In this episode, Jenny Jones talks about what to look for in retirement planning software and possibly reshifting post-Covid-19. He also shares some startling statistics behind being ready and not being ready when it comes to retirement.
In this episode, Jenny Jones talks about what to look for in retirement planning software and possibly reshifting post-Covid-19. He also shares some startling statistics behind being ready and not being ready when it comes to retirement.
Hi, Jenny Jones, my retirement exit, and what I want to talk to you today about is a retirement survey that I saw that was conducted by the Employee Benefit Research Institute and Greenwall and Associates. And this was a two thousand nineteen survey. And a survey was trying to figure out how many people had literally just sat down, whether it be a single person or a married couple. How many people have tried to figure out how much they actually need in retirement?
And it was interesting because the survey said that just four in 10 workers, or 42 percent, they report that they or their spouse have even ever try to calculate how much money they will need to have saved or that they can live comfortably in retirement. And I find that very interesting because I really thought more people had really actually done their homework when it comes to trying to figure out and or determine how much you need for retirement. And, you know, 42 percent, that's less than half.
So if you work in an office building or because we're in covered, if you're on a zoom call or a team call, less than half of the people on that call have not even tried to figure out how much they've saved for retirement or how much will they need for retirement.
And what I want to do is just try to break some things down for you or what may be the biggest concerns when it comes to retirement, because there's different types of spenders, even when it comes to retirement. And what I mean by that is there there are actually spenders who who once they go into retirement, most of the income that they have coming in, whether that be retirement or some type of pension, it's going to the cost of their home.
Right. And then there's these other type of spenders that when they go into retirement, the retirement is going mostly towards medical. Right. And so we can sit here and we can try to determine how much money it will take to comfortably retire. You know, and I always posed this question to people when I'm out doing workshops and seminars and actually on Zoom calls now I ask people is, gosh, do you know where retirement came from? Right. Do you know where it originated from?
Right. No one can seem to answer that question, and it's not in any ancient times or anything like that, you look at some of the living going to biblical times, you'll see that most of the biblical characters, they you know, they did most of their work in their latter ages. And that's strange because no one can seem to tell me why they want to retire. Right. And what it really comes down to is people are really fed up with their job and order position.
But then I started digging deeper. Why? Right.
And it comes from the debt that they carry, the debt that they carry. Most of the debt that people carry forces them into a position and or a job that they really don't care to do. But they have to do because they have to make the bills and they have to pay the bills. Right now, I'm talking I'm not talking about the ultra wealthy. You know, even if you look at the ultra wealthy, which their wealth was built either brick by brick or end and or in fact, it was inherited.
Right. And some most wealthy people, they work to continue to continue to have wealth. Right. And some of them, their money works for them, but they still enjoy having a certain amount of money. So they still continue to work. They may not roll up their sleeves and go out and pour concrete and serve in a retail industry or anything like that. But there still are some type of working that they are doing. So everybody continues to work.
But retirement is this. And what I don't want retirement to be for me. And then I advise people to not have retirement for them. I don't want people to work doing some job that they never really wanted to do for 20, 25 years and then go into retirement. And then they do nothing right. Because they've worked so hard that they don't get an opportunity to enjoy it and. The best thing that you could probably do. On this day is try to get what an adviser or an investment adviser or a certified financial planner, someone of that nature, don't go to specialized right.
If a person does insurance and they said, oh, I do financial planning, too, like, yeah. Do you really do that right? Or insurance is your bread and butter, your license, do insurance. But because our company offers other products while we do that too, it's not going to be your bread and butter. Right, because an investment professional and or a retirement planner, that is their specialty. Right. That's what they do.
And they and most of them, which I recommend I wouldn't go the one who works for who who's a captured person, meaning that they can only sell the products and services of that particular organization. I'd rather go with someone who has an opportunity to to offer you whatever you need. Right.
They'll write you a prescription for your retirement plan on whatever it is you need. Right.
And so it's not based on the type of commission that they'll receive from the organization, but it's more can I put together a solution for the client that sits before me no matter where I go to put the solution together? I still want to be to satisfy that client. And that's what I think people should be doing once they do decide to move forward to put their plan together. And this 42 percent is challenging to me because there are tools out there that you can get a rough estimate from.
I know my particular organization, we we drill down into the weeds and we really try to find out what is it? What will retirement look like for you? Will you travel right. Well, post pandemic, will you travel right? Will you try to send grandkids to school? Would you buy a new house or you add a new extension? All those types of things we want to try to know so we can factor and figure that in. One of the other interesting things that I've been finding out and I've been discovering more is this pandemic has forced a lot of people out of work and people have had to rely on what they know.
