5 signs it is time to retire

0:00 Welcome to something more with Chris Boyd. Chris Boyd is a certified financial planner, practitioner, and senior vice president, financial advisor at Wealth Enhancement Group, one of the nation's largest registered investment advisors. We call it something more because we'd like to talk not only about those important dollar and cents issues, but also the quality of life issues that make the money matters matter. Here he is your fulfillment facilitator, your partner in prosperity, advising clients on Cape Cod and across the country. Here's your host, Jay Christopher Boyd. Welcome to the program and thanks for being with us for another episode. I'm Chris Boyd. I'm here with Jeff Perry. We are the AMR team at Wealth Enhancement.

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1:23 So please go there and like our posts and share as much as you can. I would love to get the word out about the program and, um, your ratings and, um, stars and following and all that does help get the word out. So appreciate that. Um, Jeff, we wanted to talk a little bit about the signs of when it's time to retire and, uh, there might be some things to consider. Some, um, as you know, our listeners probably know this, but we tend to work mostly with people who are either in or near retirement. So this is the kind of topic that's near and dear to our, uh, experience with our clientele and the kind of things we deal with routinely and helping people navigate, uh, some of the things to be mindful about.

2:15 There was a good Kiplinger article that we're going to maybe make some reference to, but, uh, where should we begin today? I think we should start with that. The decision to retire, isn't just the random number that you throw out there and say, I'm going to retire at age 60, 65, 70, never, you know, whatever people kind of come up with the old, it's so interesting how people decide it's time to retire, right? Some people it's I'm working toward my number, you know, uh, that they have the right amount of assets is in mind, which of course changes the number changes if you retire earlier or later, or, you know, how much.

2:56 It's not the same number. If you want to retire at 50, then it would have been a 65, which believe it or not, some people don't get that, but yeah. And so, so that's one, one thing. The other thing is sometimes people just go, I'm done. I retired. Right. And they're like, well, do you think it'll work? Uh, you know, that's sort of an afterthought. Well, how's this going to play out? I'm just going to have to work, you know? They're going to make it work, you know? So, and sometimes it's retirement's forced on you. Let's, you know, that's not a pleasant thing, but, um, you know, maybe some federal employees lately are getting some notices, you know, maybe they're in their early sixties and they're still working or whatever, and they've been thinking, Oh, when am I going to retire? I don't know.

3:37 But, you know, they get a notice that says your job is eliminated. Not just the federal government. I'm just, this is the kind of thing that can happen. It happens. Uh, particularly, you know, workers who are, um, in their certain age range can really find it difficult then to get back into the workforce, especially at the salary that they were making. Right. Yeah. Yeah. So it may be that they, uh, decide, okay, I guess I'm retired. Maybe they'll do some part-time work or whatever, but it may be a challenge. So that's one time. Sometimes it's just this decision, or in this case, you're talking about a forced decision, but, uh, sometimes there are other things that people think about that sort of draws them in to say, Oh, I think I might be ready.

4:25 Yeah. And that's the focus of our conversation today and the focus of the Kiplinger's article, which I can throw in the show notes if people want to read the whole thing, but these are signs, right? Signs that maybe the universe is telling you. Um, kind of joking there, but maybe not. So when you are, or not ready, right. I used to be thinking about like, maybe you're not thinking about retirement, but if these things resonate with you, maybe, maybe you should be. So the number one thing doesn't have anything to do with money, Chris. It has to do with emotions. You're emotionally ready. You know, you kind of like, yeah.

5:07 Well, I gotta say, Jeff, I talk to people all the time. It might be emotionally ready, but it's only one part of it. You can't just say, I would listen to this podcast with these financial guys. And they said, when I'm emotionally ready, no, this is just one. This is just one part of it. Right. Well, I do think that, you know, I think sometimes people feel burnt out. And that can be a driver for them to be thinking about, I need to change. And, um, that that's a valid, uh, consideration. Sometimes it's, I'm ready for a new, uh, adventure, a new opportunity.

