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the first year of retirement isn't always the dreamy Escape many people imagine no it's not maybe one of the most significant transitions in your life it was for us and it probably is going to be for you and that's because it's filled with all the unexpected challenges roadblocks and adjustments you have to make in this new pH and I think it's really important to understand that if you fail to navigate this first year you might find yourself questioning your entire decision to retire and today we're going to give you some strategies to feel empowered to overcome any of the struggles you might find do we ever feel like we made a mistake and we should still be working I do sometimes do you I do back in your corporate life I oh my good I do I know but listen and I'm sure some people do maybe but if you're new here I'm Mark Rollins and this is my wife Jody Rollins we don't focus on the financial aspects of retirement but rather life lifestyle Health relationships and more and we're so happy you're here today and it really would be helpful to us if you could share this video with anyone else that you know or care about that's in their retirement Journey too and you know join our free Facebook community at retirement transformed we go live each week and offer guidance support strategies to make this chapter the best it can be so before we jump in I want to remind you that this first year of retirement really sets the foundation for all the future years to come so you want to be able to equip yourself with the knowledge that you need you want to stay proactive and embrace this new Journey with a lot of confidence you know we know dozens of people who are floundering in this first year of retirement and it's really not pretty to watch I was at a bridal shower this past weekend and a woman across the table from me said um you know I heard her talking to someone else and she said I'm terrified and I thought oo this will be an interesting conversation we're at a bridal shower I'm not sure what there is to be terrified about but she's a teacher and this is her last year so in June she's done done after 35 years of teaching the third grade and she said I'm I'm literally terrified I don't know where to start that is scary and it it's scary for everyone I'm not saying it's scarier for a teacher or doctor whatever but if this is all you've known and you know teachers have a special kind of thing they they work from the middle of August through the end of June and then I have the summer off right and you do that for 30 40 years right and it's a routine that you're comfortable with and you get enjoy it you get fulfillment right what do you how do you feel that so the first year is really really important to get that right my dad screwed it up big time I mean he without a doubt he's a good example of someone who made a lot of mistakes in his first year and I you know I I tell people that retirement actually killed my dad because he just didn't know how to get through this first year and set himself off in a spiral which yeah he was he was unprepared and a lot of people do enter this phase of their life maybe prepared financially but unprepared emotionally and with all of the kind of red flags that start to come their way you know your dad really just couldn't reinvent himself he lived in the used to world yeah it was it was bad but you know we do know plenty of people who think this phase is easy and for some people they actually make the transition smoothly but for others like my dad you know like I said it can actually kill you if you don't really get it right so we should cut the mystery and jump into what people really struggle with yeah and I think the first thing we see in people that we know and clients that we have and talks that we have given as well as the research that we do is this major loss of identity that hits you probably a week or two after you retire ire yeah and for a long time whether you're a teacher or a doctor or a lawyer or an insurance agent or a corporate executive we derived a lot of our selfworth from our job roles right I mean that's just the way it was and it you know when you first got out of college and started your job it was one thing but by the time you ended up you were at a much higher very senior level in your company and that was your identity and when that identity no longer exists you really find yourself in a strange danger zone right you know without an identity in retirement you can have feelings of worthlessness and and really have a hard time finding your purpose and passion so it's really a reinvention of source so in your first year this is going to happen you're going to lose your identity and you really need to start thinking about creating a new one you don't want to go too long like my dad did and spend the next 10 years holding on to or feeling sad about losing your identity you want to make a new one it's really really important now the other thing that people struggle with in the first year of retirement is financial concerns and that's normal right because you're moving from a time in your life when you have a steady paycheck or an expense account or whatever it might be health insurance all of that is just coming at you automatically yeah and then it stops it does stop and then you have your nest egg and Market volatility can add to your stress you know if you've planned properly up to that moment but then have to make different financial decisions moving forward maybe riskier or less risky Investments depending on you know how you're advised you find yourself in a little bit of a budgeting process that becomes really crucial to how you're going to live this first year well it's a good point and we spend 30 40 Years of our life accumulating assets right just adding to it adding to it adding to it 401 okay whatever it might be but then that stops and now you go into this new phase called uh decumulation where you're actually taking your savings and your assets and living on that and that is mentally is a really hard financial concern so in the first year you've really got to make sure that you figure that out and get comfortable with it and have a good plan a good financial plan or you know really nail your financials yeah really and then you know we hear a lot from people you know that they're bored they're bored in retirement you know they don't really have a routine that they can stick to and they really struggle that first year getting away from you know the the structure and accountability that they had with their work days just this morning I was down watching the sun come up and I ran into my friend who retired a year ago and he keeps himself busy but you know I was checking with him and say how's it going cuz it's it's okay it's okay how's your you know how's your new uh career that you're doing he's a he's a writer now and he's writing he said well it's interesting you know I watch you guys on YouTube and you talk a lot about um having routines and I find that it's easier not having a routine which it is but then he doesn't do what he wants to do which frankly is harder if you don't have some routines built in and some plans for your day in the first year of retirement you're going to get used to not having routines you're going to get used to not getting things done and you're not going to like it you just are not going to like it so I think that it's easier to have routines maybe harder to get moving in that direction but once you have them your life becomes so much easier I don't know how you think about no I I agree with you I do know we get a lot of push back on people who want to just abandon routine because they've lived 35 or 40 years in a strict routine and I really advise people I think it's okay to let it go for a little while but not too long so that you know as they say the proverbial horse is out of the barn and now you can't get it back you wake up every day what am I going to do today that is not a good position to be in for a whole year for sure now the other thing that you can struggle with and you might struggle with right out of the box when you leave your career is social isolation I know for me I had you know 80 people working in my company I was the CEO and I had great relationship with these people and it was kind of like Fridays were what are you going to do this weekend what's going to happen Mondays were how was your weekend what did you do how are the kids how are the grandkids all of this stops right and then it's just you and me I really I really it's important to remember that um you know those relationships that you had at work even extending out to you know I knew a lot of you know my co-worker spouses and their children and I watch them grow and go through college you know you have that longevity of your story your relationship story with these folks and some of them you will bring with you but a lot of them get kind of left behind in the situational kind of friendship bucket um so the big message here is you need to is to replace it you've got to find Community whether it's joining a health club or you know we do pickle ball we talk about that a lot going back to church or religious institution Social Clubs community centers Gym classes gym classes reaching out to your friends make a list of all your friends and start contacting them because you don't want to struggle with social isolation in your first year it's really going to bring you down you know and the fourth thing that we really wanted to talk about was your health and physical