Ep 6: The Challenges Of No More Paychecks, Part 3

On This Episode

It’s time for part 3 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 how to turn your nest egg into paychecks with strategies like living off of dividends and using an income floor.

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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:

Marc Killian: Hey everybody, welcome into Retirement Planning Redefined with the guys from PFG Private Wealth, John and Nick, financial advisors here with me once again as we talk about investing, finance, and retirement on the program. Anytime you’re listening to the podcast and you’ve got a question or concern, jot it down, jot this number down, give them a call and talk to them about it before you take any action with anything you’re listening to that’s financially related, 813-286-7776. Well, that’s a mouthful. Let me do that again, 813-286-7776 is the number to call, and of course you can go online to PFGPrivateWealth.com. That’s PFGPrivateWealth.com, and while you’re there, subscribe to the podcast so you can get upcoming episodes and check out past ones and all that good stuff.

Speaker 2: John, what’s going on man? How are you?

John Teixeira: I’m good. How are you doing?

Speaker 2: I’m hanging in there. Trying not to melt. At the time of this podcast, it’s about 8 million degrees, I think, on the outside. Nick, what about you buddy? You hanging in there?

Nick McDevitt: Yeah. Yeah, we’ve had a ton of rain lately-

Speaker 2: Which just makes it worse.

Nick McDevitt: Giving me flashback of living up north, but …

Speaker 2: Well, aside from the heat and all that fun stuff, what else is going on with you guys? Do you guys got anything cooking, no pun intended.

John Teixeira: Yeah, so tonight we’re actually excited to, we’re doing some volunteer work tonight, and there’s a group that Nick and I are part of. It’s called the 13 Ugly Men. That’s exactly the response whenever people hear that name. But no, it’s a great organization. It’s about 30, although it’s 13, there’s 35 guys in it. We throw events and donate to local Tampa Bay charities. And part of the donation, we actually do hands on work. So we’re donating to a charity called Gigi’s Playhouse, which Nick and I actually interviewed, and he’s on the charity committee for, for our group.

Speaker 2: Nice.

John Teixeira: And we’re throwing a Halloween event. The goal is to donate about $25,000 to them. And tonight we’re doing some hands on efforts, which Nick can kinda touch on, cause he set it up.

Nick McDevitt: Yeah, man. The organization supports people with Down Syndrome, and so they have a lot of different programs that they have. So tonight we’re going to go in and kinda run an evening of Bingo and bring in some food, and kind of play Bingo, and there will be a broad range of ages there and stuff like that. So, so we’re looking forward to that tonight.

Speaker 2: That’s awesome. That’s really cool. I appreciate you sharing that with us. That’s very cool that you can do that.

Speaker 2: And maybe what we can do is we can talk on another podcast about how you can get involved with that particular thing if you’d like to help. But that’s awesome that you guys are doing those extra things out in the community here in the area. So, well, with that, let’s turn our attention to this week’s podcast, which is to continue our conversation about strategies to turn that nest egg into a paycheck. We covered several things last time to your cash reserves, bucket strategy, so on and so forth. What are some other things we need to think about?

John Teixeira: Yeah, so you know, like we talked about last week, there’s a lot of different strategies and really we let our financial plan kind of dictate which is best for the individuals based on needs and goals.

John Teixeira: So as you mentioned last, week we did go over the two year cash reserves bucket strategy. Another one that we’ve been utilizing, and depending on the situation, is basically just living off of your dividends and interest. So that’s where you have your principal and whatever dividends interest is spun off either monthly or quarterly, that goes into a spend account, and that basically becomes your paycheck moving forward. Some of the benefits of kind of utilizing this would be you don’t have to worry about your money running out, because you keep your principal intact, and you’re never really dipping into into it. So, the fear of money running out goes away.

John Teixeira: And also we see this a lot where someone’s interested in leaving some type of legacy to somebody.

Speaker 2: Right. Sure.

John Teixeira: Basically like, “Hey John, Nick, I have this money here. I want to leave it to my kids, I want to leave it to whoever. So I’m just going to live off of the interest in dividends.” So that’s kind of one way to look at it.

Nick McDevitt: And I would say this is a strategy we wanted to talk about, because we get asked about it. However, with how the markets have changed over time and how people spending in longevity has changed over time, it’s become less of a common strategy, with one of the big reasons being yields are down significantly over the last 20 years. Where years ago you could get a really good CD rates and things like that, where you can get a decent paycheck from that.

