On This Episode
It’s time for part 2 of our discussion about one of the most challenging parts of transitioning into retirement, dealing with the fact that you’re no longer receiving a paycheck from work. Today, we’ll discuss specifically ways to get more comfortable with the transition from working to retirement.
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PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents.
Here is a transcript of today’s episode:
Speaker 1: The rules of retirement have changed. No longer can most of us rely on social security or a single pension to fund our futures. We’re living longer in retirement, doesn’t just last a handful of years anymore. Instead, you might stay retired for 20 or 30 years and maybe even more. We need to look at retirement through a new lens with fresh eyes, with a new approach and plan of attack. Here to answer the call are financial advisors, John Teixeira and Nick McDevitt at PFG Private Wealth Management, serving you throughout the Tampa Bay area. This podcast is retirement planning redefined, and it starts right now.
Mark: Hey, welcome into another edition of Retirement Planning – Redefined with John and Nick, financial advisors at PFG Private Wealth, serving you here in the Tampa Bay area. We’re going to talk about investing, finance and retirement as we usually do here on the program. And you can find John and Nick at their website at pfgprivatewealth.com. That’s pfgprivatewealth.com. Of course, you can also give them a call and come and see them in their office in Tampa Bay at eight, one three, two, eight, six, 77, seven, six. That’s eight, one three, two, eight, six, seven, seven, seven, six. If you hear something useful, interesting nugget on the program and you want to talk more about it before you take any action, always check with a qualified professional. Reach out to John and Nick, give them a call at that number. Eight, one, three, two, eight, six, seven, seven, seven, six. Guys, how you doing this week?
John: I’m doing good. How are you?
Mark: I’m hanging in there. Doing all right. Just surviving the summer, the dog days. How about you Nick? You doing all right?
Nick: Yeah, doing pretty well. One of the things that we like to do is present on different retirement topics. And earlier today we did a lunch and learn or what we can refer to as a financial wellness presentation over at the University of South Florida at their College of Public Health.
Mark: Oh nice.
Nick: So that’s something that we enjoy doing and covered a specific topic and something that we’re looking to do more of.
Mark: That’s very cool. So yeah, lunch and learns. What’d you call it, financial wealth class?
Nick: Wellness. Financial wellness-
Mark: Wellness, I like that.
Mark: Was the turnout out, good people enjoy it?
Nick: Yeah, it’s usually a small, at those sorts of things it can be tough for people to get away. So usually we have somewhere between eight and 15 people in the room and we present for 45 to 50 minutes and just try to keep it light and really focused on a single subject at that period of time. We like to do that with different local companies as well. So it’s something we enjoy doing.
Mark: No, that’s very cool. So if our listeners to the podcast want to be involved in those in the future, is that something they can reach out to you guys or find that on the website at all, or just give a call if they’d like to attend those things? Or are they kind of closed door deals?
Nick: We usually go through the employer.
Mark: Oh, okay. Oh, I gotcha. Okay.
Nick: So if they are an employer, really no cost to the employer and it’s definitely a benefit for their employees.
Mark: Sure. Yeah.
Nick: And we bring in lunch and go over a couple of different topics. But they can absolutely reach out to us and I’ll let us know and connect us with whether it’s an HR department or their employer.
Mark: Yeah. Okay.
Nick: Cover different topics.
Mark: Very cool. Well, yeah. So if you’re listening to the podcast and you think that might benefit your fellow employees or you’re an employee yourself, give them a call. Eight, one, three, two, eight, six, seven, seven, seven, six. Ask about the lunch and learns or the wellness classes. So you guys, John, have both of you guys presented this thing or do you guys take turns?
John: This one here we both did.
Mark: Okay. Very good.
John: We do a lot of stuff as a team.
Mark: Nice. Very cool. Well good. That’s exciting. We’ll have to talk more about those in the future coming up. But I do want to address what we mentioned last week since we teed that up and I want to kind of go back to that conversation. We talked last week about just the stresses and some challenges of not having a paycheck anymore when we transition from working years to retirement years. And so let’s talk a little bit now as I had mentioned about just some strategies on how to create that paycheck, if you will, from our nest egg.
Mark: Now I think most of us realize we have to do this, but it becomes kind of … It becomes daunting for people who just obviously don’t do this all the time to think, “Well, how do I turn my IRA into income,” and so on and so forth.
John: There’s a lot of different strategies to use. And when we do planning, we don’t just say this the only one that worked. There’s a lot of different ones and it’s really depends on kind of how the person ticks, kind of what they’re comfortable with and what their goals are. So we’ll go through, we talk about a few of them, but we’re not … Whatever we talk about today, it’s not going to be all of them.
John: But you know, one that a lot of people feel comfortable with is where we do two years of cash reserves where we’ll basically set up a separate account and almost be like a payroll account where that’s where their money’s going to filter from for the next roughly two years or so. And again, that number can change depending on the individuaL. But that’s where if hey, they have social security coming in and pension, we’ll look at, hey, what your income gap. So if their expenses are 50,000 and let’s say social security covers 20,000 of that, basically we’ll have this account that generates 30,000 a year and that might come up monthly.
John: And that’s one strategy. And what that will do is it’ll provide a little bit of peace of mind, which we discussed last week, where hey, if the market does turn down, you have a special place where you can go and not be worried about, “Hey, do I need to pull on my investments while the market’s down?”
