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 Kreinbrink bringing you today’s show. Hard to believe December is moving right along, pretty much getting close to the halfway point of the month. And looking at it, December 11th today, meaning Christmas is basically two weeks away. Hopefully, everyone has got a decent start on their holiday shopping and planning and everything because as we know the way the rest of the year has went, these next two weeks are absolutely going to just fly by, and before we know it, it’ll be Christmas.
And again, fun time of the year. We had our Christmas events up at the Eagle Point Lodge. And as always, the Symphony of Lights up there did a remarkable job as far as the decorating, lodge looks great. It’s always kind of a festive time, getting everybody together, decorating some cookies. Obviously, Santa made an appearance and kind of that kickoff to the holiday season, getting everybody kind of into that mood a little bit. So had decent weather. Again, a little chilly, but again, it is December. We were kind of spoiled a little bit this past weekend. It was kind of a nice little change of pace, I guess you would say, to see the sun out. And I think pushing close to 60 there on Sunday.
But again, looking at what’s ahead in the next 24 to 48 hours, just a reminder of how quickly that weather does change in our area. And again, it is December, we kind of guess do expect that, but again, hard to believe that we are flying right by. And again, hopefully Christmas programs, basketball seasons, wrestling seasons, hopefully it’s going well for everybody. Calendars and schedules, I’m sure if you’ve got anybody involved with it, is jam packed practices, games, meets, matches, everything going on right now. And again, best of luck to all the area participants, athletes as they continue on their season, wishing them the best of luck as they get into the meat of their seasons here.
For today’s program, I know last week was the first of the month having David Nelson on with his live program talking with Gary, again, talking markets, economy, that type of things. The week prior to that, talking a little Medicare with Mike Steigerwald there in the office. Again, a lot of topics to kind of go over today. Again, bringing it back a little bit, and a common question that we get, whether it’s running into somebody when you’re out and about, again, meetings at the office, is how much do I need to be able to retire? As people start getting closer to that age of retirement and wanting to kind of plan for what that’s going to look like, that is usually the first question that comes up, is how much do I need to have to retire?
And again, when you think about that question, it seems simple, but again, from a planning standpoint and a practicality standpoint, you kind of have to ask that secondary question as a follow-up to that one, and that is, well, how much are you going to need? And that’s the other side of the issue that I think people will, again, not necessarily forget about, but maybe downplay the importance of, again, what you need to have to pay your bills, to pay any debt that you have, what lifestyle do you want to live? Things like that are going to determine how much you need to have as far as to be able to say that you can retire and make it work. Again, the more debt you have, the higher your expenses are, the more traveling you want to do, the more activities you want to do, you’re going to have to have a bigger asset pile to be able to fund that throughout your retirement.
And I think when people kind of change that way of thinking, it gives them a little bit a different perspective as far as what they need to do to prepare for retirement. Obviously, what you have saved is extremely important along your work career. Obviously, as we’ve went over in different ways, the more you save, the better off you’re going to be. Again, we’ve never had anybody say that they saved too much or they started saving too early. It’s obviously the other side of that all the time. But again, looking at it from a expense standpoint.
So as you get closer to retirement, whether you are 5 years, 10 years, a year away, again, understanding what your expense number is going to be. And the easiest way to kind of start looking at that is, again, prior to you entering into retirement, really sit down and kind of make a budget for yourself. Write down all of your expenses. Write down all of your bills. Write down what you’re paying in taxes, what it’s costing you to go grocery store, to do all these different things because the more that you get in the habit of looking at that and being able to control that number, you’re going to be able to then control, again, what it is that you have and how you are going to pay for and how you’re going to fund those expenses throughout your retirement.
So when you look at it, obviously your income is going to be, again, anything that you have saved, whether it was a 401(k), 403(b), a savings account, an investment account, a Roth account, an IRA, whatever it may be. Again, if you’re fortunate enough to have any pension, and then social security when it comes into play. So you take those different income streams and say, okay, how is that going to fund then when I list all my bills, all my debt? How long am I going to have this debt? If I have a mortgage, how long do I have it? Is it worth paying a little bit more to get that done earlier prior to me maybe retirement? How do these different scenarios kind of play themselves out so that way when I do make that transition into retirement, I’m making it confident and not kind of winging it to see, I hope this works?