5:47 Sometimes it's, um, uh, other, uh, other ways, health. I need something, you know, less physically demanding or whatever it might be. So it can be a variety of things that can lead to that. I'm ready. Kind of emotions, physical, right. I mean, people are, it depends on the type of job you have. If you have a job that's difficult on your body, you know, you're out there on a roof or you're landscaping or, you know, something that's really strenuous. Obviously. That could be a physical thing that gets you like, I just can't do this anymore. Right. Um, what we're really talking about is something more of a psychology, emotional.

6:29 Yep. Yeah. And the notion of what's the alternative, like, you know, I mean, it's, you talk about this from time to time, that notion that it's okay, so now what, what are you actually going to do? Yeah, that's important. There's a little bit of vacation. Sensibility. We had a client in not too long ago and recently retired, and he was talking about that notion. It's like, yeah, I get up and I don't have to do anything. I don't have to be anywhere. And this sort of sense of freedom that comes with that is liberating, you know, or, or anxiety ridden, like, I feel like I'm supposed to be somewhere, you know, that kind of thing. Right. I think when people think about that, they thinking about really short term, they may not be saying that, but the thing, yo, I won't have to do this.

7:15 I won't have to do that. It's going to be, I'm going to go on vacation. And, you know, it's like, that's retiring. We talk about this, but I think in this context, we should dig in a little bit. That's that reminds me of people saying I'm retiring from something. I'm retiring from the stress, from the, maybe a toxic work culture, maybe, you know, whatever. Yeah. But what are you retiring to? Right. Yeah. It's a great point. And you got to think of it in both directions. There can be reasons where, you know, you do want that retiring from mindset.

7:57 Totally get that. On the other hand, you really want to have a sense of clarity of what you're retiring to. We, you can't just be saying, I'm going to be a couch potato all day in retirement. You got to have something you're doing, you're moving toward. You have, you're energized by, you are enthusiastic to participate in or whatever. You need something that's going to really give you purpose and energy that you're moving toward, not just saying, oh, I don't, we don't have to do that anymore.

8:40 Yeah. I think the key word there is purpose, right? And it's, it's different for different people's, you know, the study show it's different for different genders, you know, women are much better at retirement and shifting into a new, making new social connections, activities, men struggle with that a bit. So, but either way, have something that you want to do that, you know, write it down, make a plan. I've seen some of the suggestions and stuff that I've read, having to do with making a calendar, not a day by day calendar, but like maybe a week by week calendar. What would I do over the next few weeks?

9:20 What would I do over the next few months? Just to give yourself a vision of what am I going to be doing? And it is an opportunity to do what you want to do. Could be a hobby, could be a charity. We've talked about this with some guests as well, and there are some good episodes that we've had. If you haven't, Dr. Landry, you've interviewed a couple of women about, I forget the, the future of you or something like that, right? Yep. Nan and Lisa. Yep. Yep. And the notion that, you know, sometimes there's it's hard to imagine what you might do if you have difficulty with that.

10:00 Sometimes it's perhaps helpful to have a, a helping hand in that process. Sure. But it's an, it's an opportunity that you don't want to squander, you know, to sort of be thinking about this stage of life where you think in terms of financial freedom that you can then say, what do I want this time to be about? How am I going to make some, the most of that time with something that will be meaningful to me, you know, whatever that is. So what are some of the other things that you need to think about? Well, perfectly timed. Number two, you know, number one is you're emotionally ready.

10:41 Number two is I've saved enough. So back to your thing that we say frequently, what's my number, right? Yeah, right. I think, you know, this is very much dependent in part on knowing two things, beginning date and ending date. Unfortunately, we don't necessarily know both of those all the time, but, you know, we don't know how long we'll live to, how much, how long those funds will be needed for. We don't necessarily know, as you've described, you know, exactly when we'll need to start. Sometimes people have unexpected changes in their retirement plan due to a layoff or something like that.

11:25 So, you know, I think these are key ingredients. We can make some adjustments based on assumptions of what is going to be inflation and how are we going to get rate of return? What are we going to spend? But all of these have variables that we have to, you know, be a little bit prepared for variation in some of these considerations. But that can be done. You can get a fair sense of, all right, at what point do I have that expectation of financial freedom? That's right. And that goes right into the next one. These two are, I guess, could have been put in the same category, but it talks about your retirement plan.

