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Over the past year, one retirement video on YouTube pulled in 3.7 million views. The title: “Sell These 5 Things Before You Retire.” We thought it was worth a conversation — not to tear it apart, but to react honestly. Do we agree? How often do we actually see this play out with real clients? Let’s get into it.
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Disclaimer: 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.
Marc:
Do a little reaction conversation this week here on the podcast. Over the past year, one retirement video on YouTube pulled in 3.7 million views. The title was Sell These Five Things Before You Retire, so we thought it was worth a conversation, not necessarily to tear it apart, but just to react to it honestly. Do we agree? Do we not? Let’s dive in this week here on Retirement Planning Redefined with John and Nick.
Welcome in once again to the podcast. This is Retirement Planning Redefined with John and Nick from PFG Private Wealth. Find them online at pfgprivatewealth.com, that’s pfgprivatewealth.com, and we’re going to talk about this video this week, guys. I want to kind of break down these couple of sections here. Now, we can throw a link into the descriptions for folks if they want to go check it out, but this video, as I said in the teaser, got just under four million views last year for the five things you should sell before you retire. I wanted to get your guys’ take on this. First of all, how are you doing this week, John?
John:
I’m doing good. I’m doing good. I was telling Nick earlier, I started trying to give my kids something to do this summer, and I have them working out, because they want to get better at gymnastics, so I put together a program and told them it was time they learn a language. We started doing some Portuguese, so it’s interesting listening to them try to pronunciate the words, but it’s been fun.
Marc:
Nice. Nice. That’s very cool. Very good. Good job parenting there, sir. Absolutely. What about you, Nick, buddy? You doing all right this week?
Nick:
Yeah. Yeah. I have visitors in from out of town for a bit, so that’s always fun, but they’re easy. We’ve been having a good time enjoying the new house.
Marc:
Well, you’re a good guy in that regard. You were saying it’s going to be a bit that they’re staying. See, I was brought up with the rule and I live by the rule of, house guests and fish, same timeline, three days. After three days, they’ve got to go.
John:
Nick is having home-cooked meals I think daily, and I think they’re just helping out around the house, so he’s probably very comfortable right now.
Marc:
Okay. Nice. Nice.
Nick:
Yeah. There is a net gain in the scheme of things for me.
Marc:
Okay. All right. Fair enough.
Nick:
Yeah.
Marc:
That adds to the equation, right?
Nick:
It definitely helps. It definitely helps.
Marc:
Look, you’re always planning, right? You’re always doing the math on the situation, right? Well, let’s talk about this video this week. 3.7 million views on this, so let’s start with the first one. I’m going to get your guys’ reaction to it. The oversized house. The house that was perfect for raising a family isn’t always the right house for retirement. Certainly, this one’s kind of understandable. Selling it can free up some significant equity, especially in today’s market, depending on where you’re at, right, so what’s your thoughts on this being one of the five things you should sell before you retire? Whoever wants to start.
John:
I can jump in on this. I think, like we say with everything, it depends, but this could be, depending on the outflows of the house, the maintenance, property taxes, insurance, just how big it is, one of those spots where it could make sense, if you’re ready, just to kind of start eliminating some of your to-do lists and outgoing cashflow and stuff like that, where this is definitely a spot where we see a lot of people say, “Hey, is it time to downsize, and what does that look like for me? If I downsize, what else can I do with the extra cash flow I now have? Maybe I pocket a lump sum balance, that I could do something else with it.”
Marc:
Yeah. I mean, especially again, depending on where you’re at, you could make some good cheddar on that, right? Unless you were going to buy another house, Nick, right? Because then it might cost you more.
Nick:
Yeah. Yeah, it’s tricky too, because for example, right now Florida’s in the news quite a bit from the perspective of property tax and potential property tax reform, but one thing that does happen here is a homestead exemption, and property taxes can only go up by a certain percentage each year. We will see instances of somebody maybe looking to downsize the house locally and maybe move out of state, so there are opportunities to essentially kind of carry over. There’s some portability in the state of Florida on property taxes, but if you shift to another state, that isn’t necessarily the case, and if somebody, especially the way that taxes have, or, I’m sorry, values on homes have gone up here in the area, if you’ve been in your house for 15, 20 years locally and are looking to sell and shift elsewhere and maybe go to a state that has a state income tax, and then you start to factor in … If you’re selling your home for … There’s something to downsizing size, but what we also have found is that people that are, if they’re selling their house for 800,000 to a million dollars, they don’t want to buy a 200,000 dollar condo. They want to buy a 600 or 700,000 dollar condo. That’s just easier to handle and maintain, and then when you start to tack on some of those other expenses, a lot of times in can end up being actually pretty close.
