It is 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 of 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.
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 program. Hard to believe that we are into the second week of August already. I know we always say summers fly by. This summer obviously has been no different, but it seems to be on fast-forward even more. School is back in session. I know there’s a lot of kids, sometimes teachers, parents don’t want to hear that as summer is coming to an end. A lot of area schools have roughly about two weeks left before they officially head back, but getting into that time of the year, I guess. Area high school fall sports activities, football, volleyball, cross country, golf in some schools getting back underway. That time of the year, it’s getting shorter days, which you don’t like to see, but hopefully, the beautiful fall transition that we will see will slow again and we can kind of hold onto this a little bit longer and as long as we can do that.
So getting into today’s program, I know we’ve talked a little bit over the last couple of weeks. We’ve had Andy Ferguson, Mike Van Zudin with NelsonCorp Tax Solutions, talking a little tax specific topics for a couple of weeks on the show. David was on last week bringing you up to date on some of the current market news, topics, outlooks, what some of those things are really getting to impact you on a personal level. Wanted to bring it back today and just look at broad topic of retirement planning, retirement readiness, I guess you could call it. I’ve had a lot of people, I would say again, over the past year or two just out of curiosity wanting to set up a meeting, come in, talk and say, “Hey, am I even ready to think about retiring a year from now, two years from now, three years from now, five years from now? Am I even on the right course? Am I even on the right road to even think that way? Or what do I need to do to get myself to that point?”
And I think it’s important that that question and that honesty with yourself, the earlier you can have those discussions, the earlier you can ask yourself those one on one questions, the better off you’re going to put yourself as far as being ready to, when you do make that decision, to be confident that you’re making the right decision and that you’re able to handle transitioning into the next phase of your life. Because let’s face it, if we know we are transitioning from a working career, something that we’ve done 30, 40 plus years where we would report to our job, go to our job, work our hours for the week and then we would get a paycheck. We would get a paycheck after whatever, every week, every two weeks, every month, however it was that you got paid, but we knew if we went to work and we did what we were supposed to do, we were going to get that paycheck. That allowed us to pay our bills, to do whatever it was that we were doing with it.
Well, you transition now to an unknown time period, something that you’ve never done before. Something where, again, that regular paycheck doesn’t happen anymore. And have we done enough as far as savings? Have we done enough planning with a pension if you’re fortunate enough to have one of those? Have we done enough with reducing our expenses to make that transition from that regular paycheck to having to fund it ourselves and be confident enough that we are able to handle any situation? Because again, let’s face it, we’re going to have market cycles. We’re going to have ups, we’re going to have downs in the market, so again, living off of your retirement accounts, instead of putting money into it, you are now taking money out, and now we see a little pullback in the markets. Are we able to handle that? Do we have plan B to have to suffice our cashflow during those tougher times in the markets where maybe we want to shut that off a little bit and live off of some additional savings or whatever it is, may be.
So again, that transition is one of the biggest I think obviously physical decisions, but again, psychological decisions, because I think people a lot of times underestimate the psychological side as far as making that decision to retire. Transitioning to that next phase, what is it going to look like? What am I going to do? What is going to keep me busy every day? In the summer, in the fall, in wintertime. You can only play golf so many times, and if you live here in the Midwest and/or Clinton in this part of their area, you’re not going to be golfing 12 months out of the year.
So again, what are we going to have to fill that time period to keep us busy, to keep us active, to keep us I think fulfilled? And most people want to say it’s with a purpose. What is my purpose to do today? And finding that is going to make it much better for you. And as we get to those questions, as we get to those meetings, the root of everything that they are wanting to ask is just simply, how much am I going to need to save to retire? That’s literally the simplistic answer or the simplistic question that they want to know the answer to.
Well, from my end, it seems simple, but again, I cannot answer that question honestly unless I ask them a question back and it basically is the opposite of that. Well, you want to know how much you need to have. I’m going to ask you how much you’re going to need to have every month. So what are your bills every single month? What is your current debt? Do you have a mortgage? Do you owe anything on a house? What do you owe on credit cards? Do you have any student loans that you are still paying on? And so on and so on, because that number will determine how much you need to have. The bigger it is as far as your expenses, the more you’re going to have to have to fund those expenses.
So again, and I think people right from the get go when they start and flip their way of thinking towards, am I ready for retirement? Not from what I have saved but from what my expenses are, it gives them a little bit different viewpoint as far as what do I have to do over the next couple of years, over the next five years before I want to retire? Or I was looking at retiring in a year or so but I can’t because of carrying this debt and so I may have to work a little bit more, not to save more but to reduce my expenses. And I think that’s an important thing that people need to look at really. And again, the earlier you can look at that and start tackling those questions, again, the more confident you are going to be when you make the decision to retire.
