I recently spoke with someone about a year from retirement who had a big problem that wasn’t being addressed, so I wanted to share it with you in case you find yourself in the same situation as them.
During this free retirement planning session, this couple said, “We’ve had an advisor for years and they do a great job, we really like them, but we’re a year or two from retirement. We started doing some research on retirement planning, which led us to your YouTube videos. After watching a few, we wondered: Why isn’t our guy bringing this stuff up?I shouldn’t be discovering this on my own.”
How can you really know if your advisor, or someone who’s going to do a quick checkup for you, is bringing up all the important things that can improve your retirement? I wanted to share two things to use as a filter when you’re talking to an advisor.
Do I Need a Specialist or a Generalist
Number one is getting clear on what you need. If you’re close to retirement you might realize it’s not just about maximizing returns anymore or building up the nest egg to get as big as you can but rather how to create tax-efficient withdrawal plans, and then how to take the least amount of risk possible when it comes to investments with the highest chance of success. Make sure you’re talking to a specialist versus a generalist.
Specialists typically work with one type of client instead of anyone and everyone. The problem for you is that specialists may cost more. The way I think about it is if you absolutely needed a very important surgery, and you found a general surgeon five minutes from your home who’s done the surgery you need one other time, and then you found a specialist surgeon who only does this one type of surgery and has done over 2,000 of them, but he’s located on the other side of the country.
The chance of success in the surgery is so much higher for the person who’s done it over and over again, so the value is so much higher too. That’s why knowing what you need and then finding that specialist can be really important. The second important thing to find out is how many clients they help.
How Many Clients?
We’ve seen a lot of people come over from some of the big firms that you see on TV because they realized after six months or a year that their advisor wasn’t being proactive. Don’t get me wrong, these massive firms are really needed for the majority of people in this country because most people don’t have or need custom planning to really optimize their retirement. However, specialty firms are necessary for those people who aren’t too worried about running out of money but know that there are things that they can do to optimize their plan and reduce the amount of tax that they pay, etc.
When you’re thinking about big firms, it’s hard to be proactive when you have more than 100 clients. It’s hard to think about and plan for them all. We just know that through how many relationships we can have in our life. Everyone wants something different, but going deeper with fewer people allows your advisor to be thinking about you when they’re looking at or reading about wealth transfer strategies – it’s more likely that you’ll pop into their head if they have fewer people to think about because it’s so custom.
For us at least, it’s more about relationships than revenue because when you work with a select few people, it allows us to go to the funeral of a client who passed away or to go visit a client who has recently been admitted to a long-term care facility.
TL;DR
To recap, if you’re doing research and getting knowledge about retirement and looking at your retirement more closely, and if you’re going to think about talking to an advisor, find out if they specialize in retirement planning and then make sure they’ve been doing it for a long time, 10 years at least. It doesn’t have to be, but it’s always nicer that they’ve had experience. Then, find out how many clients they have helped do what you are looking to do.
Investment Advisory Services offered through LaSalle St. Investment Advisors, LLC, a SEC Registered Investment Advisor (LSIA). Securities offered through LaSalle St. Securities, LLC (LSS), a Broker/Dealer and Member FINRA/SIPC. LSS is a Subsidiary of LSIA. Streamline Financial Services is not affiliated with LSS or affiliates. Investing involves risk, including loss of principal. This video content is not a recommendation to buy or sell specific securities or investment company products. Any third party software future performance and/or projection services are neither provided nor endorsed by LaSalle St. Securities, LLC LSS affiliates, or Streamline Financial Services.
The information by Advisor (“we”, “us”, or “our”) is for general information purposes only. None of this information should be construed as tax, legal, financial, insurance, financial advisor, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. It is solely at your own risk. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. All information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site. Under no circumstance shall we have any liability to you for any loss or damage of any kind as a result of the use of the site and reliance on the information provided.
This site may contain testimonials by clients who are users of our products and/or services. These are non-paid either directly or indirectly testimonies that reflect their real-life experiences and opinions. These experiences are personal to those particular individuals and may not necessarily be representative of all clients who use our products and/or services. Your individual results may vary.
This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them.
