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Battle of the Plans III, Part 1

RL054 - Retirement Lifestyle: Battle of the Plans III, Part 1


On this episode of the Retirement Lifestyle Show, Erik Olson, and Adrian Nicholson present the third installment of Battle The Plans, which covers planning for retirement, risk tolerance, and the ideal social security withdrawal strategy. They take a look at a couples hypothetical financial situation to determine if they are on track for retirement.


[05:41] Planning for Retirement


[13:33] Why People Nearing Retirement Start Stockpiling Cash


[21:23] Filling in The Gaps


[28:53] Risk Tolerance


[24:48] When to Start Claiming Your Social Security


[36:30] The Ideal Social Security Strategy


[44:30] Balancing Fixed and Discretionary expenses


[49:20] Long-term Care


Roshan Loungani can be reached at roshan.loungani@aretewealth.com or at 202-536-4468.


Erik Olson can be reached at erik.olson@aretewealth.com or 815-940-4652.


Adrian Nicholson can be reached at adrian.nicholson@aretewealth.com or at 703-915-8905.

Listen to the whole episode on our website here: https://www.retirewithroshan.com/podcast


OR for links to your favorite platform like Spotify, iTunes and so on go here:

https://anchor.fm/roshan-a-loungani/episodes/RL054---Retirement-Lifestyle-Battle-of-the-Plans-III--Part-1-erdndb


Select episodes, like this one can be found on YouTube:

https://www.youtube.com/channel/UC0ZZPM3xk6onXNpb1ceAkCg


Click here to read Full Show Notes.





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Planning for Retirement

Once a person hits 60 or nears retirement, the first issue of concern is whether they have enough funds to sustain themselves throughout their retirement years. And sustainment can come in man

y different forms, but it all comes down to living a comfortable life. With that, some people start panicking and postponing retirement for a couple more years, hoping that all will be well once they stop working. A financial advisor will analyze your goals and determine whether the goals are feasible regarding your financial situation, life expectancy, inflation, and taxes.


Why People Nearing Retirement Start Stockpiling Cash

As earlier mentioned, people nearing retirement are often worried about their financial situation. With that, most people start accumulating money that they'll use post-working years. Investing is an option, but it can be overwhelming, and there's always the risk of markets crashing. Thus, saving up some cash seems like a better alternative that removes all the heartache from the equation. While it's a good thing to accumulate money, there's one thing that makes it all not worth the effort, inflation. Saved up money loses value fast, such that even when it's accumulating interest, the inflation rate can sometimes be higher than the interest rates. So, have some cash at hand that can sustain you for at least six months, and invest all the other assets into income-generating avenues.


Filling in The Gaps

Once it's determined that a couple is not ready for retirement, it's time to start filling in their gaps in their portfolio that covers them till age 100. The main idea here is to explore all avenues while adjusting their portfolio and reducing the number of years they'll need to work after hitting 60. However, care should be taken when thinking about adjustments because a 1% shift can significantly affect a person's portfolio. The one thing that most advisors concentrate on is social security; determining the right age a person can start withdrawing social security benefits.


Risk Tolerance

If a person's portfolio is worth $1million, the market goes down 20%, taking the portfolio to eight hundred thousand dollars. How most people would react is being aggressive in their investments in trying to recover the lost money. However, this approach is often hazardous because most people assume that being aggressive is a faster and easier solution to fixing investment issues. Before you become aggressive in your investments, consider your risk tolerance and how you can cushion yourself if the market crashes.


When to Start Claiming Your Social Security

Once a person retires, the first instinct is to start claiming social security. The minimum age to claim is 62. If you are turning 62 and need the income from Social Security to support yourself, you might want to start claiming your benefits immediately. But if you have enough other income to keep you going until you are older, you may want to delay to increase the size of your monthly benefit. The longer you can afford to wait after age 62, the larger your monthly benefit will be.

Nevertheless, delaying benefits doesn't necessarily mean you'll come out ahead overall. You'll also need to weigh in some other factors, including your expected longevity and whether you or your spouse plan to file for spousal benefits. You will also need to consider the tax, investment opportunity, and health coverage implications.


The Ideal Social Security Withdrawal Strategy

You probably already know that you're required by law to withdraw a certain amount of money every year once you reach 72. What happens is that people tend to take out more money than they need. If you find that the government requirement is higher than your yearly spending, you might consider investing that extra cash in other forms of income streams rather than having cash at hand. Moreover, your financial plan should be dynamic enough to incorporate excess money from your social security withdrawals.


All opinions expressed by podcast hosts and guests are solely their own. While based on information that they believe is reliable, neither Arete Wealth nor its affiliates warrant its completeness or accuracy, nor do their opinions reflect the opinion of Arete Wealth. This podcast is for general informational purposes only, and should not be regarded as specific advice or recommendations for any individual. Before making any decisions, consult a professional.


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Arete Wealth Advisors LLC and Arete Insurance Agency LLC are affiliates of Arete Wealth Management, LLC. Advisory services offered through Arete Wealth Advisors, an SEC registered investment advisor. Securities offered through Arete Wealth Management, LLC, member FINRA, SIPC and NFA.

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© 2018 by Roshan Loungani, CRPC®.  Vienna, Virginia

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