12:06 And, you know, we've talked a little bit about purpose, but I also interpret what's your retirement plan is to really, really do a deep dive about the conditions, the things that could happen in your retirement. You know, have you saved enough? That's your number. That's just like thinking about if I don't have a pension or if I do, how much is that cash flow? That is how much is my social security? I think people think about this and then they think about withdrawing from the assets that they've accumulated and they just get this number as we're talking about. So I need eight thousand dollars a month, for example, to live the lifestyle that I want. And they do the math and they say, OK, I can do that right now.

12:48 So that's that's kind of have I saved enough. But just continuing on that, I'd like to get your thoughts on. What can mess up, right? Yeah, there's variables. I mean, a couple of things. One is, OK, I can do that today, but what will I need in the future? How will inflation factor into my cash flow demands over time? Am I spending principal or am I only living off of earnings? And that, you know, how am I defining earnings? How much? Right. Markets don't only move in one direction when it comes to market volatility, as we talked about recently.

13:31 Everyone's aware right now of all the volatility we're enduring. So, you know, those are things you need to be mindful of. There are other things like, well, am I going to buy a car from time to time? Where's that money going to come from? That's right. Travel. Are there going to be new additional expenses? Are we going to have occasionally do some renovations to the home or update the bathroom or whatever it might be? Or the roof needs a new shingles. That is one of those categories, those items that you've referenced is I mean, it's they're simple to think about, but so many people do not include them when they're doing their cash flow projections.

14:14 And it can really take a dent in some of the numbers. And as you know, one of the ones that can be most unexpected and damaging isn't any of these considerations. But the unexpected, I have family who needs something. I have someone who maybe a child who maybe maybe you have children and you think they're all set and then all of a sudden one of them has a job loss or a divorce or the grandkids come along and you want to help there. Or, you know, the list is really endless. Or maybe a daughter who wasn't going to get married gets married and you want to have a wedding or a divorce or whatever.

14:57 Or, you know, and I like to remind clients when they think, oh, you know, I'm 70 or whatever, nothing else is going to happen. Everything's settled. Just, you know, I say, think about your friends. What stories are your friends telling you? Or just think back 10 years. What has come up in your financial life that you didn't that you didn't see? Right. And that gets them thinking. And so it's not just cash flow. Like, what are my expenses this month times 12 times 20 years or however long you expect to live? Right. It's really thinking about and this is where when you work with when you work with us, I'll say that or someone else who operates a business like you do.

15:43 When we we spend a lot of time getting to know our clients, understanding where they are, you know, where they want to be in their personal situations and their challenges and ask them these questions in person, because sometimes people are so focused on I'm retiring, getting out of I'm retiring from something. I can't wait to be home. And I met my number. They don't really dig into these what ifs, we call them. And then when you get to the big what if, I guess, is what if I need some help at home? What if I need, you know, what if health to, you know, chronic illness or health deterioration or death of a spouse, there is a cost of death of a spouse where that can change the cash flows.

16:32 All of these are variables. You got to do some of these stress test kind of scenarios. What if I live longer than I expect? What if, what if, what if, right? You got to kind of look at some of these variables and say, how does that, is there enough cushion in the plan that I can I can make it work? Right. So it's not so tight. There are times when we'll run a plan and be like, oh, we've got a plan that works. And then we say, what if you had to spend a thousand dollars a month more? Right. You know, it's more, but it's not like outrageously more.

17:13 But of course, it's not a thousand a month. It's a thousand a month now. Right. But then inflation, I guess we should talk about that part too, inflation. Yeah. And the impact can be devastating, not devastating always, but it can be like they just can totally change the outcome of the plan as to is this a viable plan or not. So, you know, in some instances could be very narrow in some instances that could be, you know, very large before it disrupts the plan. But my point is, you know, these are things you need to be paying attention to and then it can really be that much more important if you're in that scenario that you have to be, you know, perpetually updating the plan to say, how's it going?

17:54 How am I responding to inflation is one example. And if the numbers are so tight, what would be the impact of another year of work or a part time job or, you know, some of these other possibilities that might move the needle a little bit. In some cases, you know, the best of circumstances, people have an abundance and there's more than sufficient resources. It's really a question of how does it affect the next generation? Not so much for their charitable intentions or something like that. It's not so much a hardship, but it's different in all different circumstances.