Right. And so there's people out there says, listen, I don't have a job. I don't work for a corporation anymore. But I do know this skill set and they've gone into business for themselves, for that particular skill set and they're more satisfied.
So now I'm running into clients and I have some clients that I still have some clients who still work for corporate America. But I'm running it to some clients just like, hey, you know, I'm doing what I love to do. I don't know that I am going to retire. Right. I just really enjoy doing what I'm doing. And I've had several conversations in several workshops and seminars.
Everybody knows my three exit, three exit doors. Everybody knows that concept. One of them is the hybrid model. Hey, I'll still work. I may not work 40 hours a week anymore, but I still enjoy doing what I'm doing. I may cut it back to maybe twenty or I may work two days a week. Right. I may work, you know, Tuesday, Wednesday and Thursday, Friday, Saturday, Sunday, Monday, Tuesday. I mean, you know, on and on.
And those are people that I'm running into a lot more. And I think this is a good opportunity. I think covid allows this opportunity to reassess what we got and what's going on. And I think one of those things are trying to probably even reposition yourself. This is a good reposition time and try to go into an occupation if you desire to be an employee for the rest of your life. And that's totally OK.
But trying to go into doing something that you really want to do. Right. And so the the recovery of the economy will still be long.
But to get it, you may not even be making what you were making, but you have much more job satisfaction and it doesn't become a chore for you to get up in the morning and go to work because you enjoy your job, may not be working, making what you were making right.
And maybe as a result, you've had to jettison some of the debt that you had or some of the things you had to do.
But it's one thing to get up because you have to. But it's another to get up because you want to and I think if you get up to go to work because you want to, it's going to extend your life a lot longer and you'll enjoy retirement a lot longer. Now, retirement will look a little bit different, right? It won't be a typical retirement. You say, hey, I'm just get up every day and do nothing, but it'll be a retirement where you're still kind of actively involved, whether you go back and volunteer or whether you go back teach or whether you go and consult, that is becoming more prevalent.
And I really think a mindset shift right now should be made. And with that as a desire and says, hey, listen, I want to go out, part of my exit is to I still kind of want to work. I just don't want to get up every single day.
Right. And I think putting a report together now and giving you and telling you what you'll need, because your report will tell you what you will need. Right. And really what you will need is depend on the decisions that you make today. Let me give you an example.
One of the reasons why you're probably still working is because of a mortgage. Right?
If you if you reposition yourself right now why the mortgage rates are at a historical low and probably even position yourself and get out of a 30 year mortgage and move into a 15 year mortgage, then that's part of your preparation and getting ready for your retirement exit, because one of the biggest things that keeps us working and will continue to keep us working is debt and or a lifestyle. Right. And so if you reduce your debt, it'll free it up so you still can continue to have the lifestyle that you want it.
So going into retirement with little to no debt is the best way to go because now you've got options, right? And hey, you know, I don't have to work or I only have to work two or three days a week.
Right. And I get to spend time with the grandkids, and so those are the things you need to be considering, but getting a financial plan is is definitely at the top of the list because here's what a financial planner I know.
The financial plan that we do here is it will give you everything.
It's not some plan that you find online that does an estimate for you the difficulty in finding a plan online or downloading a plan or going to some free service, they're not going to get the intricate details. No one could really.
One of the biggest faults that I found in some of the most online, the online tools that I see for the retirement plans is no one could estimate your Social Security for you.
Right. And that's one of the biggest myths about retirement planning. No one can estimate your retirement Social Security for you, because a couple of things are going to happen with Social Security.
One, we've moved from having a 10 trillion dollar deficit in 2008 after the Great Recession, the financial meltdown of the housing markets. We're at a 10 trillion dollar deficit in the United States. That was our deficit. And that was 10 trillion. Fast forward to 2020, it's about 27 trillion now. That's a large jump and it's going up and up the pandemic, the pandemic is working on two sides and it's burning a candle at two ends. The candle is burning at one in his.
Most of the revenue that comes to pay down the debt comes from employee employees, whether it be through consumers or whether through be through employee taxes and or us paying taxes for for goods and services. So that's in. That's in that's burning because we're not doing that as much in only a couple of key players. Right. Your Costco and any Wal-Mart and your Target and your Amazon. It's a couple of key players that are still running robust sales. But, you know, all your restaurants and your small businesses that will not return all your gems and your hairstylist and all the those, a lot of those will not return.
Right. So those are lost revenue dollars. So those dollars that are lost, that goes to taxes or personal taxes, which make up a large percentage of the revenue that that the country brings in, that's going to be reduced on one end.
