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Can I Retire? The Four Questions You Need To Answer First

Welcome to the Retirement Game Plan. Today's question's simple, but yet super important. Can I retire? A lot of people get stuck at this stage. They feel like they've saved their entire lives after a career of working tireless hours. They've done all the things right, but they just aren't quite sure if they have enough yet.

So today's all about helping you prepare for that decision, not necessarily giving you all the answers, but at least making you aware of all the things that you need to be thinking about or strategizing about and answering that question of, "Can I retire?" And I'd ask, as you listen to this, if you find value in the information that we provide today, share the show.

Pass it along to some friends, maybe a family member. Think of somebody that's asked you that question of, "Can I retire?" Or, "Do I have enough to get there?" So let's dive into some questions that we've really put together as part of this decision or this question that we have to answer.

And the first one, why is this question so hard? Why is it that people have such a hard time determining if they can retire or not? And again, this is one of the biggest decisions you will ever make in your entire life. The common thoughts we hear are, "Well, what if I run out of money? What if I retire too early?

What if I regretted the decision I make, can I ever go back to what I once had?" I get it. It's a challenge. And if you think about it, you've spent your entire lifetime working and collecting a paycheck every week, every couple weeks, to now a transition where you are forced to take all of your savings and provide your own paycheck and provide your own plan, if you will, to take care of all the stuff that you want to do, and that's a big shift.

And there's a lot of moving parts that go into that. How much income do you need? What kind of taxes are you going to be paying? What market volatility is going to be occurring during your retirement years? And then the old dreaded healthcare. How am I going to get my healthcare or how do I make decisions along those lines because it's an awfully difficult process.

So I want you first off to know that you're not out of the ordinary there. If you're unsure, that's completely normal. In my 20-some years of working with individuals and families and helping them plan for their retirement, I hear that all the time. Like, "Do you think I should? Do you think I can?

How do I go about it?" All those things, all that leads from uncertainty, right, or concern about what their retirement life's going to look like. So our goal isn't always to be perfect, but it's to be clear about the decisions that you make and the reasons that you're making those. So I wanted to share a story and I think this kind of goes into that clarity that I was talking about.

So this goes back probably 15 years or so ago, and, this was a pretty good family friend of ours. We went down, we'd met with them, and within probably 10 minutes of our conversation they looked at us and they said, "Hey, can I retire? I feel like I've got enough, but I just don't know for sure."

And they had saved really well. They had accumulated nice 401k plans. They had some old IRAs. They had, they had plenty of assets to retire. But he said, "You know, I've Google searched things. I've tried to, you know, figure this stuff out on my own, and I'm just not certain I can trust the information that I've assembled or I've gathered, if you will."

So we gathered all the information that we needed. We came back. We built an entire plan for these folks, laid out where their income was going to come from and how much we felt they needed after some discussions, and, covered all the pieces. And when we go back to present this and we laid it all out, they basically looked like a weight was lifted off of their shoulders, and within a week of our meeting, they put in their two weeks notice and they fully retired.

And the great news is 15 years later, they are now living their best lives. They're traveling around the country. They're riding horses. They're spending time with their kids and their grandkids and going to all these ball games. They're truly thriving, and it, and it's such a rewarding process.

But the key there is the decision doesn't have to be so hard. We get there's lots of moving parts, but by having a plan, that decision process becomes a lot easier So now let's move on. What does being ready actually mean? Right? All these things, but at the end of the day, what does being ready really mean?

And a lot of people think it's a number. How many times have you heard at work, like, "If I get to a million dollars, I should probably be able to retire." Maybe it's 2 million today or 5 million today. Everybody's got a different number in mind, but I can tell you right now it's not about a number.

It's about the income that number can generate that really matters the most. And I, and I always say, you know, what kind of planning has that coworker of yours done in order to determine that is enough for you to retire? So I always say it's, again, how much income do you need in order to live the lifestyle that you want?

