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Episode #524 - Retirement Plan Live: Mature Marriage - Managing Joint Cash Flow with Separate Assets
Roger: Show is a proud member of the retirement podcast network. You do not need to do anything terribly complicated 90 percent of everything that is talked about is just clutter.
Hey there.
Welcome to the Retirement Answer Man show. Roger Whitney here. This is the show dedicated to helping you not just survive retirement but have the confidence because you're doing the work to lean in and really rock retirement.
Magical moments happen when you least expect them. So last month in the Rock Retirement Club, we were having a meetup where I was teaching how to build very simple algorithms to make better decisions. Basically, building a little process. It was an open discussion and we were explaining what an algorithm was and how to go about and if then structure around not just retirement planning, but life to sort of simplify your life a little bit.
At the end of that, we were having an open discussion and a member spoke up. It was a woman who was in her mid-sixties. I don't know if she's ever spoken up before in a live meetup or even commented in the club. She had a ton of courage because she shared, hey, I have a great life. I've owned a business, and I have a lot of competencies in areas, but this retirement planning is so intimidating. I'm intimidated by all the things people say about Roth conversions and IRMAA and all that stuff. I'm intimidated by these very intelligent people that are talking about them, whether it's in the club or friends that she knows are spreadsheet geeks and just loving all the stuff. I'm scared, it's essentially what she said. I'm intimidated and confused and I have this great life, but I feel like I'm so inadequate. All these mistakes that I made in the past and all this stuff, I guess I should know because everybody's talking about this stuff. It was really a special moment. We had maybe a hundred people on the meetup.
Her courage to share that led to a discussion of how she is not alone. She is normal. She's what most people are. It's all the geeky people that just this is their hobby as much as anything else that are the most vocal, but she is what most of us are.
So, we had a discussion around how we've all made mistakes and we should have started earlier on this and we should not have done that. There was so much love and encouragement coming from the members of the club verbally and in the chat. She and I work through slowing down and focusing on one is you can do this. This is not as difficult as it seems, and you're not alone. Everybody feels the same way you do. You're just brave enough to Say it. That's a gift to everybody else that was listening. We wanted to affirm that and affirm that this isn't really as complicated as it's made out to be. It's just all this stuff coming in that clutters it. You could see the pain in her face when she says she has a great life, and you could see how this thread can taint that life in a negative way because of the intimidation and cause someone to close off.
So, we walked through and I encouraged her to go to the retirement masterclass and just take each little baby step because the whole structure is designed around little baby steps where I'm teaching the concept, I'm demonstrating doing it and say, okay, go do that. Awesome. Celebrate that. Let's go do the next little thing and the next little thing. I encouraged her to tune everything out and focus there.
My second piece of encouragement was when you get stuck or you don't have clarity. That's why we have the Clubhouse. We have a lot of smart, wise people that are ahead of you on this journey where you can say, I don't quite understand this concept or how to do that. No doubt, I know for a fact that other members will pour in how they dealt with that or where their struggle or where their solution was, and the coaches and I are there to help guide them in creating their own plan.
That's the power of surrounding yourself with amazing people. So, we all get stuck and we all feel like we fail. We all feel like it's not good enough. So many times, all of the clutter around all this detail stuff, which is in the big scheme of things, all about optimization, not having a feasible plan that's resilient, is where the issues are. So, I just wanted to share that because it was an amazing moment, and I'm so proud of her, and I'm so thankful that she had the courage to share. I think it really helped a lot of other people and hopefully has helped her on her journey.
So today on the show, we're going to do two things. one is we're going to have Mark and Mary. We're going to talk about how do they manage cash flow and get them started on figuring out, do we merge our assets or what do we keep separate? I think they have different opinions on that and it's important they're on the same page.
Then we're going to have an update from Sam, who is a single person that retired, I think we talked with her 6 years ago to see the journey that she's on. A lot of things have worked out the way she thought, but other things are dramatically different than what she thought. Excited to get that update.
I want to remind you to make sure you register for the live meetup, the results show with Mark and Mary in February first, Thursday night at 7 pm central where they're going to be live with us. We're going to walk through their retirement framework and have a discussion with them and you're going to have the ability to ask questions and share comments to have all of us work together. This will be a conversation where we can help them create a structure that they can take forward, but also you can learn a little bit too. So, you can register for that at livewithroger.com.
