Your Retirement Lifestyle: What Do You Want Your Retirement to Look Like?
Key Points – Your Retirement Lifestyle: What Do You Want Your Retirement to Look Like?
- Going Through Our Prioritization to Figure Out Your Ideal Retirement Lifestyle
- Retirement Planning Isn’t Just About You … What About Your Spouse, Children, and Grandchildren?
- What Are Some of the Most Popular Retirement Lifestyles?
- Creating a Living Legacy
- 13 Minutes to Read | 23 Minutes to Watch
Defining Your Retirement Lifestyle
Retirement is a time for new beginnings and enjoying the lifestyle you’ve always dreamed of. But what exactly does that mean to you? Dean Barber and Bud Kasper discuss what goes into defining your retirement lifestyle on America’s Wealth Management Show to help you figure out what you want your retirement to look like.
What Decisions Go into Creating Your Retirement Lifestyle?
There are various factors that shape your retirement lifestyle, including your passions, goals, and financial capabilities. You might have a few things in mind, but it’s truly a thorough process to envision your ideal retirement lifestyle. We’re going to help you navigate the decisions that will bring that vision to life. From travel and hobbies to charitable endeavors and family considerations, we’re going to uncover the possibilities and tradeoffs that come with the different retirement lifestyles. Let’s create a financial plan that’s centered around your retirement lifestyle.
“We’ve seen a lot of people head into retirement. And we’ve seen all kinds of different retirement lifestyles take place. Sometimes, I feel like a psychologist with my clients. I’ve had people I’ve had people say that I’m the best marriage counselor that they’ve ever had. I’m not a licensed counselor, so I ask them why they say that. They always say that it’s because what I do truly helps them live the life they want to live.” – Dean Barber
The Prioritization Exercise
The creation of the financial plan that starts with a prioritized exercise. The prioritization exercise that we take people through is really a deep discovery with their CFP® Professional and their spouse about what they want the rest of their life to look like. Oftentimes, that’s a discussion that goes down different paths. There are times where one spouse looks at the other spouse and didn’t realize that something was important to them.
A CFO Spouse and Non-CFO Spouse
A few years ago, we started to realize that when we were meeting with most couples for the first time that one spouse would be dominating the conversation—usually because they’ve been the one coordinating the couple’s finances. Even if that’s the case, couples retirement planning is crucial. Both spouses need to convey their needs, wants, and wishes for retirement during the retirement planning process. Hence why we now take couples through the prioritization exercise.
“I think of it as having a CFO spouse and a non-CFO spouse. There is typically one spouse that’s less engaged in the finances. The prioritization exercise gives the non-CFO spouse a voice because the foundation of a financial plan has nothing to do with investment strategy. It just doesn’t. In fact, you can’t define the proper investment strategy until you’ve got the financial plan done.” – Dean Barber
The Difference Between a CFP® Professional and an Investment Manager
If you’re working with somebody who says that they’re a financial advisor and all they ever talk about is investments, you’re not dealing with a true financial planner. You’re dealing with somebody who is just an investment manager. Those people have a place, but at Modern Wealth, we have a team that’s led by a chartered financial analyst that oversees the investments 24/7 and creates strategies so that we can deepen that relationship with our clients and help them live out their ideal retirement lifestyle.
“It’s significant to have this type of the team working toward what we’re trying to accomplish for our clients because nothing’s left untouched. We cover all the bases.” – Bud Kasper
The Top Three Things That Bud Sees People Miss When Figuring Out Their Retirement Lifestyle
Now that we’ve outlined our prioritization exercise, Dean is going to go through a quick exercise with Bud to highlight what goes into defining someone’s retirement lifestyle. Dean asked Bud the top three things that he sees people miss when figuring out their retirement lifestyle.
1. Maximizing Social Security Benefits as a Couple
What do we all have in common as working Americans? We’ve all paid into Social Security. But how you get Social Security out is an art form, especially if you’re married. You need to understand how to maximize the result as a couple.
It might be that we delay one of the Social Security benefits while taking one immediately. There are more than 600 different iterations that an average 62-year-old couple can claim Social Security.
2. Understanding Tax Implications
Speaking of Social Security, a lot of people don’t know that up to 85% of their Social Security can be taxable. Do you know how your Social Security can be taxed? There are certain rules that you need to understand about that. The last thing you want to do is to have a significant amount of your Social Security taxed in a way that it detracts from the amount of net income that you have to spend.
