Transcript
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Welcome to Something More with Chris Boyd.
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Chris Boyd is a certified financial planner, practitioner, and senior
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vice president and financial advisor at Wealth Enhancement Group, one
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of the nation's largest registered investment advisors.
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We call it Something More because we'd like to talk
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not only about those important dollar and cents issues, but
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also the quality of life issues that make the money
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matters matter.
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Here he is, your fulfillment facilitator, your partner in prosperity,
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advising clients on Cape Cod and across the country.
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Here's your host, Jay Christopher Boyd.
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Welcome to the program.
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Thanks for being with us.
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I'm Chris Boyd.
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I'm here with Jeff Perry and Russ Ball.
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We're of the AMR team at Wealth Enhancement Group and
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glad to have you with us for another episode of
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Something More with Chris Boyd.
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We like to talk about not only those important dollar
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and cents issues, but also those quality of life issues
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that make the money matters matter.
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Before we get started, we're going to talk about a
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variety of things today, pensions a little bit more.
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We had some follow-up thoughts after our last episode.
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We started talking about, hey, we should have talked about
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this.
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Then we'll talk a little bit about some questions about
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savings and moving from savings to spending and this transitional
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time of life when people get to retirement and mindset
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shifts that to occur.
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One of the things I wanted to remember before we
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forget, Jeff, is it's a good time to encourage people
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to take our survey.
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We've, we set up a survey, and we've gotten a
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few responses.
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We'd love to hear from you.
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Always like hearing from our listeners when it comes to,
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What do you like?
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What would you like to hear more of?
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We want to get your feedback.
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Additionally, if you have questions you'd like to submit to
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us, you can do that by an email as well.
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We're going to have both of those in the show
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notes, but I'll rattle off the email right now.
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The email is amr-info at wealthenhancement.com.
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Jeff, did I cover everything you wanted to hit on,
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on that stuff?
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Yes.
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The survey is also in the show notes.
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There's a link there that you can complete it anonymously,
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or you can put your name in either way, and
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you can tell us what you don't like too.
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Oh, good point.
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And if you would, we very much appreciate it.
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It's important for people to do the stars, you know,
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like and follow and all that kind of stuff.
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So we get a greater extension of our audience so
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it can help other people find us.
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So if you can help us out that way, we
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always appreciate it.
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So we wanted to start off with some of the
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things we thought of after we were talking in our
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last episode, and some common misperceptions, perhaps, that you were
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talking about, Jeff.
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Jeff, you had a couple, you had a headline too
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that you mentioned.
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Maybe we should start with that.
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So, oh, it's kind of like putting the punchline before
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the joke.
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Oh, sorry.
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Okay, never mind.
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I think we should start with Russ telling us about
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something that he's been researching.
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Okay.
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Okay.
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So this is the conversation that came about after the
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recent episode.
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Basically, I have a family member who was a teacher
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in Texas, and she has since switched jobs.
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And the question is, you know, what's going to happen?
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Is she going to get Social Security?
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Is she not?
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And then also, similar to what we were talking about
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last time, she thought once she's done teaching, she has
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to take the pension as soon as she gets a
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certain age.
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And obviously, we found out she could wait to take
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the pension.
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So, Jeff, I know you had some thoughts right off
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the bat on that situation.
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I got excited when you told me because Chris and
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I, before the previous podcast, had talked about a situation
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where someone had the same assumption, and maybe I'm mischaracterizing
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your relative.
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But the assumption of I have a public pension or
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I'm working for a public pension, therefore, I don't pay
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Social Security in some states.
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Some states you do.
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Right.
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That's what I'm talking about.
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Just wanted to make that distinction that not all states
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work the same way when you work in the public
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sector.
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That's right.
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So, Massachusetts and Texas, apparently, where your relative may be,
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I'm slowly identifying them, do not pay Social Security because
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they pay into a state pension.
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And so many, so many, too many people in that
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situation say, well, I'm not paying in, and I'm getting
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a pension, therefore, I won't be able to collect Social
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Security.
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That's the premise.
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And as I said in the last episode opening, it
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depends.
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And so it's not really necessarily the case, right?
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It's not an all or nothing, right?
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So, if you graduated from high school or graduated from
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college and your first job was a public employee, and
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you spent your entire career in a state that doesn't
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collect Social Security on public employees, and you retired as
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a public employee, and you never contributed to Social Security,
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you are not going to collect Social Security.
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Right.
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Right.
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But the, and so the opposite side, if you collect
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a public pension in a state that did not take
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Social Security, and you had 30 years of financial earnings
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paying into Social Security.
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So, for the example of someone who just worked maybe
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10 years in the public sector, got a small pension,
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but most of their life, 30 years in this other
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extreme example, you were paying into Social Security, you get
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your full Social Security and the full pension that you're
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entitled to.
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In the middle of that, so if you qualified for
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Social Security, meaning just to say 10 years of, what
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are the 40 quarters?
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40 quarters, it doesn't have to be 10 consecutive years,
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but if you qualified.
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So, part-time wages at the McDonald's when you were
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a kid, and then maybe some work experience as an
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adult, and then maybe even in retirement, you had some
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before you turned on your Social Security, all that kind
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of stuff.