activity because I know we did this when we retired you know we were like you know we're just going to go ahead and relax and eat and drink and just sleep late and you know we got a little sluggish there for a while and it wasn't healthy for us and we did course correct and um you know not saying seven days a week you know 30 days out of the month we're always on track we do stay on the health and wellness you know Mission because as you age health challenges come your way it just happens well the other big thing that you could find yourself struggling with is when you first retire in your first year depending upon your circumstances with your partner in in this case jod and I as a married couple that relationship can struggle because we both had work we had our careers we had time at home but every all the Dynamics change when both of you now are home all day long and Frank of this business for us is really helpful because it gives us something to do together but we also do a lot of things on our own we do and and you know while the business is helpful it adds stress and boundaries become even more important I think so if you're starting a business in retirement which we should maybe do a series on that we are we definitely are because there is some Milestones that we uncovered well the other thing that people struggle with in the first year is getting used to setting goals like you said a lot of people say gosh you guys do all this planning and stuff but you need to if you don't set some goals for yourself because you were used to that during your career right you set work rated Milestones um you might find yourself without goals a little bit aimless and at least having personal goals on your physical or whatever it might be yeah I think the big difference with goals is now you have a chance to hold yourself accountable and your goals can be aimed at things that you're really interested in right and then if you're really interested in for example I've been trying to I've been practicing I don't know that I'll ever end the practice but you know different things in yoga and I set goals for for myself no one else is holding me accountable I mean you would have no idea no I but you come home and you tell me about the new stances like the the the one-legged chicken is that one of the things it is not one but we'll do a whole another yoga series I guess well I think again having goals is really important and you know just a a couple more things your emotional well-being it's easy to get in this first year and all of a sudden find yourself sad and down and cre uh you know that stuff will will creep into your life if you're not doing everything we said you know what's funny about this this emotional well-being one because I'm so sad all we actually had a little bit of a tussle this morning you think and sometimes I wonder if in retirement you have more time to think about things mhm and you know maybe you create a mountain out of a mole hill you think no no no what is this I didn't do that yes you did my finger never you're the one that built this huge mountain this morning out of a mole hill so you know I wonder if this is something to really focus on you know you know recognize emotions that you have and consider even you know seeking some counsel on it so now I need a therapist for our relationship this this whole first year of retirement can be very very difficult without a doubt definitely it's meant to be fun and exciting so we don't want to find ourselves in a rut and unsure what to do next yeah I mean trust us when it when we tell you if you get into some good rhythm in your first year the rest of your retirement can become all that you dreamed of like our retirement right that's so funny we hope you enjoyed this video and if you did this next one a happy retirement is in your control we talk about how to bring healthy habits into your life so that you can flourish in retirement so watch this one next
Presenter 1: Welcome to the CalPERS Your Retirement Calculation video. Before we get to the main presentation, let’s take care of some housekeeping items. To provide you with a future reference, and make your note taking easier, we’ve provided a learning guide for this presentation. You’ll see the link to the learning guide in the YouTube description box. This video will stay posted here on YouTube, so you can come back and watch again if you need to. Please note that due the large number of participants, even though the chat feature is active, we won’t be able to respond to member questions during this video. In today’s session we’ll discuss how your retirement allowance is calculated. This includes going over the three factors used in the calculation of your monthly benefit. We’ll then put it all together by showing you some example calculations. Your CalPERS pension is a defined benefit plan, which means that your pension is calculated using a formula and not by how much you’ve contributed to the system. There are three factors that make up this formula. The first factor is Service Credit which is your total years of service with all your CalPERS employers.
Second is the Benefit Factor which is the percentage of pay you’re entitled to for each year of service credit that you’ve earned. And third is the Final Compensation which is an average of your highest monthly pay rate. When you retire, we’ll multiply your years of Service Credit by your Benefit Factor, and then multiply that result by your Final Compensation which will give your Unmodified Allowance. The Unmodified Allowance is what you’ve earned and the highest monthly amount you can receive when you retire. For more information on the unmodified allowance and the other retirement options available, read our publication, Planning Your Service Retirement, which is Publication 1. In the coming slides we’ll review each factor in more detail. So, let’s begin with the first factor, service credit. Service credit is earned during your time spent on the job at a CalPERS-covered employer.
Service Credit is earned on a fiscal-year basis, July 1 to June 30. Your service credit earned is based on the manner in which you’re paid. If you’re paid on an hourly basis, it takes 1,720 hours to earn one full year of service credit. If you’re paid daily, it’s 215 days of fulltime work. And if you’re paid monthly, it takes only 10 months fulltime within a fiscal year to earn your one year of service credit. If you earn less than this, you’re earning partial service credit. This is an example of how service credit is earned on a fiscal year basis for a member who’s paid on a monthly basis. July 1st is the beginning of the fiscal year. If you work full time in the month of July, you’ll earn one tenth of a year of service credit. If you continue to work full time through the rest of the fiscal year, you’ll earn another tenth of a year for each full-time month worked until you get to the end of April, when you’ll have a year of service credit.
Notice that you only have to work ten months full time to earn a full year of service credit. You can’t earn more than a year of service credit in a fiscal year so because you’ve earned a full year of service credit by the end of April, you won’t earn additional service credit in May and June. But most of us don’t start working on July 1st.You probably started working part-way through the fiscal year and may have noticed on your Annual Member Statement a fractional number of years. Something like 22.525 or 7.783. Let’s say in this example that you started working full time in the middle of November. Since you only worked half a month, you earned .05 of a year of service credit for that month. You then worked full time the rest of the fiscal year. Notice that because you didn’t have a full year of service credit at the end of April, you continued to earn service credit in May and June.
At the end of this first fiscal year, you have .750 of a year of service credit. If you continued to work full time then the next statement would read 1.750, then the one after that 2.750 and so on. So we’ve just covered how you earn CalPERS service credit, but did you know that there may be service credit that you’re eligible to purchase? We encourage you to make any eligible service credit purchases as early as possible because it may save you money and you may be able to pay it off prior to your retirement. We’re going to look at the three most common types of service credit purchases. First is a Redeposit of Withdrawn Contributions. If you were previously a CalPERS member, left your CalPERS-covered employer, and took a refund of your contributions and interest, once you’ve come back into CalPERS membership you can redeposit these funds plus interest and restore those years of service credit.
You may have worked for a CalPERS-covered employer in a position that did not qualify you for membership at the time. This may have been a permanent/intermittent, part-time, temporary, on-call, or seasonal position. Now that you’re a member, you may be able to purchase Service Prior to Membership. Additionally, if you served in active military service, you may be able to purchase up to four years of Military Service Credit. All State and School members, as well as members of Public Agencies that contract for this benefit may be eligible. You may have served in the military while employed by a CalPERS employer. If you are granted a military leave of absence and then return to CalPERS-covered employment, you may be eligible to have service credit for the time served on active military duty credited to your account at no cost.