There are some changes coming to social security in 2023 that will affect both those approaching retirement and those already in retirement and receiving social security. See below our quick breakdown of those changes, what you should know, and what you should do in light of this information.
Cost-of-Living Adjustment
If you’re already receiving social security, you already know about the Cost of Living Adjustment (COLA). This adjustment will increase the social security benefit you’re currently receiving by 8.7%. For example, if you were receiving the average social security benefit of $1,850 per month, this adjustment will make your new social security payment close to $2,000.
Taxable Income Adjustment
There’s also an adjustment for those who are not retired yet and are still earning an income and paying into social security. The amount of your income that’s subject to social security tax was previously $147,000 per year. Any income above $147,000 than was not subject to social security tax. In 2023 that number is going to change to $160,200 per year. So, going forward, up to $160,200 of your annual income will be subject to social security tax at a rate of 7.65%. There is not anything you can do strategically to avoid this change, but it is something to be aware of. That said, if you’re in your 60s and starting to develop a game plan for social security, you should pay attention to this next change.
Beware of Starting Social Security Early
If you’re under your “full retirement age” by social security standards and you are still earning some level of income from something like consulting or a part-time role, then you need to think twice before choosing to start social security early. Here’s why: if you were making more than $19,560 per year in 2022, you might actually be subjecting to a withholding that is the equivalent of $1 for every $2 you make, which often makes taking social security early a poor decision mathematically. In 2023, that earning limit will actually increase to $21,240.
This consideration can get a little complex but it’s very important to understand, so we recorded a separate video explaining it in more detail and even walking through a real-life example from one of our clients. You can review that video here to see if this consideration would apply to you.
Meeting With an Advisor Consultant
It’s important to note that like many financial-related issues, there are quite a few factors that impact your financial plan, whether it’s Social Security planning, maintaining your lifestyle, or income in retirement. Like many of our clients, you might not be too worried about running out of money in retirement, but there might still be tax planning opportunities to optimize your financial situation even further. related to tax planning.
If you’re not sure how to model out different scenarios related to social security decisions, retirement income planning, or tax planning, see if you can reach out to a Certified Financial Planner™. Our recommendation would be to try to find someone who has been working specifically with retirees or who has at least 10+ years of experience. Many of them have a free consulting session that you could take advantage of to get a better idea of your situation and your options. Obviously, our team at Streamline would also love to serve you. We don’t always have the capacity to serve everyone that contacts our team, but we’d be happy to point you in the right direction no matter what.
Investment Advisory Services offered through LaSalle St. Investment Advisors, LLC, a SEC Registered Investment Advisor (LSIA). Securities offered through LaSalle St. Securities, LLC (LSS), a Broker/Dealer and Member FINRA/SIPC. LSS is a Subsidiary of LSIA. Streamline Financial Services is not affiliated with LSS or affiliates. Investing involves risk, including loss of principal. This video content is not a recommendation to buy or sell specific securities or investment company products. Any third party software future performance and/or projection services are neither provided nor endorsed by LaSalle St. Securities, LLC LSS affiliates, or Streamline Financial Services.
The information by Advisor (“we”, “us”, or “our”) is for general information purposes only. None of this information should be construed as tax, legal, financial, insurance, financial advisor, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. It is solely at your own risk. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. All information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site. Under no circumstance shall we have any liability to you for any loss or damage of any kind as a result of the use of the site and reliance on the information provided.
This site may contain testimonials by clients who are users of our products and/or services. These are non-paid either directly or indirectly testimonies that reflect their real-life experiences and opinions. These experiences are personal to those particular individuals and may not necessarily be representative of all clients who use our products and/or services. Your individual results may vary.
This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them.
The Best Retirement Advice: Five Truths Every Retiree Faces
I want to share one of the most valuable pieces of retirement advice that I’ve ever heard. If you’re thinking about your retirement and wondering if you’re doing the right thing, or think that you should be doing something different, or if you’re just worried about all the things going on right now – whether it’s the economy, the markets, or the value of your accounts – I’m going to share the retirement truths that every retiree goes through.