Nick McDevitt: So some of those challenges are, it’s tough to find a yield, whether it’s via dividend, whether it’s via fixed securities, to give people the amount of income that they need. And so what’ll happen is they’ll chase that yield and give up growth opportunities, which then essentially makes it difficult for them to keep up with inflation over time. So dividend rates will change over time and at the onset people kind of see it as, “Hey this is what my parents did,” but maybe their parents had a pension or their parents expenses were a lot lower.

Nick McDevitt: And we like to talk about it because, and it’s interesting, it’s usually men that bring it up and more focused on like individual stock or individual bond investing, which is less common now. So although it is a lot more rare, we do like to bring it up at least to address it, so that people understand how it works that depending upon their overall situation it can be, but most likely some of the other strategies we’re going to discuss are probably going to make more sense for them.

John Teixeira: Yeah. And kind of who this works for is really someone who has a very large nest egg and…

Speaker 2: Okay.

John Teixeira: …and necessarily doesn’t need more than the dividends interest will spin off. And as Nick mentioned, this environment does make it very challenging because interest rates are low, and then people will kind of go to stocks for that to try to find some extra dividends.

Speaker 2: Right.

John Teixeira: But we [inaudible 00:06:24] some of the equity corporations, they’ll actually change the dividend on you. So that’s a big risk where, and I know Nick touched on it, but I’ve seen where some companies will have a specific dividend and then recession hits or the stock isn’t doing so well, so they need some growth, so they’ll go ahead and lower their dividend, which could really affect your monthly income.

Speaker 2: Okay. All right.

Speaker 2: So that’s kind of a living off a dividend type of strategy to turn that nest egg into a paycheck. What’s another one? Is there something else we can also share with the listeners?

Nick McDevitt: Yeah, so another one again, depends on the situation, is kind of creating an income floor.

Speaker 2: Okay.

John Teixeira: So this is where you look at, “Hey, what’s my guaranteed income that I have coming in?” And most people, clearly social security is number one. But some other people might have a pension and what they’ll look at is saying, “Okay, what’s my guaranteed income?” And we’ll do an exercise and do all their expenses, but we’ll divvy it up where we have our fixed expenses and then our discretionary. And what we’ll try to do in this situation is match up their guaranteed income with their fixed expenses. So no matter what happens, it gives them peace of mind to say, “Hey, no matter what happens in the market or health, I know that my fixed expenses are covered.” And we make sure that those fixed expenses are covered for life.

John Teixeira: The risk of running out of money necessarily for those fixed expenses really isn’t there. And then some challenges to this, what we see in why. Again, it’s not perfect every situation, but some challenges with it is, does that leave you with enough liquidity? Do you have enough money? What if you need to tap into a little bit more. And then also the big one with this I would say is inflation. I don’t know if you want to add anything to that, Nick.

Nick McDevitt: Yeah. So, realistically there’s only a few ways to kind of create the guaranteed income floor, and we’ll end up talking about that kind of later on down the series of a podcast. But, John mentioned the social security. They may or may not have a pension, and so the only other way to create, essentially a guaranteed income, would be through some sort of annuity, and there are different sorts of annuity.

Nick McDevitt: So when John refers to the not having enough liquidity, meaning that, to provide the guaranteed paycheck that they may be looking for, there may not be enough in assets to do it in a large sum of money. So usually if we’re looking at something like that, we only like to attribute up to 20% of their overall nest egg into a strategy like that.

Nick McDevitt: So typically it’s people that, where something like this would make sense is somebody that may be a conservative investor, somebody that has maybe a lot of longevity in their family and they have a significant fear of running out of, or outliving their money. Maybe they’re only guaranteed source of income is social security. So they’re looking to kind of build on and have some additional security from that standpoint. So, going through and trying to find other ways to help increase that floor is a pretty typical process that we use with people.

Speaker 2: Okay. Yeah.

Speaker 2: So again, each of these strategies may or may not be the right fit for the individual. It’s a matter of going through and talking about some different things and looking at stuff to see which is going to work best for you.

Speaker 2: You mentioned kind of earlier on that you’re just living off the dividends. What about somebody who might be in a situation where they do need to sell off the investments, maybe as needed type of thing. So more of a withdrawal strategy, I guess.

Nick McDevitt: Yeah. So what we’ll kind of refer to that as is like a systematic withdrawal. And frankly this is pretty much the most common way.

Speaker 2: The norm kind of thing.

Nick McDevitt: Yeah. How people handle their income from their assets in retirement. The majority of people, their nest egg is comprised of some sort of combination of funds, whether it’s mutual funds, exchange traded funds, in some sort of diversified portfolio.

