, the higher income you can expect to achieve. Here's why that's important. It's our first tip for getting retirement planning right. It's about adopting the behaviors and the habits of saving money. Paying yourself first is a must. Number one, start saving now. Tip one, you've got to prepare to be putting money away right now, don't wait. This has to be a priority in your life. We cover this in previous blogs, and the critical ways to reduce debt so that you can allocate more to your savings. And I invite folks to check out those previous episodes. Unless you stand to inherit substantial wealth, savings is only gonna be the engine that gets you the comfortable retirement years. Continued debt, high interest balances, these are blockades to slow or even stop your engine at retirement. Let us help you get the savings plan in place so that you don't have to wonder if you have enough. You can be confident that you're going to save enough money and that you are stringently doing enough to make it happen.
0:06:42.1 SW: So tip two is determine the time frame. Honestly, this is simple math, it's the difference between your current age, your planned retirement age. But where the math needs financial planning expertise is all the exciting and sometimes unexpected hills and valleys in between. This is where our team works with you to understand all the contributing factors that will get you to retirement; your workplace retirement plan, other investment opportunities, ways to reduce your tax liability so you keep more of what you earn and the levels of risk you can handle based on all these factors, and so much more, like college tuition, weddings and other milestones are all stops on this timeline of life.
0:07:18.1 JT: Three, assess what retirement spending might look like for you. This is where most of the people fail to plan properly. If retirement looks like more traveling or include second property or even means a sports car moves into the garage, you need to account for those spends. But if health needs also change in retirement and put a different financial burden on your nest-egg, we gotta be aware of those things. While this is hard to predict in your younger years, I realize, planning more conservatively like health, inflation, mortgage or changing insurance needs, it should start now. At Bradford, we use a multitude of products and services to forecast and to meet those needs to be successful in your retirement plan.
0:08:03.6 SW: And number four, contribute now to your employer's retirement plan or pension plan. If you have access to this, you're blessed and you should do everything you can to max your available contributions, but take time to fully understand the value of compounding. This is the basic process where an asset's earnings from either capital gains or interests are re-invested to generate additional earnings over time. So when you begin investing or saving in interest-bearing accounts early, this has a compound effect over decades of investing. And when you begin contributing early to an employer retirement plan, you're at the beginning stages of compounding. Your employer and/or your financial professional might show you a chart that suggests what your contribution today at one rate of investing might look like for a balance in 10, 20 or 30 years. Pay attention to this. And if your employer matches a certain percentage of your contribution, contribute the maximum to take full advantage of this free money.
0:08:56.3 JT: Number five. Well, this one's a real tough one, keep your hands off your retirement savings. Wow! We can't emphasize that enough. This is your nest-egg, let it grow, taking an approach that this is untouchable savings, and it's going to be the best way to stay on pace with your retirement goals. Too many make the mistake of thinking this money is a back-up plan for buying homes, cars and paying bills, but withdrawing your retirement savings now means that you'll lose the principal and interest on that, and you'll lose tax benefits or have to pay withdrawal penalties. If you change jobs, leave your savings invested in the current retirement plan, or even better, roll it over into an IRA, or a new employer plan should it exist.
0:09:43.3 SW: A certified financial planner is a smart way to get you on the path to retirement planning at any stage. Our financial advisory team at Bradford Financial Center is ready to help you envision the goal, calculate the needs and devise a plan that is unique to you and your situation. You can find us on bradfordfinancialcenter.com, or you can find us on Facebook, and Instagram, and our address is 215, North Maine in Clarion, Iowa, 50525. And our phone number is 515-532-6661, or for our 800 number is 1-800-348-4419.
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0:10:19.4 S1: Thank you all for tuning in to Your Wealth Journey Podcast, powered by Bradford Financial Center. Be sure to tune in to our next episode on planning for retirement. We'll explore how you can start building a retirement plan at any age.
0:10:37.0 S1: Securities offered through United Planners Financial Services Member: FINRA SIPC. Advisory services are offered through Bradford Financial Center, a registered investment adviser. Insurance services offered through Bradford Insurance. Tax and accounting services offered through Bradford Tax and Accounting Network. Bradford Financial Center, Bradford Insurance and Bradford Tax and Accounting Network are not affiliated with United Planners. Neither Bradford Financial Center nor United Planners provide tax or legal advice.
0:11:00.9 S1: This podcast is for general information and educational purposes only, and not intended to be specific advice for any individual. Consult your financial professional regarding your personal situation. All investing involves risk, and there is no guarantee that any strategy will be successful