That applies to health care as well because you have the IRMAA surtax associated with it that can raise the amount of money that you have to pay into the system when you go above certain levels. Can you avoid that? Many times you can via tax planning.
3. Define Your Personal Balance to Market Risk
Especially with couples going through the retirement planning process, one spouse might be more aggressive than the other when it comes to taking on market risk. You need to come up with a realization that what you’re doing is impacting the rest of your life. You need to be working with a CFP® Professional, CPA, and specialists in estate planning, investments, and risk management to make sure you’ve done all the work necessary to give you the success that you’ve been dreaming of all these years.
Are Your Dreams Real?
The three things that Bud covered are all valid points, but all those had to do with financial decisions and aspects of retirement. Those things don’t really get into defining what you want your retirement lifestyle to look like. So, let’s circle back with Bud to see what he sees people miss from a non-financial aspect that relates more to defining someone’s retirement lifestyle.
“A lot of people have dreams, but are your dreams real? Here’s what I mean by that. Let’s say that you want to travel. Well, everybody wants to travel to a certain extent. From a couple’s perspective, they need to put their travel plans in writing and prioritize. They shouldn’t just do that for themselves, but for their family so that they’re in the know. How are you going to go on that trip? Is it affordable? Those are questions that make people say, “Oh yeah, we’ll do all that.” But why not put it through the test? That’s what our financial planning program does. It gives you a probability of success on any of these implications that I’m talking about.” – Bud Kasper
Navigating Uncertainty While Trying to Live Out Your Ideal Retirement Lifestyle
One thing that Dean sometimes sees is people that aren’t living their dream retirement lifestyle because they live in a world of uncertainty. Just look at the geopolitical landscape. And look at the interest rates and the economic landscape. All these things provide constant uncertainty.
“I can’t go back in the 37 years that I’ve been in the financial services industry and find a year where we had nothing that caused uncertainty. There’s always something. The financial planning process allows us to stress test all kinds of scenarios to let a person know if these things occur. What’s the plan? What’s Plan A, B, and C? When you have that and know that there’s not a condition that’s going to disrupt the retirement lifestyle that you’ve defined, suddenly you have the freedom to live the life that you want to live without worry of running out of money or something tripping you up.” – Dean Barber
The thing is that most people aren’t aware that they have that opportunity. That’s why we have America’s Wealth Management Show to share the information that we want to share with people.
“We want to let them know that there are alternatives out there to approach to retirement that are incredibly thoughtful and fulfilling. There are oftentimes difficult questions that need to be answered as you enter retirement.” – Bud Kasper
Getting Your Financial Life in Order with the Retirement Plan Checklist
If you want to get the financial side of it right, we encourage you to start by getting a copy of our Retirement Plan Checklist. It has everything that you need to be thinking of regarding retirement and all the questions that you need to be asking. One of the sections of the Retirement Plan Checklist is a checklist of 30 yes-or-no questions. It serves as an amazing conversation starter with your spouse to get started so that everybody who is involved in this.
The Retirement Plan Checklist also includes age-based and date-based timelines. What should you do 10-15 years, five years, two-three years, and a year out from retirement? What are all the things that you need to be thinking of? The age-based timeline lists several things that you need to consider as you approach and go through retirement. There are critical things that happen at certain ages that you need to be aware of, such as 55, 59½, 60, 62, 65, 66, 70, 72, 73. Download your copy of the Retirement Plan Checklist below to find out what those things are and gauge you retirement readiness.
Top Retirement Lifestyles That Dean Sees from Retirees
As we help you think about how to define your retirement lifestyle, we’re going to have Dean list the top three retirement lifestyles that he sees from retirees.
1. Travel and Family Vacation Retirement Lifestyle
For one of Dean’s client couples that had the travel and family vacation retirement lifestyle, he spent time with them before they retired to talk about all the different places that they wanted to travel to in their first 10 years of retirement.
“We did research on what it was going to cost and if they could fly first class or needed to fly coach. We went through year by year and went through the places they wanted to travel to and put price tags on them. Then, we assumed a decent inflation rate to make sure that they had the money to cover those expenses. I’ve helped people do that a lot. I think the travel and family vacation retirement lifestyle is a great one.” – Dean Barber
2. Multi-Home Retirement Lifestyle
Another retirement lifestyle that Dean sees a lot of is a multi-home retirement lifestyle. For example, the winters in the Kansas City area where Dean lives can be brutal. There are several of his clients in the Kansas City area that have purchased second homes to spend the winters in Arizona, Texas, Florida, etc.