Nick McDevitt: And what we’ll do is, kind of after we go through the planning, and we figure out – Hey, your plan kind of tells us that we need to pull out, we’ll call it $3,000 a month from the nest egg, and they want to receive it on the first of the month, each month. And from the standpoint of their advisors and kind of portfolio managers, we’ll structure it so that that money deposits automatically into their account. We decide which investments that kind of sweeps off of, and we do it via kind of an automatic quarterly rebalance to make sure that we’re keeping the portfolio diversified in what the overall objective of the account. And then, realistically, this helps them deal with the ups and downs of the market. And really they’re only spending what they need.

John Teixeira: So, one of the things that Nick kind of said here…it’s important that you have a very good advisor, because you are looking at your advisor to make sure they customize the portfolio to deal with some challenges like a market downturn. So, that is a big risk with this, because if the market goes down and you need to sell off your investments, the worst thing you can do is really start selling off big chunks in a down market.

John Teixeira: So it’s important that your advisor has some strategy in place for that. And then also, again, a challenge with this would be depending on the person’s mindset, they might get afraid of spending too much, because the risk of running out of money and the kind of spiral down effect of tapping into your principal is always there.

Nick McDevitt: So it’s really important. I think you’ll notice as far as who the strategies work for is really who’s saved a lot of money. So it’s important to save as much as you can, because it allows you the ability to really use any of these strategies and be comfortable with it depending on your situation.

Speaker 2: All right. Well there you go.

Speaker 2: So there’s a few things to consider, to think about. We were, again, continuing our conversation about ways to turn our nest egg into paychecks and retirement and if you’ve got some questions, if you’ve got some concerns you’d like to talk with the team about how to do that, talk with John and Nick, give them a call at 813-286-7776, that’s 813-286-7776, to talk with John and Nick, financial advisors at PFG Private Wealth, serving you in the Tampa Bay area.

Speaker 2: Go to the website, PFGPrivateWealth.com. Again, that is PFGPrivateWealth.Com – check them out there, as well as subscribe to the podcast, and give us a chance to share a bit more of these things with the each and every week by subscribing on whatever platform it is that you happen to like. Apple. You can find us on Apple podcasts, on Google play, Stitcher, iHeart, various things like that. Thanks for listening to this edition of Retirement Planning Redefined. For John and Nick, I’m Mark, and we’ll see you next time here on the program.

Ep 5: The Challenges Of No More Paychecks, Part 2

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.

Subscribe On Your Favorite App


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.

Nick:                     Yeah.

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.

Ep 4: The Challenges Of No More Paychecks, Part 1

On This Episode

One of the most challenging parts of transitioning into retirement is dealing with the fact that you’re no longer receiving a paycheck from work. So today we’ll discuss how to make that process as smooth as possible, as well as talk about some of the common feelings and missteps that many people face.

Subscribe On Your Favorite App


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:

Marc Killian: Hey everybody. Welcome in to another edition of Retirement Planning Redefined with John and Nick financial advisors at PFG Private Wealth, an independent RIA serving you in the Tampa Bay area. Their office is also in Tampa Bay. Find the guys online at pfgprivatewealth.com. That’s pfgprivatewealth.com, and anytime you’re listening to the podcast, not just ours, but anybody’s, if you hear something interesting or that you want to learn more about when it comes to your retirement plans, your financial plans, before you take any action, always check with a qualified professional like John and Nick at 813-286-7776. That’s how you can call them and ask those questions that you might find interesting or useful. 813-286-7776 and with that I’ll say, guys, welcome in. How are you?

John Teixeira: Hey, good. How are you doing?

Marc Killian: I’m hanging in there. Nick, how are you? Doing all right?

Nick McDevitt: Yeah, staying busy.

Marc Killian: Staying busy. So what’s going on with you guys? I haven’t talked to you for just a little bit, and now we’re getting back on the podcast here. What’s new?

John Teixeira: Oh, what’s going on with me? I have three year old daughter, Olivia, just started her swim lessons back up. So that’s been pretty exciting. Going to the YMCA few times a week

Nick McDevitt: And I have been traveling a little bit this summer. Was Up north in my hometown of Rochester, New York for a week for a family reunion, and traveled a little bit out to the west coast to visit an old friend.

Marc Killian: Oh, Okay. Cool. So had a little bit of personal stuff going on. What’s going on with the business? How’s things going in the practice? You know, let’s talk about some things today that might help our listeners out when it comes to, you know, just in general when we’re thinking about retirement planning and getting these things together. I kind of had a general thing I wanted to talk about, if that’s alright with you guys? It’s just to kind of touch on the fact that a lot of people would kind of stress over no longer having a paycheck anymore, and that’s usually like kind of the big hurdle mentally, at least when you’re first hitting retirement is to say, “All right, so, what do I do when I don’t have a check?”