And what do-- how do I reflect that? I tell this story all the time to my clients, is what are you going to do if every day's Saturday? Right? 'Cause that's really what retirement is. Every day for the rest of your life truly becomes a Saturday. In fact, I think I stole that from one of our really good clients.

so you'll know who you are and you can take credit for it. But I think there's a couple of parts that go into that. First one is we have to develop our own routine in order to know what those needs really are. So if I think about every day being Saturday, what do we typically do on Saturday? Maybe we go out to eat, maybe we hit the golf course, maybe we're attending our grandkids' ball games, and then of course, going out for ice cream.

whatever it may be, but Saturdays are usually a little bit different than our work weekdays. We're usually spending a little bit more money, we're having a little bit more fun, we're enjoying our time with those we care about the most. So in thinking about how much income we're going to need, it's hard to just work off the budget that you're currently living on.

It may take a year's worth of time in your retirement for us to truly gauge what that number is. So when we do our planning with folks, we try to overestimate that budget or give them a little bit more grace, if you will, in their daily activities. So again, big transition here, a time where you go from saving money to depending on your money, and that's where a lot of people get stuck.

They know they've got all these assets, but they don't really know how to create income from those assets. In fact, I've had that question brought up quite a few times too. Like, "Greg, I have this 401, how do I get money out of it?" Right? Well, there's lots of flexibility and a lot of different ways that you can take dollars from your retirement accounts, but it starts with that income plan.

Like how much do you need, which then should determine how much you need to take. So the simple way to think about the answer to this question is that retirement isn't about assets or account balances, it's about the income that we can generate. So again, how do I know if I have enough? Oh, excuse me, that's not the question.

What being ready actually means is that it's not necessarily about how much I have in total assets, but it's about the income that I need and I can generate to, be ready for that retirement. And it makes me think back to a book I read. I'm forgetting the name of the title right now, but it had a really interesting beginning of that book, and it talked about a survey that had been done with all these pre-retirees that were out there, and it said this.

It said, "The number one word associated with the word money was anxiety." And when I think about retirement and this whole question of, can I retire, the last thing I want to have in my retirement years is any sort of anxiety. I want to know that I've planned properly, that I know where my money's going to come from, I'm prepared for anything that life throws at me, and I don't want to have anxiety in my life at that stage.

So I think that's really important for us to know if we're ready, is if I can have clear answers for all of those questions So now let's move on to the next question How do I know if I have enough. Again, we just got done saying it's not asset balances that matters, it's the income that matters.

So how do I really know when I have enough money? And the honest answer is this: you don't guess. You plan. You have somebody or yourself, either way, and you've got to address all the different moving parts that go into that for you to truly determine if you have enough at this stage of life to be able to retire, or to answer that question confidently and say, "Yes, I can retire."

So what are those four areas? The first one, and we've talked a little bit about it before, but income and the sources of that income. So where are we going to get income from in retirement? I would say Social Security. Again, who knows quite what the future of Social Security is, but I tell our clients this, with the political space as it is, what kind of politician is going to vote to get rid of security when the biggest voting bloc out there today is seniors?

I don't know if there's a politician that'd be willing to do that. The second one, maybe it's a pension that you got or earned through your employer. You don't see those as often as you once did, but those still could be out there. Maybe it's some sort of rental income, whether it be farm ground or, real estate, something along those lines where you're able to collect rents, throughout the remainder of your life.

And then the final one is your investments. Again, how do I take this pool of money and create a, some sort of income stream or have it available for me to take larger withdrawals from as I need those dollars? So we have to, we have to know where that money is going to come from and how much we're going to take from each one of those sources.

The second one, again, every day's Saturday. We talked about that before. But how much am I going to spend? I always try to help our clients break it down into three pretty simple areas. First one is fixed expenses. What are those things that we're never going to run out of? Right? Meaning, like, utilities, insurance premiums, taxes.

Gotta put food on the table in retirement just like you did when you were still working. So those are what I would refer to as fixed expenses. How much are we going to need to cover those fixed expenses? Then it's more of the lifestyle. Sometimes I refer to this as the fun money. What are we going to do for travel?

