Retirement Realities: Bliss or Bust Video from Savant Wealth Management

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Hello and welcome to our webinar today on retirement realities, bliss or bust. My name is Rob Morris and I’m the chief experience officer at Savant.  I’m also a financial adviser for almost 25 years and I’m delighted to be joined today with by Grant Moore who’s a financial adviser as well. Hey Grant. Hey Rob. Thanks for having me today. I’m excited to dive into this topic. We certainly have seen this a lot. It’s probably the most central thing that we do in our profession. Lots of observations and insights both financial and non-financial that we can talk about today.  things that we’ve seen people do well and things that we’d encourage people to avoid. Here’s our agenda today. We’re going to talk about some of the nuts and bolts of building a good retirement strategy, the elements of income and investments and combining those things. And then, as I mentioned, want to really point out some of the key pitfalls we’ve seen over the years, not only Grant, you and I, but with some of our colleagues and our various offices around the country.  and I think just as important the non-financial some of the emotional, personal, psychological shifts that we’ve seen that that need to go along with this and often don’t. And then hopefully we’ll have a little time at the end to take questions. Feel free to drop a question in our chat at the bottom of your screen as we go here. And as I said, we’ll try to pick it up at the end as there’s time. Ready, Grant? I’m ready. All right. Well, one I’ll turn it over to you to really dive into how do we begin to think about building our retirement strategy. Absolutely, Rob. And this is really probably the most important conversation that we tend to have with folks.  When can I retire? How much can I spend? Making sure that you kind of take all those assets that have been accumulated over a working career and effectively deploy them to accomplish the goals and objectives that you have in your life.

A lot of times, you know, when folks come in, we see one of a few different scenarios. I would say maybe the most common is, can I retire early and still maintain my current lifestyle? The old kind of rhetoric centered around about an 80% of final year income spending. What we’ve seen though in theory and in practice is that most folks say, “Well, I don’t want a pay cut when I retire. I want to maintain my current lifestyle and if I have to potentially work a little bit longer then then so be it. But this is I would say one of the more common questions is can I retire early and still maintain my lifestyle? Other scenarios that people come in with. Can I retire at 60 and potentially update my kitchen or add a screened porch? Some you more major home remodel costs. I’m gonna stay in my house throughout retirement, but I want to update it so that we can enjoy it during those years. And this specific scenario brings in two different kinds of pieces. First off, if someone’s retiring 5 years prior to Medicare, we have to make sure that we’re taking into account those larger private insurance costs for the health insurance. And secondly, if there’s a kitchen update or another major home project that is you know a significant cash withdrawal early in retirement, we want to stress test that and make sure it doesn’t negatively affect the plan too much. The third question here is: can I retire tomorrow? I’m burned out. I really want to retire as soon as possible. And I’ve lived in the Midwest, for example, all my life. I really want to go to Florida or Arizona in the winters. Could I buy a vacation home and is that feasible for my plan? And the last one that we’ve looked at here is maybe someone that says, “I’m comfortable in my job. I I can afford to be patient and work a few more years, but for that I want to make sure that I build in a pretty healthy travel budget, especially for those first 10, 15, or 20 years of retirement.” So, that’s an important piece to me and again I’m willing to work a few more years to make sure that I save appropriately to  meet that goal of mine. Yeah, I think  this is a good construct and one of the old sayings in this we used to use is you know the first third of your retirement are the go- go years, the middle 10 are the slow go years and then of course everybody can guess the last 10 tend to be more the no-go years. and front long if you will a lot of these activities and home improvements is a really common thing.