It’s important to check into this as soon as you return to work as this is not done automatically. You must submit the Military Leave of Absence Request form along with your DD-214. There are also several less common types of service credit that may be purchased, for example a layoff, certain types of leaves of absences or time spent in the Peace Corps or AmericCorps*VISTA Service.
If you’re considering purchasing service credit, you should review the appropriate publication which provides the types of service credit available, eligibility for each type, and what is needed to submit the request. The publications are A Guide to Your CalPERS Service Credit Purchase Options, Publication 12, or for military time, the Military Service Credit Options, Publication 15. These publications can be found on our website. If you believe you’re eligible to purchase service credit, you can apply for service credit purchase, through your myCalPERS account. Notice there’s a service credit link. There you’ll find eligibility requirements for the different types of service credits you can purchase and links to additional forms and publications. As you go through the application process, you will see an estimate amount of the cost to purchase service credit. If we find you are eligible, we’ll send you the service credit election package. If you want to make the purchase, you must make the election by the expiration date provided. The next part of the calculation is your benefit factor. Each of you works under formulas that define a range of percentages used in your calculation at retirement.
This percentage is called the Benefit Factor. The Benefit Factor defines the percentage of pay you’re entitled to for each year of service credit. Benefit factors start at age 50 or 52, depending on the formula you are under with your employer, and when you were hired. If you’ve worked for more than one CalPERS employer you may have more than one retirement formula. If that applies to you, we’ll calculate each separately based on the service credit earned under each formula and then add the totals together. If you’re unsure of your retirement formula, you can log in to your myCalPERS account. Select Retirement Summary from the Retirement dropdown tab, then scroll down until you see service credit history.
This section provides your retirement formulas, employers, and a breakdown of your service credit by employer. Your benefit factor increases with each quarter year of age or every three months, based on your birthday. We call these birthday quarters. For example, if your birthday is March 10, your birthday quarters would be June 10 for the quarter year, September 10 for the half year, and December 10 for the three-quarter year. You may want to pick a retirement date that coincides with one of your birthday quarters in order to receive a higher percentage of your final compensation. You must retire on or after your birthday or birthday quarter to receive an increased age factor. Once you reach the maximum age for your formula, your age factor no longer increases, but you can increase your amount of service credit and rate of pay, which increases your monthly benefit when you retire.
If you’re a state and local safety member under the 3% at 50 formula, you don’t need to worry about the birthday quarters because the percentage is fixed at 3%. Let’s take a look at an example of a formula chart, in this case, the 2% @ 62 formula. This formula applies to you if you were first hired into a miscellaneous position on or after January 1, 2013. If you’re under a different formula, the numbers are a little different, but the concepts are still the same. The percentages you see within the chart are the range of benefit factors available to you. As you can see, on this chart, they start at age 52. This factor increases each quarter year from your birthday, up to a maximum age which in this example is age 67.
Using the birthday quarters, we just went over, in this example, if your birthday is March 10 and you retired at age 62, the benefit factor would be two percent. Three months later on June 10, the formula increases to 2.025%. Then on September 10 it increases to 2.050%. If you were to retire on September 9, just one day before your birthday quarter increase, then instead of the higher factor of 2.050% being used, you would stay at the previous factor of 2.025%. To find the chart for your formula, visit our website at www.calpers.ca.gov and search for benefit factor charts. Now let’s go into the 3rd part of the calculation, Final Compensation. First, it’ll be helpful to define what compensation is, then we can talk about final compensation. Compensation is defined as payment to employees for service performed during normal work hours or for time during which employees use vacation, compensatory time off, sick leave or other types of leave. Your employer may report items of special compensation in addition to your base pay rate.
Special compensation may include payment for special skills, knowledge, abilities, work assignments, and so on. Check with your employer to find out what types of pay are reported for you. The final compensation used as part of your calculation is based on your highest average full-time monthly pay rate for either 12 or 36 consecutive months of employment, depending on your employer’s contract and when you first became a member. It is not based on your earnings. For example, if you work part-time, your earnings are lower, we still use your full-time equivalent pay rate to determine your final compensation although you are earning less service credit working part-time. Some Safety formulas have a cap on the percentage of final compensation that can be received. The final compensation for school employees who work 10 or 11 months a year will be calculated based on the actual number of months worked within the period to be used.
This averaging will lower the final compensation. Additionally, you may have time where you worked under the Public Employees’ Pension Reform Act, or PEPRA, and time where you didn’t, called classic membership. If this situation applies to you and you have service under both PEPRA and classic membership, then the highest final compensation earned under each formula will be used to calculate the time in that formula. Let’s look at an example of a final compensation calculation if you planned to retire on November 1. In this example, the final compensation period is 12 months. Final compensation starts on November 1 the previous year, 12 months prior to your retirement date. For the first 6 months from November 1 to April 30, your pay rate was $4,400 per month, for a total of $26,400. On May 1, you received a raise so the last six months from May 1 to October 31, your pay rate is $4,600 per month, for a total of $27,600.
We take the total amount of $54,000 and divide it by 12 months to arrive at the average final compensation of $4,500. If you’re under a 36-month final compensation, the averaging process works the same way. Now let’s talk about the final compensation adjustment. If you don’t contribute to Social Security, there is no adjustment. Also, if you’re a school member or a new PEPRA member with a public agency or California State University, you are not subject to the final compensation adjustment. If, however, you contribute to Social Security while working under your CalPERS employer, then you’ll be subject to an adjustment to your final compensation, which is $133.33. The amount you contribute into CalPERS is not based on your full monthly earnings, there is an excluded amount.
Because of this excluded amount, there is an adjustment made to your final compensation. The adjustment is the same no matter how much you earn. This is a one-time adjustment during the calculation process. It is not a monthly deduction to your retirement check. If you’re subject to the adjustment, it’s automatically calculated in your retirement estimates. If we use the average final compensation of $4,500, we calculated in our earlier example and subtract the $133.33, this results in an adjusted final compensation of $4,366.67. This adjusted final compensation is then used to calculate your pension. If you have multiple CalPERS employers, you may have some service that is coordinated with Social Security and some that isn’t. The adjustment is applied ONLY to service that is coordinated with Social Security. Now that we’ve looked at each of the factors that go into your pension calculation, let’s put it all together.