Again, when you’re at that point in time, you want to have that confidence because it is a big psychological change in your life. Going from a working career of 30 plus, 40 years to now a time period where I’m not necessarily getting a paycheck is a big hurdle to overcome, and sometimes bigger than what a lot of people think it is. So again, we want to make sure that, again, we’re confident when we make that decision.
When you sit down and you make a budget, when you sit down and start listing everything, one thing that kind of gets overlooked or maybe underestimated as far as the cost is, again, the insurance aspect of retirement. If you are before age 65, what is it going to cost me for me to basically go out to the marketplace and get coverage for me to be able to have that coverage until I hit that Medicare age of 65?
And again, when people start looking at that cost sometimes, sometimes it is a deal breaker because they’re not realizing how much it is going to cost for them to buy their coverage on their own prior to Medicare. Again, so when you start looking at it to say, yes, I’ve been fortunate enough to have a good plan while working, again, now I don’t have the employer paying any part, I am paying 100% of it. Are we able to put that into the budget to make it work, again, with the assets and cash flow that we have? If you’re married, are you able to go onto a spouse’s plan up until you hit age 65? If that is an option, again, we want to start looking at what is all out there for us and how can we be able to fund it?
If you retire from a place, sometimes they will let you stay on. Again, you are now paying 100% of those premiums, not splitting it with your employer like you did when you were working.
So again, when you start looking at all these things, it’s important to really kind of, again, looking at what we have versus what we need. It sounds simple, it sounds very simplistic when it comes into it, but again, at the end of the day, that’s what we’re trying to kind of break down and to make sure to see, okay, these different pieces of our puzzle, of our retirement puzzle that we are trying to put together and make work, are the pieces going to fit together?
And again, sometimes people retire, and they end up going back to work part-time because that is going to supplement some income that they need. It also supplements from a psychological side that purpose, and that’s something that we talk about a lot when we look at it is, again, when you retire, it’s replacing that purpose with something.
Now, that purpose is different for everybody, whether it is going back to work part-time, whether it’s spending time with the grandkids, their activities, babysitting, whether it’s volunteering, whether it’s all these different things, a hobby that they like, woodworking, crafting, whatever that is. Again, you have to replace that purpose as to, again, why am I getting up today? What am I going to do today to, again, feel like I’ve accomplished something? And again, as you get into retirement, that purpose becomes even more important.
So again, a purpose becomes work for 30 plus years to retire and sit at home and stare at the wall. They still want to go out, enjoy it. They still want to be involved in activities. And again, that is different for everybody as far as what they need to be able to kind of fulfill that aspect of it. But again, it’s an important part of it. And a lot of people, the first winter that they retired, they kind of realize that winters are maybe a little longer than what they maybe thought they were going to be. And I get it all the time. “Well, I can only clean my garage so many times, and now I’m looking for things to do.”
So again, the more prepared from that standpoint, the more prepared you are from a financial standpoint, from a cash flow standpoint, is just going to make you be able to transition into that new world a lot easier, and more importantly, a lot more confidently as you do that. So again, there’s a lot of things that kind of go into those decisions, but again, helping people navigate through them, understand some of the decisions that they’re making and why they are making the decisions, not just for today, but down the road, maybe from a cash flow, from a tax planning standpoint.
Again, it’s all valuable things that, again, if you’ve got questions on any of this, please give us a call. We’d be happy to sit down with you and kind of help get you through some of those unknowns, some of those questions, and make it as easy as we can.
So again, before I run out of time here, I did want to mention that every Friday, NelsonCorp Wealth Management and NelsonCorp Tax Solutions are wearing jeans for charity. Money raised in the month of December will be donated to the Living Peace 365 program.
Again, this is Nate Kreinbrink with this week’s Financial Focus. Thanks 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 the 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 www.nelsoncorp.com.