So your plan is obviously unique. So each person has their own plan. What we like to do is to start with the vision.  so what does your future look like? How are you going to spend your time?  are you going to stay in your current city or are you going to maybe move to a different climate? How again are you spending your time with kids and grandkids? Are you wanting to travel? Kind of mapping out that ideal vision just a high-level view of what retirement looks like for you to feel a sense of satisfaction. You know, you’ve accumulated assets again over a working career and really the money is simply a tool to help you accomplish the goals that are important for you. This is where we get a little more concrete and map out goals that will help you achieve that vision. , a lot of times we’ll look at more short-term goals in the next one or two years. What goals do I want to do maybe earlier in retirement to make sure that I’m starting off correctly  and accomplishing some of those bucket items that I’ve had for a long time.  secondly, you know, maybe in that 2 to 5year window. What does retirement look like? A lot of times this is maybe a move or something else, a big, you know, European trip that you’ve always wanted to take. And then beyond five years, what  items do you need to make sure that you accomplish so that you know when you’re 90 years old sitting on your front porch, you’ve looked back and said, “Well, I’ve really accomplished the main objectives that I had in in life or in retirement” and once we have those goals, then we have to take action on them. So having an action plan that sets that that retirement plan in motion. And so I think it’s just making sure you start again kind of high level with that vision, get a little more detailed with the goals and then setting out an action plan so that we can make sure that you’re you know accomplishing those objectives over time.

Obviously consumption is a driving factor. So when you retire, how are you going to get an income stream?  the first is we kind of set an initial target amount.  this is something that helps you meet your basic lifestyle needs. You know, again, maybe have some travel involved.  just, you know, the foundations of your overall expenses in retirement and ultimately making sure that your current assets and income level support that consumption long term. You know, in the first several years it may be fine, but we want to make sure that we’re extrapolating that out for a longer retirement projection and making sure that everything’s still appropriate. It’s also important to consider some rising costs that happen over time. We live in an era where we tend to see longer life expectancies. If you look at the research, if you have a married couple that both make it to their 65th birthday, there’s a 50% chance that at least one will make it to age 90.  so this is a retirement that could last several decades. So we need to plan according to that. Ultimately the next step is to test the goals within a financial planning program.  ideally one that uses a Monte Carlo simulation. Now Monte Carlo is stress testing the plan to determine how many  of those iterations are successful and how many are not. So a baseline financial plan, we may say, well, what if your portfolio grows at 7% per year over the life of your plan? And while that’s a great starting point, , unfortunately, we know that , returns vary over time. So, one year you may have a positive 20% return and the next year a negative 15% return. So that Monte Carlo analysis really is more of a real world simulation to vary the rates of return over time and make sure that you have a high probability of success before you retire or start spending down these assets. And lastly, really making sure that we account for any increased cost of health coverage. Many folks think, well, once I hit 65 and I’m on Medicare, that’s it. I’m covered by  the government health care program. And unfortunately, Medicare still does come with premiums. There’s also meta gap  insurance that needs to be in place and out-of-pocket expenses as well.  so making sure that we account not only for the cost of health coverage, but also the fact that health insurance, health coverage, and college are the two  expenses that tend to inflate at a higher clip than just sort of baseline living expense inflation.

