Transcript: Episode 135: Am I OK?

Click here to Listen to this Podcast (30 minutes)

In this Podcast:

• Our goal: to make sure clients are going to be okay
  • Meeting with clients continuously every quarter
  • “Let’s look at it again”
  • Ensure success and ensure stability
  • Everyone’s timeline is unique
• Do I have enough money to retire?
  • Managing your “total lifetime tax bill”
• Can my money sustain high inflation?
  • Do you have an inflation hedge?
  • Take advantage of high interest rates where possible
  • A silver lining: fixed interest has gotten much, much better
  • Envision a sustainable lifestyle in retirement
  • Retirement is like “six Saturdays and a Sunday”
• Leave money to the next generation efficiently
  • Have a succession plan for your business
  • Investable assets and sellable assets
  • Real estate, multifamily properties and rental income
• Social Security
  • The longer you wait on Social Security, the more money you get
  • The longer you wait, the less time you have left to live
  • Social Security income is not fully taxable, and not state-taxable in Massachusetts
• Budgeting
  • An easy way to try and save money is looking at what you’re actually spending money on.
  • “Small c” conservative approach
  • Little things can add up to large expenses on a monthly basis
  • Eliminate unnecessary apps and subscriptions

Narrator:

This is Retire South Shore Radio, a weekly program designed to educate you on all your retirement options and introduce you to mark Rowlette, founder of South Shore Retirement Services for the latest on free seminars. To obtain a report or to set up a consultation, please visit RetireSouthShore.com. Retirement Services and real world retirement solutions. Looking at the whole picture to design a complete strategy including retirement planning, Medicare decisions and legal documents. Now, here’s Mark Rowlette. And your host Jordan Rich.

Host Jordan Rich
Hello and welcome. This is Retire South Radio, of course – Jordan Rich as mentioned – and with me, Mark Rowlette, the founder and president of South Shore Retirement Services in Hingham. It is fall Mark. I know it’s not too late to go fishing. But this fall, where did the summer go?

Mark Rowlette

It’s interesting that you say that the fishing, I was hopeful that this weekend, my boat was going to be returning to the south shore to Scituate where I keep it some of the time.

And we always talk about preparing and planning and building strategies to go through retirement and have enough money in retirement. And as much as you can put best laid plans together, something sometimes happens that throws things off. And for me, it was setting aside a day last week where I was not going to have to be in the office and run the boat up to Scituate. But Mother Nature decided that wasn’t going to be the case, because of the weather.

So some stuff you can’t predict you can’t control. And as a result, I will be looking for another window.

Host Jordan Rich
And the best laid plans are sailors everywhere. We all know about that. Well, today, I think it’s vital that we focus on a key question. And that’s the question on the minds of so many people who are close to or in retirement and that is “Hey, am I going to be okay in that these times are turbulent?” Am I going to be okay, well, I have enough income to support my lifestyle. And to be okay. It’s a huge question that we’re happy to tackle here.

Mark Rowlette

Yes, absolutely. Do I have enough money to retire? And it’s interesting, you know, we have a lot of clients that were preparing years in advance for the retirement and you’re mapping things out. But you can see that look in their eye or their general disposition when they come into that meeting. I had like three of them last week where they are right on the cusp of retiring like weeks, or maybe a month or two away from retiring. And they want to know, alright, let’s look at it again. I want to make sure that I’m going to be okay, that I’m going to have enough money. We talked about it over the last few years, we positioned things in the right way. We’re putting enough money away and you told me yes, we’re going to be fine. Let’s look at it now. Because this is happening. This is going to happen next week, next month, whatever it might be.

Host Jordan Rich
Well, proactively, the idea is you do take steps to ensure success and ensure stability. I know that’s the watchword of your organization, South Shore Retirement Services. But it’s funny I mentioned the fall and the winter are right around the corner. And if you were here with us at this point last year, your heating bills would be about the same as they had been the previous year. Now the heating bills are going to, if not double, come close to it. So things are in flux, no question about it, and you hear the question all the time. So what we’d like to do today is have you explain and maybe allay some of the fears if the proper planning is in place?