Nick: So the way that we’ll kind of have that conversation with them is almost back into it and take them through a situation of, even if we go back to kind of 2008 where there was the great recession. And we go through and look at historical market and show them here’s how long it took the market to bounce back. Even if we were to run into this sort of situation, how much would they specifically individually need? What would make them feel comfortable to hold in cash so that they wouldn’t make a rash decision.
Nick: And one of the things that we have kind of seen is that two year number seems to be a bit of a magic number for people. But ultimately it’s getting them to start to almost program themselves to remind themselves that, hey, this is here. If these things happen, this is here. But overall, our goal is to have this mini strategy to help us implement our overall broad base strategy.
Mark: We talked in the prior podcast when we were discussing this a little bit about the market and how it can affect people and make people nervous when they’re first making that transition. And one of the pieces that I know that also gets when you’re building the strategy to deliver that paycheck, you also have to plan for this to evolve through retirement. Because you got to plan, you got to put inflation in there. That’s something that you’ve got to make sure that you’re working on. You’ve got to look at all those little extra pieces that come in there. And that’s why getting together with a good team to build to that good strategy is going to be helpful.
Nick: Yeah. One of the ways that will … It’s become pretty popular and in the more in-depth retirement classes that we do teach, the six hour classes that we do at the local community colleges, refer to it as a bucket strategy, which a lot of people are familiar with. It’s in a general sense. So the way that they’ll identify with it is, we essentially say to them that, “We’re going to task your money with different jobs.” There’s going to be a short term, mid term, a longterm. Those short term money is where we don’t want to take the risk but that longterm money is the money that we want you to kind of think and remind yourself that we’ve got this 2030 year plan for you. And if you look in reverse in how you invested your money 20 or 30 years ago, this longterm money needs to be invested in the same sort of way. Focused on longterm growth to help make up for the money that you’re going to spend in those shorter time periods.
Nick: And we found that people definitely relate to that. They understand that and when they think about it from the standpoint of, instead of them working their money, that bucket of money is working longterm for them. People have been able to grasp that pretty well.
Mark: I got you. Yeah, because we’re talking definitely longterm. I mean obviously the number one fear is people running out of money before they run out of life. And just to veer off for a quick second. Do you happen to know who the oldest, not the … No. But you take a guess at the age of the oldest person in the world right now. Either one of you.
John: [inaudible 00:07:50] seven.
Mark: What’d you say? One oh seven?
Nick: Yeah, I’d probably go like one 15.
Mark: Yeah, Nick, you’re the winner. Actually you’re closer. It’s actually Mr. Tanaka, he’s 116 years old. 116, can you imagine that? So I know that’s like totally not the norm, it’s the exception to the rule. But we’re getting there more and more where when you guys are doing this, kind of to Nick’s point a minute ago, you got to plan this stuff out a much longer to have these income streams past 80 or 85. You’ve got to be pushing this into the nineties a lot of times or maybe even a hundred, right?
Nick: Yeah. When we plan, we always start off our plans planning to age 100. And we used to get heckled quite a bit from potential clients and existing clients about that strategy. But actually, because a lot of people that we work with come through our class, they see the importance of planning for longevity. And I would say probably in the last 18 months we’ve actually had people asking us, more than one, asking us to plan past a hundred. So I think that sentiment is actually starting to kind of permeate people’s thinking and if they have longevity in their family, people have started to focus a little bit more on that. And making sure that they’re focusing on being able to kind of stave off inflation and plan for longterm.
Mark: Yeah, I just, I don’t know if I’d want to be a 116. either one of you guys?
John: I’m going to say no to that depending on what technology brings at that point.
Mark: Right. I guess that’s true. Yeah.
John: As of now, no.
Mark: What about you, Nick?
Nick: I’d have to ask Mr. Tanaka what it’s like.
Mark: That’s probably a good idea. I don’t know, man. I just, I couldn’t imagine it. But yeah, I mean that’s going to become more than norm the more technology continues to go.
Mark: So yep, well really good conversation here with the guys talking about the fact that you you’ve got to create a paycheck for retirement and you got to make sure that that nest egg is going to [inaudible 00:09:38]. So we covered a couple of cool things to think about. The cash reserve, the two years, the bucket strategy, the dividends, keeping the principle, income floor, all these kinds of things we touched on. So if you have some questions, if you have some concerns, you have some thoughts about it, make sure you reach out to the guys, give them a call. If you’re interested in some of that wellness classes and lunch and learns, give them a call. Reach out to them at eight, one, three, two, eight, six, 77, seven, six. That’s eight, one, three, two, eight, six, seven, seven, seven, six to talk with John and Nick, financial advisors at PFG Private Wealth, serving you in the Tampa Bay area, here from their office as well as in Tampa Bay. And pfgprivatewealth.com is where you can find them online. That is pfgprivatewealth.com.
Mark: Guys, anything else you want to touch on this week before we go or shall we wrap it up until next time?
John: I think we’re good.Till I think we’re good.
Mark: All right, well with that I’ll say thanks for tuning into the podcast. You’ve been listening to Retirement Planning – Redefined for John and Nick. I’m Mark. We’ll catch you next time you’re on the program.