So this is you know making sure that we make an informed decision. So, taking all the variables that we’ve talked about, you know, how much do you have, what, you know, as your social security benefit, potentially any pension benefit that you may have as well. Again, how much do I want to spend on basic living expenses, and then adding in other things that are wants, like travel or a country club membership, and, you know, long-term wishes, , such as a home improvement project.  and just kind of seeing again what probability of success you have for each of those scenarios. So each of these columns represents a distinct retirement projection.  the first one is sort of that baseline. I want to retire at 60. You know, we build in all those different expenses that you have. And you can see that dial towards the bottom of the page gives a 95% probability of success for the plan. Now, you know, this isn’t school where 93 and above is an A., in financial planning, generally speaking, between 75% and 85% is our confidence zone. What we would consider a successful plan. U, so if you’re at 95% in this scenario and you were in our office, we would say that’s a very strong financial plan. , and because it is, now we can maybe look at some what if scenarios, some alternative options as well. So the second scenario is retiring at age 57. So you say well you know scenario one has a strong likelihood of success. What if I decided to retire early but kept my expense level the same? And in that case it moves the dial a little bit down from 95% to 93% but still a very strong plan. Scenario three looks at retiring at 60, again, that original retirement date, but this time upgrading to a $750,000 house. , and you can see that that does bring down the probability of success to 85%. So, still in that confidence zone, but we need to make sure that we’re keeping an eye on, you know, a year-by-year projection. Just as markets change and circumstances change, we want to make sure that’s a successful plan. In the middle of that, you can kind of see a safety margin.  and it says 2,479,000. That is really the value in today’s dollars at the end of the plan with just an average rate of return. As I said before, it may be 7% a year, something that’s kind of an average rate of return. But that next column over you can see $311. So essentially if there’s bad timing which is again another stress test in the portfolio then there is a risk of running out of money before you run out of time.  and in this case bad timing is you retire today and starting tomorrow the financial markets really crumble for the next two years. you know, if we had a 40 or 45% pullback in the stock market, yet you go on with these expenses exactly, , as we’ve indicated, you don’t change your behavior at all. , then there is a real risk of kind of running the portfolio down to zero. So that is a scenario that we might say okay this is potentially feasible but we would feel a little more comfortable based on that bad timing if we either monitored it more closely or you know maybe you scale back that home price or work an extra year or something like that. And the last scenario is kind of looking at a happy medium between all of them.  retiring at 57. So, you do bump it up early, but backing down and having a $450,000 home expense. So you can see, you know, that if you’re removing $750,000 from the portfolio right after retirement versus 450,000, even though you’re retiring 3 years earlier, it really does kind of enhance the overall plan. So, this is where it’s helpful to make sure that that you stress test the plan before you just kind of make that decision to either retire or have a big  purchase such as a house purchase or a home remodel expense. Make sure you’re quantifying it, stress testing the plan and running that Monte Carlo so that you’re comfortable in retirement. I think this is great. There’s a lot in this grant about how we do this. And I think what’s important is it’s not a thumbs up or thumbs down, you can or can’t. It’s sort of what colors do we want to use on your canvas.  And there’s a as you’ve displayed here, a great combination of things that people are typically trying to decide. You know, the other piece of this is it’s not just a set it and forget it exercise. Once you get into retirement, you’re making we’re reviewing this. You’re making adjustments as needed because markets do what they do and inflation does what it does and life does what it does which we’ll talk more about. Absolutely.

So this is another very important piece. So I would say maybe the two driving forces between a financial plan are how much are you spending the overall expense number but also how much are you earning in terms of the portfolio rate of return. So if one person had their assets entirely in the bank in cash over the next 25 or 30 years they would have a far different financial plan than someone that had a more balanced portfolio containing a mixture of stocks and bonds. So determining an appropriate asset allocation to your portfolio is one of the keys to having a successful retirement. So you know which asset classes stocks and bonds as a high level but then u kind of drilling down and saying well US stocks versus international what percent in each of those categories large companies versus small value stocks growth or you know a blend between them making sure that you don’t have all your eggs in one basket. And really the ultimate goal here is for any unit of risk that someone is willing to take, how should we rearrange the pieces to get the maximum expected long-term return?  and so that’s the ultimate goal and a very important part to the financial planning exercise.