If you can't make it that night, register and we'll share a replay of this for you. In addition, because February first, we're opening the clubhouse, the Rock Retirement Club for you to join, and we want to invite you to join so you can build your own retirement planned and be focused on the right steps and have a community of over a thousand people all walking a similar journey that are there to encourage and assist each other. So, you can sign up for that at livewithroger.com.
With that, let's go chat with Mark and Mary.
RETIREMENT PLAN LIVE
Now it's time for Mark and Mary not to come on and talk about how to manage cash flow in a later in life marriage and have healthy conversation about money. As you probably already know, they are going through their own foundational challenges, and they've stepped away from the case study and we wish them the best. That said, we are going to continue on.
I got a comment on our YouTube channel, the Retirement Answer Man YouTube channel from Laura, and we post unique videos there once a week.
Laura said,
"I wasn't surprised at all that Mark and Mary decided not to move forward with Retirement Plan Live. When I listened to Mary's episode last week, all I could think was the two are not on the same page, possibly not even the same chapter or book."
Then Laura went on wondering why Roger was moving forward now with their situation with a faux scenario. The reason I enjoy Retirement Plan Live is I get to hear real life scenarios that I can hopefully learn from.
I replied to Laura, and I totally agree. But due to time constraints, we couldn't pivot in January, so we had to march on and make lemonade. But and I told this to Laura in the comments on our YouTube channel, we will have another Retirement Plan Live likely the first half of this year so we can get that full experience of hearing someone's journey. That said, we had a wonderful Rock Retirement Club member reach out to me personally and say,
"Hey. I was listening to the case study, and I know someone just like Mark and Mary, but they've been married for 7 years and are happier than ever."
She offered to connect me with Kay. Kay doesn't even listen to the show. Kay and I had a conversation and she was gracious enough to come on and answer some questions to talk about her journey in doing this. So, we're going to hear from Kay today.
But before we do that, I want to walk through just some of my experiences in navigating later in life marriages with clients, real world experiences. I think this starts off with conversations. If you don't have a foundation of respect and wanting the best for each other and being willing to compromise, it’s a nonstarter, and this may have been the challenge that Mark and Mary are facing. You have to have that foundation. We are in this together, and you'll hear that from Kay later.
When I think of conversations, I think of a lot of the work I did with Nick Kennedy in his coaching with the Townsend Leadership program and now his private coaching practice around what John Townsend, Doctor John Townsend identified as the 4 quadrants of relational needs. We're going to have a link to the conversation I had with Nick around those in our 6-Shot Saturday email, and it might be something good for you to revisit. Doesn't matter whether you're later in life marriage. This is true even if you're talking to the postman.
Basically, quadrant one is just to be present, just to be present when someone is talking. Quadrant 2 is to convey the good. Quadrant 3 is to provide reality and quadrant 4 is essentially to give advice.
We tend to always want to be in quadrant 4 but when we're dealing with difficult issues, and people are coming with different issues. It's important to be in quadrant one and just listen, really hear what they're trying to communicate. So, we'll have a link to that.
Because I think listening to the other party, restating what you just heard, and getting confirmation that you heard it accurately can go a long way in trying to get to a place where you can both get a little bit of what you want. I think these pre discussions establishing this in any relationship, but in a later in life marriage, bringing up these uncomfortable things early in bite sized pieces where you're practicing some good relational skills sets the stage for lots of little conversations. Some of them are going to be a little bit uncomfortable, and that's part of the process. Where it can really go astray is because the conversation's uncomfortable, you don't really have it because it won't go away and it won't be reconciled. That will likely lead to a bigger conversation later on and it could lead to destruction of the whole relationship. I think this is what Mark and Mary are challenged with.
So, what are some things you need to consider in a later in life marriage? Well, first thing I think is, what are the interested parties here? There's you, there's the other person, your spouse. We know those are two interesting parties. Both of you have your own assets, your own income, your own history that you're bringing to this later in life marriage, but you also have another layer of interested parties. You have ex-spouses, you have children, either adult or minor, that was the case in Kay's which we're going to hear. Those are interested parties in the relational part of a later in life marriage, but potentially in the financial part as well. It's good to bring those up.