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Or after, maybe after your public life, you went back
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to the public sector.
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So, if you get your 40 quarters, you are entitled
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to some Social Security, and people can get their benefits,
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earnings and benefits statements on the Social Security website.
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They have these reports they used to send everybody, but
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now you have to log in and create an account,
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and you can view whether or not you're entitled.
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And so, once you get the 40 quarters, you're entitled
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to some Social Security.
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However, your Social Security will be diminished by something called
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the windfall provision, right?
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And so, if you are...
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Elimination provision, yeah.
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Thank you.
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If you are less than 30 years of substantial earnings
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in Social Security, your Social Security will be reduced by
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a maximum amount of $558 this year that's indexed for
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Social Security.
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So, your Social Security can be reduced by up to
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$558.
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So, that's kind of the baseline, but there's a sliding
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scale in the middle of that.
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So, if you start with the foundational principle that you
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qualified for Social Security, you get that minimum 40 quarters,
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and you have some public pension, and you have some
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Social Security, kind of a mix, maybe a half and
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half, the amount that your Social Security will be reduced
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by, the windfall reduction, is based on a sliding scale.
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So, between 18 years of substantial earnings and 30 years
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of substantial earnings, the amount is reduced for each year,
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18 and above, so forth, till you get to no
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reduction at 30 years.
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So, it depends on, in your relative situation is, first
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of all, did they qualify for Social Security?
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Do they have the minimum 40 quarters?
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And if they do, how many years of substantial earnings
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they have will be the formula on how much of
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a reduction to their Social Security it'll be.
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Got it.
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Yeah.
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Well, I need to figure out.
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Well, I'll let her know, and that's definitely helpful.
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I think by the time she's done working completely, when
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she retires, that'll be the case, where she has at
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least over 10 years.
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I don't know the exact amount, but that's definitely good
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news.
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Well, it's complicated, right?
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I mean, that is a little bit complicated.
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You did a great job explaining it, Jeff, but it's
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still, I'm sure people listening were going, huh?
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What?
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Can you say that again?
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Yeah.
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So, it is complex.
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Anyway, certainly Jeff or I can be a resource if
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you need help in that process.
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Don't hesitate to reach out.
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We've got a great team here to be a resource
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to you.
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Yeah.
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And so many people.
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So, a lot of public employees retire before they would
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be collecting Social Security, and they have these part-time
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jobs that might give them enough substantial earnings that those
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years actually matter to reduce the amount of the reduction
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in Social Security.
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So, if you think about it early, like this relative
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sounds like they might be doing, there might be some
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planning to do.
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Like, well, you know what?
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If you work five more years in the public sector
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after you, you can be collecting your pension, but before
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you start collecting Social Security, that can make a big
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difference to the amount of Social Security that you end
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up with for the rest of your life.
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So, it's not an all or nothing.
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It's this formula.
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It's very complicated to someone who's never dealt with it
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before, but this is something that we deal with a
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lot of clients, and it just takes a little bit
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of discussion about your specific circumstances to give you a
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better answer.
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All right.
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So, is it time for the punchline?
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Yes.
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So, this is a political issue.
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This is really something that's hot.
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I like to use myself as an example.
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I'm in this, and it's a disclosure, right?
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So, maybe my opinion is biased.
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So, I had 26 years of government service, which qualifies
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me for a pension, but that also means I have
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like 20 years, 20 something years of public sector work,
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right?
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That I actually paid into Social Security.
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Private sector.
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Private sector, sorry.
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I mean, I'm working right now and I'm getting paid
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and I'm paying Social Security.
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So, the idea that what I qualify for in Social
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Security that I paid in, not that I didn't pay
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in, that my Social Security should be reduced because I
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also earned another benefit for those people in my situation.
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Nobody's feeling bad for me out there listening, I know.
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But for the millions of Americans who this affects, that
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they paid into both, right?
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The thought of having one reduced because you get the
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other, which you also paid into, is a political issue,
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as you can see.
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So, there's been efforts in Congress for decades now to
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get rid of the windfall elimination provision, right?
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And it's been proposed.
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Every Congress is like hundreds and hundreds, a majority of
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Congressmen sponsor it, probably because they want to keep their
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constituents happy who are in the situation.
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And it's never really moved out of committee.
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It's never passed either of the Senate or the House.
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00:12:30,080 --> 00:12:35,500
But this year, within the last few weeks, the elimination
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00:12:35,500 --> 00:12:39,320
of the windfall elimination provision has passed the House.
266
00:12:40,900 --> 00:12:43,480
So, it is in the Senate.
267
00:12:43,880 --> 00:12:48,000
I know the date is December, meaning there's not a
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00:12:48,000 --> 00:12:48,480
lot of time.
269
00:12:48,480 --> 00:12:52,540
When the next Congress takes the oath at the beginning
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00:12:52,540 --> 00:12:56,540
of January, everything that hasn't completed the legislative process disappears
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00:12:56,540 --> 00:12:58,440
and has to start over.
