2019 Retirement Checklist – Part 2

For Part 2 of this series, we’ll cover four more items that you should be making sure to discuss with your financial advisor to kick off the new year right and on track to reach your retirement goals.


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John Stillman: Thanks for tuning into Wright Money Tips with Isaac Wright, chartered financial consultant, president of financial dynamics and associates, and the author of Navigate Your Way To A Secure Retirement. You can get in touch at 804-777-9999, and of course, there's plenty of information available at WrightMoneyTips.com. Isaac, today, we're doing the second part of our 2019 retirement planning checklist. We had the first part a couple of weeks ago. Today, is part deux, which for your own edification, Isaac, is what the French say for two.

Isaac Wright: Dos.

John: That's part two is what that means.

Isaac: Part dos.

John: Yes.

Isaac: We can go a lot of different directions with this. We may not even get to the second half of the checklist.

John: Yeah. Well, we could have a quick language lesson, or we could talk about what everybody wanted us to talk about, which is retirement planning issues.

Isaac: Hey, I'll tell you, man. We had so many good vibes, I would call it. We had a lot of people from existing families we serve. We've had a few families that have come into see us from the earlier January show. Checklist wise, in terms of what we've covered, I think it really hit home with people. If you haven't had a chance to listen to the one, you again, go to Wright Money Tips, you can hear the one from earlier in January, part one of our retirement checklist series. We're going to make this a little bit shorter here, because there's only four, not five. But basically, we have nine total tips for the month of January. We'll jump right in here. But just know that we are here to sincerely help, and I think a lot of things that we talk about here, being in a new office right here beside our social security office here in Chesterfield, I've had a lot of families come in and visit us, and right off of 288 and [inaudible 00:01:37] Parkway. So, very convenient to almost any section of Richmond, or even the extended counties, now. I'm excited as you can tell about 2019, where we're going, and hopefully get families on board with us, man, so they know what we're doing.

John: In case you did not memorize part one of this series, I'm going to do a quick review on the first five things on this checklist. Do I know exactly how much income I need every month in retirement? Do I know which account I should withdraw from first? Do I know the ideal time to take social security? Have I addressed longevity risks, so that I don't outlive my money? And am I prepared to handle market volatility? Which brings us to item number six on the checklist, Isaac. Do I have a plan to combat inflation? Everybody thinks about inflation. Everybody knows it's a thing. I just don't know how consciously people have thought about, okay, I need to account for that in my retirement plan.

Isaac: Well, I think what it comes down to with inflation, it just is slow and steady. I think people can look at charts, graphs, and reports, and see, wow, people even know themselves when they went to the grocery store 25 years ago, the price of bread and milk is different than today. Not to mention gasoline. Things do fluctuate up and down. Keep in mind, most people, and this is really truly truthful, most people only have a little bit of inflation protection on their social security check. They haven't developed a plan of increasing income from investments, especially if they need it for their monthly expenses, and that gets back to point one that we had at the beginning of our program at our last program beginning of January.

Isaac: So, I want to be clear here. Inflation is something you have to prepare and prep for. Your Medicare premiums, your healthcare associated costs, with anything that's to do with living is going to likely go up over a period of time. You may short term ups and downs, but if you're not prepared for that, if you retire ... let's say your budget is $4000 a month, and you're bringing in $4500 a month, and let's call it that's even after taxes, and you're thinking, wow, I'm doing really good, I've got a $500 a month buffer. At the tune of inflation going up at three, four, some people would argue it's higher than that with certain expenses, and it absolutely is, next thing you know within about 10 years of your retirement, you are backwards. You're pulling more out of your investments, and if you'd didn't plan for this correctly, all of a sudden, your money is starting to run dry, and that's the problem, is the probability of how much and how long my money is going to last, and you're not taking into consideration inflation.

Isaac: Really, our entire planning process, and we've included specifics on how that can look relative to different inflationary environments, and people love having somebody that can also look and address that every year. So, just keep in mind, that's really what a retirement professional should be doing. That's step number six, is understanding how to combat inflation.

John: Item number seven on our checklist, I think, is something that, again, people know it's out there. It's this boogeyman that could show its face any day now. But again, a lot of people haven't planned for it in their retirement, and that's am I prepared for the possibility of future tax increases? Most people, Isaac, the majority of their money is in 401Ks and IRAs, which makes them very susceptible to increases in tax rates down the road.

Isaac: No, actually, when it comes to tax increases, because we are historically in a very low tax environment, we've actually for the first quarter of 2019, if you go to our website Financial And Estate Planning, you'll find that we have different dates that we are talking about how to maximize the tax environment we're in today, specifically when it comes to the money that you've grown tax deferred inside of your 401Ks, your IRAs, your 403Bs. Many people are trying to figure out, you know, you've been taught and told so long to not pay any taxes, or try to defer taxes as long as possible. It may be very advantageous to look at whether or not it makes sense to pay some tax now.

Isaac: But that's going to be an ongoing storyline for many people when they retire, and they're retired for 15, 20, 30 years. And people are not receiving what I would call an over the shoulder look at what those tax scenarios can look like. And so, keep in mind that when you're preparing for retirement, you have to look at the possibility of the tax code changing, and unfortunately, I think we're in such a great tax environment now that I don't necessarily know, depending on the wins of our system, if that's going to stay that way for a long period of time, because our debt is still climbing. So, please know that that's something we do plan and consider, and you should, as well.