First a quick review of what was just covered. Your retirement calculation is based on a formula. The three factors in this formula are your years of service credit, the benefit factor based on your age at retirement, and final compensation. Any increase in one or more of the three factors can mean a higher pension at retirement. To help us make a little more sense of this, let’s look at a retirement calculation with some numbers added in.
In this example, you work for an employer who contracts for 2% @ 62 retirement formula. You have 25 years of service credit, and the benefit factor is 2% based retiring at age 62. Multiply 25 years by 2% benefit factor which results in 50% final compensation. We then multiply that 50% with the adjusted final compensation of $4,366.67. This provides your monthly unmodified retirement benefit of $2,183.34 per month. So what would happen if you decide to wait another six months before you retire? You will have increased your service credit to 25.6 years and because you waited six months, your benefit factor increases to 2.050%. We multiply these together to equal 52.4% of final compensation. You’ve stayed six months longer under your higher payrate which increased your final compensation to $4,566.67. When we multiply that with 52.4%, we get the unmodified allowance or your monthly retirement benefit of $2,396.59. By waiting six more months to retire, your unmodified allowance or pension increases by about $213 a month. Now that you know the basics of how your retirement is calculated, you’ll want to run your own numbers. The Retirement Estimate Calculator found in your myCalPERS account allows you to run various scenarios, such as if you took a higher paying position, or maybe you want to see the difference between retiring at age 62 or waiting until 65.
You can run estimates for both scenarios and more using the calculator. And you can save your estimate scenarios for review in the future. If you have specific questions that weren’t answered, there are several ways you can contact us. Log into your myCalPERS account and send a secure message. Schedule a virtual or in-person appointment. Select the appointment reason provided that best fits your needs. Another way to contact us is by phone. Our CalPERS representatives are available from 8-5 Monday through Friday. In most cases, they can assist you in a single call. Call us at 888 CalPERS (888-225-7377). This video will stay posted here on YouTube, so you can come back and catch what you might have missed.
All our previous videos are also available on our YouTube channel. You’ll also have access to the link for the learning guide. Our presentation today was intended to provide you information on your retirement calculation. Please note that CalPERS is governed by the Public Employees’ Retirement Law. The information in this presentation is general. The Retirement Law is complex and subject to change. If there is a conflict between the law and the information presented in this presentation, all decisions will be based on the law. Later today, you’ll receive an email with a short evaluation. Please answer all the questions as it’s important for us to get your feedback to help us improve these presentations. Thank you for taking time out of your day to attend this presentation and have a great day.
must i convert my 401k to gold individual retirement account if you'' re seeking a new destination for the funds in your 401k and you want something that doesn'' t very closely comply with the stock market or the economic climate then a 401k to gold individual retirement account rollover could be a great option that stated it'' s constantly vital to diversify your financial investments can i roll my 401k into gold and silver individual retirement account 401k accounts from past companies can be rolled over right into self-directed silver or gold ira accounts a new 401k strategy with a present employer or may be paid out can i convert my 401k to physical gold by buying medals you'' re taking activity to safeguard your retirement cost savings with a financial investment that is backed with the tangible possession of physical gold and not the buck fortunately is you can quickly roll over your 401k right into a gold individual retirement account to do so is a non-taxable occasion and there are no penalties just how does a gold individual retirement account rollover job once the gold individual retirement account is open you can begin the rollover you have two rollover choices indirect or direct through an indirect rollover you take the cash out of your retirement account and placed it into a gold individual retirement account with a direct rollover the funds are moved immediately from the retired life account to the ira can i relocate my 401k right into silver individual retirement account a 401k only gives you investment choices that your company or plan chooses when the funds from your 401k have been deposited in an individual retirement account they can be utilized to buy gold or silver rc bullion makes surrendering an old retirement cost savings plan from a previous employer easy for you how do i roll over my 401k to gold scot-free exactly how do i move my 401k to silver scot-free just how to relocate 401k to silver or gold without charge one pick a gold ira firm 2 open an account three initiate a distribution or rollover from your existing retired life account for fund the gold ira account five pick the valuable metals to keep in the gold ira to read more about just how to roll over your 401k to a gold ira visit https colon slash reduce www dot cold age 401 convesting dot com lower gold individual retirement account rollover lower click link in the summary listed below
Even if it's my goal to continue working longer, what would I do for healthcare, for example, if for some reason I'm not able to continue working until I'm Medicare eligible? What is a safe withdrawal rate for me from my investment portfolio if I need to retire earlier than I expected to? Morningstar's Personal Finance Guru joins us for part two of our Building and Better retirement series on Consuelo Mack WEALTHTRACK. Announcer: Funding provided by ClearBridge Investments, First Eagle Investments, Royce Investment Partners, Baird, Matthews Asia, Strategas Asset Management and Women Investing in Security and Education. Mack: Hello and welcome to this edition of WEALTHTRACK.
I'm Consuelo Mack. There are few tasks more fraught with financial challenges and anxiety than planning for retirement and replacing a work paycheck with one from savings, ostensibly to last a lifetime. It's especially daunting against the backdrop of 2022's broad-based market decline and the new era of higher inflation, rising interest rates and the threat of recession. This week's guest describes herself as being passionate about simplifying retirement portfolio planning. Amen to that! She is Christine Benz, Morningstar's widely followed and admired Director of Personal Finance, a position she has held since 2008. She is here for the second of our two-part series on Building a Better Retirement. If you missed the first installment, you can see it on wealthtrack.com. Well, this week Benz is discussing retirement blind spots. She has identified six of them and she's going to help us fix them. The retirement blind spots are: retirement date risk, sequence-of-return risk, low-yield risk, inflation risk, health care / long-term care risk and longevity risk. She certainly ticked all of my boxes.
Now, how to mitigate those risks and what steps to take to solve them. I asked Benz to address them one by one, starting with retirement date risk. How big a problem is it? Benz: Well, this is simply that we tend to not be great judges of when we might retire. So there was a survey that Pew Research did several years ago where they asked pre-retirees approximately when they thought they might retire. And one trend that you see in the data is that people tended to think that they would be able to work longer than they were actually able to work. So many people identified kind of in the period from 70 to 75 as the period when they thought they might hang it up. Well, in reality, when they tracked those same folks about their actual retirement dates, they found that people were not able to delay retirement that long. So the short answer is that we tend to not be great judges of when we might retire. And there are a few reasons why this is the case.
