Announcer:
It’s time now on KROS for Financial Focus brought to you by NelsonCorp Wealth Management. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated, a broker dealer member FINRA SIPC, investment advisor, representative Cambridge Investment Research Advisors Incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. Now here’s today’s Financial Focus program.
Nate Kreinbrink:
Good morning. And welcome to this week’s Financial Focus brought to you each and every Wednesday morning right here on KROS. Well, this is Nate. I got James joining me again today. Pleasant morning, walking up the hill, a little dewy on the grass, which has been a little different from the last couple of times where it’s been brown and almost pretty bare and dead out there.
James Nelson:
Yeah, exactly. It’s a nice morning. Nice time of year. I love the fall temperatures.
Nate Kreinbrink:
Great time of year. And again, if you’re a college football fan and got kicked off under the way last week. And local teams had pretty much success. And big one out in aims this weekend for all the Cyclone and Hawkeye fan.
James Nelson:
Game day there’s too.
Nate Kreinbrink:
So see who gets bragging rights again for another 365 days so.
James Nelson:
Yeah. Yeah. Fun time of year, for sure.
Nate Kreinbrink:
So getting into today’s program, I know we had talked a lot as far as different topics and one of the things that we talk about a lot is obviously financial planning, retirement planning, and all the different aspects that go into it from looking at your taxes, not only now, but later on in retirement, social security planning, obviously your investments, the assets that you have, expenses that you’re going to have maybe in retirement that you may not have now. And all those things kind of come into play. And obviously all of those are equally important and play a big part of it. But one aspect that we seem to find when we actually sit down and start having some of these tough conversations with individuals or couples, as they get closer to that big day, that big retirement, where they think there’s going to be this big glorious party, and they’re going to walk off and live happily ever after.
Nate Kreinbrink:
But what we find is there’s another aspect that goes I think, unnoticed and is bigger to overcome than most people think and that’s the psychological part of it. And again, from when you started working, when you were 16, 17, 18, whatever years old, you’ve had the purpose where again, you’ve had to get up and go to a job and you put in your time there and that’s how you went about it. And that was your routine. That was your kind of purpose for that time was to, you had a responsibility with your employer to go there and clock in, get paid, do your job, come home. That was your routine. You take that aspect away from it and people when they get to there really admit that that’s a big hurdle to overcome trying to find out what that next purpose is as you get to transition to that next phase. And as soon as people I think, realize that and try to figure out what that is, it helps them make that adjustment.
James Nelson:
Yeah, no doubt. And there’s several psychological components there too. It’s also interesting to have these conversations when clients go from saving money to all of a sudden drawing money. And that seems totally backwards for a lot of the good savers that, Hey, I’m plowing money in while I’m working, putting money away in the 401k or whatever the retirement plan may be. And then having to make that transition to now spending some of that money. Whoa, that could be a big transition for some people. And doesn’t always feel too comfortable going through that. So yeah, there are, there’s a lot of different dynamics in play when you go from working to retirement. And some people kind of ease into that better than others, but over time and I think with some confidence knowing that you’re going to be okay and having some input from us and maybe a plan that was presented that tells them that they’re going to be okay, that transition can be difficult for people. And again, some people settle in a little quicker than others.
Nate Kreinbrink:
Right. And I think it goes too, it was because you’re planning to have your assets last for this unknown period of time. Again, no one knows. And we asked the question, will you tell me how long you’re going to live? We’ll kind of map out a plan exactly of how to do that. No one’s given us that right answer yet. So again, when we do this planning with your assets and your income, we have to make this thing last for again, 10 years, 20 years, 30 years, 40 years, depending on what your longevity is. And that’s another overwhelming part for people to say, I’m going to have enough to live off of. I don’t want to get towards the last years of my life and just not have enough to live off of.
Nate Kreinbrink:
So there’s a lot of it that goes into some of this. And again, the planning that comes into it obviously is a big part to help ease some of those questions. And those, I guess you could call them fears when people try to transition into that retirement. And again, dealing with those makes that transition easier.
James Nelson:
And it makes sense. I mean, most people hopefully only retire once.
Nate Kreinbrink:
Right.
James Nelson:
Right. If things go well and they can stay retired and that’s generally the goal and that’s generally what people want to do. Now sometimes people will go back to work if they want something part-time or need something to do, that may be a little bit different, but it makes sense why there’s some anxiety and some unknowns because you only do it once and you want to get it right. And it’s something that most people kind of look off into the future and somewhere down the line, I’ll hopefully be able to retire. But then when it’s there in front of you, it’s a little bit tougher sometimes to pull the trigger and feel comfortable in that decision.