Mark Rowlette

Like you just said, stuff has gotten more expensive. Inflation is soaring, the market is extremely volatile at the moment, and the Fed is trying to curb things long term. But in the short term, these rising interest rates are having an effect on everybody. So that is the mother of all questions. Am I going to be okay, do I have enough? So what are some of the things that maybe you should be looking at or should be thinking about? One of the main things is understanding your financial position. What assets do you own that you can use to fund your retirement? How much do you plan to spend each month? In today’s dollars, try to map that out to say, alright, well, what do I need? And I say that because I have meetings with people. And you know, sometimes you can tell I’ve been doing this for a long time, you can tell if they’re arbitrarily just throwing out a monthly number. And sometimes that number is too low. And you know it’s too low.

They think they only need $2,500 a month, I’m like, well, let’s break that down. You know, are you going to get a haircut or you’re going to the grocery store or jump into the Starbucks line once or twice a week? Or they go the other way, and they say “I think I need $7,000.” And when you map it out, they don’t need anywhere close to that. And it’s amazing when we’re building it out in our software.

The differential in $250 a month over a 30-year period adjusted for inflation is enormous. So making sure that you have a fairer idea of what you actually need every month for your “need-to-have” expenses. And the other stuff, the fun stuff, the trips every four or five years or seven years, whatever you decide, or buying a new car and things like that. They don’t necessarily have to be mapped out on a monthly basis.

Host Jordan Rich
You mentioned assets. And that’s, in a sense, a technical term that all of us can relate to. But understanding what you have, and the value of things that don’t appear to be hard currency is really impressive when you start to break it down. If you could get into a bit more of that.

Mark Rowlette

Trying to understand where your money is, what sort of money you have, what sort of lifestyle you envision yourself having in retirement – and is that a sustainable lifestyle? And then that question at the end of every All Hands Analysis for us is, what do you want to do? Do you want to be able to leave money to the next generation? How do we do that in the most efficient way possible? So you bring up the concept of gathering a list of your specific assets and investments. And when I say that, and when most people who do what I do say that people just assume I mean, their investments, right? Or stocks, bonds, mutual funds, ETFs, annuities, savings accounts, whatever it might be. And that’s one of them. You know, I mean, those are definitely what we would call your investable assets. But there are also sellable assets that a lot of clients have. And what I mean by that is, clients have businesses. I have multiple clients that have businesses that some businesses are obviously really sellable, really quantifiable, and sellable.

Some businesses are more service businesses, and when the client steps away from the business goals, there’s no value to it. But look at what you have. And if you have some sort of a business like that, what sort of income is that generating for you now? Where do you see that going in the future? Do you have some sort of succession plan or you’re handing it down to a son, daughter, son-in-law daughter-in-law? How are you going to transition that from a monetary standpoint out.

Then start looking at income assets as well. Lots of our clients have real estate, they have a multifamily or many multifamily properties, or they have an in-law apartment that they’re using for rental income. So trying to break down your specific assets and seeing what the future is going to hold for those assets obviously puts you in a much stronger position to know what your monthly income is going to be when you actually transition into retirement. And then looking at like stress testing, that we talk about stress testing every week – what would happen if the market went down three years in a row? What would happen if inflation stayed either at the rate it’s at now in the 8’s or even stayed at five or 6% for 10 consecutive years? Could your money sustain that?

I think for a lot of people, the answer that they would immediately have is, “I don’t know.” So I would suggest, seeking professional advice. Obviously you can contact our office, but talk to people who look at these things and map out a strategy that has all of these what-if scenarios, and the hope is that none of them occur? But the reality is that some of them will.

Host Jordan Rich

The technology is so far advanced, and these kinds of answers in the in the hands of professionals are easier to access than ever before. But if you’d like a question answered, right now or very soon, you can make an appointment to get that answer with the 15 Minute No Obligation Strategy. Call it literally a chance to get a specific question answered. And it happens throughout the week. You can schedule it to go to RetireSouthShore.com or call 781-836-4214 as the office number, somebody will get back to you first thing Monday 781-836-4214. And again, I would venture to say that most people coming in and most people making that phone call or asking the same question were posing today. Is it going to be okay for me and my family as I retire? Am I going to have enough money? So we’re exploring some of the options and some of the things to consider and I’ll have you continue on that.