Nick McDevitt: Sure. We’ve actually had a lot of clients kind of making the transition to retirement lately, and recently the markets had been a little bit more volatile.

Marc Killian: Sure, yeah.

Nick McDevitt: One of the interesting things that we’ve seen is with them being retired, they spend some more time watching TV and watching the news and of- [crosstalk 00:02:14]

Marc Killian: Man, that’s a bad combination.

Nick McDevitt: … Yeah. Tends to tick up a little bit. And so, you know, we’ve really been working on emphasizing with them the importance of having an overall strategy and plan, reminding them of that, and helping to work with them to just kind of implement a process where we can kind of recreate what they’re used to from the standpoint of, although they don’t have a paycheck from work anymore, you know, we are generating a paycheck from their investment accounts. And so we try to create some stability with that, and remind them of the longterm strategy.

John Teixeira: Yeah. Kind of jumping on that with Nick, you know, a lot of people, I mean in reality start kind of working what, 16, 18 you getting a paycheck the whole time.

Marc Killian: Right.

John Teixeira: And it’s really almost like your permission slip to go spend things. It’s like, “All right, I want to buy this,” and all of a sudden, “Hey, all right, after two months of saving I’ll go ahead and purchase this.” And when that’s gone, it really creates a little bit of fear, because now you have your investments that need to provide that. And what we’ve seen a lot is clients, they get afraid to spend. One of our joint clients was kind of transitioning to retirement and she’s like, “I don’t know. I’m afraid to spend money, because I don’t have my paycheck anymore.” So you know, it’s really important what Nick mentioned to really focus on trying to create some type of strategy to provide a peace of mind.

Marc Killian: Yeah. I mean, you can get the plan put together and all that kind of stuff, but sometimes there’s these mental hurdles. The things that you just have to sit down and talk through that part of what you guys do sometimes really is also a bit of counselors, if you will, because it’s like, “Okay, let me show you why it’s okay for you to spend some of your assets,” or you know conversely saying, “Okay, you’re going a little too crazy spending. Let’s roll that back and whatever and make some adjustments.” So clearly that makes it important to have a strategy, you know, like if people are used to getting paid, let’s say monthly or bimonthly, do you do the same thing when it comes to disbursing, you know, their retirement accounts?

Nick McDevitt: Yeah, we tend to try to focus people on a monthly budget, especially from the standpoint of, you know, for those that have filed for social security, they are getting paid once a month, usually towards the beginning of the month. And then a lot of times what we will do is maybe the automatic distribution that we send to them will be a couple of weeks later, halfway through the month. So they still get, you know, two paychecks, one from social security, one from us. And that provides them with a little bit of stability to kind of get used to. Although the paychecks usually aren’t equal, they’re still getting paid twice a month. And they get used to figuring out when they have to pay their bills, and how they’re going to manage your expenses. But overall we try to really, as we go through the planning, we create a budget. We create, you know, a projected monthly expense.

Nick McDevitt: We start sending them, you know, the proper amount based upon that. But we also let them know that that first year or two is really a test, you know, to see, make sure that they’re comfortable, emphasize for the planning that what they’re spending is okay, and also the factor of trust really comes into play, because we’re letting them know that if we’re uncomfortable with the amount of money that they’re spending, we’re going to let them know. And so we try to have them filter some of those concerns through us, so that they’re not restricting themselves at times when they don’t really need to be.

Marc Killian: Yeah, I mean obviously that’s going to be the case because like anything as you’re moving through retirement, you’re going to have to alter this. The strategy needs to move and flow and ebb. You know, you kind of mentioned earlier that the markets have been pretty volatile the last little bit. At the time of this podcast taping, we’ve had a pretty good slide. Just earlier this week it was like, I think it was, what, almost a 10% drop or so, but that’s going to happen. Right? And so if don’t have a paycheck coming anymore, sure it’s understandable to get stressed out. I mean, the market does this. I think on average it does move quite often. If you go do the research and the statistics, you’ll find that it doesn’t always just, even this bull run we’ve been in, it doesn’t just go straight up. There’s always ups and downs and ups and downs.

Marc Killian: And I think most of us know that, but when we don’t have a paycheck, that’s when we start to get a little more touchy about it. We start to get a little bit more worried that it’s going to alter our lifestyle, and how we are going to be able to, you know, use those monies and so on and so forth. So is there an amount you try to determine? Do you try to go a percentage over what somebody is already doing? Let’s say, okay, we were making $5,000 a month, now that we’re going to be hitting retirement, is that kind of where you use as a starting point?