One is the health situation, either our own health or our spouse's health or parental health may pull us out of the workforce. We know that ageism is a thing in our culture. We know that some folks who might have the intention of continuing to work may not be able to. They may have a job that's physically untenable to continue to do later in life. So there are a lot of things that can complicate someone's plans to work longer, which is one reason why I get very nervous when I talk to older adults who say, Well, my plan is to continue working until I'm 70 or 75 or whatever it is. As Morningstar contributor Mark Miller often says, that's a worthy aspiration. It's not a plan. Mack: So how do you resolve that? Clearly you can't anticipate it unless you're self-employed, in which case you're the one who's going to fire yourself. So that's right. There are some people – or keep your business going, whatever it is. Benz: Well, it's tricky, but the key thing is that you need to stay flexible.
And I think for older adults, it's really valuable to kind of have a contingency plan in mind. Even if it's my goal to continue working longer, what would I do for health care, for example, if for some reason I'm not able to continue working until I'm Medicare eligible? What is a safe withdrawal rate for me from my investment portfolio if I need to retire earlier than I expected to? What would I draw upon if I needed to pull from my portfolio? Do I have safe liquid reserves that I could draw upon if I were shoved out of the workforce in a year like 2022 when stocks and bonds went down at the same time? So I think you want to kind of build up, build in that contingency plan.
And then also top of mind is have a backup plan for some other form of work and maybe it's consulting in your field that you've built your career in. Maybe it's a completely different career path. But if you can find some sort of paid remuneration to tide you over in those early retirement years, that can go a long way toward helping your plan last and helping ensure that you're not having to invade your portfolio when it's at a low ebb. Mack: In part one of this series on building a better, more resilient retirement plan, and you've certainly talked about how to handle that from an investment point of view. So I just want our audience to know that, and they can see that on wealthtrack.com. The next blind spot that you mentioned is sequence-of-return risk. So explain that. And it certainly is, you know, uppermost in our minds after what happened with the markets in 2022.
Benz: Sequence-of-return risk is something that retirement researchers really worry about. And this is basically the odds that early on in your retirement, often when your portfolio is at its largest, you encounter a really bad market environment that either features dropping bond prices, falling stock prices, high inflation. Well of course, we had all of that come into play in 2022. And so what retirement researchers really worry about is that a period like that stretches on for a period of 2 or 3 years or even longer. And if the retiree is simultaneously pulling too much from that portfolio that's dwindling, that is a very bad thing. And that can leave less, leave fewer assets in place to recover and heal themselves when the market eventually does. Mack: One of WealthTrack guests, Mark Cortazzo, who I know you know, is a financial planner, has given us two matching portfolios, equal amounts of money, but showed what happens if you retire in a down market like 2022 versus a market where the stocks and bond prices do really well afterwards. And it can just be devastating in those first couple of years of what happens to you and how quickly you can run out of money.
Benz: Well, that's absolutely true. And that's where we got the 4% guideline for safe withdrawal rates from, where William Bengen looked back over market history and tried to identify, well, what would have been the worst period in market history to have retired into. And he identified the period of the late 1960s to early 70s as the worst starting period in modern market history, because you had a convergence of bad events where you had the '73 '74 bear market for equities, which some of your viewers may remember, you had high inflation after that, and then rising interest rates to help curtail inflation. And that, of course, clobbered bond prices during that period. So that's the period when researchers look back into history that they home in on as the type of environment when you want to be very, very careful. I think it's too soon to say whether we're sort of in a period like that. But coming into 2022, there were certainly a lot of storm clouds gathering for new retirees specifically that we had very low yields on fixed income and cash securities. So there just wasn't much of a buffer for bond investors.
When bond prices decline, they felt the full brunt of that price decline because there wasn't much of a yield there to cushion the losses. Mack: So, Christine, let's take that worst-case scenario that we are in a period where we could be going into like a lost decade or a period, as you just described in the 1970s, for instance, of high inflation, poor market results. What do we do? Benz: Well, I think two key things.
So if you are accumulating assets for retirement, if you're not yet retired, don't worry about it. That this sort of environment is your friend accumulating assets at lower prices. But if you are someone who is just on the cusp of retirement or you've just retired, I would say that a couple of key strategies can come into play. One is if you can find a way to reduce your withdrawals in those bad market years that redounds to the benefit of the sustainability of your plan. So if you can pull in your belt a little bit in those tough years, that's the first thing you can think about. And then the second thing you can think about is just make sure that you've built a portfolio that includes safe assets that you could spend from. If we go through a period where stocks go down and stay down and we have, say, another lost decade like we had in the early 2000s, the idea would be that you would build yourself kind of a runway of cash investments, perhaps short and intermediate term, high-quality bonds that you could effectively spend through rather than having to touch your depreciated equity assets.
So those are the two things: curtail withdrawals if you possibly can, and also build a portfolio that includes safer assets that you could pull your withdrawals from. Mack: You were talking about yields and one of the retirement blind spots that would have been operative a couple of years ago is the low-yield risk. Now that's changed. So how much of a risk are yields now? Benz: Well, it's gotten so much better.
We had this war on savers going on for the past couple of decades, really, where we saw this steady drip drop downward in terms of the interest rates that you're able to earn on safe investments. The good news story of the very bad market environment we had in 2022 is that yields are much, much higher today on all manner of cash and fixed-income investments. So you don't need to stretch to obtain a decent income stream from a cash or fixed-income portfolio. And I would say that this is the kind of thing that kind of ebbs and flows over time if perhaps we have a recessionary environment going forward.
I think it's a reasonable thing to kind of think about that yields could, in fact, drop from here and you'd want to be able to adjust if, in fact, that happens. So another thing to keep in mind, in a recessionary environment, if we see yields on safe investments drop, we will probably also see the prices of higher risk, fixed income securities see price declines as well, because we typically see them move in sympathy with equity markets during recessionary environments.
So for me, that's kind of a caution against overly gravitating toward higher yielding, lower quality fixed income securities because they do tend to be pretty equity-like and do tend to respond negatively in a recessionary environment. Mack: You know, as you mentioned, if interest rates do drop, which they do, if we do go into a recession, then the longer-term high-quality bonds like Treasuries will do extremely well because bond prices go up when interest rates drop. Benz: Definitely the high-quality fixed income is just a superb ballast for equity portfolios. We saw it in the great financial crisis. My guess is that in some other recessionary environment or economic shock, we would see a similar pattern where high-quality bonds would really earn their keep. Mack: Now, another retirement blind spot that you've mentioned, which is quite real now is inflation risk. How can we resolve how can we mitigate the inflation risk? Benz: It's a huge risk factor. It's a risk factor for all consumers, people of all ages. But I think of retirees in some ways as being especially vulnerable for a few key reasons.