Mark Rowlette

Psychologically, it’s a very difficult transition for many people to go from that job where they got up every morning, drove to work, did their job, got paid, came home, and repeated that, you know, four or five days a week, whatever way you were working, and then to transition into retirement and have to create your own monthly income is very difficult for a lot of people. And nobody likes to hear the “B word” when we start sitting down and talking to them that the “B word” being budget.

But I think it’s important that you map out your monthly budget or track your spending, see what you’re spending money on. And I say this every single day, multiple times a day to clients. It’s not that we’re trying to put you on a budget, try to tighten your belt. It just makes sense to look at what you’re spending money on, and how that’s going to evolve over time. Because quite honestly, it can put you in a much more comfortable position if you’re realistic enough to know what you’re going to spend money on in retirement and what do I mean by that?

Well, the first 10 years of retirement, are going to look very different to the second 10 years of retirement are going to look different to the third 10 years of retirement. In the first 10 years of retirement, maybe you’re doing all the traveling that you didn’t have time to do, you’re doing a lot of more, a lot more fun stuff, right?

The next 10 years of retirement, maybe you’re starting to slow down a little bit, you know, your grandkids have grown, and maybe they’ve moved to some other parts of the country, and they’re starting to have children. So maybe you’re not doing as many things and you’re kind of saving money in that respect, and that you’re not constantly on a on a cruise or on a vacation, not that if that’s what you want to do, go ahead and do it.

And then the next 10 years of retirement, you know, years 20 to 30. Maybe your expenses, in fact go up a little bit. And some of the expenses go up not for good reasons, maybe somebody starts to get ill, maybe your doctor is someone that now you’re seeing three or four times a month as opposed to once or twice a year. Unfortunately, maybe somebody passes away, and it puts a little bit more pressure on the money. But when you map that out, and look realistically, and I guess when you’re talking to people like us who have done this so many times for others and have seen “Alright, well, you should be thinking about this, because this happens to eight or nine out of 10 people.”

It allows you to build your own inflation right into your retirement plan.

Host Jordan Rich

Indeed, we’re talking about the important question of the day on the minds of many – not just beating people retiring, but people just trying to make ends meet. We’re in a challenging time, not the end of times by any stretch of the imagination, but a challenging time. And for retirees, you know, most of us who are of a certain age have lived through periods like this, which is also important for you to remind people about. We have our common sense, and read the papers and understand basically what’s happening, but we kind of forget that things go cyclically. And in terms of economy.

Mark Rowlette

You can read statistics all day, and you see how many people are retiring. The baby boomer generation is just thousands and thousands of people transitioning to retirement on a daily basis. And for a lot of this generation, the baby boomer generation, it’s new territory for them, because when their parents retired, generally they retired and they had social security and a pension. Right? But now, there are so many more financial instruments and vehicles where you can save money, and there’s probably a lot less pension money.

So people are more anxious, because sometimes having control is a really scary thing. And they have control meaning that they, in their minds, could overspend in their money, and overspend not even from the perspective of they’re taking an aggressive amount of money out of their accounts. It’s that things are costing more as time goes by, inflation being the reason for that. Obviously, we want to make sure those clients are comfortable enough to know that if things start to go up, well, how do we address that? How do we hedge against the ever-rising cost of whatever it is that you’re deciding to buy? And I thought, after the break, I thought we would talk about some tips about how do you not suffer as much from the cause of inflation.

Host Jordan Rich

I’ll be listening and taking notes on that score as well. You’re listening to retire South Shore radio, go to retire associate.com And we’ll be right back.

(Begin pre-recorded segment)
When it comes to making key decisions about your retirement education is so important. So you’re invited to Register now for an upcoming free seminar on taxes in retirement, sponsored by the All Hands Analysis Team at South Shore Retirement Services. A host of informative taxes and retirement seminars are coming up this week, Tuesday and Thursday, the 27th and 29th at Davio’s Italian Steakhouse in Braintree at the South Shore Plaza, each one of these starting at 6pm.

