10 Experiences You Don't Want as a Retiree

Summary

The transcript covers a financial advice podcast focused on key pitfalls to avoid in retirement planning. Main topics include working longer than necessary, loneliness issues, maintaining a sense of purpose, fear of running out of money, market volatility risks, health care costs, estate planning conflicts, overemphasis on 0% tax bracket, supporting adult children financially, and managing high interest debt. Action items advise meeting with a retirement professional to develop a comprehensive plan, engaging in community groups for social connections, anticipating health costs with insurance, ensuring clear estate documents, understanding tax planning tradeoffs, prioritizing own needs before children support, and promptly addressing high interest debt.

Chapters

Introducing Ask Ralph Financial Advice Podcast

The host Ralph introduces the podcast which provides valuable financial tips to help listeners make smart decisions. The current episode will cover 10 experiences to avoid in retirement planning based on Ralph's professional experience.

Working Longer Than Necessary

Many people believe they must work until a certain age or savings level before retiring which is not necessarily true with proper planning. Ralph shares a client example who is cutting back work in her 50s to enjoy retirement.

Facing Loneliness in Retirement

Losing workplace interactions can lead to decline so staying socially engaged in community groups is important. Ralph sees mental sharpness benefits for retired clients who remain involved.

Lacking Sense of Purpose

Having a hobby or cause that motivates each day, like a retired client who is busier now, keeps retirees positive and eager to embrace opportunities.

Fearing Running Out of Money

Living frugally due to financial fears dampens retirement so a comprehensive plan providing confidence allows enjoying retirement without constraints.

Impact of Market Volatility

Relying solely on investments vulnerable to market swings makes budgets hard to sustain. Income protection against volatility is key in retirement planning.

Burden of Health Care Costs

Managing large, unexpected health expenses can be difficult so anticipating costs with insurance helps handle potential issues.

Inadequate Estate Planning

Unclear wishes or ambiguities lead to heir conflicts and resentment. Ensuring documents clearly state intent avoids relationship damage.

Overemphasis on 0% Tax Bracket

The goal of 0% tax can have greater costs than benefits for some retirees. Understanding tradeoffs based on effective tax rates is important.

Supporting Grown Children

Adult children becoming financial dependents in retirement disrupts plans. Prioritizing own needs first maintains stability.

High Interest Debt Issues

Promptly addressing high interest debt secures retirement stability. Low interest debt aligned with financial portfolio may be acceptable.

Action Items

1. Meet with a retirement professional to develop a comprehensive financial plan.
2. Join community groups or reconnect with friends for social engagement in retirement.
3. Research health insurance and asset-based long-term care insurance options.
4. Ensure estate planning documents clearly state wishes to avoid heir conflicts.
5. Consult a tax advisor on retirement income tax planning based on effective rates.
6. Communicate firm boundaries with grown children on financial support limits.
7. Address high interest debts quickly to maintain retirement budget stability.

Welcome back to the Ask Ralph show where we provide valuable financial advice to help you make smart decisions. Today we're diving into a topic that's crucial for retirees. We like to call our anti-bucket list. Listen, we all have dreams and aspirations for retirement years, but it's equally important to be aware of potential pitfalls that can disrupt your plans. I've been in business for a long time, folks, and I will tell you that from my experience, these are the 10 experiences you don't want to have as a retiree.

So make sure you listen today as we jump into these things that you absolutely do not want on your retirement bucket list.

Welcome to the Ask Ralph podcast. We're listening to an experienced financial professional can help you make sense of confusing questions current headlines and industry trends about taxes, small business, financial decision making, investment strategies, and even the art of proper budgeting, as Ralph makes the complex simple by sharing his real world knowledge with all things financial. Now here's your host, Ralph Estep, Jr.

And again, thanks for joining us today as we tackle the TEN things you don't want to experience as a retiree.

And these are things I've just collected in my years of practice, meeting with clients who have gone from their working years to their retirement years. Number one on our list, and that is working longer than you think is necessary.

Many people believe that they have to work until a specific age or accumulate a certain amount of savings before they can retire. That's just not true folks. With proper planning and guidance from a retirement professional, you may discover that you can retire sooner than anticipated or transition into part-time work while maintaining your financial stability.

I've got a client right now. I won't mention her name, but she's doing just this. She's done a good job of planning for her retirement. She's in her fifties. She's going to really cut back on the amount of work she must do so she can start to spend more time with her husband and enjoy doing the things they want to do.

She doesn't have this magical belief that she's got to wait till she's 65 or 67 to retire because she's really done the right things and put the money away for retirement. So, what's number two?

Loneliness is another common issue that retirees face. The void created by leaving the workplace and losing daily interactions with colleagues can lead to mental and physical decline. I've seen this firsthand.

It's important to stay engaged in social activities by participating in community groups or reconnecting with old friends. My clients that stay involved, whether it be in a social organization or charitable organization, keep their mind sharp.

I find that to be a much better experience in the retirement years than just sitting around and waiting to die for lack of a better way of saying it. Number three, maintaining a sense of purpose is vital for happiness in retirement.

Whether it's pursuing hobbies or devoting time to meaningful causes, having something that motivates you each day will keep you positive and eager to embrace new opportunities. I remember this past tax season, I had a client come in and I said, you know, how are you enjoying retirement?

And his response to me was rough. He says, I don't know how I got anything done when I was working. He's said I’m busier now than I've ever been. And he is also happier now than I think he's ever been.