So next we’re going to talk about the balance of income investments and expenses. How do you again get that income for retirement? And how do you pair those with the different expenses that you have coming up? And it’s really important from day one to establish a reliable income stream in retirement. I’d say kind of the floor, the baseline are those fixed payments through social security, a pension if you’re lucky enough nowadays to have one, and any annuity payments that are coming in. That’s kind of the foundation of income that you tend to not be able to outlive.  from there, any systematic withdrawals from savings or investment accounts.  when you’re looking at a blended stock and bond portfolio, not all of them, but a number of the stock pieces will pay dividends that will give you just a cash flow that is more consistent over time. And the bonds tend to pay interest. So that’s again kind of that second bucket to pull from is the income from the portfolio to offset some of your expenses. And lastly, if you need to, you know, sell some of the investments to fund your cash flow, then that would be another thing as well. So a lot of times people want to have predictability of income. So, you may say, “Well, I have my social security check that hits and I want to invest or take out $5,000 per month on the first of the month from my portfolio.” That’s a really good spot to really have the goal of covering your essential living expenses with dependable income sources. Now any larger expenses such as you know big vacations or home remodel that’s where you kind of have more of a conversation around what’s the most tax-efficient way to fund some of those larger goals and really it’s about managing your investments wisely. So it is important to have a balance between growth and preservation.  The growth is that that driving factor the stock  market generally speaking that if we’re looking at inflation over 10 20 or 30 years that’s a real risk.  so we want to make sure that the portfolio is growing to combat not only expenses but also inflation over time. Having said that we know that the stock market can be variable and  there’s no guarantee that it’s going to be up next year. So that preservation bucket, the safety net with bonds or maybe some  cash from an emergency fund is very important because if we have a 2008 or another really bad bare market, you want to make sure that there’s an asset class like bonds that you can pull from  to allow the stocks to have time to recover. So that gives you just more  diversification across various asset classes. Adjust the risk  as retirement progresses. So if someone retires at 62,  when they’re 82, they may not want to have the same portfolio. So over time, make sure that it’s still appropriate for the goals, the cash flow needs, and kind of the comfortability that a client may have with their again overall risk. And lastly, it’s really nice to go through an actual risk assessment. So this is both qualitative and quantitative to kind of say, you know, this is how much cash flow I need. This is when I need it. You know, I’m going to need that cash for 20 years.  based on those answers, the risk assessment might give you a range of stock to bond portfolios that are appropriate. But you also need to pair that with your behavior. So if one of the questions for example is if this if the market or if your portfolio fell by 20% what would your reaction be and if you said I would panic and sell everything and move it to cash well then maybe that’s not an appropriate allocation for you. So it’s really pairing what you know how you maybe should invest the funds with your emotional attachment to money as well and making sure it’s an appropriate long-term allocation based on both of those components. I I think it’s really important when we do this and when an investor planner does this that they do bucket money like you said that we want to diversify because we don’t know from year to year which asset classes will be up and which will be down. having a source of liquidity like you mentioned bonds. You know, we we’ve lived through that multiple times, 2008 being the most extreme, you know, that it was not a game changer for people who had just retired if they had enough in in safer harbors like bonds and cash. Absolutely.

And we’ve kind of talked about the vision and goals, but align your spending with your goals. So having a budget for some of those essential  lifestyle and health care expenses, these are the expenses that they are what they are. You know, you need them to to generally live a healthy retirement. I would say this is kind of bucket one. So there’s not a whole lot of flexibility around that. Then guard against inflation and unexpected costs. So, you know, things like insurance, umbrella liability coverage, making sure that you’re appropriately covered that way. And again, inflation with things like stocks that tend to combat inflation over time. Also, TIPS, which are in Treasury inflation protected securities, a form of bond that actually does well with inflation.  And again, just making sure that that’s utilized for the duration of your retirement. And lastly, something that we’ve seen is more of this dynamic withdrawal rate. If you have flexibility in your retirement withdrawals, that really will enhance your retirement security. And what I mean by that is if the market’s doing really well, well, maybe that’s a time that you can take a little extra money out for a big European vacation, for example. If we have a pullback and the market is down 20 or 30% and your portfolio is really hit by that, well, that’s maybe the time to tighten the belt a little bit. And so, if you have some flexibility there, that really will go a long way to enhance your overall retirement security.