And then October 12 and 13th also at 6pm, seminars are taking place at the Abington Ale House in Abington, very convenient and accessible locations plenty of free parking and refreshments are served. And you’ll have an opportunity to meet representatives from South Shore Retirement Services and learn more about such a key issue – taxes in retirement register now online at RetireSouthShore.com That’s RetireSouthShore.com

Narrator
You can’t get a second opinion from the person who gave you the first. That’s especially true when it comes to your retirement. You deserve sound advice from qualified professionals. And that’s what the All Hands Analysis team at South Shore Retirement Services is all about. Mark Rowlette founder and president of South Shore Retirement Services:

Mark Rowlette

Nobody should have to worry about running out of money in retirement. Our approach is simple. Build a strategy that can give you consistent income while allowing your money to grow while times are good. Consistent returns are critically important during your retirement, but I would argue that tax management and tax strategy are equally as important. It’s not just about reducing your tax bill this year. It’s about minimizing and being smart with your total lifetime tax bill, and that takes preparation.

Host Jordan Rich

Schedule your FREE 15 Minute Strategy Call today. Visit RetireSouthShore.com. Investment advisory services made available through AE Wealth Management LLC, AEWM.  AEWM and South Shore Retirement Services are not affiliated companies.

(End pre-recorded segment)

Host Jordan Rich

Welcome, this is Retire South Shore Radio, a place to come and find information and, I would love to add, to find some reassurance that things are going to be okay. That is the question, Mark, that you’re dealing with, with clients and new folks coming into the office all the time. The question on their minds is, hey, with all this inflation and all this market volatility, am I going to be okay? Am I going to have enough money to retire comfortably and safely? So I thought I’d ask you to continue to talk about the impact of inflation and how to deal with that impact in retirement.

Mark Rowlette

Some of it can be very proactive, looking at when and how you’re going to start taking money from various accounts.

Some of it can be more as you go along. Do we have an inflation hedge? And I thought I would just talk about some tips that people should be thinking about. I mean, one of them is when do we start taking Social Security. The whole talk is about, well, the longer you wait on Social Security, the more money you’re going to get from Social Security, that’s not wrong. The more money you’re going to get on a monthly basis, doesn’t necessarily mean you’re going to get more money out of it. Because the longer you wait, the less time you have left to live.

So what we look at is, on a case by case basis, when does it make sense for one or both people in a couple situation to actually trigger the Social Security. It’s not as cut and dried as “Alright, at 62, I’m going to get 1500 bucks at 66, I’m going to get 2000 bucks and 70, I’m going to get $2500 or $2600,” whatever the number might be, because mathematically that looks like the longer I wait, the better off, I’m going to be.

But if you’re having to pull money from other accounts, in lieu of not taking Social Security, maybe that’s not the best strategy for you. Social Security is more tax efficient, because it’s not fully taxable. It’s not state taxable in Massachusetts, it also doesn’t have any residual value to it. So if you miss-hit, nobody’s getting any money from that. So what we try to do is map out the most efficient way to get money or from whatever source (and social is one of those.) Not to say that people shouldn’t necessarily push it out, not to say that people shouldn’t necessarily take it early. It also depends on kind of family history.

I was with a couple earlier this past week. Everyone in the husband’s family lives late into their 90s, so the conversation around having taking Social Security early might not make sense for them. I think it’s very unique to a person’s situation.

It doesn’t necessarily have to be, you’re standing at the water cooler at work, and this is what my friend’s doing. This, they say, that’s the best possible thing. Well, they might not know your entire financial situation. So I think it’s important to map out a strategy that works for you, not necessarily one that just works for other people.

Host Jordan Rich

And everyone’s timeline is, as you say, unique. So time is definitely sort of on your side to use that old expression. Now, there are so many things to get to. I want to allow you to provide us with more info here.

Mark Rowlette

There are other ways to continue to maintain the purchasing power in your pocket, right? That the dollars that you have are able to buy the things you want to buy, and maybe get creative with how you’re spending money, like eating out. I love eating out. Lauren and I go out and we take the kids out, we go out by ourselves. But evaluate that. Just see how much money you’re spending eating out on a weekly or monthly basis. It’s not to say that you should be staying home and having a can of beans every night. But maybe you’re spending more than you thought you were spending on eating out. Maybe that run over to Dunkin Donuts or Starbucks twice a day, every day, seven days a week is quite a hefty bill at the end of the month, or the end of the year.

So just look at how you’re spending your money when you’re spending your money, especially in retirement because it’s not like you’re working full time anymore. And Friday and Saturday night are the only nights that you can go out Tuesday night is a lovely night to go out. And maybe that’s when you decide you want to go out. So I joke with clients, I’m like retirement is like “six Saturdays and a Sunday.”