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00:12:59,280 --> 00:13:02,540
So, whether or not that was a political move by
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00:13:02,540 --> 00:13:06,080
the House to allow House members to say, I voted
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00:13:06,080 --> 00:13:09,880
for it, it's not my fault, call the Senator, or
275
00:13:09,880 --> 00:13:13,820
whether the Senator will add, the Senators will add to
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00:13:13,820 --> 00:13:15,520
that and say, let's pass it and send it to
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00:13:15,520 --> 00:13:16,020
the President.
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00:13:16,560 --> 00:13:17,740
Let's put it on him.
279
00:13:18,380 --> 00:13:20,460
Who knows what's going to happen in the next month,
280
00:13:20,560 --> 00:13:22,900
but there is movement on it.
281
00:13:23,260 --> 00:13:26,220
So, just to eat up more air, because I'm the
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00:13:26,220 --> 00:13:32,300
only one talking so far, this doesn't come with a
283
00:13:32,300 --> 00:13:33,940
cost, without a cost, right?
284
00:13:34,040 --> 00:13:34,580
Yeah, exactly.
285
00:13:35,360 --> 00:13:37,420
I'll weigh in on this just for what it's worth.
286
00:13:37,660 --> 00:13:38,500
Nothing's going to happen.
287
00:13:39,520 --> 00:13:40,960
But I'm so hopeful.
288
00:13:41,720 --> 00:13:44,380
But here's why I say that.
289
00:13:44,820 --> 00:13:48,700
Social Security is already facing problems.
290
00:13:49,000 --> 00:13:53,580
We've got a decade before, if we don't do something,
291
00:13:54,160 --> 00:13:55,400
benefits would be reduced.
292
00:13:55,700 --> 00:13:59,140
We know that's a solvable problem, but there's not the
293
00:13:59,140 --> 00:14:01,080
political will to deal with it right now.
294
00:14:01,120 --> 00:14:01,820
I have a counter.
295
00:14:01,820 --> 00:14:05,820
And I don't think it's likely that this will get
296
00:14:05,820 --> 00:14:11,780
resolved, unless there's a broader effort to address what's going
297
00:14:11,780 --> 00:14:14,480
to happen with the Social Security challenges.
298
00:14:15,020 --> 00:14:15,700
That's my take.
299
00:14:15,900 --> 00:14:17,140
But go ahead, you counter that.
300
00:14:17,360 --> 00:14:20,380
So, Congressman Boyd, here's my counter, Congressman Perry.
301
00:14:20,760 --> 00:14:25,180
As part of the deal, how about if we eliminate
302
00:14:25,180 --> 00:14:30,140
the penalty on all these innocent people, and moving forward,
303
00:14:30,800 --> 00:14:34,180
public employees pay into Social Security?
304
00:14:36,660 --> 00:14:37,880
Make that mandatory?
305
00:14:38,140 --> 00:14:41,460
Does that infringe on states' rights in any way?
306
00:14:43,440 --> 00:14:45,120
Arguably, it does.
307
00:14:45,340 --> 00:14:48,220
So, when all this started, for history that people may
308
00:14:48,220 --> 00:14:52,000
not care about, when this provision passed, states had the
309
00:14:52,000 --> 00:14:55,880
choice of whether or not they wanted their public employees
310
00:14:55,880 --> 00:14:59,020
to pay into Social Security or not.
311
00:14:59,280 --> 00:15:03,060
So, many states who have public employees, the public employee
312
00:15:03,060 --> 00:15:05,920
pays into their pension, and they pay into Social Security.
313
00:15:06,020 --> 00:15:08,520
So, they're not affected by this, because they have the
314
00:15:08,520 --> 00:15:09,900
30 years easily, right?
315
00:15:10,440 --> 00:15:10,620
Right.
316
00:15:12,360 --> 00:15:14,700
So, I'm just trying to negotiate with you on this.
317
00:15:17,020 --> 00:15:19,880
You're saying if I had the choice, could we finagle
318
00:15:19,880 --> 00:15:20,060
this?
319
00:15:20,060 --> 00:15:20,900
Could we work this out?
320
00:15:21,160 --> 00:15:22,680
Maybe there's a way to work that out.
321
00:15:22,680 --> 00:15:25,380
Aren't we more interested in the solvency of Social Security
322
00:15:25,380 --> 00:15:26,920
long term?
323
00:15:27,360 --> 00:15:31,940
So, having public employees contribute into the future would certainly
324
00:15:31,940 --> 00:15:32,420
offset.
325
00:15:33,380 --> 00:15:36,220
It gives you additional contributors, but it also gives you
326
00:15:36,220 --> 00:15:38,140
additional benefactors, doesn't it?
327
00:15:38,200 --> 00:15:39,900
In terms of the benefit impact.
328
00:15:40,580 --> 00:15:41,440
Absolutely, right?
329
00:15:41,460 --> 00:15:42,520
So, it's a math question.
330
00:15:42,820 --> 00:15:45,400
Yeah, but either way, I mean, I think this is
331
00:15:45,400 --> 00:15:49,560
a solvable issue with both of these kind of scenarios.
332
00:15:49,720 --> 00:15:53,200
Both Social Security as a whole is really just arithmetic.