Some of the categories that older adults spend more on, notably health care, have historically been inflating at a higher, even higher rate than the general inflation rate. So that's one risk factor. Another risk factor is that if you have safe investments in your portfolio and retirees inevitably do and should have safer assets in their portfolio like cash, like bonds, Well, on an inflation-adjusted basis, you're going to kind of get eaten alive. Your purchasing power will be gobbled up. So that's another reason that older adults tend to be more vulnerable. And then a key issue is that even though a portion of your income stream in retirement is going to receive an inflation adjustment, so specifically, your Social Security benefits will get a very nice bump up.
We saw Social Security working exactly as we would hope over the past year in this inflationary environment, The portion of your portfolio that you're withdrawing for your living expenses is not automatically insulated against inflation, which is why it's so valuable to think about adding that inflation insulation to the portfolio. Mack: And give us some ideas of adding inflation protection to your portfolio. What would you suggest that we look at? Benz: Well, a couple of key categories. One is within that fixed income position, the fixed income allocation, I would hold a complement of Treasury Inflation-Protected Securities and or I Bonds. And when we look at the allocations that my colleagues in Morningstar Investment Management would recommend, they would typically say 25 or 30% of a retiree's fixed income holdings should go in bonds that have those explicit inflation protections. Mack: That's a fairly sizable portion. That's a quarter or more of your fixed income.
Yeah. Benz: And probably more than many retirees have. I tend to like the short-term TIPS, short-term inflation-protected bonds because they provide more pure inflation protection without a lot of the interest rate volatility that come along with intermediate-term TIPS. But retirees should check out that within their fixed income holdings and then equities, we know over long time periods, even though they're by no means any sort of an inflation hedge, they do tend to outearn inflation over long periods of time. We typically see that equity return being higher than the inflation rate. I would expect that that pattern will likely persist into the future, which is one reason why I would say even conservative retirees should take steps to hold stocks in their portfolios simply because they need that growth potential that comes along with an equity portfolio.
Mack: And Christine, as far as the Treasury Inflation-Protected Securities, you can buy them directly, you know, at Treasury Direct.gov, but you're talking about funds. So what are some of the funds that Morningstar recommends to buy TIPS. Benz: So investors can go either route. I would keep it very plain vanilla here, and that's probably a recurrent theme with me. I tend to like the funds that give you a lot of diversification and very low costs. So most of the big firms do run good quality core and even short-term TIPS funds. One I recommend and to the extent that I put together model portfolios: Vanguard Short-Term Inflation-Protected Securities is a fund I really like because of its rock bottom costs and kind of a no-nonsense approach to portfolio construction. So that's a good strategy and I think one that can make sense in retiree portfolios.
Mack: And you mentioned another blind spot is health care and long-term care risk, especially. Describe how significant that is and also how we can mitigate it. Benz: Many people think, oh, I'm Medicare eligible, I'm home free. But Fidelity does these annual reports on how much a 65-year-old couple will expect to spend in health care outlays, out-of-pocket health care outlays over their retirement time horizon.
And the most recent run came around, came in around 315,000 for that 65-year-old couple. And importantly, that does not factor in long-term care expenses. So it's a big number. A couple of key messages is, one, you're not paying for it all at once that, you know, typically will be paying for it on an ongoing basis. And your health care costs can really vary a lot, certainly by your own health situation. But also geography is a big swing factor that in more expensive geographies, certainly in big urban centers, people tend to spend more on health care. They may receive higher quality health care, but they will pay for it. So kind of customizing your own situation, thinking about your own situation, certainly to the extent that people are still accumulating assets for retirement, to the extent that they can be mindful about setting aside a component of their retirement assets to help meet health care needs explicitly can make a lot of sense.
I'm a huge believer in health savings accounts for people who are covered by a high-deductible health care plan. If you can start on this when you're young, fund that HSA to the max and then that is like gold for you coming into retirement because the funds go in pre-tax, they accumulate and can be invested, accumulate interest on a tax-free basis and then their tax free withdrawals for health care expenses. So it's just a terrific account type to bring into retirement, but you need to be covered by a high deductible health care plan in order to be able to contribute to one.
Mack: No the HSAs are fabulous. But for retirees, for people who are on Medicare, I mean, they really need a good supplemental health insurance plan. Benz: Absolutely. And good prescription drug coverage as well. And it's also important to re-shop that drug plan every year because your own needs may have changed and what's covered within your plan may have changed. So even though it takes up a little bit of time, if you can do that, a little bit of hygiene every year with your coverage just to make sure you're getting the best possible deal given the drugs that you're taking, that can be time extremely well spent.
Mack: Longevity risk is the final retirement blind spot. And I don't know how you anticipate or plan for that. What's your advice as far as handling longevity risk? Benz: It's such an important consideration, Consuelo. One thing I would say to your viewers is that we see a very strong correlation with income and wealth and longevity.
So my guess is that many of your viewers will be higher income folks who have done well in their careers, have amassed substantial assets. That's great news on many levels, but it does tend to mean that you will live a longer life and will have a longer retirement. So for couples who are, say, in their mid-60s or individuals in their mid-60s who are in fairly good health today, I think it's reasonable to plan for quite a long retirement where you'd want your portfolio to last 30 years or even longer. And so that argues for being conservative in terms of your portfolio withdrawals, not taking too much early on especially. And it also argues for having a balanced portfolio that includes plenty of growth potential. So you'd want to have ample stock exposure, not 90% stock exposure, but probably some sort of a balanced asset allocation because you need the growth potential that comes along with stocks.
Mack: And Christine, we also have in our audience, you know, people who are not as well-to-do and or are aspiring to be. Since so many people don't have a defined benefit plan any longer, they don't have a pension plan. So what about annuities? Benz: And I'm so glad you mentioned that, Consuelo, because annuities, especially with higher interest rates that we have today, that really embellishes the case for annuities in a lot of ways because an annuity, a very simple annuity, which is the type of product that I would tend to favor, is just a contract with an insurance company where they pay you a stream of income that will last for your whole lifetime. So it can be a terrific product. You don't need to have a lot of assets to have an annuity.
And one strategy I really like is just look at your household's fixed costs, your very basic outlays for housing and food and insurance and taxes. Tally those up and try to see if you can match your certain sources of income, your Social Security, plus potentially an annuity, with those fixed outlays. And that I think will just give you a lot more peace of mind with that long-term portfolio. It can get buffeted around. We can encounter more years like 2022, but you'll know that you'll have those very basic income outlays set aside without having to worry about your portfolio. Very basic, immediate annuity or even a deferred annuity that will start paying you at some later date can be really effective ways to embellish your lifetime income in addition to Social Security. But job one is get the most you can out of Social Security because that's the best annuity-like product that any of us has.