Early on, I would suggest both of you have your own plan of record, and then you have a joint plan of record with the intent of slowly moving your individual plans into a joint plan that we can call a hybrid plan. So that's really important. Then when you're thinking of this, our plan, start to talk about who's covering what expenses, what expenses are joint that we establish, say, a joint operating account. Who's contributing what to that operating account? You know, we would think that it's 50/50, but I've had instances in my practice and you'll hear it from Kay a little bit later, where sometimes you have 2 individuals bringing very unequal assets or unequal incomes to the marriage. I have one instance where what was reconciled was it was one spouse was contributing 70 percent to the operating account where the other was contributing 30.
That can be an uncomfortable conversation initially. Both parties are going to have to understand where the other one's coming from to come to reconciliation on that, if that's the word. You can see how this can get a little bit messy, but they have to be had. Who contributes to that? What do you cover for your own separately?
If you have a child that's going to school, do you cover that from your separate assets? Or is the new spouse going to help contribute to it in some way? It's good to identify these things early. You're not going to get them resolved in a meeting. You're not going to get them resolved by a lawyer, really. You're going to have to iterate and have lots of little conversations.
Another consideration later in life, especially if you're bringing in children to the marriage or other interested parties is to start to understand what your intent is when you pass away. So, we have John and Betty. They get married later in life. Both have children from different marriages, adult or otherwise.
Most likely, Both John and Betty want to leave some money to their children, but they also likely want to make sure the other spouse is taken care of in the event that they pass. They don't want to leave their spouse in a lurch, so they want to make sure money is available to support their surviving spouse, but they also want a legacy for their children. What order is going to be individual. How do you navigate that? Well, I think it's really important that you understand as you're navigating this and discussing it, the order of titling in the order of the flow of assets and the implications. So, you can do prenups, which is a legal agreement, which is not necessarily a bad thing at all, but you have to be aware of this.
So, let's assume John and Betty, they're all in, and so they put all of their after-tax assets into a joint account. We are together. Joint tenants with rights of survivorship. The downstream impact of that is that when John or Betty dies, all of the assets that are in joint name will go to the surviving spouse and not be available for John's kids if John was the one to pass.
In fact, when Betty dies, it'll be based on whatever her will says, which might not include John's kids. You want to be aware of these things. I've had instances with clients where they're like, I trust the other one to take care of my kids as much as their kids. We don't need a legal agreement because you can get over legal for sure. This might be the other extreme.
They trust each other, which is fine. So joint tenants or joint accounts. You have to understand how that titling works because you can have transfer on death accounts. You can have trust driven distributions. I had one instance of one of my longest clients where they were later in life marriage, both had individual adult children, we'll call them John and Betty.
John passed away, the plan was when John passed away, all of his assets went into a trust, and that trust provided for the health maintenance support of Betty while she was alive and this operated towards the end of this journey, actually. So Betty has been drawing from that trust to supplement her assets and income in order to live the way that John and her wanted her to live. Then whatever is left in that trust will go to John's kids. Seems like a nice solution. Some of the downstream impacts of that that I've experienced and Betty has experienced is that one, Betty's had to draw on that trust a lot. There's not nearly as much as they probably thought would be into it. There'll be a little bit of assets there for John's kids, but not near what anybody probably thought there would be.
Second is that's created a different dynamic in the relationship between Betty and John's kids. They have a conflict because any dollar Betty spends, the kids aren't going to get. In this case, Betty's had to tap that for her health, maintenance, and support. It's changed that relationship. Hasn't totally soured it, but it's definitely changed that relationship. So, we have to be thoughtful of these downstream impacts.
Another example that I've walked with clients is I'll use John and Betty as an example, is John and Betty came to marriage, and they both needed the assets together, and if one passed, the other spouse needed most of the assets to be able to maintain their lifestyle. But they also wanted to leave money for their children. The initial thing is you have to carve the money out now in some way. But what they did was they were able to purchase a second to die life insurance policy, which is basically a permanent life insurance policy that pays out when the second person dies. So, they were free as long as they paid the premiums and the policy was enforced, they could spend down all of the assets that they had together. Then when one passed, the other one would still have the assets. Then when the last spouse passed, the life insurance would pay out to give some inheritance to the children. That did not fully replace what could have been but still honor those other interested parties.
But the key here is, and you're going to hear it in Kay's conversation, that it's a journey that you have to figure out together.