Marc:
Got you.
John:
Yeah, and to jump in with that, you definitely want the downsize to be worth it. It’s not worth it if it’s 100,000 or something like that. You really want to make sure, if you’re downsizing to either free up some cashflow or get some type of lump sum balance to do something else with, you want to model it to make sure it makes sense, because Nick mentioned the pitfalls, property taxes. You’ve got realtor fees, things like that. You want to really itemize, “Hey, what is this expense going to be, and what is the benefit of it?”
Marc:
Okay, that’s a great point, so that’s the first one. The second one, second point on here, guys, of this video, was financially supporting adult children. I kind of roll with this one too, right? This is the hardest one for every parent because everybody’s going to be a little bit different. The argument is, some people feel like they’ve got to help their grown kids out, and others say, “Heck no,” right, so how do you feel about that, first of all, and second of all, how do you approach that with clients?
John:
Yeah, I’ll let Nick take this one so he can be the bad guy.
Nick:
Yeah, I’ll go first, and I’m not a parent, so that’s my disclaimer. We see this more and more, and one of the things that we hear about this quite a bit are that, and we agree to a certain extent, is that the barriers to entry on certain assets or kind of landmark acquisitions in the lives of people that are in their late 20s, early 30s, dependent upon where you are, and this area is one of them, they are harder to achieve. Granted, and people that have had assets or substantial assets over the last 10 years have gotten some massive appreciation and have really benefited, where people that don’t have assets haven’t been able to participate. Dependent upon what it is, as long as it’s not having a material negative impact on the plan of our clients, we do tend to be pushing them in the way of, “Hey, let’s kind of cut some of this stuff off,” especially if it’s an ongoing monthly sort of support, if there’s not any sort of major medical or whatever and it’s just like a failure to launch scenario. Up north we used to have basements. It’s like, if somebody’s kid is in the prototypical, in the basement for the last 10 years and they need to get out, then we may have some gentle nudging related to that.
For example, one instance I’ve seen is people helping with IVF, for example, which can be really expensive, and their kids want to start a family and they don’t have the money to start a family, and that’s been a gift that, giving some money to help that sort of thing. Something like that makes a ton of sense, if they can afford it. For them to buy a motorcycle or something, that maybe if they were just kind of … The kid maybe worked more or had some sort of plan or was making good income, and it wasn’t just to make them happier because they felt guilty, that’s a different sort of conversation.
Marc:
All right. John, you want to stay away from being the bad guy on this one, or are you good with that?
John:
No, I can jump in here with some thoughts. No, we see it a lot more often recently. I’ll tell you that home purchases, home prices have skyrocketed, so I’ve seen a lot of clients where it’s like, “Hey, I’m going to help them with a down payment.” It goes back to everything we always say, “Just make sure you can afford to do it and it doesn’t hurt your plan,” because your kids have time to adapt, and the last thing we want for our clients, it’s where it’s like, “Hey, I need to go back to work or I need to do … I can’t now enjoy my retirement. I can’t go on vacation because now I’ve basically been funding my children, at this point.” I mean, there’s certain things you have to assist with, and we get that, but we’ve also seen scenarios where we’ve had some clients that just continue to assist kids pay just unsecured debt for running up the credit card bill, and that’s where it’s a situation where you’ve got to weigh out what you’re doing, but your kids can typically adapt, where, once you’re at a certain age, it’s hard to go back to work even if you have to. Just make sure take care of yourself first so you have the ability to help others.
Marc:
Well, you’re right. Yeah. It’s like the whole airplane thing, right? Make sure your mask is on before you try to help the others, kind of thing. I get it, right? As a parent, we all want to try to do something for them, but to your point, don’t overextend yourself. Don’t risk your own retirement, because you can’t finance that, right? You can’t finance retirement.