But the cost of the pandemic, the cost of the of the stimulus checks, those weigh heavily on the debt side, and that's why the debt went up. So that particular case is working in two different directions. We have less revenue coming in who have more debt going out. And that to me, is going to be a problem in the long run. So now is the time to readjust, readjust your thinking of what you think.
This is not your mom, your dad's retirement moving forward. There's a lot of adjustments. And I really think it starts with the mindset of what will retirement look like for you. The biggest thing that I would be doing is trying to reduce my debt. That would be the biggest that would be the number one thing that I would be doing right now, trying to go into retirement or even thinking about retirement.
And so if if you're if they're not looking at your debt, when you do these retirement plans, if they're not looking at your debt, they're not seen when debt is going to be paid off. Right. That's the one of the biggest things that whole people from retirement.
So that's a big deal. A lot of the retirement plans as well. Tell us how much you want.
Well, I mean, I can tell you, I want a million dollars right now where you need to save X amount of dollars for X amount of years and you get a million dollars, OK, or, hey, how much debt you got while I have this much debt, OK?
So if we reduce that by 20 percent and let's look at some things how we can do that, we can reduce our mortgage, we can turn it into a 15 year mortgage, which is very affordable, by the way, even for a large home, a 15 year mortgage is a lot less expensive than a 30 year mortgage. That's a whole nother conversation. And I probably will be doing a conversation, a thorough conversation on my other podcast, The Financial Evangelist's.
I will be I will talk about that specifically because when you lift the hit, when you lift the hood up and look at the numbers on a 15 year versus a 30 year, it's so much more expensive because the the underwriters and or the lenders know, no, there's probably a greater than seventy five percent chance that you're not going to pay off a 30 year.
Right. And so the the way the loans are amortized, they make so much more money on the front end from the loan and it doesn't even go to your mortgage until maybe halfway point fifteen years in and you'll see a little bit gradual. Go more to your mortgage. But it doesn't even break even at that point where at 15 year you start breaking even at around seven, seven and a half years. And that's a whole nother topic for a whole nother discussion.
But those are things that we need to be looking at as we move into retirement. Your plan also when I said that a plan can't tell you what your Social Security. You can't no plan can tell you that one. We don't know what that's going to look like, basically because of the the pandemic. We don't know if. Well, I think we have a good chance that Social Security payouts will be reduced. Right. They will not be the same as they've always been because that's running a deficit and they that can look a little bit different.
But the biggest thing, if you were retiring here in the near future, then you have to get your information from the Department of Social Security. You have to get the information from those are the only people that can tell you how much your estimation will be. Anybody else that's using that factor. That's hey, we think it's going to be this. The reason why it doesn't work is because you put in that your salary says, hey, what are you making while I make a hundred thousand?
OK, the biggest red flag on that is have you always made one hundred thousand?
No, well, because I was going to retire. I took another promotion and then pushed me over one hundred thousand. OK, great. Social Security is not going to pay you off of one hundred thousand. They're going to pay you off over an average.
I don't have the numbers right in front of me, but I think the average is probably about the last 10 years or they take a good snapshot of what you've made and then they pay you off of that average. Not going to pay you if you've only made one hundred thousand for one year. That doesn't help you from Social Security, right? If you've always made one hundred thousand, far as you can remember, then that's a good estimate going into Social Security.
Right. And so those those two big things, when you're looking at a retirement plan or someone's going to put one together for you, they need to know how much you're spending now as far as debt, what is a variable and what's a fixed cost? What's what can we change today? Right. And then because another variable, as you get older is your medical costs, you don't know what that cost is going to be.
You can estimate, but you really don't know what that cost is going to be. Right.
And so going back and as I as a kind of bring this to a close, I want you to just to start sitting down, having a serious conversation with your spouse, your loved one, or if it's just you having a conversation with yourself and say, listen, what I want to do, I think now is the perfect opportunity for you to figure out how to want to put this together.
How do I want this exit to look right? Do I want to position myself to just work with kids for the rest of my life? Because I just enjoy and adore kids. So I just want to be, you know, work at a nursery for the rest of my life. I don't know. I'm just I'm just thinking of different things. Right. And there are some people that, hey, they used to be hairstylists and that's all I knew.
But now just to get started back up, you'll climb back up and all that. They may not like that. So now what do they do? So now it's about trying to do. I like to say and I've told my wife, I say, do you? Because if you do, you're going to be a lot, much happier going into retirement if you decide to go into retirement or if you decide to take the hybrid door, which most people I'm running into every single day, every person that I'm sitting down with, maybe in the last I know since covid, maybe in the last six months to a year, their consideration has been, hey, you know what, I don't know if I'm going to retire.