So, before we get to Kay's journey, I want to share Some feedback I got from a long-time listener who is married later in life.
"Hey, Roger.
I was not surprised about Mark and Mary. You got into a bit of a challenging conversation which caused lemonade making. It's been fun over the last 3 weeks listening because my wife and I are similar to Mark and Mary. Almost 9 years later, we are still figuring it out. It's not easy for sure.
Where we are is very clearly yours, mine, and ours scenario. Each of us contributes half of our monthly budget to cover expenses for our base great life and each of us has a portion of our nest egg that is allocated to the trust and that is going to be used for joint assets. It is free for us to decide how we want to use it in terms of interested parties, kids, etcetera. We're not quite sure if what's in our bucket is enough for 30 years. Let's hope that when we have to address that, that there will be money left in mine and yours buckets.
This isn't what I expected, but it is what it is."
So here we have a couple that's 9 years married. I'm guessing they're very happy, still figuring it out.
Let's hear Kay's experiences because she has a lot of wisdom in the journey that she had.
CHATTING WITH KAY
All right. We're here with Kay who reached out via a friend in a weird way to give her perspective on her journey of marriage later in life.
How are you doing, Kay?
Kay: Doing great. Thank you for having me.
Roger: Well, thanks for sharing your journey and whatever wisdom you've been able to glean. So, I'm just going to walk through the basics.
So now, Kay, how old are you?
Kay: I am 67.
Roger: Okay. 67, and your husband's name is Dale.
How old is Dale?
Kay: Dale is 72.
Roger: 72. These are not your real names, so we're just giving you some identity. How old were you guys when you got married?
Kay: Well, we've been married for 17 years. So, Dale was 54, about to be 55, and I was one week shy of my fiftieth birthday.
Roger: Okay. Okay. Were you planning on getting married when you first met, or was it just happenstance?
Kay: No. We dated for almost 3 years before we married. So, yeah, did we go into it thinking we were going to get married? Not really.
Roger: Okay. So, prior to being married, you’re 49, about to be 50. Have you ever been married before?
Kay: No.
Roger: Okay. Any kids?
Kay: No.
Roger: Okay. Had Dale been married before?
Kay: Yes.
Roger: Kids?
Kay: Two minor children. Yes. At the time we got married.
Roger: At the time we got married. Okay, and how were his previous marriages?
Kay: Not so great.
Roger: Okay. Well, obviously, I guess they didn't last, so not so great.
Kay: Yeah. Exactly, and he'd really have to answer that.
Obviously, they didn't last.
Roger: But so, there are some wrinkles in you two getting married. He had minor children, had had some previous marriages, and he was bringing children into the marriage.
From a stylistic standpoint, from a personality standpoint, can you give me a sense of who you are? Are you an engineer y type or a big picture type. How do you usually approach things?
Kay: Myself?
Roger: Yeah.
Kay: Oh, that's an interesting question. I knew how to answer it for my husband, but I don't think I'm probably as big a picture person as he is as far as the financial area goes. Because I was on my own for so long, I didn't make a whole lot of money. Obviously, I made enough money to make it, and I owned my own home. But I pretty much I don't want to say paycheck to paycheck, but I didn't plan out of these, whereas he's excellent in that area, and I've learned a lot from him. But he also had a lot more income than I had.
So, I think those two kinds of go hand in hand. It's easier to save for future things and save for the future for whatever When you have more income, I think. You have more choices.
Roger: Yeah. You have more choices about what to do with that income.
So, in getting married, so just in the part of just getting married, what were some of the challenges that the two of you had to navigate.
Kay: Well, I think because having children and having had prior marriages or part of it. The fact that I had not been married was a piece of it as well. Our big questions were the kids. How are we going to navigate the finances as far as the expenses that went along with having the kids? So those were some of the things in the beginning. Yes.
Roger: Okay. When you guys got married later in life, I remember you telling me you had a prenup.
Kay: Yes. We had a prenup.
Roger: Whose idea was that?
Kay: It actually was mine, but I have a legal background. I'm a paralegal, so it seemed just common sense to me because Dale had prior marriages as well, because I came from the legal background and because of his previous marriages.