I’m excited to cover some other elements on this, but I think that flexibility piece is really a key. I the mindset we tend to come at this with is more of a fixed mindset. But the reality is even in our accumulation of working years, you know, there are always adjustments that we’re making and that will continue throughout retirement. Right. So, let’s pivot and I want to cover a few things, Grant, that you’ve touched on and add a few more that where we’ve seen missteps or things that we want to just encourage people to think about. And a lot of this underscores what you’ve already covered you know which is you know there are a number of things that are maybe unknown as you sit here today or that we can’t predict  you know going forward. We don’t have a crystal ball tells us exactly how it’s going to be. You know a lot of successful people especially if it’s a couple and two income house they don’t actually often know their true spending. You know, you’ve been talking about this already in terms of what we’re setting as goals and budgets, but it really does bear for us to sharpen our pencil and start to track and start with the big ticket items and work our way down. U you know, you mentioned the fixed costs. You know, I think that’s fairly easily to easy to get an arm around. It’s the discretionary spending, you know, that is variable and but beginning to think about that and work on that for a future budget, I think is super important. We don’t know what market returns are going to be or inflation or interest rates from year to year.  That’s just something that we’re going to have to adjust to as things unfold.  we build a plan for the long t long term and then we adjust as needed. And fortunately, a good plan, you’re not making significant adjustments year to year. You’re tweaking it at the edges, right?  And then there are things that are going to change in your life. And we hope everybody lives long healthy lives, but you know, things happen and people need additional care and we’ll talk more about that. But that’s why you need to keep the conversation going. If you have a partner in this, what do you want what do we want life to look like?  I think one of the big things I’ve seen over the years is we don’t think about the big ticket items, car purchases, wedding funds. You know, we often set a budget of, hey, we think you can afford to spend, let’s say it’s $100,000 a year in total. We’re thinking about regular spending and not the big ticket every so often spending. So we need to account for that. How often do you replace your cars as an example? You mentioned Grant, you know, social security and pensions, you know, that steady income. I just want to encourage that we approach those decisions very carefully because they’re irrevocable decisions. you know, once you make that that call on triggering a pension or social security, you can’t reverse that. And so, we want to step into permanent decisions having really thought it out well and calculated what’s the smartest move to make. There’s an inclination to want immediacy. I want I want income right away. And usually, you’re taking a little bit of a haircut. , and it may or may not be the best move in in the long run. And as I think everybody is really familiar, , you know, and you pointed out, health care is kind of the last, you know, frontier unknown here. We don’t know how long we’re going to live and we don’t know what kind of care and the cost of that care. U, we need to try and anticipate at least build that in as a future  item for us to consider. Robin, I think when you talked about some of those big ticket items, you know, a lot of times if you’re using a general rule of thumb, say that 4% withdrawal rate, that’s a little bit easier to quantify with those month-to-month lifestyle expenses. But you’re right, to have that financial planning software to build out some of those one-offs that don’t happen each year really helps to make sure that the plan’s solid. Yeah. and have some guard rails and as you had said in in good years maybe there’s an opportunity for us to harvest some of the that additional profit or gain and use that on a big ticket item opportunistically right so you know one of the pitfalls we often see is while we’re in the working accumulation years we’re saving we’re investing you know kind of set it and forget it in terms of the portfolio but then there’s a more sense of immediacy in retirement  to your portfolio returns. You you’re eating your returns  as it were. So, there’s an inclination to want to do some more market timing or stock picking and just want to reinforce that you need to understand where you’re taking risk and that’s one of them. Trying to time markets, trying to  pick the winners  if you will of any category of stocks is a is a risky venture. This chart is showing us in aggregate as an example the two column two bars on the left s the S&P 500 is the second column that’s the return of the S&P 500 over the last 20 years. So if you just invested in an index that bought the S&P 500 you did 10.4% 4% per year or to the left of it, if you hired an active fund manager