And I always challenge people, if you’re looking at retiring in the next year or two, start doing a budget. Look at your monthly expenses, everything that you use that debit card for, anything that you put on a charge card. Whatever it is that you are spending, whether it’s that coffee, whether it’s that tank of gas, whether it’s eating out, whether it’s this bill or this bill or this, that, whatever it is, be honest with yourself and put everything on there because the more accurate you’re going to be able to do that, the more confident you’re going to feel to say, “Hey, do I have enough to pay my bills? This is realistically what I spend.”
A lot of times, people give me a number and it’s not even close to what they spend. When we start breaking it down between cell phone bill, internet bill, eating out, groceries and gas and whatever it may be, and all of a sudden, they’re like, “That’s what I spend in a month on that?” It’s an eyeopening kind of exercise for them, but an important one that you need to have with yourself in order to ensure that, again, what you have is going to be able to carry you through your normal spending. Or what changes do I have to make? And again, the earlier you make those changes, the better off you’re going to be to get yourself ready for retirement.
And I touched on it a little bit ago, and just simply, what are you going to be doing in retirement? And I think that sometimes it’s viewed as a silly question when I ask that to people when they’re asking that, but again, that, “Oh, I’m not going to do anything. I’ve worked 40 years. I’m not doing anything as far as when I retire. That’s what I’m retiring for.” Well, that’s fine for a week or so, but then a week, that’s going to get old. And again, finding that purpose. Get involved with volunteer groups, get active. Work part-time because you want to, not because you have to, doing something that you like to do. That’s a big difference, going into work a couple of days a week because you’re choosing to do that, not because you feel like you have to go do that. And again, that helps with retirement, that helps with cashflow, that helps with a little spending cash, all things to do.
But again, look at it as what is going to be your purpose each day when you are in retirement? Maybe it’s the grandkids, maybe it’s babysitting, maybe it’s taking care of a parent, a spouse. Whatever the case it may be, it’s different for everybody. And talking with a lot of people, I know especially here in the Midwest, colder weather, that first winter when you’re retired is a tough one. You don’t realize how long those winters may be when, again, you can’t go outside and work in the yard or go play golf or take a walk or whatever it is because of the different weather. What are you going to do to fill that void in the wintertime, not just, again, in summer when the weather’s nice and you can do whatever, but wintertime, how is that going to be?
Another point that they always bring up is insurance. What is going to be your reason for insurance and how are you going to fund your healthcare insurance? If you’re 65, obviously it’s easy, you transition to Medicare. That’s an easy one. But for those that are retiring pre age 65, what are your plans to continue to have health insurance? You need to have some type of coverage. If you don’t, you will be penalized when you file for your Medicare. So again, we don’t want to do that. We want to avoid that. So again, what is going to be your coverage? Are you going to be able to switch over to a spouse’s coverage if they are still working? Things you need to look into. Are you able to keep your coverage through your employer up until age 65? Is that an option? Are you going to go out and get private healthcare insurance and look at it that way? Again, all things you need to look at. But again, we also want to look at, again, if you’re married, what is the spouse going to do for insurance?
If you are carrying the primary insurance and you retire, maybe you’re 65, you carry the insurance, you retire, you transition to Medicare. Wife or spouse or husband is not 65 yet, what are they going to do for insurance? Are they going to be automatically kicked off of your old plan? Are they going to be able to get it someplace else? So again, all these things need to come into play and be part of the discussion when you make these decisions. And again, looking at all the pieces to the puzzle and how can we maximize and tie all these questions? How can we tie them all together and make sure that they’re all moving forward together? Because again, ultimately, like we have always said, it’s not what you have, it’s what you keep. And if we can do a little bit more to help keep everything together and maximize what you have, it’s going to be better for you at the end.
So questions on any of that, give us a call. I’d be happy to help you out, answer these questions with you. I did want to mention real quick that every Friday, NelsonCorp Wealth Management is wearing jeans for charity. Money raised in the month of August will be donated to the Duke Slater Memorial Statue and Scholarship fund. As always, appreciate you joining me on this Wednesday morning. Nate Kreinbrink with NelsonCorp Wealth Management, bringing you this week’s Financial Focus. Thanks again for tuning in and have a great rest of your week.
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 of 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.