Do I want to go golf every day? Do I plan on staying in the hotel at my grandkids' over weekend or over the weekend tournament type of scenarios? If I am going to travel, is it just me and my spouse? Or are we going to take the whole family on those types of trips or those types of adventures? So we usually try to help break it down between paychecks and playchecks.

I stole that line from a gentleman called Tom Hegna. If you ever want to read about guaranteed lifetime income, he is a fantastic author, speaker, and industry legend. He has a lot of really great information about paychecks and playchecks. Those two things I think are super important. How much are we going to need for each of those two categories?

And then the third one, that's kind of the wild card, but that's our healthcare. And most people overlook this healthcare item, and I've seen several studies of, you know, several hundreds of thousands of dollars will be needed to be applied towards healthcare in retirement. But it's not just your, what if I get sick type stuff, it's what if I enjoy massages, what if I enjoy chiropractor visits, or maybe not enjoy is always the right word there, but, having the ability to take care of yourself.

Maybe it's a gym membership. Whatever it may be for you to maintain your health is going to be something that you're probably more apt to spend in your retirement years than you were in your working years. So account for it. Build it into the budget, build it into your spending plan. So we got income sources, and we got spending.

The next biggest one, and this is always a wild card as well, but it's longevity. How long are we planning on being retiring? Or in other words, how quickly are we planning on dying? Nobody likes talking about dying. But we have to think in terms that we would have longevity in our, in our lifespan.

So think about your situation. How old were mom and dad when either they passed or if they're still living, do we have longevity in our family? What's your current health? You know, do you have any conditions that may lead to a shortened lifespan? Again, all these things we have to factor in to the plan, and I've always taken the approach of this as we should always plan for the best.

Healthy, long life, get to see the grandkids and the great-grandkids and all those types of pieces, but we have to be prepared for the worst. Right? What if we get sick? What if we die suddenly? All right. How does that affect our plan and the passing of those assets down to the next generation? And the final one is market impact.

And when I say market impact, this.. Yes, this is movements of the market. We can't control it. It goes up, it goes down, it stays where it's at. All those things are out of your control. But how is our portfolio positioned in order to handle those scenarios? And then on top of market, like, let's just throw in, what about law changes?

What about, geopolitical risks? In today's society, I'm not sure there's a whole lot of people that are very trustworthy of our leadership in Washington, DC, or in our own states for that matter, or local communities. So how do we prepare ourselves for those things that we can't control? But we really have to have a plan around all four of those areas in order for us to be able to answer that question, which again, was, "How do I know if I have enough?"

If I've got plans that can cover all four of those categories, that should help you answer that question. And then let's move to the next part. I think this one's probably one of the most interesting parts of the retirement planning process today, and that's this question, is that, will I regret retiring?

And I haven't, I haven't met a lot of people that have said they've regretted retiring, but I have met some people that have came in six months or 12 months after they've retired, and they said, "I never should have retired. I'm bored out of my mind. I'm sitting at home. I blew right through my honedo list.

That only took me six weeks, and now I'm sitting around every day wondering what am I to do? Who am I supposed to go hang out with or socialize with?" So we have to be able to address this major question of will I regret retiring as I proceed in my retirement journey? And so it's a lot of times the emotional side, not just the financial that I'm talking about there.

And so here's some, I don't know, recommendations, if you will. Number one, make sure you have a purpose. Your entire working career, your purpose was to go to work, add value in whatever shape, form, or effort that you were giving at your daily routine. Number one, find something.. Or excuse me, number two, find something to be passionate about.

Maybe it's volunteering for the first time. Maybe it's spending more time, quality time with your kids or your grandkids. Maybe it's your spouse. Funny thing, that is one of the common concerns is spending too much time with your spouse is actually something that people brought up as a concern of retirement too early because they'd have to spend too much time with their spouse.

And then the old, like, make sure you don't have to go back to work. I've seen that happen multiple times throughout our journey. People have this plan to retire, but then they get a couple years into it and they find out they didn't have enough money. Or they didn't plan properly, and now they have to go back to work.