to try and pick stocks for you, you actually did worse. , and we’ve seen this in every asset class, and that’s what’s represented here, midcap, small cap, , international stocks, emerging market stocks, that when you’re trying to just pick stocks, individual securities, you’re typically decreasing your expected return going forward. And nobody really wants to do that. The flip side, however, is one of the greatest pre-haunches in investing is rebalancing. And it’s again super important when we get into retirement to be adhering to a discipline of rebalancing. What does that mean? means when I have certain asset classes that grow disproportionately that I should redistribute, rebalance that back down and buy the things that have underperformed in the last period. And by doing that, I effectively force myself to buy low and sell high consistently through different market cycles. It also makes sure that we manage our overall risk level in the portfolio. We don’t just let it ride for the long term and we smooth out that roller coaster so that we don’t have the booms and busts while we’re drawing on the portfolio. Yeah, Rob, also with rebalancing, you know, a lot of times people think rebalancing just stocks to bonds, which is great for making sure that your risk doesn’t sway more than what you’re comfortable with, but it’s also nice to look at, you know, within that  rebalancing between US and international or small and large because they don’t always zig zag in the same  motion. So, it’s nice to kind of take advantage of rebalancing sub asset classes as well. Yeah, we’re seeing that this year. A departure from a trend over the last few years. International stocks outperforming US stocks. That’s why we diversify. Another key piece  that we’ve got up on the screen here is we all tend to have a broad array of tax treatment of our assets  and different buckets therein.  and we want to think about how we draw on those different tax buckets as well as how we invest within them. So most of us have you know what we consider our retirement assets which where we’ve been contributing to a 401k 403b or an IRA that that has a preferential tax treatment. Usually we’ve put money in there and deducted that off of our income. So that’s pre-tax. It’ll be taxed on the way out when we distribute. So, we have to be careful there because as we draw more dollars from that bucket, we’re actually increasing our taxable income in the year that we do that. Hopefully you’ve been fortunate to save in in addition to your retirement account into things like a taxable brokerage. That’s after tax money. You know, we pay every year on the activity in that account, meaning things that we buy and sell and the income that we receive.  but it that tends to be post tax otherwise and so it doesn’t increase our taxable income as we draw it out. Health savings accounts has become much more popular and is kind of the third rail of  tx treatment where this is pre-tax money that if we’re using it for healthcare expenses, we can actually avoid all tax on it  when we draw it out and so we like when we see clients who have built up an HSA account that they can use in retirement to fund their medical expenses.  and then another favorite tool which has become you know much more mainstream in the last 10 years is either a Roth 401k or a Roth IRA which is post tax where we’ve actually already paid tax but then all of the growth and accumulation in that account  comes out tax free. So, you know, different treatments and this needs to be coordinated. And in fact, we should think about how to use and how to invest in each of these accounts differently. And this is where there’s a pitfall is that if we treat each of these buckets the same or we draw out of the wrong ones, we could be tripping over a tax issue and causing ourselves to pay more than we our fair share.

And a and a last piece in this is thinking about charitable gifts.  most of us tend to come at charitable giving from a checkbook perspective. What do I have in the checkbook that I can give at the end of the year? There’s some very powerful tools. One of them listed here is from those IAS that I was talking about. we have an opportunity to start making charitable contributions if we’re so inclined out of what’s required to be drawn out once we get to require distribution ages. So you can actually give to your favorite causes from this pre-tax  type of account your 401k your IRA tax-free from those accounts as part of your required minimum distribution. So something that once you get, you know, over 70 and a half to think about and if you want to give a meaningful amount each year to charity, this is a great place to do it. So those are all of the sort of financial things that that we run into or many of them anyway. What about some of the emotional and lifestyle adjustments that we see are so important and I think people need to put equal time into. There are some personal pitfalls that that I’ve observed and curious Grant kind of what you’ve seen in this area as well. But you know the first and foremost is this is often the first time in life that