James Nelson:
So again, all of what we talk about is planning and putting yourself in position. And when somebody has something to kind of fall back on and a plan that illustrates that yeah, the next 10 years, 20 years, 30 years, this does look pretty good. This does look favorable. I can do this. Again, what you said, Nate, it’s just the confidence to be able to make that decision. Most people want to make that decision. This just helps kind of nudge them along and gives them a little conviction in that decision making.
Nate Kreinbrink:
Right. And I think you kind of hit it on the head with that continuing to work aspect of that decision making, whether that’s at your current employer or whether that’s retiring from that thing and getting some part-time work after you retire from your main job. And again, there’s a big difference between choosing to walk in the door every day to go to work because you’re choosing to, and not necessarily because you have to, in order to save money for your retirement. Again, that’s a big difference. Whether, again, it’s at your current employer, where again, you should have enough assets to retire, but you like what you do, you’re able to still do it. So you’re going to work a few more years as far as at your current employer. But again, you’re choosing to do that because you want to do that. Not necessarily because you have to do that to pay the bills and ever to do that.
Nate Kreinbrink:
Working in retirement is a whole nother aspect that’s becoming even more popular for people as again, retiring from their main job, getting a part-time job doing something else that, you know what they maybe enjoy doing it. Where they work a few days a week, a few hours a day, whatever the case may be. But again, it fills in that void of all those 30, 40 years of having to go to a job. They have that purpose as far as going to a work, they’ve got a little paycheck, they’ve got some cash flow coming in. So that eases that kind of fear a little bit with it. So again, there’s a bunch of different ways to look at it and help with it, but a lot of questions that people kind of don’t even think of, again, they think of, okay, how much do I have in assets? How much am I going to need as far as expenses? Can I make this work? But they don’t even think about the other aspects that are emotionally inside of you that are going to be a big hurdle to overcome.
James Nelson:
And generally when somebody retires, they’ve got maybe three or four different things being thrown at them at once. The first one that’s generally, is brought up is health insurance. Am I 65 or am I prior to age 65, where I’ve got to go find health insurance. That’s a big stressor right there because the health insurance industry as a whole is just tough to navigate. And when you work for an employer, you pretty much know what you got. Now, when you retire having to navigate that, that’s stressful. And that’s not always the easiest. The other big one is social security generally. Maybe somebody’s either close to drawing social security or it’s in the near term. So having to make that social security decision is also maybe a little overwhelming, a little stressful. Then you’ve got the expenses and the investments like you just brought up Nate. What are my expenses?
James Nelson:
What do I need on a monthly basis? And do I have enough money to generate that income not just this year, but for an extended period of time, 10, 20, 30 years maybe. And then the final one is taxes, I think. Taxes, your tax situation changes pretty dramatically in most cases, when you retire. There’s generally some pretty good opportunities in those first couple of years of retirement, but how does my overall tax picture changed from drawing a W2 wage or 1099 to now I’m living off my retirement income. Generally, those are kind of night and day differences when you look at it from a tax perspective. So again, big decision making that retirement call, but also all of those other factors that are kind of baked into that decision that need to be made at roughly the same time. That’s pretty stressful.
Nate Kreinbrink:
And it’s all thrown into your lap at the same time. And if you’re like most people, you start going through these Medicare brochures, you start looking at the different options for social security, taxes, income, investments, everything. It almost becomes like a foreign language to people. And again, if you’re like most people, that is the case because you don’t deal with that on a regular basis. However, you’re forced to try to make some of those decisions as you try to do that transition. And it’s overwhelming and that’s, again, we’re sitting down and having a plan and seeing how all those things kind of coordinate each other, how one decision impacts the other one, how one decision compliments the other things, makes that decision again, very much easier and a lot less stressful. And being able to make that decision with confidence that you’re doing the right thing, I think is the peace of mind that people are looking for. And oftentimes appreciate as they kind of transitioned into that from working into retirement.
James Nelson:
Yeah, no doubt. So a lot of different components there. Feel free to give us a call. We’re happy to sit down with you and go through any of these discussion points.
Nate Kreinbrink:
Again, all great stuff. Did want to mention real quick that every Friday NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of September will be donated to the Gateway Area Community Center here in Clinton. As always James, thanks for joining me.
James Nelson:
Absolutely.
Nate Kreinbrink:
Again, Nate and James with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in and have a great rest of your week.
Announcer:
Financial focus is a production of NelsonCorp Wealth Management in Clinton and Davenport. The opinions voiced in this show are for general information only and are not intended to provide specific advice or recommendations for any individual. Any indices mentioned are unmanaged and cannot be invested into directly. Registered representative securities offered through Cambridge Investment Research Incorporated. A broker dealer member FINRA SIPC. Investment advisor representative Cambridge Investment Research advisors incorporated, a registered investment advisor, Cambridge and NelsonCorp Wealth Management are not affiliated. Cambridge does not offer tax advice. For more information visit our website at www.nelsoncorp.com.