So, let's move on to number four. Next on our list is the just-in-case retirement strategy. Living in fear of running out of money and unnecessarily tightening your budget. Building a comprehensive plan that gives you confidence in your finances allows you to enjoy your retirement years without unnecessary constraints.

This all comes down to planning, not failing to plan, but putting a plan together. Let's move on to number five. Market fluctuations can also impact retirees' budgets if they solely rely on investment income.

Drawing from an account that has already experienced losses can make it harder to sustain financial stability. It's important to have a plan in place that provides income while protecting against market volatility.

This is why I say you need to engage the services professional retirement planner. We can sit down with you as a consultant and kind of go over some big picture issues, but we would direct you to a true retirement planner to help you with that.

Number six. Health-related financial hardships can also be a challenge in retirement. Anticipating health care costs and considering options like self-insuring or asset-based long-term care insurance can help mitigate potential difficulties.

This is an area I see all the time as well. I would venture to guess that with some of my retired clients, they may be spending upwards 20 to 30% of their monthly budget on health insurance or health care costs.

I don't know that a lot of people anticipated that. You go from traveling and doing the things you want to do to paying for doctors and specialists and maybe treatments. Number seven. Inadequate estate planning is another issue that retirees may face.

Ensuring your wishes are clearly stated and addressing any potential conflicts or ambiguities can help avoid resentment and ruin relationships among your heirs. I just did a podcast on this within the last few days about common estate planning mistakes.

Well, this is one of them. If you don't have those documents in order and something happens to you, then you're gonna have a big issue. And this completely can be avoided. Like I said in the other podcast when I was talking about this, you know, you can't control your health.

I mean, there's things you can do to make your health better. But at some point, your health is gonna be what it is. And you're gonna pass away when you pass away. But this is something you absolutely can control.

Make sure you have the documents in place that will do things the way you want them to be done. So let's move on to number eight. And that's focusing too much on the 0% tax bracket is another pitfall to avoid.

While it may sound appealing, the cost of getting there may outweigh the benefits for many individuals. Understanding the delicate balance of tax planning based on your effective tax rate is crucial.

When we sit down with our clients during tax season. I have this discussion with many of my retired clients. They may have a desire to say, Ralph, look, do I even have to file?

And that's what we're talking about. We say the 0% tax rate. But what I have found in practice, and this is gonna sound kinda odd, is a lot of my clients, and I maybe unbiased because I have clients that maybe are a little bit more affluent, have equal to or more income in retirement.

So, this type of tax planning is essential. It's essential that you talk with a tax professional like me and come up with strategies to help mitigate your tax impact of decisions. A lot of times we'll sit down with clients and talk about major purchases and figure out what the impact of that is going to be on their taxes.

So it might be a situation where they withdraw money from a retirement account partially in December and the other part in January to sort of straddle that tax year to mitigate that current year tax cost.

Let's move on to number nine. This is a tough one, folks. This is one that I've seen play out in the ugliest of ways sometimes. And that's supporting capable children is important, but not at the expense of your own financial well-being.

Prioritizing your own needs and desires before offering extensive support to your children ensures you maintain a secure retirement. I don't know how many times I've had to ask clients, what's going on with your adult children that are living with you?

And they become a burden to them. And I've counseled them, I've said to them, I tell clients I put on my counseling hat and just say to them, listen, you didn't plan to have these children with you the rest of your life.

Your budget can't sustain that. It's time that they grow up and get out.  I had a client a few years ago, it cracked me up as I looked back at it now. They said, you know, Ralph, we sold our house and we downsized to a one-bedroom house.

And I said, well, why did you do that? They said, this way, none of our children can move back with us. I guess people in current culture call it boomerang kids. But like, it's tough because it really makes a huge impact on that retiree's budget.

And a lot of times you just need to say to their children, listen, I'd like to help you, or we'd like to help you, but we just haven't planned for you to be a part of our retirement. And lastly, number ten, managing high interest debt should be addressed promptly to secure your financial stability during retirement.

Retaining low interest debt that aligns with your overall financial portfolio may be acceptable, but addressing high interest debt should be a priority. This is not the time to go out and get those high interest rate credit cards.

Or those buy now pay later situations that can put you into real problems if you're unable to pay them before the end of the grace period. I've got clients coming in to see me now that are in their retirement years who are going and refinancing to a 30 year mortgage.

They're never going to pay that off in their lifetime. And I'm not trying to say that that's not a valid way to handle things. You may get down to that point, but it's just something, again, meet with a retirement planning or a financial counseling professional like me and kind of work these things out.

In conclusion, time is our most precious asset. This is not the time to spend it fearing about what's going to happen next. Retirement should offer some of the best years of your lives by crafting a comprehensive retirement plan with guidance from an experienced professional.

We can tackle these challenges head on and enjoy our retirement years to the fullest. Thank you for joining us today on the Ask Ralph show. Be sure to share this podcast with your friends and family.

As always, I ask you to visit our podcast page at www.askralphpodcast.com. To leave us a review or a voicemail message with your questions. Like I said, click on the bottom right, the little microphone icon, and we'll answer on a future episode.

This episode has been brought to you by Saggio Accounting, your experts in financial counseling and tax. Until next time, my friends, be well and if you're retired, enjoy your retirement years.

Thank you for joining us on the Ask Ralph podcast. And with a simple click to subscribe, we'll invite you back to our next episode. And remember, financial issues don't have to be complicated. Just Ask Ralph.

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