it feels like we have a blank sheet of paper right in front of us. Most of life’s stages have an appropriate next stage. I need to get good grades in school so that I can get a good job so that I can maybe buy a home and when I want to start a family support my family. you know, there’s a natural progression to things, but now it’s wide open when you’re moving into retirement. And that’s exciting, but it can also be kind of scary and why I see it often people put off retiring because they’re not quite sure what they’re retiring to. So, we need to consider that question. What is it that I want this life to look like in the next chapter? Maybe I should not do this all at once. What I call a cliff retirement. Maybe we want to do this in stages so that you know if I have the opportunity in my job, maybe I can phase into retirement so that I can get acclimated and really figure out  what I want to do. Super important if you’re with a partner that we’re having this conversation together and that we create a vision that we share.  if we have different ideas  you know that that’s going to lead us astray in terms of how we make decisions and not just with our partner but connection socially you know one of the great positive benefits of work is the social connections that we have every day  whether they be virtual like this or you know in person and there’s more and more research coming out these days showing that it’s so important that we maintain and actually keep building social connection connections in our communities, our faiths, wherever it is that we like to spend our time, we need to we need to keep those social connections alive and not just draw in  into the home. And then lastly, you know, the journey of aging and longevity has different twists and turns that  we need to be ready for and aware of in advance around, you know, how do I maintain my independence, my partner and myself, how do we transition eventually if we need additional support and all of the pieces that go with that as we’re living longer lives and requiring more help to do it. Yeah. Yeah. And I always tend to say, you know, there’s kind of two paths for retirement. The first is financially, are you able to retire and accomplish what it is that you need?  but then secondly, are you emotionally ready for it? And so sometimes people have hit that financial goal where their plan’s in good shape, but they’re just not sure what that next step is. So, you know, working certainly gives purpose and meaning. And so it’s really important to find that kind of purpose and meaning in retirement. And as you said, Rob, you know, making sure that there’s still that social interaction as well. Really important that you make sure that you’re emotionally ready and maybe kind of stair stepping down a little bit more part-time work along the way before you just kind of fully decide to quit. Yeah. Well said. Well said. So, you know, here some realities here. you know, anticipate just like in any chapter of life, career, school, whatever it may be, raising kids, there will be bumps. This isn’t the proverbial couple on the sailboat riding off into the sunset that, you know, there will be ups and downs in this.  so, take a realistic mindset into it. Consider this your victory lap. You know, this is an exciting time. It’s an opportunity to reinvent yourself, maybe do a phase retirement. I was fortunate a few years ago to co-author a book on what we called victory lap retirement which was about reinventing yourself getting started on this sooner. Grant you were talking about different stages of retiring different ages. There’s a tremendous opportunity to think outside the box.  so take advantage of that, right? Consider this a five-year window around retirement. It’s not just a one year or one day event of retirement. It’s a couple of years leading up getting things in place, making sure all your financial chest pieces are aligned, then the year of retirement itself, which is a big adjustment period, and a couple of years after until you get settled. So, it’s give yourself that five-year timeline. And you want to make investments in the things we’ve been talking about, building relationships, maintaining relationships with other people, family, friends, , current and prior colleagues, and consider what areas do you want to put your attention to? What passions do you have, whether they be hobbies or volunteering or recreation or travel? You know, I we see it’s so important to continue to be a lifelong learner to maintain those muscles, those brain muscles and  live a full life in retirement in this chapter. So, some things to think about along those lines. You know, take some time to consider what does an ideal day look like for you? You again, this is a blank sheet of paper. You have an opportunity to reset and have an exciting new chapter. So, where would you spend your time? What kinds of activities? Again, are you someone that would like to do some volunteering, help out with your family in some way? And what are the things that are have a cost factor that we should build into a financial plan and account for it?