“We want to make sure that people living that retirement lifestyle have the financial resources to do that. Should the rent while they’re there? Should they buy a place? How do they want to go about all that?” – Dean Barber
3. Charitable Retirement Lifestyle
The third retirement lifestyle on Dean’s list is the charitable retirement lifestyle. Those people aren’t just giving dollars. They’re also giving time, mentoring the next generation, and passing along their knowledge.
“That can be very rewarding. It’s something that doesn’t require dollars to do, but it requires time and the desire to help people. When I think about the retirement lifestyles of people that I’ve worked with over the years, those are the top three that I’ve seen where people get the most reward out of their retirement. And they’ve accomplished that by being very thoughtful in going into retirement with figuring out what they want to do with their life.” – Dean Barber
All Charities Need Time and Money
Let’s expand upon the charitable retirement lifestyle a little bit. Like Dean said, all charities need time and money. Oftentimes, the charity values the time you give them just as much, if not more than, the money they receive from you. They need people to do the things they want to do.
Let’s use Catholic Charities as an example. Dean was raised in the Catholic church and knows that several of his clients spend a lot of time with Catholic Charities.
“It can become very rewarding for them. Remember, we need community. We need people to be around during retirement and in life in general. Most people thrive on that. You can make new friends in those areas by having something in common with them. It’s a big deal to me.” – Dean Barber
Qualified Charitable Distributions
For people who enjoy the charitable retirement lifestyle and are 70½ and older, there’s a special opportunity for you. Through Qualified Charitable Distributions, you can take money out of your IRA and send it directly to charity without it ever showing up on your tax return. It doesn’t cause your Medicare premiums to go up or make more of your Social Security taxable.
Donor-Advised Funds
If you haven’t reached 70½ yet, a donor-advised fund is a popular option for those who enjoy the charitable retirement lifestyle. Donor-advised funds allow you to put a lump sum in a single year and get a charitable deduction that year. Then, you can give that money to whatever charities you want to in whatever amount and over whatever period you want to. You get the tax break in the year that you open that donor-advised fund.
“The reason why donor-advised funds and QCDs have become so popular is due to the Tax Cuts and Jobs Act that increased the standard deduction to a point where a lot of people couldn’t itemize on their tax return because the standard deduction was higher than what they were giving away in charitable deduction. They weren’t really getting any tax break from it.” – Dean Barber
Almost Everyone’s Retirement Lifestyle Includes More Time with Family
As we begin to wrap up this article on retirement lifestyles, we want to talk a little bit more about the importance of the prioritization exercise. It’s the foundation of our financial plan. When we’re taking people through the prioritization exercise and asking them different questions about what’s most important to them, we ask them to rank those things on a scale of one to five with five being very important. There’s one question that we ask that almost always gets a five: How important is spending time with the people that you care about?
“When we ask people to define what that means, it means that they want to spend time with their family, whether it’s their spouse, kids, grandkids, etc. Most times, they don’t get to see their kids and grandkids as often as they’d like to.” – Dean Barber
Creating a Living Legacy
Part of the reason why our clients can’t see their kids and grandkids as much as they like is because of how busy their kids and grandkids are with different activities and/or their jobs. They aren’t as free to do the things our clients want to do. That’s why when we’re building financial plans, we look at things like family vacations to find a time when the whole family can get together and spend quality time with each other.
“Create a living legacy. If you like to travel and want to spend time with the people that you care about, set it up far enough in advance that you can pay for the vacation for the entire family. Get everybody together, find locations where your family wants to go, and plan those out. I promise you those kids will find a way to get off work and the grandkids will find a way to be there if you plan it out in advance.” – Dean Barber
The Power of a Financial Plan
When you think about the most important things in life and think about your retirement lifestyle, retirement is a time when you’re supposed to enjoy what you’re doing. You need to get your financial plan in place to drive the lifestyle that you want and know that from a financial perspective that you’ve set yourself up to do all the things you want to do. That’s where the plan comes in.
“So many people don’t take the time to do that. They’ll be in retirement and one spouse might say, ‘Hey, why don’t we take the kids and grandkids on a vacation?’ If they haven’t talked about it and haven’t planned it, the first reaction from the CFO spouse is generally going to be that they probably shouldn’t do it because they don’t think they can afford it. The start worrying about things like one of them going into long-term care or if there’s a market downturns. If you’ve already taken all that into consideration and you built that into your plan, that discussion is a lot different.” – Dean Barber
Your Financial Plan Needs to Be Fluid
And your plan will change from time to time based upon your needs, wants, and wishes. Let’s keep using a family vacation as an example. Can you take one every year? Maybe. Maybe not and it needs to be every couple of years. One way or another, your plan can tell you if you can or not.