Nick:
Yeah, and not only that, but sometimes going to the well once is maybe one thing, and we can model it and show it, but we’ve also seen instances of, it’s the third time, fourth time. John mentioned revolving debt, credit card debt, “Oh, they learned their lesson this time,” et cetera, et cetera, and especially when that’s-
Marc:
“They helped me once. Maybe they’ll help me again.” Yeah.
Nick:
Yeah, exactly. There’s definitely some … Unfortunately, sometimes the kids will take advantage of that.
Marc:
For sure. Yeah, good point. All right. Number three, expensive toys that become expensive burdens. I think we’ve all probably been there as you get closer to retirement, too. You’re making more money, right, so you’ve got the boat, the RV, the classic car, something, right? At some point, maybe you don’t own things. Things own you, as the saying goes. Thoughts?
John:
I’ll say I feel like my house owns me right now so I can relate to some of this stuff. Yeah, here in Florida, we see this quite a bit with boats, where clients have boats, enjoy it. As they get into retirement, maybe early on, they’re enjoying it, maintenance, all this stuff. Then it kind of turns into, “I’m not really going on the boat as much.” What we normally do, even with our younger clients that still have it, we’ll model selling it and offloading those expenses. That’s a big one we see here, and then when COVID hit, kind of backtracking six years now, the whole RV craze, where we couldn’t travel too much, and all of a sudden everyone started buying RVs.
Marc:
Yeah, that’s a good point.
John:
I’ve seen a lot of RV sales lately, the last couple of years.
Marc:
Yeah, that’s a great point. Travel trailers and the whatnot. Yeah.
Nick:
Yeah, and I’ll say the thing with, especially with boats, tends to be all of the ancillary expenses related to it.
Marc:
Bust out another thousand, that’s what it stands for.
Nick:
Yeah, yeah, but-
John:
I like that one.
Nick:
Especially here now, I mean, we’ve seen where even on a boat that’s paid off, between fuel, dock fee, the power, regular annual maintenance, somebody might be running between 25 to 35,000 a year, and when they realize, when you factor in a safe withdrawal rate, hey, essentially you’ve got withdrawals from five to 600,000 dollars of your assets that are dedicated specifically to your boat. Do you love it that much? The reminder with people that it’s not always all or nothing, where maybe it’s like, “Hey, let’s just have an exit plan.” Say, “Hey, you’ve got five more years of this. Enjoy it, use it to its maximum, really look to have a great time with it, and if you end up after the third year just kind of really slowing down and not really using it as much, that’s a sign for you to shift. You can always join a boat club and try that and not have to deal with the other maintenance related.
Marc:
That’s a good point. Yeah, that’s a good point. Well, we’re talking about these things that they, again, this video is saying, “Hey, sell these things before you retire.” I want to get to the last two here, guys. Number four, and this is interesting, the second car. Without a commute, now, again, you’re thinking that the concept is you’re in retirement at this point, right? Two cars sitting in the garage may be costing more than they’re worth in insurance, maintenance, so on and so forth. Is it worth asking the question, John?
John:
Yeah, so in the video, I’ll go from my own experience and plan the last 20 years, but in the video he talked about, hey, it worked out for some of his clients. I’ll tell you, I see the reverse, where most, and I’d say most people, I think, like having the second car and the autonomy, doing their things.
Marc:
The freedom. Yeah.
John:
Yeah. We just had a meeting, Nick and I last week, where it said, “Hey, we have one car, but we want another one,” and we were like, “Let’s put it in the plan.” It worked, and maybe to kind of find an in between, it’s like, hey, you have your main car, and maybe you find kind of a used car that’s good quality, safe, everything like that, but it’s not as expensive as the other one. This one here, I would say more often than not, I think it’s okay having the second car if you can afford it, unless someone really just doesn’t drive. I’ll pick on my parents here. My mom hates driving, but I’ll tell you, she has her car, because if she wants to go to her sister’s house, she’s not waiting for my dad. I’ll tell you that.
Marc:
Yeah, exactly. No, the freedom thing comes … I mean, it’s a huge piece of it, for sure. Nick, any thoughts there?