There are emotional pieces to this, of course. That’s the subtext to a lot of this is realize that if you’ve spent 30 or 40 years in a career, this is a shift and your identity maybe more than you’ll realize is, you know, tied into that.  I when someone says, oh, you know, hi, it’s nice to meet you. What’s the first question that comes to mind? It’s usually what do you do? That’s how we tend to define ourselves. So that’s a bit of a shift that we need to make in how we think about ourselves and how we think about what our purpose is in in the next chapter. Our relationships might shift a little bit. I remember years ago I had a client say I asked him how retirement was going in the first six months and he said it’s going well except our kitchen got smaller. And I thought how’s that that your kitchen got smaller? He said, “Well, for 40 years working construction, I was out the door at 5:30 in the morning every day. We never were in the kitchen at the same time.” And so, you never know the changes that  you’ll be faced when you’re retired. But just recognize that we need to give grace to one another during this period of transition and that there will be some different emotions, but there’s a great opportunity and we want to embrace that opportunity emotionally as well. probably goes without saying, but you know, it’s key to think about lifestyle in this. You know, the traditional idea of retirement was sitting on the front porch, , you know, watching the day go by. And now it’s a much more vibrant, active period. And that’s important to maintain physical health, to maintain attitude. And we see in in more and more research the importance of this on your brain  to maintain physical activity in whatever form makes sense for you obviously but to push yourself physically, spiritually, mentally  all of these things will help you move forward into this next chapter. My co-author in the victory lap retirement book, Mike Dra, came up with this concept which I think really articulates what this process can look like. The initial euphoria which is very short, usually the first few weeks, the excitement of the transition and then without, you know, kind of proper planning, we can experience what Mike would call retirement hell where we feel a little bit lost and it takes some work to get back. It’s just it’s not about avoiding these areas or these chapters. It’s just how much time do we spend and how well planned are we going into this? Similar to, you know, our experience, Grant, with investing, you know, investing is a roller coaster and so is retirement. turns out right that there are periods of euphoria and despondency and you know the real goal of planning is to smooth this out  as best we can and not just ride these waves up and down.

So that’s all the content that we have to cover. We don’t have a lot of time left but we want to offer a couple of things. First, if you’d like to have more conversation about this, we’d love to talk with you about it. So, we’re happy to offer a free 15-minute introductory call. You can click in the chat to request that and get it actually scheduled, and we’d be happy to dig in a little bit more into your situation and offer whatever help we can. So, with that, Grant, we’re running a little short on time, but notice a couple of comments here or questions in in the chat. So, maybe I’ll take the first one if that’s okay. Okay. Sure. So, a question here about kind of phased retirement and how does one think about doing that? And it’s a great question.  and I would point back to some of the things Grant you said at the beginning that you need to understand what you can and can’t afford to do.  obviously you have to take stock in your profession, your career, what kind of optionality you have if you work for a company, but you need to arm yourself first with what is the requirement I have to work because that that changes everything. If you, you know, need to maintain half of your income for a few years, you need to know that before you start exploring your options versus, you know, maybe you’re already at financial independence and you don’t need income and now your choice set opens up, you know, vastly. You could even do volunteer work at that point. So, you know, solving for the things Grant that you talked about in the financial plan, I think is still the first step on that front. So, that’s a great question. You want to take the next one? Sure. Yeah. So, the next one’s regarding that Monte Carlo analysis and it says, “Is the Monte Carlo analysis just for when you’re retired or can or can it still be valuable to you if you plan on working 10 more years?” It’s, I would say equally as important. The benefit to someone that still has a 10-year runway before retirement is that you can make changes.  Oftentimes if we’re having this discussion and you either just retire or on the verge of retiring, we can’t tell you, well, you need to save a little bit more each month to kind of hit that ideal retirement because you’re already kind of there.  So, you know, the benefit to that pre-planning, the more time that you have on your side, the better. So, I would say that exercise is equally, if not maybe more valuable pre-retirement than even when you’re in retirement. Yeah. Yeah. Good call there. Well, this is great stuff. I know you and I could spend all day and sometimes we do spend all day on this.  but hopefully everybody’s gotten some  bits out of this that are helpful in your thinking and evolution. Again, we’re happy to be a resource. This is core to what we do at Savant.  and we’d love to help if we can. So, thanks for joining us and have a good rest of your day.

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