333
00:15:54,260 --> 00:15:57,280
More money in or less money out, how are you
334
00:15:57,280 --> 00:15:57,860
going to do that?
335
00:15:59,240 --> 00:16:01,440
And there's a variety of ways you can do that.
336
00:16:02,640 --> 00:16:05,940
And then in this scenario, yeah, maybe that's a viable
337
00:16:05,940 --> 00:16:09,400
resolution to the issue.
338
00:16:09,700 --> 00:16:13,420
And would that also resolve the pension offset provision, which
339
00:16:13,420 --> 00:16:18,680
affects the spouses who have this issue?
340
00:16:18,680 --> 00:16:22,760
They typically put those two topics together.
341
00:16:24,980 --> 00:16:26,300
So, in any case.
342
00:16:26,600 --> 00:16:28,840
Kicking the can down the road, as seems to be
343
00:16:28,840 --> 00:16:32,040
the posture of Congress on this issue, and presidents of
344
00:16:32,040 --> 00:16:35,060
both parties, is not the answer.
345
00:16:36,100 --> 00:16:42,500
Well, I think you've got a financial challenge you've got
346
00:16:42,500 --> 00:16:43,300
to deal with.
347
00:16:44,280 --> 00:16:48,280
And to me, I don't see an appetite to deal
348
00:16:48,280 --> 00:16:50,940
with the broader question.
349
00:16:51,820 --> 00:16:54,600
And if you did this, I think you would ultimately
350
00:16:54,600 --> 00:16:59,760
exacerbate, you'd move up that timeline of when this has
351
00:16:59,760 --> 00:17:00,440
to be dealt with.
352
00:17:01,820 --> 00:17:03,300
Do you know what I mean with the Social Security
353
00:17:03,300 --> 00:17:07,700
question, the challenge of 10 years out or whatever it
354
00:17:07,700 --> 00:17:08,619
happens to be right now?
355
00:17:08,680 --> 00:17:11,060
If you eliminated this provision.
356
00:17:11,060 --> 00:17:15,660
Yeah, I think you'd end up with a greater challenge.
357
00:17:16,599 --> 00:17:19,420
It'd be eight years, it'd be six years or whatever
358
00:17:19,420 --> 00:17:20,040
it is.
359
00:17:20,300 --> 00:17:22,660
It would be that much sooner that they'd have to
360
00:17:22,660 --> 00:17:26,420
resolve this bigger financial question for Social Security.
361
00:17:26,859 --> 00:17:29,480
And is there political will to deal with that?
362
00:17:30,100 --> 00:17:30,520
That's fair.
363
00:17:30,980 --> 00:17:31,160
Yeah.
364
00:17:31,600 --> 00:17:33,860
So, sorry to be a bummer for you.
365
00:17:34,200 --> 00:17:37,600
No, I agree with your overall premise that we need
366
00:17:37,600 --> 00:17:38,660
Social Security reform.
367
00:17:38,660 --> 00:17:44,080
And that means some giving on either contribution limits or
368
00:17:44,080 --> 00:17:48,360
future retirement ages to people who are younger or the
369
00:17:48,360 --> 00:17:52,600
contribution limit itself or all these things.
370
00:17:52,780 --> 00:17:56,480
But to the opposite of that analysis of doing something.
371
00:17:56,580 --> 00:17:59,120
These testing is another thing that people talk about, yeah.
372
00:17:59,960 --> 00:18:01,780
People, not me talk about that.
373
00:18:02,300 --> 00:18:04,440
No, I don't think that's another one, yeah.
374
00:18:04,440 --> 00:18:09,900
But the sooner that this reform happens, the more solvent
375
00:18:09,900 --> 00:18:11,160
Social Security will be.
376
00:18:11,700 --> 00:18:11,820
Yeah.
377
00:18:12,340 --> 00:18:16,340
And by delaying this discussion, by pretending it's not a
378
00:18:16,340 --> 00:18:19,580
problem or to have this kind of rhetoric that says,
379
00:18:19,660 --> 00:18:21,720
the other guy wants to take your Social Security away.
380
00:18:21,980 --> 00:18:22,760
Which is where we are.
381
00:18:22,840 --> 00:18:27,900
Is destructive to the longer term effort to actually resolve
382
00:18:27,900 --> 00:18:28,360
this.
383
00:18:28,500 --> 00:18:28,940
Yeah.
384
00:18:29,320 --> 00:18:30,840
This is like a big problem.
385
00:18:30,840 --> 00:18:34,160
Social Security underfunding.
386
00:18:34,720 --> 00:18:38,300
It's like a big ship passing through the ocean.
387
00:18:38,580 --> 00:18:41,840
The closer it gets to shore, the more impossible.
388
00:18:42,580 --> 00:18:43,620
Right, right.
389
00:18:43,940 --> 00:18:49,720
Maybe a slight turn now would avoid the crash, right?
390
00:18:50,040 --> 00:18:51,180
Yeah, exactly right.
391
00:18:51,420 --> 00:18:52,120
Exactly right.
392
00:18:53,020 --> 00:18:53,240
All right.
393
00:18:53,280 --> 00:18:55,580
Well, interesting topic.