“We can put the expense inside the plan. Because this is taking in all considerations of spending, it allows us to give you a thumbs up, thumbs down, or somewhere in the middle. The reality is that people aren’t on a 12-month calendar. They might do something and then 18 months later they do something else. All this can be factored into what we accomplish with the overarching plan. But most people don’t have that capability because they don’t have the knowledge or tools to do that.” – Bud Kasper
What Does Your Money Need to Do for You to Live Your Desired Retirement Lifestyle?
Unfortunately, a lot of people won’t spend the time to soul search or and have an open, honest dialog with their spouse about what’s important to them. That’s the key.
Once our one of CFP® Professionals identifies that during the prioritization exercise with you and your spouse and truly understands the purpose of the money that you’ve accumulated, our team’s job gets a lot easier.
“We can tell your money what we need it to do by creating the right investment strategy, income strategy, and tax strategy to allow all the things in your retirement lifestyle to happen. But if we’re just tasked with only investing, what are we doing? Now we’re playing the greed game or the fear game.” – Dean Barber
Figuring Out Your Retirement Lifestyle with One of Our CFP® Professionals
The biggest takeaway that we want people to have from this is to take the time to find a good CFP® Professional and outline your ideal retirement lifestyle. And remember, your spouse needs to be a part of the conversation as well. Our CFP® Professionals are passionate about building plans that give people more confidence, freedom, and time inn retirement. We want to build a plan that allows you to have your dream retirement lifestyle.
To learn more about what that looks like, you can schedule a 20-minute “ask anything” session or complimentary consultation with one of our CFP® Professionals by clicking here. We can meet with you in person, by phone, or virtually depending on what works best for you.
And if you don’t feel like you’re quite ready to meet with one of our CFP® Professionals, we have another way that you can get started with building your financial plan. We’re giving you the opportunity to build a plan that aligns with your retirement lifestyle by using our industry-leading financial planning tool. You can begin building your plan from the comfort of your own home—and at no cost or obligation—by clicking the “Start Planning” button below.
And as always, if you have any questions that come up as you’re using our tool, please don’t hesitate to reach out. We’re ready to build you a plan that’s centered around what you want to do in retirement.
Your Retirement Lifestyle: What Do You Want Your Retirement to Look Like? | Watch Guide
00:00 – Introduction
03:26 – The Non-CFO Spouse
04:53 – Bud’s Top Three Things People Miss
09:27 – The Retirement Plan Checklist
11:29 – Dean’s Top Three Retirement Lifestyles
13:49 – The Charitably Inclined
17:06 – Spending Time with Family and Loved Ones
22:10 – What We Learned Today
Resources Mentioned in the Episode
Articles
- Planning a Large Family Vacation
- Charitable Giving in Retirement
- Family Financial Planning with Matt Kasper
- Components of a Complete Financial Plan with Logan DeGraeve
- Starting the Retirement Planning Process
- Proper Portfolio Construction with Stephen Tuckwood
- Maximizing Social Security Benefits
- Health Care Costs During Retirement
- Investment Risk in 2023 with Garrett Waters
- What Is a Monte Carlo Simulation?
- Geopolitical Uncertainty Creates Chaos … And Opportunities
- Making a Big Purchase in Retirement
- Charitable Giving in Retirement
- Rising Long-Term Care Costs
- When Will the Bear Market Be Over?
- Setting Up a Spending Plan for Retirement
Past Episodes
- Couples Retirement Planning: What You Need to Know
- What Is Tax Planning?
- Meet Modern Wealth Management
- 8 Wats to Combat Financial Uncertainty
- Interest Rate Forecast for the Rest of 2023
- The Effect of Rising Interest Rates on the Economy
- Stress Testing Your Financial Plan
- 10 Ways to Fight Inflation in Retirement
- 6 Things the Wealthy Do with Their Money (That Most People Don’t)
- DIY Retirement Planning: What Can Be Overlooked?
Downloads
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Investment advisory services offered through Modern Wealth Management, LLC, an SEC Registered Investment Adviser.
The views expressed represent the opinion of Modern Wealth Management an SEC Registered Investment Adviser. Information provided is for illustrative purposes only and does not constitute investment, tax, or legal advice. Modern Wealth Management does not accept any liability for the use of the information discussed. Consult with a qualified financial, legal, or tax professional prior to taking any action.