Nick:
Yeah, there’s no way that I would tell somebody to sell a car and hang out. That’s one of those things that I wouldn’t touch. I mean, I’ve seen it where we’ve had some clients kind of make that decision maybe late 70s, early 80s, but really early on in retirement there’s already a sense of purpose and autonomy, changes that are happening by shifting out of work and all that.
John:
People are together all day now.
Nick:
Yeah, yeah.
Marc:
Yeah. That’s a good point. Yeah. “I’ve got to get in the car to get away from you.” Yeah.
Nick:
Yeah. Yeah. Needing to escape, and that’s not anything that’s-
Marc:
I think, maybe depending on where you live, too, right, guys? I mean, in some places, if you can walk to everything you want to do, then great, but again, depending on where you live, I mean, here in North Carolina, where I live, no, there’s no way. It’s miles to get to anything, right?
Nick:
The other thing I would say, too, is maybe the one thing, one conversation that we have had with people is, where maybe it’s a couple that’s used to getting a new car every three years, each of them, and maybe shifting to kind of having the one car that’s a little bit higher end, and then, second car, maybe just holding onto it longer or keeping the costs down over a longer period of time, something like that.
Marc:
That’s a good point. Yeah.
Nick:
Can make a whole lot of sense.
Marc:
Well, Nick, you touched on the identity piece, and that was the fifth piece of this. This one can’t be sold on eBay or gotten rid of, right? The argument is that clinging to that professional title or your sense of former self can hold you back from discovering what you want to do or be in retirement. I guess it just kind of, we’ll wind it out like that. How do you guys help? Because that’s probably the biggest challenge, right? How do you reframe and rebuild who you are, when you get to this new phase?
Nick:
Yeah, and I can kind of start with this one. We’re big believers in the fact that people need purpose, and oftentimes throughout their, in theory, working age years or raising a family years, whatever it is, there’s oftentimes the purpose needed, whether it’s raising kids, whether it’s being part of helping to raise grandkids, whether it’s work and only work, if you didn’t have kids. My wife and I, we don’t have kids, and from the standpoint of our work and the things that we do, other things like volunteering and stuff like that, people need purpose, and shifting that mindset of, the outward perception of people showing value or acknowledging your value through things that you do shifts to be more internal, where you don’t get sort of that automatic response that you might with a job or from your kids doing well in school, or different things like that. It can be a tough transition for people.
Marc:
Well, John, I guess I would ask you this final question. Maybe something for folks to ask themselves is, “Does this still serve my new life or my old one?” Right? When you get into retirement, when you’re thinking about the questions that you’ve got to deal with, would you say that’s a pretty good way of looking at that?
John:
Yeah, I do. I think it’s kind of starting with, going back to the plan, you start with, “Hey, what are my goals? What am I trying to accomplish?” You can look at that from a personal time standpoint. “What are my priorities? What do I enjoy doing now? What are some of the bucket list things?” All comes down to just identifying what you want to focus on to maximize your retirement and what you guys like to do.
Marc:
Yeah. At the end of the day, right, you’ve got to ask yourselves those tough questions, right? “Does this still serve the life I want or the old life?” With 3.7 million people watching this video, that was for a good reason. It touched on something real. Retirement isn’t just about what you’ve accumulated. Sometimes it’s also about what you’re willing to let go of. Right? We also kind of hit this phase now, and it’s become very trendy as well., to declutter, but I think as you get older, you do kind of want to do some of that. You’re kind of like, “I don’t need all this junk anymore,” and so you need to kind of think about some of those things when it comes to your financial life. Not just the monetary pieces, but also just the other factors and things that go into it. As always, if you’ve got questions, you need help on how to do that, because it’s our first retirement most of the time, right?
Most of us don’t retire more than once unless you’re Favre or Brady or somebody like that. You’ve got to get it right the first time, so reach out to a team that helps people all the time get to and through retirement. Reach out to John and Nick and the team at pfgprivatewealth.com, that’s pfgprivatewealth.com, and get started today with a consultation. Do a 15-minute chat by simply calling 813-286-7776, 813-286-7776, or go to pfgprivatewealth.com. That’s going to do it this week for Retirement Planning Redefined. Don’t forget to subscribe to us on Apple or Spotify or whatever podcasting app you enjoy. For John and Nick, I’m your host, Mark. We’ll see you next time.