394
00:18:55,800 --> 00:18:58,140
Again, I feel like we're squeezing two topics into each
395
00:18:58,140 --> 00:19:00,680
show the last couple of days.
396
00:19:01,240 --> 00:19:03,120
Here's our next topic.
397
00:19:03,680 --> 00:19:06,960
We want to also move on to that discussion that
398
00:19:06,960 --> 00:19:09,960
we mentioned about saving to spending, right?
399
00:19:10,060 --> 00:19:11,440
Or do you want to keep on this?
400
00:19:13,260 --> 00:19:15,820
No, I think we did a good job at explaining
401
00:19:15,820 --> 00:19:16,100
it.
402
00:19:16,300 --> 00:19:18,380
And just to put a cap on, I repeat what
403
00:19:18,380 --> 00:19:18,860
you said.
404
00:19:19,480 --> 00:19:22,640
Don't hesitate to call us or whoever you work with
405
00:19:22,640 --> 00:19:26,700
your fiduciary, your financial planner to talk about these things
406
00:19:26,700 --> 00:19:29,120
before you're at them, right?
407
00:19:29,120 --> 00:19:33,960
Because as we're suggesting to Mr. Ball there, there can
408
00:19:33,960 --> 00:19:36,600
be some planning, there can be some strategizing around.
409
00:19:36,720 --> 00:19:39,040
And if people have information like, oh, I just need
410
00:19:39,040 --> 00:19:43,420
to work two more years in the private sector to
411
00:19:43,420 --> 00:19:47,120
get something, they can plan for that and do that
412
00:19:47,120 --> 00:19:49,880
and not miss an opportunity to get the most that's
413
00:19:49,880 --> 00:19:50,740
available to them.
414
00:19:52,620 --> 00:19:55,920
Yeah, there's a lot of opportunity and a lot of
415
00:19:55,920 --> 00:19:58,980
planning that can really have an impact that if you're
416
00:19:58,980 --> 00:20:00,100
not paying attention.
417
00:20:00,440 --> 00:20:03,300
And the same with just general social security decision making.
418
00:20:04,460 --> 00:20:06,940
It's one of these things that comes up a lot
419
00:20:06,940 --> 00:20:09,640
and it's really important.
420
00:20:09,820 --> 00:20:13,520
It has a really consequential impact on the way your
421
00:20:13,520 --> 00:20:15,440
financial plan will work in retirement.
422
00:20:17,660 --> 00:20:26,900
And I think, again, income and money in, money out.
423
00:20:26,900 --> 00:20:30,220
And this is a big part of that money in
424
00:20:30,220 --> 00:20:31,160
for most people.
425
00:20:31,500 --> 00:20:34,120
You know what a common mistake I see down here
426
00:20:34,120 --> 00:20:36,740
in Florida with my retired friends that are all around
427
00:20:36,740 --> 00:20:36,940
me?
428
00:20:38,500 --> 00:20:42,040
They collect social security at 62 because they can.
429
00:20:42,320 --> 00:20:44,760
And then they go to work because they're bored.
430
00:20:45,660 --> 00:20:47,940
And then they pay taxes on the social security.
431
00:20:48,140 --> 00:20:52,200
Yeah, so they've permanently reduced their social security going forward
432
00:20:52,200 --> 00:20:55,220
in terms of that you take about today.
433
00:20:55,220 --> 00:20:58,600
I think it's close to a 30% discount between
434
00:20:58,600 --> 00:21:02,740
25% and 30% when you start early from
435
00:21:02,740 --> 00:21:05,360
full retirement age being roughly 67.
436
00:21:07,340 --> 00:21:11,140
Maybe a little shy of that at some ages today.
437
00:21:11,240 --> 00:21:13,200
I'm not sure where we're at on that, but close
438
00:21:13,200 --> 00:21:13,980
to 67.
439
00:21:14,540 --> 00:21:21,040
Every month you start sooner than your full retirement age,
440
00:21:21,080 --> 00:21:22,500
you're discounting your benefit.
441
00:21:22,500 --> 00:21:27,180
If you go out essentially five years or somewhere close
442
00:21:27,180 --> 00:21:29,440
to that, it's about 30% of a discount that
443
00:21:29,440 --> 00:21:29,800
you take.
444
00:21:30,460 --> 00:21:33,620
And if you delay to get it after full retirement
445
00:21:33,620 --> 00:21:36,280
age to age 70, if you take that, that's an
446
00:21:36,280 --> 00:21:37,220
additional 24%.
447
00:21:37,800 --> 00:21:42,320
So by starting at 62 instead of at, say, the
448
00:21:42,320 --> 00:21:48,220
maximum potential, that's a 50%-ish difference in benefit.
449
00:21:49,600 --> 00:21:51,480
I think it's even greater than that.
450
00:21:51,480 --> 00:21:53,300
It's 54% or something like that.
451
00:21:53,440 --> 00:21:58,460
This enormous change in the monthly benefit that you could
452
00:21:58,460 --> 00:22:01,200
get every month for the rest of your life.