The negative of these retirement truths that we’re going to look at is that many of them lead to increased uncertainty or worry about your retirement. One of our goals is really the opposite of uncertainty or worry in retirement. It really should be more about confidence, right? The next years, really all the way up until you pass away, are the magic years. These could be the best years of your life, and I know that because there’s an actual study proving this. People were asked to score their life satisfaction from 0 to 10, where 10 is the best possible life and then 0 is the worst possible life. I thought it was encouraging to see that life satisfaction tends to increase as we get older.
Truth #1 – Should I Be Doing Something Different?
In retirement, it will be common to think: should I be doing something different? It’s normal to feel this way in retirement especially when you see the news, or listening to friends talk about their finances. There’s this feeling of doubt about our current plan, which causes some people to make more emotional decisions instead of making smart financial decisions. A good way to avoid this feeling is by having an understanding of your plan, which leads to more confidence with what you’re doing. Specifically, having a plan for both the good and bad market times so that you know you’re prepared for either one.
Truth #2 – Expect Bear Markets
Now onto the second thing that comes up in retirement – we need to expect bear markets. You’ve most likely lived through a lot of them already, but in retirement they feel a little bit different. Creating a plan with bear markets in mind and really big corrections built into the plan is a smart thing to do. That way you don’t have to worry when they eventually come. Now, if you’re not sure how to model these various what-if scenarios or bad market scenarios for your plan, then you may want to talk to a CFP or check out my favorite retirement income planner here.
Truth #3 – Should I Keep Working?
The next thing to bring up is for pre-retirees who are close to stopping their wage, especially if that’s during bad markets. We had a client who was five months into her retirement call us and say, “It seems like so much bad news is out there, and with what’s going on with the markets I’m wondering if it would’ve been better if I had just kept working.” We reviewed her plan, and because we built this expectation of bad markets into her plan, everything looked great. Really, the only reason to keep working would be if she really enjoyed this sort of work that she was doing and it brought her some purpose, but she didn’t. It was great confirmation that she was still on the right track. If this sounds like you, take a look at this video with a few real examples of what working an extra year might look like in a financial plan.
Truth #4 – Spoiler Alert: No One Knows
The next thing to know is that no one really knows what’s going to happen next. It seems like everybody has a prediction on TV, YouTube, or at the dinner table with family, but no one knows what is definitely going to happen. It’s important to prepare your investment plan for the four economic seasons that we may go through in the future since we don’t know which one we’re going to go through next.
The four economic seasons are higher than expected economic growth, lower than expected economic growth, higher than expected inflation, and lower than expected inflation.
Truth #5 – Comparison Is a Thief
In retirement we may have a tendency to compare ourselves to others. The grass is always greener on the other side of the fence. If we mention a dollar amount in a video as an example, we don’t want that to make you feel better or feel worse about your current situation. Because we help high net worth families at Streamline Financial, we sometimes mention big numbers, but we don’t want it to be about the numbers. We really want to communicate the principles and the strategies that can be applied to anybody’s finances.
There are always going to be people with more than us, and then there are always going to be people with less. Comparing ourselves to someone else can hurt our retirement plans because that leads back to that first point that we talked about – feeling like we should be doing something different. One of the most helpful pieces of advice that I’ve heard that we can apply to retirement planning is really the difference between fear and anxiety. When we think about fear and anxiety, we might think of them as being the same thing, but actually, they’re completely different things. Fear is a caution over a real and present danger, while anxiety is a worry over an imagined future danger.
We can’t control the markets or inflation, or what’s happening in the news or the world, or tax laws, or the elections, but a lot of these things actually do relate to things that we can control. You can control when to pay taxes when it’s related to investing. With the news, all we can control is how we consume it. Either find a great certified financial planner who can show you the what-if scenarios, or check out the DIY planner. Anxiety can be the thief of dreams. It takes you away from enjoying the present moment, and it stops you from even taking the right action to make things better in the future because you only focus on the negative as you’re moving through life.
Investment Advisory Services offered through LaSalle St. Investment Advisors, LLC, a SEC Registered Investment Advisor (LSIA). Securities offered through LaSalle St. Securities, LLC (LSS), a Broker/Dealer and Member FINRA/SIPC. LSS is a Subsidiary of LSIA. Streamline Financial Services is not affiliated with LSS or affiliates. Investing involves risk, including loss of principal. This video content is not a recommendation to buy or sell specific securities or investment company products. Any third party software future performance and/or projection services are neither provided nor endorsed by LaSalle St. Securities, LLC LSS affiliates, or Streamline Financial Services.