The main reason I wanted the prenup was so that I could put in the prenup that if something happened to our marriage, that I would not expect alimony or maintenance, whichever state you're in and whatever it's called, that I would not expect that from him because, you know, he had bruises from that. So, I said, it's fine. I'm not marrying you because of your money, I will do that.
So that also spelled out well as part of the prenup, what his premarital assets and income were and what mine were. We spelled all that out in the prenup. But it's hopeful to do that. Now Some people I know feel like, oh, you know, that's like planning for defeat before you even get started.
I didn't see it that way. I saw it as a protection for both of us, actually.
Roger: Yeah, and you were the one that brought it up and he brought a lot more assets and a lot more income to the marriage.
For him, he had all these challenges of previous alimony and divorce and those challenges. Was it a challenge for you who had always just operated your own ship? You were never co-captain. You were always captain.
How did you navigate that right at the beginning?
Kay: Well, I looked at it when first went into it. In Dale's previous relationships, his wife did not Work full time, just a little bit part time, so brought just a small amount of income to the marriages. He was looking for someone because we met online, and he had a profile.
Roger: That was a while ago. That was, like, early online. Wow.
Kay: Oh, yeah.
Back then, we were, like, almost ashamed to tell people that we had met that way because they were like, what?
So, yeah, on his profile he had that he was looking for someone who was doing well on their own. So, I expected going into this that he would welcome the additional income. He would welcome the fact that everything wasn't on his plate. So, I kind of went into it that way, that it was going to be a plus.
It was, but it's there was still a lot to maneuver.
Roger: These are a lot of discussions for you and Dale to have early on. How did those discussions go? How did you navigate those productively? Was it pretty amicable and you're just figuring this out together?
Kay: Well, doing the prenup was a big plus because he really had more to gain from the prenup than I did. So that was pretty easygoing.
Then as we went on, I don't remember there being a lot of friction Before we got married about how we were going to do things. We just kind of talked about throwing everything in one pot, that was kind of probably as far as we got before we got married.
Roger: So, once you got married, how did you and Dale manage cash flow in your incomes and your assets?
Was it mine, his, ours, or was it all just ours? Or how did that work?
Kay: Every way you can imagine, we tried. We tried everything together. We tried individual accounts. We tried just having an account for the kids expenses, and honestly, nothing really worked for us very well.
Roger: Because he had extra expenses with the kids, and Dale also had a lot more income.
So, nothing really works. So how did you figure it out?
Kay: Well, we just tried different things, actually. We eventually just felt like we needed to keep moving towards being one, Not being individuals.
I think a lot of it also had to do with the fact that I, after time, came to the realization that when you marry somebody with kids, whether they're minors or in college or totally launched, there is stuff that comes with that, and it's for forever. And so, you'd better get used to figuring out how to navigate this.
Roger: Well, I remember Mary from the case study that stepped away Said, "I never had to ask anybody before I purchased something or spent money on something." That really didn't sit well with her.
Did you have that feeling ever or he or how did you navigate that of like, I feel like I have to ask permission now?
Kay: Yeah. I guess maybe a little bit in the beginning, but what we ended up doing was having a system where we were like, okay, if we're going to spend over a hundred bucks on something. We're going to just talk to each other about it. Because Dale is such a good planner that he had areas of our budget that I would have never even thought of. So, we had money put away and things planned for.
So, if we were going to spend more than a hundred bucks, we would tell each other. I didn't really feel like I was asking. Also, I'm coming into this marriage with someone who makes 2 times, sometimes even more than that than I do. I'm in a more relaxed position financially than I would have been by myself. Maybe that was not Mary's situation. That was my situation.
Roger: So, let's flip that around. Did you feel guilty in wanting to spend money because the incomes were not equal?
Kay: No. Dale and I had very different backgrounds as far as how much spendable income we always had.
I always had to be more careful about what I spent. He always still to this day, he can spend money easier than I can because he's always had more. So, for me, it was actually just an easier situation for me, and I didn't feel bad because I'm not really a spender.
Roger: Okay. Now you have described one, but can you tell me about a challenge or two that you have had around money and your choices about it.
Kay: I think within the last several years, Dale wanted an electric bike. So, he asked me, would you like one too? I'm like, not really. So, the agreement that we made was because it was a several thousand-dollar purchase. The agreement we made was that if something came up that I wanted that was kind of in that range, I could go ahead and get that. Now nothing has come up that I wanted, but that's one way that we if it's a large amount of money that one of us is spending that we can kind of just even it out.