John Teixeira: So we really will try to take a look at what their expenses into retirement are going to be. So it’s not always necessarily going to be the same as what it was. So we really try to, again, with the strategy and the plan, providing the blueprint of, “Hey, this is how much you’re going to have to be spending.” So we’ll start there, but kind of perfect example of what we talked about earlier of people having a hard time spending when they don’t have a paycheck because they’re afraid, is exactly what happened these last week or so with the market sliding.

John Teixeira: That type of kind of market slide creates fear of saying, “Well I don’t want to spend my money.” So it’s important to have kind of the ability to have the strategy, to make sure if something like this does happen, you don’t want less income, you want to keep it the same, and then also to be ready to adjust. So if there’s a market pullback, it’s “Hey, what do I do now?” So that’s important when you’re building the plan or strategy that you can manage it and adapt to whatever’s happening in what environment you’re in.

Nick McDevitt: One of the things that we found with people that we kind of tend to have an honest conversation with them about is, you know, we figure out how much do they like to have in savings at their bank, because they feel that that money’s, you know, accessible and easy to touch. And then we go through and we kind of go through an exercise and figure out what’s their personal pain point, or what’s going to make them comfortable. How many years of expenses sitting in cash or something close to cash is going to make them feel comfortable? And then what we’ve found is that when we maintain that, they feel a lot more comfortable, because overall the objective is to make sure that they don’t make any rash decisions. So managing that short term money has tended to be an exercise that’s made people feel more at peace with what’s going on in the short term with the market.

Marc Killian: Yeah. Well I mean, that makes sense. You know, so, I mean a lot of times you’re going to have to find these places to be able to compensate and deal with the fact that it’s going to do that. So, you know, if you’re looking at having just a challenge in general of not having a paycheck anymore in retirement, it’s going to come with several things, not just the loss of the check because hopefully you’ve got those retirement accounts that are going to create those funds for you, but really a lot of times, again, it comes down to kind of maybe the mental hurdles that we need to kind of get used to in the transition from working years to retirement years. Would you agree?

John Teixeira: Yeah, I would agree with that. And I think the worst thing that as a planner, I think that we see sometimes, is where, you know, working with someone that has enough money to really enjoy their retirement and they don’t do it. Especially in the first few years, because they’re afraid, again, of not having a paycheck, and it’s really those, you know, I hate to say it, but your first five, ten years of retirement should be the most exciting because you’re able to do more-

Marc Killian: Right. Sure, yeah.

John Teixeira: … as far health goes. So you don’t want to waste the first five years just looking at your balance and saying, you know, “Can I spend this or not?” You really want to be comfortable with doing that, which you know, Nick just mentioned there. We really like to get people’s kind of comfort point as far as how much, you know, how much do you like to have in the bank and as long as they feel comfortable, they make better decisions, and ultimately, you know, you’re doing all this to enjoy retirement and really, you know, have your wish list and start checking those things off.

Marc Killian: Yeah, I mean that makes a lot of sense because you do want to get out and what do they call that? The go go phase of retirement. When you first get there, you want to be able to enjoy it.

John Teixeira: [inaudible 00:09:50] Yeah.

Marc Killian: Yeah, and not look at the market, you know, not tune into these TV shows like as we mentioned at the top of the podcast, and get ourselves all worked up because they’re going to lead with, you know, doom and gloom anyway, right? So they’re going to make everything sound, you know, just terrible. And so if you’re sitting there stressing over that or watching of that, certainly no way that you want to enjoy your retirement. So having a good plan in place, will certainly lead towards that. Well, what I think we’ll do is next week on the podcast we’ll talk about some strategies to create a paycheck, since we are talking about no longer having a paycheck anymore on this week’s show.

Marc Killian: And so I think with that, I think that’s pretty good thing. We’ll wrap this up this week on the podcast. We hope that you got some useful information from it. If you’ve got a question or concern, again, always reach out, don’t hesitate. Give them a call at 813-286-7776. That’s 813-286-7776. Call John and Nick at PFG Private Wealth. They are an independent RIA. They are financial advisors here in the Tampa Bay area. And don’t forget to go to the website, pfgprivatewealth.com, subscribe to the podcast, listen to it on whatever platform of choice it is that you like, whether it’s Google, Apple, iHeart, so on and so forth, whatever, Stitcher, whatever different platform you like. So reach out to them at pfgprivatewealth.com that way. And for John, for Nick, I’m Marc, we’ll talk to you next time here on Retirement Planning Redefined.