The information by Advisor (“we”, “us”, or “our”) is for general information purposes only. None of this information should be construed as tax, legal, financial, insurance, financial advisor, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. It is solely at your own risk. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. All information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site. Under no circumstance shall we have any liability to you for any loss or damage of any kind as a result of the use of the site and reliance on the information provided.
This site may contain testimonials by clients who are users of our products and/or services. These are non-paid either directly or indirectly testimonies that reflect their real-life experiences and opinions. These experiences are personal to those particular individuals and may not necessarily be representative of all clients who use our products and/or services. Your individual results may vary.
This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them.
Taking Social Security before your full retirement age could end up hurting your retirement plan. We see it ever-so-often when people end up having to reduce their benefits when they really don’t need to. I only recently noticed that there’s a specific type of person who probably should not take Social Security before their full retirement age, even if they are retired, and even if they don’t think they’re going to earn an income anymore.
Are You the Type of Person Who Should Wait?
Last week we had a Zoom call with a 63-year-old couple. They sold their business and they were talking about Social Security and the strategy behind it and what’s best for them. This couple wondered if they should just start Social Security now. Here’s why we decided not to take it.
He fits that category of a certain type of person: a business owner or an entrepreneur. He’s got a lot of ideas and finds it difficult to sit still. If you’re that way, you might know what I’m talking about. The reason why we decided to wait until full retirement age at minimum is because there’s a chance that he may have an idea that turns into an income-producing idea.
Entrepreneurs and Social Security
We sometimes see that happen with entrepreneurs in retirement because the ideas that they have often end up helping other people and that’s fun for them. The great thing about retirement is that you’re retiring from your vocation or occupation, which is usually the income-producing thing, but you don’t retire from your avocation or what you do for pleasure or fun or for hobby. The way that some entrepreneurs are wired, they may find that their avocation can turn into a money-making thing.
How Do You Know?
So here’s the question that we asked to see if they should take Social Security before full retirement age, even though they didn’t think they were going to be earning an income moving forward…
Is there a 20% chance you might make more than 20K in a year from a possible future wage?
He thought about it for just a few seconds and answered yes. So the plan became to not take Social Security until the full retirement age because 1) they’ve got other funds that are available in retirement that they’re going to use as part of their withdrawal strategy, and 2) if they make more than about 20K, they’re taking Social Security, and are under the full retirement age, then they may have to pay some back to Social Security each year. So that pretty much concluded the discussion.
Our goal at Streamline Financial is to share what’s working and what’s not working from other retirees so that hopefully you can learn from it and you can make your retirement just a little bit better.
Investment Advisory Services offered through LaSalle St. Investment Advisors, LLC, a SEC Registered Investment Advisor (LSIA). Securities offered through LaSalle St. Securities, LLC (LSS), a Broker/Dealer and Member FINRA/SIPC. LSS is a Subsidiary of LSIA. Streamline Financial Services is not affiliated with LSS or affiliates. Investing involves risk, including loss of principal. This video content is not a recommendation to buy or sell specific securities or investment company products. Any third party software future performance and/or projection services are neither provided nor endorsed by LaSalle St. Securities, LLC LSS affiliates, or Streamline Financial Services.
The information by Advisor (“we”, “us”, or “our”) is for general information purposes only. None of this information should be construed as tax, legal, financial, insurance, financial advisor, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. It is solely at your own risk. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. All information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site. Under no circumstance shall we have any liability to you for any loss or damage of any kind as a result of the use of the site and reliance on the information provided.
This site may contain testimonials by clients who are users of our products and/or services. These are non-paid either directly or indirectly testimonies that reflect their real-life experiences and opinions. These experiences are personal to those particular individuals and may not necessarily be representative of all clients who use our products and/or services. Your individual results may vary.
This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them.
Bear markets can feel a lot different when you’re retired and are no longer earning income from work, especially if this is your first bear market since you stopped working. When you were younger, you had time on your side. You may have even seen drops in the market as an opportunity because it gave you additional time and you got to purchase more shares while things were on sale, so to speak.