18:38 So we need to think about these issues. Yep. And just a plug for people who are not at retirement right now, but people maybe five years out or something. That's the time to go in and have your plan really crafted or revised because small, small differences, you know, working one more year or whatever. Or how much you're saving at that point, you know, a little more set aside could make a big impact because, you know, that could mean you're not drawing down more from certain places or, you know, when to turn on Social Security could make an impact.

19:23 If I don't turn on Social Security when I retire, where does that, where am I going to draw from to spend money? Yeah, that's one that people often get wrong. How much I have in tax diversification, like am I all in IRA type money from all my money? Well, if that's the case, a third of that or whatever the number really is. But, you know, a chunk of that isn't yours. It's Uncle Sam's, so to speak. So the thoughts of, oh, I'm going to spend so much. Well, you may be spending that plus a third, you know, whatever. All right. So you're emotionally ready, you've saved enough and you have a retirement plan in place that not only helps with your cash flow projections, but, you know, does some planning on longer term things.

20:14 Yeah. Stress test is it for the what ifs, all those, a solid, comprehensive financial plan in place that supports that you can. Now, if you retire at 65, just to use that number, a lot of people are retiring earlier, but you have a likelihood and it's not a small one of living into your 90s. And so inflation, think about how much things cost 25 years ago and think about what they're going to cost 25 years from now. So to have all these components accurately included in your financial plan and testing it for the long term. The next one that they talk about is signs you might be ready for retirement.

20:56 Are you OK with watching your money deplete? Because some people, you know, you go through, you start, you get your first serious job when you're in your mid-20s, you started putting money away, you've been a diligent, savvy investor, you're piling, piling cash, as you say, you're a prudent investor and you've developed this nest egg that gives you the opportunity. I call it, it's not my quote, it's not my word, but Bob Frank is critical mass. You have the critical mass to live the retirement that you earned. And then people struggle with withdrawing money and watching those numbers go down.

21:38 Yeah, there's a certain, I think, you know, people all come to their money issues with different experiences, particularly people who've been through scarcity, are very much aware of the risks of asset depletion and the anxiety that comes with that possibility. So, you know, when we think about it, as we were just saying, sometimes you have money in different places. And so when you're talking about bank accounts or, you know, some of these monies that might be depleting, they might not be all of the resources, but it may be the most impactful for that sense of security.

22:32 So in any case, this notion of if you're even if you're just talking about your net worth, you know, not just the bank account per se or whatever it might be, that anxiety of seeing that get spent to some extent, you know, I think it becomes really important to have clarity of what's my plan, you know, is the plan to have money left over for others. That could be an important driver for many people. But for others, it's really about, well, I just want to don't want to run out over while I need it.

23:13 So does the does the balance going down on the net worth disrupt one's sense of comfort zone? It's really normal to bother people. I mean, that's because you think about it, you spent your entire adult life building. It's not natural to think even if you cognitively know it, right? Yeah, it's not natural to think that that number is going to go down. You're going to switch directions. It's almost like, you know, snap your fingers and now you're going to be depleting your assets for the reasons that you saved them for. Nicely done with that snap of the fingers. Yeah, thank you.

23:53 Thank you. That was not a sound effect. That was real life. Yeah, that was good. It's true. I think one of the things that oftentimes we see is not just that notion of the assets going down, it's people develop a comfort zone that they're willing to spend within. And they may have ample resources to spend more, but they don't have a comfort zone of spending more because they've become accustomed to a certain lifestyle model that even though they might have the ability and the resources and the permission, as you talked about, they just aren't comfortable with that at times because it's this anxiety that it will lead to scarcity.

24:46 Yeah, I just have one follow up on scarcity. It's just a note for people. Some people have not lived scarcity, had scarcity in their lives, in their adult life, but they could have experienced it as a child and that can have equally or even greater impact on how you look at these things. So having somebody to talk it out and having that, not to be super repetitive, but having that financial plan in place and going back to it, you know, like we get clients in at least once a year, sometimes more if they need it, but at least once a year we want them to sit down or virtually meet with us and say, all right, let's look at your plan.