John: Moving right along. Just a couple more items here on our 2019 retirement planning checklist. Next up, Isaac, do I have a plan to address healthcare costs? Now, I should clarify. When we say healthcare costs, I don't mean just how am I going to pay my Medicare part B premium every month. I mean what happens if we have nursing home care, or assisted living, or we end up in an Alzheimer's unit? Things like this. How are we going to pay for that?

Isaac: Well, this situation with healthcare between your Medicare, your supplemental, your prescription drug, if you needed home healthcare, assisted living, if you went to a daycare nursing home care. Of course, right out of the gate, that alone sounds like it's high anxiety. But what I want people to know is, that's where we start helping you understand where the budget stands for you as you transition, if you even have already retired, but not fully thought this out. We look at the options inclusive of whether or not you can self insure, whether or not you can leverage existing investments to help pay for healthcare costs, and especially for husbands, wives, I mean the thing is, that's the main thing. You just have to be understanding of if cost of care today is, let's call it, 8 to 9 grand a month, maybe in an assisted living facility it's 5 to 6 grand. Maybe you can get away with some part time home care, maybe you never need care at all. But I think you can't go and just not even think about having a pool of money to take care of that, and I have been a big proponent of looking at alternatives other than longterm care insurance.

Isaac: Don't get me wrong, longterm care insurance still is out there, it's still available. There's been a lot of rate increases. There have been a lot of pros and cons with it as of the last several years, and a lot of companies no longer offer it, because it just wasn't sustainable. So, you have to start planning for your healthcare needs, and you also have to take a good look at kind of what your, let's say your own health is going to likely be. If you're in great health, I mean, we never know. We can have stroke one day, and life as we know it is different. But you just have to kind of consider, especially if you're protecting some loved ones, especially your spouse. You don't want all of the money going out for care, and leaving the surviving spouse in a really bad predicament if something happens to you. So, that is very important. It made our top nine because of that reason.

John: Last item on our checklist, Isaac, as we wrap up the 2019 retirement planning checklist. Do I have my legacy plan nailed down? Now, for some people, they say, well, I'm single, I've never been married, I have no kids. I have a niece or nephew I guess I could leave some money to, but I don't really care if there's anything left or not. Well, congratulations to you, your legacy plan is nailed now. Your legacy plan is whatever is left over, they can have it, fine.

Isaac: Tell them what they won, Johnny.

John: Right.

Isaac: Yeah.

John: But for most people, there's a little more nuance to the discussion than that.

Isaac: I would almost tell everybody this. Whatever your legacy plan is today, mark my words, it's going to change two or threes times when you're in your retirement. You'll have deaths, you'll have births, you'll have changes, lifestyle, and all of the above. And most of you today, if you have a family, you have loved ones, you have nieces, nephews, daughters, sons, and all the above, you have to keep in mind that you do not want most of your money going out to Uncle Sam. You want to make certain that, that plan is put in place, that is allowing them to take money, and a lot of times even, again, for some of the families we serve, whether they are middle to high net worth families, we're finding more families what I call putting strings attached on the money, which means they don't want large lump sums going out to maybe young grandkids, or maybe even their own kids quite honestly, and some kids are very successful. I mean, we meet with a lot of the kids that we've been serving the families for, for 15-20 years. But just got to know that it may make sense to have that recognized, knowing that if somebody knows who you are, you can have that updated.

Isaac: So, for us, we work with many estate and other planning attorneys, and make certain that if you come to our firm, you come in our door, that you're going to have, if you need, somebody to come sit along side you that's helping you plan. We can bring in an attorney, an accountant. We try to have that true team approach. If you haven't been to our website, you can go to Wright Money Tips, that'll lead you right over to financial and estate planning. Those are our two main sties. It tells you a lot about what we do, what our philosophy is, how we want to have people leading their lives into and through their retirement years. And John, I think for the month of January, go back and you think about the nine things that we've covered here, for everybody that's had an opportunity to listen, we're going to keep this momentum, and we're going to help people increase the probability of their success when it comes to their financial and retirement goals. So, it's been a great show, man.

John: Great couple of shows to cover this retirement planning checklist to get you off on the right foot in 2019. I guess if we had to add one more thing to the checklist, if we wanted to put a 10th item on here, it would be go ahead and call Isaac. Setup a time to sit down, and talk about some of these issues. I can almost guarantee that you probably don't have all of these checklist items checked off. You probably have at least a couple of things that you have not done a good job of addressing. And if you're the average person, you probably need to address like, eight of the nine, if not nine of the nine. There's no shame in that. That's just the reality for most people. You have a lot of things that need to be addressed. If you'd like some help, the number to call is 804-777-9999. You can of course find us online, as well, at WrightMoneyTips.com. That's Wright with a W like Isaac's name. WrightMoneyTips.com. Thanks for tuning in. We'll talk with you again soon right here on Wright Money Tips. Have a great day.

Announcer: Information is for illustrative purposes only, and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action. Investment advisory services offered through global financial private capital LLC.