The relationship between your money and your accounts now is of money going out versus money going in, to put it simply. You may have noticed that there’s this psychological component around money and not wanting to mess things up. The decisions we make carry much more weight now when we’re close to or in retirement.
What led to your investment success the last 30 years is a lot different than what’s going to lead to success the next 20 or 30 years, or that’s at least what we’ve been seeing at Streamline Financial since we’ve been around. I want to share how to endure bad markets if you’re close to retirement, and what you can do to actually take advantage of this if you’re already retired – even if you’re no longer saving money.
Newton’s Third Law of Motion
There is a universal law of physics that we can actually apply to our retirement. Newton’s third law of motion states that for every action, there’s an equal and opposite reaction. The way I see it, there’s a positive to every negative and vice versa. I want to share what the positive is to take advantage of during bad markets.
Getting Through Bear Markets
The first thing we need to be aware of is that in the previous 30 years, there were four bear market corrections (a drop of 20% or more). The 30 years before that, there were a total of five bear market corrections. We need to expect these bear markets to happen during our retirement (the next 20 or 30 years).
The second thing is we don’t want to make a change based solely on emotion. We were just talking to someone yesterday about how emotions can cause us not to take action when we know doing so is actually the smart financial thing to do. For instance, during March of 2020 it wasn’t easy to rebalance your accounts, but if you followed through and did the correct rebalancing system or strategy and you were to look back now, it could have made a lot of sense.
Lastly, start with your income plan because that helps guide us and make really good planning decisions around our investment plan. Updating your income plan during bad markets can also give you some confidence as well as you’re looking at where we are today and then looking at over the next few years and seeing that things maybe aren’t as bad as it might seem.
How to Take Advantage of Bear Markets
This takes us back to that law of polarity we mentioned earlier. Idea number one to think about is tax-loss harvesting. That could be a way to write off some of the losses while still keeping your investment strategy intact. One thing to really pay attention to when we’re talking about tax-loss harvesting is that wash-sale rule.
The second thing that could be a possible opportunity is the ability or option to lock in higher yields in that conservative bucket. You’ve seen the bucket strategy on here before where you have the possible three buckets, and having that conservative bucket is a great way to plan out and prepare for bad markets. At the time of this recording, some of those historically conservative asset classes are paying a higher interest, a higher yield, than what we’ve seen really over the last decade which could be a silver lining during this period of time.
Those are just two things you could potentially take advantage of. If you’d like to talk more about your plan, feel free to reach out. We don’t always have space available but you’ll hear back from us either way. See you in the next video!
Investment Advisory Services offered through LaSalle St. Investment Advisors, LLC, a SEC Registered Investment Advisor (LSIA). Securities offered through LaSalle St. Securities, LLC (LSS), a Broker/Dealer and Member FINRA/SIPC. LSS is a Subsidiary of LSIA. Streamline Financial Services is not affiliated with LSS or affiliates. Investing involves risk, including loss of principal. This video content is not a recommendation to buy or sell specific securities or investment company products. Any third party software future performance and/or projection services are neither provided nor endorsed by LaSalle St. Securities, LLC LSS affiliates, or Streamline Financial Services.
The information by Advisor (“we”, “us”, or “our”) is for general information purposes only. None of this information should be construed as tax, legal, financial, insurance, financial advisor, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. It is solely at your own risk. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. All information is provided in good faith. However, we make no representation or warranty of any kind, express or implied, regarding the accuracy, adequacy, validity, reliability, availability, or completeness of any information on the Site. Under no circumstance shall we have any liability to you for any loss or damage of any kind as a result of the use of the site and reliance on the information provided.
This site may contain testimonials by clients who are users of our products and/or services. These are non-paid either directly or indirectly testimonies that reflect their real-life experiences and opinions. These experiences are personal to those particular individuals and may not necessarily be representative of all clients who use our products and/or services. Your individual results may vary.
This site may contain endorsements by non-clients who are not users of our products and/or services. These endorsements reflect their own opinions or views and may not be representative of our own. We are not affiliated with users who provide endorsements and they are not paid or otherwise compensated directly or indirectly for them.
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