Today’s Prep:
As you near the final months or years before taking the plunge into retirement, there are always a few details to work out and questions to ask. Eric answers a few questions from the mailbag about pensions, paying taxes in retirement, and deciding when to walk away from a retention bonus and just retire already.
Equipping Points:
0:48 Pensions: Lump sum or payout?
- You need to look at what the payout of the pension is.
- How many years will it take you to break even on the payout?
- Eric talks about clients locally who had the option for the pension payout.
- Having a guaranteed payoff is comforting, but you don’t have the control of it if something happened to you early.
- How many months will it take to get the lump sum back?
4:28 Mailbag: Taxes in retirement
- Kathy in Clive says her income will be very different once she retires. What should she do about taxes?
- First, pay your taxes.
- Right now, your taxes are automatically withheld at your job. In retirement, you can choose if you want your taxes withheld or not.
- If you have a pension or Social Security or even IRA distributions, you can choose to have it withheld automatically. Or, you can get the full check and send in the quarterly estimated taxes.
- In retirement you have more tax control than you’ve had in the past.
7:46 Retention bonus or retiring?
- James in Grimes has been frustrated and stressed with his job, but he receives a sizable retention bonus along with stock options each year. When can he walk away without feeling bad about it?
- The job probably provides this bonus because they know it is grinding.
- If you went through a planning process, you could determine whether or not you could retire today.
- If you know you can retire, it may make going to work more palatable or give you the feeling of control.
- Life’s too short to work somewhere that you don’t like.
- Sometimes if you modify your lifestyle or take a part-time job you can retire and do what you want to do.
Today’s Takeaway:
“Instead of your job causing you stress–you don’t want that. Come to a financial analysis and see if you can retire now or need to do something else. – Eric Peterson“
Subscribe To The Podcast:
Apple Podcasts - Google Podcasts - Spotify - Stitcher - iHeartRadio - TuneIn
Check out some other recent episodes
Mailbag: Moving To A State With Income Tax And More
In this episode, Eric is answering your questions! We’ll cover a range of topics today, including key considerations for income taxes when moving to a new state, how to initiate financial conversations with parents or grandparents, and whether using a life insurance policy to save for a college fund is a wise choice.
Read More
What Is Lazy Money?
What is lazy money and why do you want to not have too much of it in your retirement portfolio? Simply put, lazy money is money that isn’t growing as much as it could be. Having your money grow and work for you is a key part of building a solid portfolio, so Eric breaks down some strategies to help get the most out of your money in this episode.
Read More
Retirement Planning Today Is Harder Than It Used To Be
Retirement planning simply isn’t the same as it used to be. From changes in life expectancy, the lack of pensions, and getting caught in the sandwich generation, there’s a lot to keep in mind when putting together your financial plan. Instead of taking advice from others who may have retired in a different era, it’s important to understand what strategy is right for you.
Read More
Social Security Variables That Impact Your Claiming Strategy
After so many years of paying into Social Security, you might feel ready to reap the benefits. But before you get too eager, it’s best to have a thorough understanding of the different variables and how to best leverage them.
Read More
Retirement Real Estate Decisions: Downsizing, Snowbirding, and More
One of the key discussions you may have in retirement is what to do about the house. Should you downsize your home? Pay it off early? Buy a vacation home and become a snow bird? Eric emphasizes the importance of considering not just the financial implications but also the lifestyle changes each of these decisions entail. Weighing out the pros and cons of each decision can highlight what is right for you (which isn’t always the same as what your neighbor is doing).
Read More
Healthcare in Retirement
One major (yet often overlooked!) expense in retirement is healthcare. Especially if you are retiring early, healthcare can be a huge expense as you bridge the gap between your working years and when eligible for Medicare. Not only will you have an increased monthly cost, but you may need to budget for additional medical costs as time goes on or even long-term care needs.
Read More
Family Matters When It Comes to Finances
Today we talk about what happens in a family, particularly when someone has passed away and the financial impact that can have.
Read More
Water Wheels and Retirement Planning
Have you ever wondered how a water wheel can relate to your retirement planning? It might seem like an odd comparison, but in today’s podcast, Eric breaks down this fascinating analogy and its significance in maintaining a stable financial future.
Read More
Most Common Retirement Planning Mistakes
We all make mistakes from time to time. But what if your financial mistakes could be avoided with just a little insight? Eric shares some of the most common retirement planning mistakes people are prone to make and what you can do to save yourself from heartache.
Read More
Common Complaints About Financial Planning
When it comes to planning for retirement, the relationship you have with your financial advisor is crucial. Many people express common complaints about their financial advisors, from taking on too much risk to paying high fees or a lack of communication. In today’s podcast, Eric sheds light on these concerns and offers valuable insights to help you navigate your financial journey.
Read More