I had to spend a lot of my retirement savings just to stay afloat. Right. So that cut into the retirement or they just said, hey, I need to reposition myself to just really do me right. And that way I'll never retire.
Won't work 40 hours, but I, I won't retire. And so those are the things you need to consider. So let me give you a couple of things. Let's take a couple of takeaways here and wanted to talk again. I told you about there's the 42 percent for 10 people. So 10 year workers or 10 of your family members. Right. Only four. Right. Is even thought about doing a retirement plan. And those who have done a retirement plan should consider getting a thorough plan that's going to break out their needs and their wants.
It's going to break out QUANTIC Quantitative Quent Quant quantitative, meaning that we want to look at the numbers and it should also look at qualitative. What were your quality of life be like?
Is it should be taken into account for those aspects? That's for one qualitative.
And quantitative, right? And so you looking at the numbers and it's also looking at the lifestyle, right? It should do that.
It also should tell you I should give you a good estimation of what your Social Security will look like.
Right. It should be able to add that in there because you've paid into Social Security, right.
Even though you're paying for about two and a half retirees right now. Your check, the one that you're putting Social Security into, is paying for two and a half retirees right now. So you're paying for two and a half people right now. Your check is right.
And so that's a whole nother cats don't want to get in. And that I think the last time I checked it was two and a half. I think it's probably a three. It's probably another half person since probably three people right now have to do the numbers on that. And I really probably want to do a podcast on that to let you know how much you're paying now for for more than one person that's retired later.
I mean, it's already retired before you.
That's how, you know, the system is really in trouble. Right. And that's a whole nother topic. A whole another podcast for a whole nother day. So again, so wrap that up. So know about your debt, right. So we talked about it 42 percent. We talked about qualitative versus quantitative. These are the things when you're looking for and your retirement plan. And we are a retirement plan that's going to be prepared for you. We also talked about reducing your debt, going into retirement.
Right. And so those are the things and changing your mindset because you don't know what retirement will look like and.
And due to the post pandemic, because it's going to affect some things, maybe, maybe not immediately, but I would say maybe in the next five to seven years, taxes and a lot of things are going to look a lot different once the economy starts to recover.
The the U.S. Treasury is going to be wanting to get their money back. And so they get that back from taxes. Right. And so the tax tables may change again. They may increase once we get our footing back to tax, tables are going to increase, which means more money coming out of your monthly household income.
That's going to happen, I'm almost certain, because you look at every every recovery has happened due to a tax change and to make up the shortfall in the most difficult thing as I close with is the right.
Now, the U.S. is spending a little bit over a dollar, about a dollar, ten dollar fifteen. The last time I checked, they're spending a dollar, 15 for every dollar that they bring in.
That's our U.S. economy. Right, and so that's going to be a challenge because we still don't have this whole pandemic being worked out. They just released the the medicine to start rolling that out. But we don't that's not going to take widely affect maybe another two years. And so we're not out of the woods yet. I think there's a little bit more confidence comes with that. But again, we're not out of the woods yet, especially when it comes to a full recovery.
And once we get into a full recovery, then the tax dollars will be taken back. Just kind of just going to how it's going to have to work. So this is Jenny Jones, my retirement exit. Want to let you know a couple of things. I will be moving into a segment. Well, I'll start interviewing potential people that want to retire and I'll start questioning them on the decisions they're making so that you can learn from them as well.
Why are people making these decisions? Why are they making those decisions? And I'll be offering a little bit of advice and some things that they need to look out for, because I've worked with so many clients that if you're young and you're coming up, you're 30 in your 40s, you don't know what's around the corner that's going to happen in your 60s and 70s. And so there are some things that work with my clients I'm able to share with them.
OK, well, I've had seventy five percent of my older clients had to deal with this. Have you considered that? And so those are some things that we're going to be doing.
And again, always, if you ever need to reach out to myself, you can reach me at retirement chat, dotcom, that's retirement chat dotcom or my retirement exit dotcom or the financial evangelist's, which is more comprehensive planning investments and debt and real estate.
I'll talk about that on that particular podcast.
This one is strictly retirement. Again, the structure will be changing a little bit because I will be interviewing more people when it comes to retirement and you can glean and you can see what people are thinking.
So that's what we do. We also do retirement plans. So if you need a retirement plan, reach out to us and retirement chat and we'll see if we can put one together for you. We can put together a pretty comprehensive one, and it's not that expensive to do as well. Hope all is going well. Stay safe out there. Good bye for now.