So every day they can go out if they wanted to. So think about just being a little bit more creative with how you’re spending money, what you’re spending money on. I sat with a couple a couple of weeks ago, and we just kind of mapped out their budget. And then we were looking at their budget and they had like five TVs in their house. Just the two of them, with five cable boxes with five high definitions and like how many of those do you use? Just one. That seems like an awful waste of money and we kind of drilling down on alright, we can eliminate 150 bucks there every month. So why wouldn’t you do that? I think it’s important to enjoy your life though. I don’t mean to come off as everyone should be budgeting like crazy because, yes, life can be short, you should enjoy yourself. But life can be really long too. So you want to be aware of making sure that you’re not having everything that you want for the first 15 years of your retirement and nothing that you can do for the last five years if you’ve got a 20 year time line. So I think it’s important to have a balance there.

Host Jordan Rich You know, this is a public service. What you just did there are people now rifling through their cable bills and their telephone bills.

Mark Rowlette

I’ll probably get in trouble for this but it took me years to do it and Lauren and I got rid of cable like four years ago. We went just the internet base instead, not changed our lives at all and basically dropped our expense down by about 75%. So it was it was good.

Host Jordan Rich

Yeah, there are so many options, and that doesn’t apply just to prices and budgeting. It applies to the planning that people do in their retirements. And we all know friends and relatives who have done it their way and their unique way that fits them. So we’re focusing on that as we do. Just a quick reminder, the free 15-Minute No-Obligation strategy call is available to you. You set it up by appointment at your convenience, go to RetireSouthShore.com. There’s an easy grid system to make that appointment and again, no obligation whatsoever. Boy, Information is power. Wouldn’t it be great to get an answer to a nagging question? And there are other nagging questions, now. The most important question of all is, “Hey, am I going to make it through whatever economic turmoil is going on?” And that’s what you’re trying to answer for people.

Mark Rowlette

Absolutely. We talk every single week about, “am I going to be okay, am I going to have enough?” And that would scream, “Well, I don’t want to take a lot of risk.” I’m not telling people don’t take any risk. I’m saying I don’t know, until I actually sit and see on a case-by-case basis. I oftentimes say to people, you don’t need to take a massive amount of risk in retirement. So what’s the point? Why? Why would you want to. Listen, everyone wants to sit at that dinner table, everyone wants to be that person that, you know, back in 1995, I bought a bunch of Amazon stock for this. And now it’s worth this, everyone wants to have that story. But I think when you go into retirement, try to avoid, having that next big thing as a huge portion of your of your holdings. And I know that’s being very general, because maybe some people can afford to do that. But that skyrocketing stock could also hit the ground and go through the ground completely and devastate your retirement.

So while it’s nice to have that story, I think “slow and steady wins the race” across the board always. And how we position clients’ money still gives them an opportunity for great growth, if things go well, but not losing their lifestyle, or losing their retirement income. If things don’t go in the right direction.

Host Jordan Rich

Well, it’s an added stress, this “small c” conservative approach. There are so many ads on television and cable if and if you cut the cable that suggest invest in gold, invest in silver, take this opportunity, and you’ll make a million. I mean this, you just have be wary of all that, and take the steady course, the tortoise and the hare. But let’s continue with a few more before we wrap up.

Mark Rowlette

An easy way to try and save money is looking at what you’re actually spending money on. There’s lots of things that you’re spending money on, potentially that you didn’t even know. So use those grandkids that you’ve spent and want to spend so much time with. Have them look at your cell phone. My kids have done this for me too. Look at the subscriptions that you’re paying for, that you maybe don’t even use – your Netflix, your Hulu’s, the music, Amazon Prime. If you’re using it, awesome. If you don’t use it, don’t pay for it. These apps, and my girls have educated me on it where you get an app and it’s free. But you’ve said something and the signing on of that app that it’s free for a month, and then all of a sudden you’re getting a $2.50 charge a week on an app that you didn’t even know you had.

But you can go into your smartphones, and you can look at what your subscriptions are. And if you can eliminate some of those costs. Sure, that’s just more money in your pocket. I think one of the main points that I’m making here is to make sure that you know what you’re spending your money on. And I don’t mean, hey, we go to Dunkin’ Donuts. I know we go to Dunkin’ Donuts. I know we go out to eat. What about the money that you don’t even know that you’re spending? What about that gym membership that you forgot to cancel that is recurring every single month and you’re not using it, or you’re going somewhere else?