25:31 How are you doing, you know, projecting it out? How's the projections look? You know, anything new, of course. And that really should add, I think it does, from my experience with clients, increases that ability that they have to say, OK, my plan's here. I'm allowed to do this, allowed permission. You know, I have I have this travel to Europe in my budget every five years and it's the fifth year so I can go. It's not going to mean I'm going to go. You know what it is, though, Jeff? I mean, I think we're we're trying to provide people intellectual rationale and a lot of this stuff is what hits you on an emotional level.

26:17 That is, it's not necessarily a rational decision as much as a feeling, you know, the comfort or discomfort that people have. And so sometimes the that that rational, oh, here's the evidence, you know, can can overcome that. But at other times it's just this is where I'm comfortable and that's where I'm going to stay. You know, that kind of mindset. But ultimately, these are things you need to I think what we really want is to make sure that people are tuned in if there's a risk of depleting assets, right, that they are prepared for how to navigate that and not to have it happen too quickly as it relates to their lifespan.

27:04 You know that it may be part of the plan that you're going to spend through some of your resources by design. And that's OK. That's you know, some people want that, some people don't. So it's really a matter of what you're trying to do. But you have to be, I think, vigilant around making sure that it's not perpetuating decline too quickly. You know, right. It's like I use I have the vision when I'm talking about this is you're driving a large ship across the ocean to a destination retirement, you know, the end of your retirement. And if you get off course and you know about it, you can make a small correction.

27:44 Right. You know, enough time in advance. You get an easy time, but if you're wrong, you're going to hit the shore or you're going to miss your mark. Or it's going to take a lot more to try to get that course correction can be difficult to do. So, yeah, I think these are so ultimately that what these are metaphors we're talking about. But, you know, what does that mean? It means you need to review your plan, you know, with some frequency because it's not static. And you need to say, oh, well, in this case, we've had a couple of years of great markets. How does that change the plan? Oh, we've had bad markets. How does that change the plan or does it in these instances?

28:26 Yeah, probably not as much as people think. Right. Right. And so or, hey, we had some unexpected expenses. We had we didn't have some of the things we planned to do that we didn't do, et cetera. And, you know, this gives you some sense of, oh, you can reassess what we want to do now, you know, and or maybe what we have to do now, you know. And there's things that we can that you may not have thought about that we, you know, talk to clients about all the time that they, you know, they think they either got to cut their spending drastically or they have to, you know, get a job. Right. And there's there's things that we talk about with clients, you know, that downsizing your house, for example.

29:10 Yeah. A lot of this comes back to accuracy of the information, the data, which is a challenge. But we have this very conversation to your point with clients very recently where, you know, they retired and their numbers at the outset look good, but then a review didn't look so good. And well, how could this happen? Well, you're spending a lot more than you said you were going to spend. All right. Let's let's evaluate. Is this an ongoing thing or are these one off? Yeah. Is it temporary? Right. You know. Yeah. So we can we can evaluate that. And if we know that it's not a perpetual thing, OK, where where's how's that adjust plan? How do we adapt? You know, if not, then we're going to take more significant action.

29:54 What are we going to do to course correct? Right. Right. So we've been talking a lot about we started with behavioral and then we, you know, went into the number and your plan and watching your money go down. Now we're going to go back to I don't know if it's behavioral or not, but it's certainly behavioral, emotional is have you talked to your spouse and, you know, are you ready for retirement? Have you talked to your spouse? Are you guys on the same page about what that means? Both of you are retiring at the same time. If not, is that OK? And what do you want to do in retirement? How many times have we heard, Chris? Usually the scenario is one of the one of the say the wife had a professional career where she was traveling a lot and the husband maybe worked in a, you know, in a certain geographical area all the time, maybe went to the same office building or the same factory or the same location.

30:49 And so the wife wants to retire and go nowhere. She wants to nest. She wants to be at home and be involved in the community for having dealt with all that stuff, all that business travel. And the husband who hasn't really seen much of the world, he's been, you know, sedentary in that one kind of spot or one geographical area. He has this dream of traveling the country and things like I'm using the extreme example, of course. But have you talked to your spouse? Are you guys on the same page? Do you have the same mindset about what retirement looks like? I want to move to Florida. I don't want to move to Florida. All these different things that come up, get on the same page and spend the time as you're thinking about all these other things, financial things, perhaps.