Of course, there's always expenses with the kids that come up all the time. They're now grown. They're out of college.
They're grown, but still one of them in the still launching category. So, yeah, he occasionally well, just recently came and he recently came and asked for some money, which I'm not sure I would have been agreeable to giving him, but Dale did.
It goes back to that situation where I just realized that things are always going to come up along these lines, and I just kind of got to the point that I'm like, I'm not going to stress out about it anymore. There was a situation I didn't tell you this story previously, but in preparing for the podcast, I thought of this.
Many years ago, when he was still paying child support and the kids were still pretty young. He got a fairly sizable Christmas bonus that he wasn't expecting. So, he told me, I'm going to give his ex-wife, I'm going to give her whatever percentage it was, I don't even remember, for child support. I was astounded by this. I totally agree that it was the right thing to do. But coming from, you know, a law background and working in a law office for so long, fathers just don't do that. Unfortunately, it's sad, but it's usually it's the other extreme.
That really spoke to me. So, when I get a little start squirming in my seat about something with the kids, I think about that. I think, would you rather be married to that man that was willing to give that and do the right thing than somebody who was trying to keep it from the kids? I revisit that a lot.
Roger: That's a good perspective to have as to where it comes from, which is a good heart.
Kay: Perspective on this is huge.
Roger: Why is that?
Kay: Well, just because this is part of the equation if you're going to marry somebody with It just is.
Roger: Or later in life in general, right? You just have you're going to have baggage. There's going to be stuff.
Kay: Absolutely.
It's just a matter of really trying to look at the positive side of it rather than because I never wanted to know where every dime was coming in and going out.
That was not ever what I wanted to do.
Roger: You and I had talked about some of the keys, and by the way, Kay was gracious enough and we had a quick phone call and you were talking about a lot of the Struggles early on about having separate money. I mean, that's a lot of different things to go through separately and contributing to a joint account. That's not working. So, you try option two, option three. That's really tumultuous when money is such a big issue in marriages. You obviously had some challenges.
What are some of the keys that got you through 17 years?
Kay: I think the fact that we just stuck with it, we would try stuff and it wouldn't work so great, so then we'd try something else.
You know, when we decided to try to split the money, then we realized we split the bills 50 50, and then all of a sudden, because I'm not as focused on this as Dale is, all of a sudden, I realized, oh, this isn't working right because he's ending up with a much bigger pot of money at the end because he makes more than I do. Then we try to divide it by percentages. So, I pay a third and he pays 2 thirds, and then we're just like, this just doesn't work. So, again, we were trying to just move it towards being one. So, we just stuck with it.
Roger: Because that would be an uncomfortable conversation, I would think, on your end. I mean, not insurmountable of, hey, this doesn't seem fair. Seems like a rough conversation to have.
Kay: It was, and it didn't go over well. Initially.
Roger: Initially, until he got it.
Kay: Part of the reason that this took us quite a while to get to the point that it is today is that we would have these hard conversations. There would be anger. We would stop, then we'd reach a stalemate where, okay, I'm just not going to bring it up. I'm just not going to bring it up.
I personally would think more about it. Like, am I right on this? You know, do I need to compromise on this? So, it took us a long time because there were big Chunks of time in there where we were kind of in limbo and didn't have everything figured out.
Roger: Yeah. Some of the keys, and these are some of the things that you shared with me. one, that we had respected each other and wanted the best for each other. Two was that you weren't just companions, you really got married because you love each other.
Kay: Absolutely.
Roger: It sounds like you just kept wanting to find a way and didn't want to give up if you wanted to find a way together as messy as it was going to be. Neither of you were going to give up.
Kay: Right. Absolutely.
Roger: Then you use this phrase, of thinking of it as like, what hills do you want to die on? It's not about winning the argument. It's about jointly trying to find the right solution.
Kay: Absolutely, and it takes time.
You both come with your baggage and you both come with the ways that you're used to doing things, and you have to sort through all of that.
Now I personally would Say to people, get as much of that done as you can before you get married. But at the same time, sometimes you just have to do life together and see what comes up and deal with it when it does.
Roger: Did you ever lose faith that Dale wanted the best for you and both of you?
Kay: No.
