Wishful Thinking In Retirement Planning

Today’s Prep:

Is your head in the clouds when it comes to retirement? Here are three common phrases people say when it comes to retirement planning. Eric shares whether these mentalities are wishful thinking.

(Click the featured times below to jump forward in the episode)

Equipping Points:

[1:05] “I’ll Live Off the Interest and Won’t Touch the Principal”

  • It’s possible because retirement is all about the income you need to maintain a standard of living.
  • This includes expenses as well as the things you want to do in retirement.
  • Can you generate enough interest off your nest egg where you don’t have to risk any of the principal?
  • Eric gives an example of how the numbers can work.
  • Retirement goes in three phases: go go, slow go, and no go years.
  • Things will cost more tomorrow than they will today because of inflation.
  • You need to have money in different buckets, including some that can outpace inflation.

[6:17] “I’ll be in a Lower Tax Bracket Once I Retire”

  • That’s possible, depending on how you structure it.
  • If your money is sheltered in tax-protected accounts like IRAs, 401(k)s, 403(b)s, TSPs, then in retirement, you aren’t forced to take that out until age 70 and 1/2.
  • Retirement gives you a better opportunity to control your tax burden than your entire career did.
  • Tax planning is a crucial element of your retirement plan.

[9:07]We Don’t Need to Worry About Assisted Living Expenses”

  • Even though you are committed to caring for your spouse, life might have other plans.
  • You won’t necessarily go into a nursing home, but you should address long-term care as part of your retirement planning process.
  • The default option when it comes to long-term care is self-insurance.
  • People are finding large increases in premiums in long-term care insurance, so Eric advises people to use other accounts for long-term care costs.
  • You need have the conversation and look at how it could impact your portfolio.

Today’s Takeaway:

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The host: Eric Peterson - Contact - Call: (515) 226-1500

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