453
00:22:01,480 --> 00:22:03,860
Now, if you don't live to 80 or something, then
454
00:22:03,860 --> 00:22:06,580
maybe then you got a different scenario.
455
00:22:07,100 --> 00:22:09,500
But if you're going to live into your 80s or
456
00:22:09,500 --> 00:22:16,240
longer, you really got to reevaluate that decision if someone's
457
00:22:16,240 --> 00:22:17,160
starting at 62.
458
00:22:17,160 --> 00:22:22,880
And if you're working in Social Security, which is actually
459
00:22:22,880 --> 00:22:25,120
what I'm seeing, then they're paying taxes.
460
00:22:25,140 --> 00:22:25,700
So it's like that.
461
00:22:25,940 --> 00:22:28,740
Yeah, you end up, if you make more than, what,
462
00:22:28,820 --> 00:22:29,600
19,000 or something.
463
00:22:29,600 --> 00:22:31,540
I think it's 20-something right now, but yeah.
464
00:22:32,060 --> 00:22:36,560
You end up being, essentially losing your Social Security benefit.
465
00:22:36,580 --> 00:22:38,200
Yeah, or a significant part of it.
466
00:22:38,440 --> 00:22:39,700
Or a significant part of it.
467
00:22:40,040 --> 00:22:41,780
So why would you do that?
468
00:22:42,540 --> 00:22:43,760
Because they're bored.
469
00:22:45,220 --> 00:22:48,960
No, I mean, I would just start it sooner, is
470
00:22:48,960 --> 00:22:49,620
what I'm saying.
471
00:22:49,980 --> 00:22:52,080
Right, so this all goes into this decision.
472
00:22:52,380 --> 00:22:54,980
Like, it's not just, I can have it now, I
473
00:22:54,980 --> 00:22:55,540
should take it.
474
00:22:55,640 --> 00:22:56,680
What else are you doing?
475
00:22:56,760 --> 00:22:57,200
Are you working?
476
00:22:57,860 --> 00:22:58,580
How's your lifespan?
477
00:22:58,920 --> 00:23:00,660
All these things that we talk about all the time.
478
00:23:00,860 --> 00:23:03,340
So get some help, get some good advice.
479
00:23:04,460 --> 00:23:07,700
Well, and this goes into this question of saving and
480
00:23:07,700 --> 00:23:08,440
spending, right?
481
00:23:08,780 --> 00:23:09,220
It does.
482
00:23:10,140 --> 00:23:12,980
Do you want to tee up that article, or just
483
00:23:12,980 --> 00:23:14,980
talk about the concepts behind it?
484
00:23:15,220 --> 00:23:15,320
Sure.
485
00:23:16,000 --> 00:23:19,700
Something we see with our clients, and I certainly see
486
00:23:19,700 --> 00:23:23,980
with my retired friends again, is that transition to being
487
00:23:23,980 --> 00:23:29,840
retired, having, not working in this case, usually, meaning you're
488
00:23:29,840 --> 00:23:31,900
not accumulating anymore.
489
00:23:32,220 --> 00:23:35,760
When you're in your 30s, 40s, 50s, maybe 60s, you're
490
00:23:35,760 --> 00:23:39,620
accumulating assets, you're investing, you're thinking about your future, and
491
00:23:39,620 --> 00:23:41,480
then you kind of stop that.
492
00:23:41,620 --> 00:23:45,680
So you're done accumulating, you've walked away from that, and
493
00:23:45,680 --> 00:23:49,480
you have a plan, hopefully, and it's a good plan,
494
00:23:49,660 --> 00:23:51,980
and made all these decisions that we talked about with
495
00:23:51,980 --> 00:23:53,300
pensions and social security.
496
00:23:53,520 --> 00:23:57,900
So now you're into this distribution phase, or spending phase,
497
00:23:57,920 --> 00:24:01,240
where you get to hopefully enjoy life and do what
498
00:24:01,240 --> 00:24:04,340
you want, and spend all that, or some of that
499
00:24:04,340 --> 00:24:05,220
money that you saved.
500
00:24:05,220 --> 00:24:11,000
People struggle with spending the money that they saved for
501
00:24:11,000 --> 00:24:12,800
the purposes of retiring.
502
00:24:13,900 --> 00:24:16,720
It really is a change in focus in a lot
503
00:24:16,720 --> 00:24:17,520
of ways, right?
504
00:24:17,620 --> 00:24:23,300
So this is one, this notion of frugality, if you
505
00:24:23,300 --> 00:24:27,160
will, the notion of trying to accumulate.
506
00:24:29,000 --> 00:24:31,780
I think at this time of year, I think of
507
00:24:31,780 --> 00:24:37,020
the squirrels squirreling away, all their nuts for the season
508
00:24:37,020 --> 00:24:37,580
ahead.
509
00:24:38,980 --> 00:24:42,820
But at some point, you're in that season, and it's
510
00:24:42,820 --> 00:24:46,960
time to reap the benefit of the harvest, or whatever.
511
00:24:48,580 --> 00:24:52,420
So it's that time of year when you're in retirement,
512
00:24:52,620 --> 00:24:56,220
is the time to enjoy those resources.
513
00:24:56,220 --> 00:24:57,600
Yeah, you earned it.