31:34 Talk about the lifestyle, not just on what you want, but with your significant other, a spouse or family, however you would define it. Yeah, I totally get your point. I think it's it's a partnership. You've got to both be on a similar page. Or how are we going to adapt? How, you know, that said, I mean, there are couples I know where it's very much that notion that one does and one does not like to travel. And so they they find a workaround. Oh, I'm going to travel with my sister or, you know, whatever it might be that.

32:14 Yeah, half the half the time I'll go with friends or a friend or a kid or some something where they get the opportunity to do what they want to do. But it's just, you know, it's and everyone's placated in a sense. Everyone gets to do what their comfort zone is. There's more than one way to do things, you know what I mean? So if one wants to and one doesn't, you can find a way to make that work. You know, if it's otherwise, you know, it's like, well, I'd be interested in going here and look, OK, we'll do that trip together, you know, that kind of thing. And it's not a right or wrong. There's no value judgments in any of this. It's just things to reflect on and think about and deal with before you make this decision to retire.

33:00 Make sure that these items and, you know, everybody has unique things. But I think the biggest challenge when it comes to spouses and, you know, this communication between spouses, when you have very different experiences, behaviors that, you know, abundance and scarcity kinds of mindset, when you're not on the same page, it can be very frustrating and challenging for each other to navigate that. In one instance, someone's a planner and a saver and, you know, trying to avoid that scarcity concern and somebody else is saying, oh, we got abundance, we got plenty.

33:47 Let's go, you know, they're a shopper or whatever it might be. And, you know, you can get into this scenario where it's like you're kind of bumping heads a little bit and it can create tensions and frustration. So there has to be good communication around these issues. And a lot of times what you find is when there's not more of a shared objective, it's very difficult to communicate around these issues. And it's really defining as to how things will play out over time. We don't have the skills as a marriage counselor or, you know, or whatever it is, you know, at the same time, it does, you know, there are, you do have these issues where you have very different preferences and issues going on where we have to somehow sometimes help people navigate a little bit of, well, how are we going to find some consensus on what we're going to do?

34:48 And but that's part of the virtue, I think, of planning is there's an opportunity to air some of these things in a way that's healthy and deliberative as opposed to, you know, just coasting along and not necessarily addressing some of these things and finding that it can be frustrating at times. Exactly. Have a good process usually has a good outcome. That's the way I usually think about it. You have a good process in decision making, your decision is likely going to be the correct one for you and your family. Well, good article, definitely check it out. And Jeff, once again, we are a little longer than we intended for our our conversation.

35:32 But, you know, listen, our listeners, if you are in need of a little bit of help in thinking about, you know, your retirement readiness, better to prepare, have the conversation, do some of these steps if you need help in the process. If you're not doing it on your own, best case is, you know, you do a little bit on your own, but get a little bit of help along the way and you will have a good outcome. If we can be a resource to you in that process, don't hesitate to reach out to us here. You can find us, the easiest way is go to our web page that can be found by the name of the show, Something More with Chris Boyd.

36:17 And you can always give us a call or send us an email. With that in mind, until next time, everybody keeps striving for something more. Thank you for listening to Something More with Chris Boyd. Call us for help, whether it's for financial planning or portfolio management, insurance concerns or those quality of life issues that make the money matters matter. Whatever's on your mind, visit us at SomethingMoreWithChrisBoyd .com or call us toll free at 866 -771-8901 or send us your questions to AMR-info at WealthEnhancement.com. You're listening to Something More with Chris Boyd, financial talk show, Wealth Enhancement Advisory Services and Jay Christopher Boyd provide investment advice on an individual basis to clients only.

37:02 Proper advice depends on a complete analysis of all facts and circumstances. The information given on this program is general financial comments and cannot be relied upon as pertaining to your specific situation. Wealth Enhancement Group cannot guarantee that using the information from this show will generate profits or ensure freedom from loss. Listeners should consult their own financial advisors or conduct their own due diligence before making any financial decisions.