So I think it'd be a lot easier to continue your work. And a thing that I've found that's been really recent, probably the last three, four years, we've seen it more and more often, is retirees are not fully retiring, they're partially retiring. So don't be afraid to explore this option. And what I mean by that is employers today, let's face it, they know what they have with you.

They know that you're going to show up to work. They know the value you're adding to their teams or their businesses and their operations. They don't want you to retire because they value what you have. So go have a conversation and say, "Hey, thinking about retirement, but I don't know if I want to fully retire.

Could I do a three-day retirement?" We've had at least five clients in the last couple years that have went and had that conversation and found a way to go to a two or a three-day work week, maintain their health insurance benefits, maintain their ability to contribute to their 401plans, and still have four or five-day weekends.

Not a bad gig, if you ask me. So again, make sure you have a purpose, make sure you've got something that you're passionate about or passionate about getting involved in, and let's make sure we don't retire and then have to go back to work again down the road.

And finally, make sure we're confident. Kinda going back to that will I regret retiring question. I think without a plan in place or without the confidence that a plan provides, oftentimes we run into that, "Oh, I should have never quit." The people that we've gone through planning processes with that have confidence in their plan or have understanding of all those different parts that I was talking about earlier, those aren't the folks that are coming back and regretting their retirement.

It's those that guessed. Or those that took the chance and retired without having the plan in place that really comes into play here And my final thought on this one is truly this, like, just like I told those folks that were able to go to a part-time, if you like what you're doing, if you like the people you're surrounded with every day, there's no reason you have to retire.

Nobody says that you're forced to retire at 60 or 65 or 70. So enjoy it. Enjoy that. If that is your passion, if that is your purpose, and you enjoy the work you're doing, keep doing it. I don't think there's anything wrong with that, and I'm seeing more and more people work well beyond 65 than I had in my first 15 years of doing this type of work.So let's wrap up with a couple things, and the main one, that comes to mind, throughout this entire process, you've heard me reference a plan. We call ours the Financial Game Plan. We designed this, purely to help people know they could have clarity and simplicity around this question of can I retire, all.

But regardless of whether you use the Financial Game Plan, I would just highly encourage you to have a plan, because the plan is where all this stuff comes into place. It allows you to take all those questions that we posed today and have somebody, whether it's an advisor or yourself with the assistance of Google or whatever AI tool that's out there, assemble a plan or a pathway for you to answer that question of can I retire?

All right. It organizes and it puts all your savings into one place for you to know how much income and where it's going to come from and all the different moving parts that we talked about, tax efficiency, uncontrolled risks that may pop up along the way, whether it's market volatility or, law changes or whatever it may be that occur.

And it truly is designed to help be that guide for you in making this decision, not just to retirement, but through retirement. And I always tell people this, a good plan should give you three things. Should give you clarity, should give you simplicity, and the most important part by far is it should give you confidence.

Because again, who wants to go live retirement without feeling fully confident, and knowing that they've got enough, they're going to be okay, they're going to be able to reach the places they want to reach, and do the things they want to do with the people they want to do them? Okay. All right. Now, in closing, one thing I want to take away, you probably just guessed it there, but this is it.

So retirement is not a guess, it's a plan. Right? In order to get there, it needs to be done with a plan. And the questions that you need to get answers from for you to walk away from this podcast is, number one, do I know how much income I need in my retirement years? Number two, do I know where that money's going to come from and how long it's going to last?

And number three, am I prepared for anything that may disrupt it, or those challenges or roadblocks that may come along the way? If you can have answers to those three questions, and thinking through all the different moving parts that go into it, there's no reason you shouldn't be able to make that decision of, yes, you can retire. So again, I hope you found some value in today's show.

This topic, it is extremely widespread. There are so many different moving parts that are out there. I tried to keep it as vanilla as I could today, but I wanted to tie in with some solid questions and hopefully connect with some parts or some pieces that people that you know or that yourself might be facing.

And if I have, and it's resonating, I'd ask you to share the show. Pass this message along. Allow people to be educated on this topic, because the better we can help prepare people, the better off we're all going to be in society. So I appreciate the time, and I want you to go be great.

We'll talk to you soon.