Mack: Is there one investment for a long term diversified portfolio that would actually address these retirement blind spots? Benz: Well, one fund that I really like, and I'm not sure that it addresses each and every blind spot, but Baird Aggregate Bond is a fund I would call out. I know you've had Mary Ellen Stanek on your show many times. She is absolutely terrific, Co-Portfolio Manager of this fund, Co-Chief Investment Officer at Baird. And what I like is that this fund is very high quality. So we've talked about, you know, the types of investments you would want in your portfolio in some sort of a recessionary environment. And this is a fund that I would expect to perform very well because it's high quality and low-cost fixed income portfolios.
Mack: Christine Benz Such a treat to have you on WEALTHTRACK for your annual appearance once again, and thank you for giving us two interviews about building a better retirement plan. You've really helped us tremendously. Thanks, Christine. Benz: Thank you so much, Consuelo. Mack: At the close of every WEALTHTRACK we try to give you one suggestion to help you build and protect your wealth over the long term. This week's Action Point is identify your retirement blind spots and take steps to fix them. Are they retirement date risks? It turns out for many people that decision is out of their control. Sequence-of-return risk? Last year's miserable markets made us all more aware of how important timing can be to long-term financial security. Inflation risk? It's a heightened reality for all of us now. And of course, should we be so lucky? Longevity risk is a challenge for many of us.
Depending on where you are in the retirement cycle, a few or all of these blind spots can be key issues. This is as good a time as any to talk to your family and your financial advisor about them. Next week we'll have another in-depth interview to learn about strategies you need to build and protect your wealth over the long term. In this week's Extra feature, we asked Christine Benz to share which financial blind spots are especially meaningful to her and how she is handling them. Please follow us on Facebook, Twitter and our YouTube channel.
We appreciate the time you spend with us. Have a super weekend and make the week ahead a healthy, profitable and productive one. Announcer: Funding provided by ClearBridge Investments, First Eagle Investments, Royce Investment Partners, Baird, Matthews Asia, Strategas Asset Management and Women Investing in Security and Education. Mack: Hello, I'm Consuelo Mack. Every week on WEALTHTRACK we sit down with great investors and financial thought leaders to talk in depth about strategies you need to build and protect your wealth over the long term. Join us on Consuelo. Mack. Wealthtrack.
– Hi everyone, Bill Lethemon
here for MoneyEvolution.com. In today's video, I'm
gonna be talking about five things that you should do when you're five years
away from retirement. Okay, so right off the bat,
number one is get organized. So, if you're planning for
retirement you might have a lot of your financial information scattered into a whole
lot of different places. Maybe you've got some
401(k) plans at work, or maybe even an old
401(k), some IRA accounts, maybe your spouse has
some retirement plans or old pension benefits. So the first thing you wanna
do is really kinda bring all of that information in together.
We also wanna start to, in that process, start identifying how some
of those retirement resources are gonna be able to work for you to provide you with the retirement
lifestyle that you want. We call it your retirement gap. So fortunately, we've got
a couple of tools available to help you with this process. One of those, and we'll
put a link right below today's video, we just
recently launched our 7 Core Elements of Retirement Planning video series and action plan, so that's kind of a
do-it-yourself type of a plan where you can start to
get some of this financial information organized. And of course, we also do
financial planning as well. We call it our WealthVision
comprehensive financial plan where we do it for you. So we'll put links to both
of those below today's video, but number one is get organized.
Number two is we wanna
look at how we can kind of optimize some of those
retirement assets that you have. We call this shift money
to tax advantaged accounts. So as you approach retirement, for a lot of people, we
find that your cash flow tends to improve or get
a little bit better. Maybe your kids have
moved out of the house, you're done paying for college, they're kind of
self-sufficient on their own. Hopefully if your career
and your job is going well you're maybe making a
little bit more money. So you might have a little
bit more cash flow available to save money for retirement.
But we also wanna look at where some of those
monies are being saved. And what we find for a lot of people is if you have money in
non-retirement accounts, taxable accounts that you have to pay income taxes every year on, are there ways or opportunities for you to shift that over into
tax advantaged accounts. And we find for many people, there are. So take a look at, are you
maxing out your 401(k) plan? Some 401(k) plans allow you
to save an additional 10% in an after-tax savings vehicle. There's a recent tax
law that now allows you to move that money directly
to a Roth IRA account, even if you're over the income limits.
You can contribute money to IRA accounts or Roth IRA accounts, there's
lots of strategies there, but can we shift money from
one side of the balance sheet where you're not getting
that tax advantage over into a retirement
account, is number two. Number three is know
your healthcare options. This came up recently, and it was listed as one
of the number one concerns for retirees going into retirement is how much is my healthcare gonna cost? And understanding that is very important because it's some big,
big price tags on this. If you're working, and
your employer is offering healthcare insurance now, you
wanna visit the HR department. Find out, well, what do they do, do they do anything for you in retirement. Is there any options to
continue that healthcare, especially if you are gonna
be retiring prior to age 65 when you're eligible for Medicare. If you're married, check out
what your spouse offers too and compare those different plans, start putting together some ideas of how much that healthcare is gonna cost because you don't wanna
get blindsided by that.
In fact, there was actually a recent study that JP Morgan did a couple years ago, and they actually said
that if you had to go out into the exchanges, the
Affordable Care Act exchanges, for a 64-year-old it would
cost you about $8400 a year per person for just a Silver Plan, so that's not even the top-level plan. So understand what those options are, check with your employer,
that's number three.
Number four is you wanna think
about your plan for income. So, hopefully, if you've
done some financial planning, you've identified some of those gaps, you know where those gaps are. And what we find oftentimes is especially early on in retirement, where your income and expenses still may be a little bit more variable, you wanna understand what
some of those gaps are and how much money will you
potentially have to pull out of those retirement accounts. Are you eligible to take money out of those retirement accounts? Are you over 59 and a half if it's an IRA, are you over 55 if it's a 401(k)? You don't wanna get
hit with any penalties. Start planning out what that
income strategy's gonna be, and maybe having some of that money in a little bit more
conservative type of investments so you're not blindsided by,
oh my gosh, I'm retiring, I need to take $20,000 out
of a retirement account and guess what, the stock market's down. So think about that plan for income and where's the money gonna come from.