514
00:24:58,140 --> 00:24:58,320
Yeah.
515
00:24:58,560 --> 00:25:02,780
We see this same transition when it comes to risk,
516
00:25:03,940 --> 00:25:06,980
and people's appetite for risk, the way they design their
517
00:25:06,980 --> 00:25:07,400
portfolio.
518
00:25:07,580 --> 00:25:10,500
They start off, they're racing to the finish line, pedal
519
00:25:10,500 --> 00:25:11,180
to the metal.
520
00:25:11,960 --> 00:25:13,420
Let's grow, grow, grow.
521
00:25:13,760 --> 00:25:17,580
You know, they want to get that portfolio maximized.
522
00:25:17,900 --> 00:25:19,700
Getting to that number that they want.
523
00:25:19,920 --> 00:25:21,160
Get to that number, right?
524
00:25:21,280 --> 00:25:22,300
Gotta grow.
525
00:25:23,100 --> 00:25:26,800
And then they run through the finish line, if you
526
00:25:26,800 --> 00:25:27,900
will, and they've retired.
527
00:25:29,080 --> 00:25:32,620
And suddenly, they start thinking, maybe I don't want to
528
00:25:32,620 --> 00:25:34,920
be as growth-oriented as I used to be.
529
00:25:35,060 --> 00:25:37,620
Maybe I don't want as much risk in my portfolio.
530
00:25:38,180 --> 00:25:41,080
I really want to draw some money from this.
531
00:25:41,640 --> 00:25:45,640
So I want some growth, but I want some income.
532
00:25:46,340 --> 00:25:49,260
And gosh, I really don't want it to go away
533
00:25:49,260 --> 00:25:50,640
if there's a disruption.
534
00:25:51,140 --> 00:25:52,660
I can't go, I don't want to have to go
535
00:25:52,660 --> 00:25:53,400
make it again.
536
00:25:54,260 --> 00:25:56,600
So they kind of have this transition of where they've
537
00:25:56,600 --> 00:25:59,560
got, used to have just sort of like, let's get
538
00:25:59,560 --> 00:26:02,960
this thing growing to a mindset of, I want to
539
00:26:02,960 --> 00:26:03,580
preserve it.
540
00:26:03,920 --> 00:26:05,540
I want some cash flow from it.
541
00:26:05,780 --> 00:26:08,480
I want it to be more for my future self
542
00:26:08,480 --> 00:26:11,740
and for inflation later in life.
543
00:26:11,840 --> 00:26:16,040
You know, I've got all these competing interests, and that's
544
00:26:16,040 --> 00:26:16,620
a challenge.
545
00:26:17,260 --> 00:26:22,340
So having a game plan around this, this issue of,
546
00:26:22,900 --> 00:26:24,800
how am I going to generate that cash flow?
547
00:26:27,100 --> 00:26:31,780
And the permission that you talk about, Jeff, let's talk
548
00:26:31,780 --> 00:26:32,200
about that.
549
00:26:32,280 --> 00:26:34,500
The idea that it's okay to spend this money.
550
00:26:34,620 --> 00:26:35,520
You've planned for it.
551
00:26:36,080 --> 00:26:38,800
You plan for a trip, you know, every year or
552
00:26:38,800 --> 00:26:39,320
whatever it is.
553
00:26:39,460 --> 00:26:42,280
You plan for your car, you know, you've got a
554
00:26:42,280 --> 00:26:42,920
game plan.
555
00:26:42,920 --> 00:26:46,500
And if you have that game plan in place, you
556
00:26:46,500 --> 00:26:49,940
know that markets will deviate, markets will fluctuate.
557
00:26:50,980 --> 00:26:55,940
There's a range of possible outcomes, some better than others,
558
00:26:56,100 --> 00:26:57,540
some worse than others, right?
559
00:26:57,760 --> 00:26:59,920
But we know there's this range of possibilities.
560
00:27:00,160 --> 00:27:03,220
But if we've got a plan that works, we can
561
00:27:03,220 --> 00:27:06,620
be confident that we can follow the plan, execute the
562
00:27:06,620 --> 00:27:06,880
plan.
563
00:27:07,380 --> 00:27:08,140
Yeah, absolutely.
564
00:27:08,420 --> 00:27:13,520
And this feeling about not wanting to spend your assets,
565
00:27:13,860 --> 00:27:15,160
it's a normal thing.
566
00:27:15,360 --> 00:27:16,980
It's not just you.
567
00:27:17,100 --> 00:27:18,420
It's a part of getting older.
568
00:27:18,580 --> 00:27:21,460
It's a part of not having an income anymore.
569
00:27:21,640 --> 00:27:25,120
So don't think that you're like having some unusual thoughts.
570
00:27:25,120 --> 00:27:27,640
Feeling like a scarcity mindset, that kind of thing, like
571
00:27:27,640 --> 00:27:29,660
I don't want to have it go away if I,
572
00:27:30,300 --> 00:27:30,480
yeah.
573
00:27:30,560 --> 00:27:30,960
That's right.
574
00:27:31,060 --> 00:27:31,760
It's very common.