I think those things, the little things, can add up to large amounts of money on a monthly basis. And I think that’s an important thing for people to look at. I also think (and were kind of getting towards the end, because I know I run and I continue to talk and I could talk for hours about this stuff.)

We have a lot of clients that start looking at, “oh, I have two kids that live on the West Coast. I have one that lives on the East Coast and I want to spend more time with the ones on the on the west coast. So think I might buy a house out there.” And Damon Latanzi and I were with a client recently who was out on the West Coast and she was looking to buy a condo. Nothing elaborate, just a condo on the west coast. So she went out for the last month and a half. And we had set aside money that if she found a place that  was sitting there ready to go, that she could buy it. But she came back and said “You know, I’m not sure that I’m ready to buy a place yet. The big thing I want to do is I’d like to rent for a few years and just feel out different spots, feel out different places in that general area to see what I actually really like.”

She found a place for the moment that she can continue to rent. She likes to be able to go back to the same place every year for the moment, until she’s ready to buy, and I said well, “Let’s just do that. Let’s just rent,” I said.

We’d set money aside in cash waiting for her to buy a place. I said, “the silver lining to what’s going on in the world right now is that fixed interest has gotten much, much better.” So we could position that cash in short term fixed interest. And the interest that that money will generate will pay for the rent. So you still have the money sitting there should you find a place that you want to buy, but at least that money is creating the income that you need to pay for that extra expense. And now you have the freedom of saying, all right, I like this place in 2022. I like that place, and 2023, and so on, and so forth, until you find the place that you want to buy. So I guess just knowing what’s going on in the world, and that’s one of the things is that fixed interest savings accounts have all gotten better, and they will probably continue to get better as the Fed increases rates.

Host Jordan Rich

I’m sure that lady was smiling when you gave her that information. I love the fact that there are so many options and so many things creatively that can be done. And it doesn’t mean taking money out of your pocket and handing it over. It’s money you’ve already earned. It’s money you’ve already worked so hard for that’s now working for you. But again, it all comes back to the importance of planning with professionals – knowing where you’re going to go and how you’re going to get there. That’s the key to the whole picture.

Mark Rowlette

Preparing for anything in life puts you in a stronger position to actually achieve what you want to do. And I think one of the things I say a lot at seminars and webinars is whomever you’re paying to take care of your money, they should be helping you in a proactive way.

With us meeting with our clients continuously every quarter, whether it be face to face, Zoom, or on the telephone, it’s not just a check in just so they know that we’re here, it’s a check in to see what’s going on in the world. You know, I mean, that lady that I was just talking about, if I only met her once a year, we position that money to buy a home, and it wouldn’t matter for another, you know, eight or nine months for that annual review. But the fact that we were meeting her every few months to see what’s going on, and if there’s something we need to tweak and change brought up that conversation about:

A) while I’m not ready to buy yet I’m going to rent and

B) well, let’s make this cash actually make you some more money so you can pay for that rent.

I guess it’s good for our business, but there are too many people who have people who are helping them, who are not seeing them frequently enough to be able to understand the changes in the world, the changes in those people’s lifestyles to changes and things that they want to do. Meeting with people on a periodic basis more frequently than annually allows the people to understand what’s going on in their financial world. It allows us to understand what’s going on in their world, be able to make quicker changes and be able to react to things that are going on in the markets. Maybe we can help them position some assets that were just sitting on the sidelines waiting for that house to buy down the road and actually create some more income for them to pay for rents, for example, or any expenses that they have. That’s our goal, because yes, we started the show by talking about people want to make sure that they’re going to be okay. And that’s our goal: to make sure that they are going to be okay.

But if there is something that can be changed during the year as opposed to a once a year situation that’s going to create more income, it’s going to take pressure off of their money and ultimately take pressure off of them.

Host Jordan Rich

You’ve helped to alleviate concerns. That’s what you do. And that’s what we did here on the show and for follow up, people, please go to RetireSouthShore.com. Mark, a busy day, but have a great rest of the weekend.

Mark Rowlette

We’ll see you next time. Take care.