And then number five, I love this one, because I think it kind of fulfills two issues here with retirees, and it's consider a semi-retirement. So I think the idea for most of us, and in fact what I think
about my own retirement when that happens, the idea of
working 40, 50 hours a week, and then all of a sudden one
day just throwing in the towel and never working again
sounds a little bit abrupt. So we've been talking to a lot of clients about semi-retirement,
and easing your way into a retirement situation where maybe you go to a part-time status, maybe you do some
consulting for a few years, or maybe you just do a job that
you've always wanted to do. Maybe it doesn't pay a lot, but it's fun, and you enjoy doing it, and
it can also help to sustain some of that early
retirement spending needs that you're gonna have as well.
So again, and especially
if you wanna do strategies like maybe delay social security benefits, having some of that semi-retirement income can really help fill
some of those gaps there. So think about semi-retirement,
that's something that can be done during
the planning process where you can see how
that income might help your overall financial situation. That's it for this video, there you go,.
Well it's great to be with you all again it's
another video day for us – It is – So things that we wish we knew before we retired almost
sounds like a country music song there Tina – And I guess you must be feeling lucky
today Norm – Oh yeah got my lucky shirt on so because we're filming been to
Costco – Got the great deals haven't we – We have so one of the things that we wish we knew
before we retired was how free it is how stress free no longer having to get up and go through the
morning ritual of preparing yourself to go to work and being accountable to somebody else all
day long it's wonderful to be accountable to your own self and your partner that's it
you're your own person and it's such a freeing feeling and we saw that with Tina when she gave
up work the amount of stress we hadn't realized until a few years after retirement just how
different she was she'd lost all that stress of meeting quotas and all that good stuff – And I think
I'll just add Norm that when you're actually doing the job you actually don't think it is stressful
you don't think you are under all this stress until you stop it do something else and
you think wow this is a lot better we like this it's great so just being accountable to ourselves
we love it don't we – It is totally life changing – One thing that we do think is very important
before you retire is you do need to have a discussion with your partner as to what it is
that the ideas that you're both thinking you have when you're going to retire you do need to
have some goals about, do you want to travel do you want to garden or do hobbies do you want
to stay home you really do need to have that conversation to make sure you're both on the
same page – I think it is it is important and we hear a lot from some comments especially
married women who are saying that their husband their frightened the husband will get under their feet
because he'll be hanging around all the time in retirement but that really isn't the case – Not
for us is it – We've been secure as a couple for the longest time and retirement hasn't changed
how we feel about each other and about what our expectations of each other is it's not as if
we've all of a sudden being locked up together in retirement (no) so it is important to figure out
what you both want out of retirement and to have that discussion a few years before you actually
do retire (yeah) one thing to bear in mind is the first few years of your retirement you'll
be your most healthy so just use that health and strength that you do have in the early years
to achieve some of the goals that you want – Yeah and if you want to be traveling do it while
you've got that – Don't think about traveling if that's on your list just do it right away – Yeah
absolutely and that's what we've done isn't it when we retired we just traveled everywhere
didn't we it was great – About two years before we retired we had an inspector come to the house
for I don't even remember what it was but it was some form of home inspection that we had to and
so we got chatting with him because he was a few years older than us but not that much and he told
us that he had a house very similar to ours that he had sold and now he was living an apartment
and he went through the whole process of them and how they moved to the apartment and how
it was such an improvement on their life and it was something we'd never ever considered
– This was big news to us wasn't it we never even thought about renting an apartment – We had been
homeowners since we were 19 years old so to rent we had that preconceived idea that it was throwing
money away but the more that we looked into it so after he left the next couple of days we spent
many hours thinking about this we did a budget of how much it cost to keep our mortgage free
home – Yeah crunched all the numbers – And what the rent would be and if we had sold the house and it
made more and more sense to us to sell the house to downsize into an apartment bank the money
from the house live off that as an investment and that's what we did – And that's what we did didn't
we – But had that guy not come to our house we might never have come up with that idea – No because
originally we had thought that we would just buy a smaller house didn't we – That's right yeah
– So part of our decision when we had actually now decided that we were going to rent and we realized
that would take care of we wouldn't have all this maintenance and stuff like that to do we decided
after we started looking at apartments that if we moved to a cheaper area could we benefit by
getting the same as what we wanted in an apartment but would it cost us less money so the more
we looked into it we did have a family member who lived in a cheaper place so we looked
at the equivalent of renting an apartment in this new place and it was so much cheaper
wasn't it Norm – Because we initially thought we would just sell our house and stay in
the same area so we started shopping for apartments to find out how much they cost and the
availability and we were pretty surprised that at the expense of them but we were prepared
to pay that (yeah) and then we came to a what you would call it a small town that's cheaper
(yeah) we came to visit a family member here and so we started looking around at the apartments here
and they were substantially cheaper about $800 a month cheaper than where we were initially going
to – Yeah and not only that Norm there was a lot of extras with it wasn't that we got there was
underground parking and what else a swimming pool – And laundry facilities in the apartment – And that
was one thing the gentleman had told us he didn't have on-suite laundry he had it in a laundry room
so we wanted that – But coming to the cheaper town it wasn't just the rents that were
cheaper everything was cheaper the Tina's hairdresser as we've
said in the past was cheaper it just permeated everything so our budget became
so attainable (yeah) by moving – That gave us a lot more money to be able to travel didn't it because
we thought if we can save money on a daily basis and it worked perfect didn't it – It did it was
great, take a look at that if you do have family that live in an area that might be cheaper or
just consider going not knowing anybody – No it's like a new adventure isn't it a new chapter in
your life because we've made friends here and they don't have any family just here but they've
made it a new place for them haven't they – A lot of people have moved out of the big cities to a
small town because it's it's far more conducive to retirement (yes) and friendlier another
thing that you really need to consider is where your friends are going to come from
in retirement because once you leave work those friendships tend to wither away because
the only common bond you have was your job your workplace so we've never
really had lasting friendships from work colleagues they've always been outside
of there so it's it's critically important to continue looking for friendships in retirement
and being outgoing and prepared to speak to people Tina when we moved to this apartment building
they did have a social room and they did a coffee morning and so she would go down there and we
found out so much information about the town and businesses to use – It was great wasn't it – It was – It
was kind of my mission wasn't it to find out new information and to try and make new friends
which we did and we made some fabulous friendships – Well in particular there was one couple that Tina
made struck up a friendship with and they in turn have introduced us to another couple yeah and then
they in turn have introduced us to another couple so that's how it goes – Yeah so now we've got
a group of really close nice friends that we socialize with don't we – And the thing that we have
in common isn't an employer it's being retired – It is isn't it – It really is so don't be afraid
of striking out to a new city a new town because it's relatively easy to make friendships
– Yeah you just have to push yourself out there a little don't you and be confident to going to
things and it's very exciting isn't it so we hope that everybody is staying safe – And keeping
well – Until the next time bye bye, bye bye