575
00:27:31,940 --> 00:27:33,100
So don't, it's normal.
576
00:27:33,420 --> 00:27:35,780
And reducing your risk as you get older is also
577
00:27:35,780 --> 00:27:36,500
normal.
578
00:27:36,880 --> 00:27:39,660
So these are normal things that happen to most people.
579
00:27:40,560 --> 00:27:43,440
But that's everything that you said, Chris, is right on.
580
00:27:43,980 --> 00:27:48,500
And I'll just emphasize, we have a financial plan for
581
00:27:48,500 --> 00:27:49,520
a lot of reasons.
582
00:27:50,120 --> 00:27:53,540
But one of the reasons, the key reasons, is to
583
00:27:53,540 --> 00:27:57,280
give you comfort to know that if you spend according
584
00:27:57,280 --> 00:28:00,940
to your financial plan, and in that financial plan, we
585
00:28:00,940 --> 00:28:03,260
would, if we were working with you, we would talk
586
00:28:03,260 --> 00:28:05,200
about when you're going to buy the next new car.
587
00:28:05,200 --> 00:28:07,120
Do you need any home repairs?
588
00:28:07,660 --> 00:28:10,340
Are you, any major gifts in retirement?
589
00:28:10,980 --> 00:28:12,420
What's your travel budget?
590
00:28:13,080 --> 00:28:16,240
You know, what, do you anticipate any long-term care?
591
00:28:16,300 --> 00:28:19,240
And if so, if this is something unexpected, what happens?
592
00:28:19,380 --> 00:28:21,600
All this is in your financial plan.
593
00:28:21,860 --> 00:28:26,160
So that each year as you're spending what is in
594
00:28:26,160 --> 00:28:29,580
the financial plan that allows you kind of a permission
595
00:28:29,580 --> 00:28:31,320
or a piece to do that.
596
00:28:31,520 --> 00:28:34,280
And not only that first plan, but coming in every
597
00:28:34,280 --> 00:28:37,860
year or more frequently if you need to review the
598
00:28:37,860 --> 00:28:39,660
plan and saying, okay, how are we doing?
599
00:28:40,220 --> 00:28:41,180
You get a grade, actually.
600
00:28:41,280 --> 00:28:43,760
We get a, you get a number grade, like you're
601
00:28:43,760 --> 00:28:44,480
back in school.
602
00:28:44,480 --> 00:28:45,500
Like you want a hundred.
603
00:28:45,980 --> 00:28:47,060
Everybody wants a hundred.
604
00:28:47,980 --> 00:28:50,340
But you don't have to get a hundred to still
605
00:28:50,340 --> 00:28:51,500
have a plan that works.
606
00:28:51,700 --> 00:28:52,000
You don't.
607
00:28:52,100 --> 00:28:55,180
But if you get a 25 on the test, you
608
00:28:55,180 --> 00:28:58,260
know, we get a, maybe the plan needs some more
609
00:28:58,260 --> 00:28:58,880
work, right?
610
00:28:58,980 --> 00:29:00,000
You still want a passing grade.
611
00:29:00,220 --> 00:29:00,340
Yeah.
612
00:29:00,420 --> 00:29:00,680
Right.
613
00:29:00,680 --> 00:29:04,180
So you have a plan, you have a good number,
614
00:29:04,640 --> 00:29:08,760
you have some priorities in your spending plan.
615
00:29:09,020 --> 00:29:12,140
So, you know, like you might say, well, I want
616
00:29:12,140 --> 00:29:15,700
to give so much to my grandchildren or pay for
617
00:29:15,700 --> 00:29:17,920
their college or pay for a wedding for my daughter
618
00:29:17,920 --> 00:29:19,020
or whatever it is.
619
00:29:19,160 --> 00:29:21,940
And when those things come up, it's in the plan.
620
00:29:22,060 --> 00:29:25,240
So you do it and then review it periodically.
621
00:29:25,580 --> 00:29:28,360
And that should give you, our hope is that it
622
00:29:28,360 --> 00:29:30,940
gives you the peace of mind to be able to
623
00:29:30,940 --> 00:29:32,740
live that life that you have earned.
624
00:29:33,680 --> 00:29:33,800
Yeah.
625
00:29:35,240 --> 00:29:36,140
Go ahead, Ross.
626
00:29:36,260 --> 00:29:40,180
I was listening to a podcast from Morningstar and they
627
00:29:40,180 --> 00:29:41,340
were talking about this exact topic.
628
00:29:41,740 --> 00:29:44,000
And a lot of people, you know, have that discipline
629
00:29:44,000 --> 00:29:47,120
mindset for 40 years of save, save, save.
630
00:29:47,300 --> 00:29:49,500
And they have that retirement nest egg.
631
00:29:49,640 --> 00:29:52,340
And the idea of tapping into that and taking from
632
00:29:52,340 --> 00:29:54,780
that is like a psychological hurdle to get over.
633
00:29:54,860 --> 00:29:56,400
It's like, we built this up.
634
00:29:56,400 --> 00:29:57,980
Like, I don't want to start taking from it.
635
00:29:57,980 --> 00:29:58,980
It feels strange, but.