I don't think I did.
Roger: That's probably the key to everything. As long as you know they're going to get angry, it's going to be rough, but they want the best for me and they want to figure this out, then you know both of you are all in.
Kay: Yes. We definitely both wanted to figure it out.
We took our vows very seriously that we made before God and our family and friends, and we just have to figure this out.
Roger: Yeah, and you did, it sounds like.
Kay: We did. We did. Yes.
Roger: Kay, thanks for sharing a bit of your journey on this.
Kay: Absolutely. I feel very honored that you would even ask.
CATCHING UP WITH SAM FROM THE 2018 RETIREMENT PLAN LIVE
Roger: Now it's time to check-in with one of our former subjects, case studies.
Single Sam. That's what I'm calling you. I don't think we called you that, but you're Sam. How are you doing, Sam?
Sam: I'm well. Thanks, Roger. It's good to see you.
Roger: Yeah. We were just chatting right before we started doing this, and May of 2018 would be when we did your case study.
Sam: Yes. Much time has passed.
Roger: If I recall, you lived in Arizona. Now some of the stuff we're changing the facts to protect Sam's identity.
You had a long-time boyfriend. You were getting ready to retire, so you hadn't retired yet. So, when did you actually retire?
Sam: Well, I retired in August 2018, so not long after we had done the series, for some reason, got it in my mind that that would be the perfect time because that was also the month that I turned 60. So, I kind of rolled retirement and turning 60 into one big event and had a party.
Roger: Was there anything specific about 60 or did it just seem elegant to do it that way?
Sam: More than that. Yeah. The pressures of my job were just increasing and increasing. I needed some sort of a clear benchmark time to get out, I think. Of course, I had thought about the financial and other aspects of it.
Roger: When you're working at such a hard pace and I forget, what industry were you in?
Sam: I was in litigation. I was in the legal field.
Roger: Oh, jeez. When you're in the thick of it, how did you navigate having time to even think about a future when you're working so hard in the present?
Sam: Well, priorities rise to the top of the list, of course. But in part, it was much a feeling as it was a firm plan. I have a financial planner that I work with. I've worked with him for years, decades.
So, he and I were starting to have more conversations about the feasibility financially, but all the other good stuff that you're so wonderful to talk about in terms of balancing both the finances and the other aspects that come up with retirement. I was on my own to do a lot of that.
Roger: When you retired in late 2018, what was your first six months like? Do you recall?
Sam: Well, it was liberating for sure. And I had certain personal reasons that I wanted to retire. My folks were getting older. My oldest daughter was pregnant with my first grandchild. So, these were events that I knew were coming up and I wanted to have more time to spend with my parents.
I kept thinking I'd have a schedule that I'd figure something out and I'd have this routine. I do have a certain amount of routine. But even to this day, I would not say that I have, quote, figured out retirement yet, and it's been over 5 years.
Roger: Was it intimidating when you actually left because you're leaving all your habits and your people, and your money income wise?
Sam: Yes. I left some money on the table in terms of the year-end bonus by choosing to leave in August. That seemed worth it to me at some level.
Honestly, that's one of the things I have to say about retirement. So many of the things I worried about were nothing. They haven't come up. Other issues have arisen, but a lot of the things I worry about financially, it's like you think it's such a big deal and you figure it out. You work it out.
Roger: So, what's an example of something you worried about that was like, oh, that was no big deal?
Sam: Well, I always worried, will I really have enough money to live. I realize now with the wisdom of five years, number one, I don't know how long I'm going to live. My daughters and I just had this conversation this weekend. If I knew exactly when I was going to die, then I could spend more money at a faster rate, but I don't know. So, I tend to be fairly conservative with that.
But I've realized as I've watched the markets go up and down over the last 5 years, I just cannot obsess about that. It's a long game. I'm conservative. I don't run out and just buy anything on a whim.
We touched briefly before we started reporting about the pandemic. That was a huge unplanned out of my control event in the early stages of my retirement, and I worry, but I try not to worry about too many things that I don't have control over.
Some of that is just the nature of the markets. I can control what I spend, but I can't control the rest of that.
Roger: Did it take you time to feel comfortable without having a paycheck.
It just took time to get to that comfort level.
Sam: Yeah. and, fortunately, I got a couple of them after I wasn't actually even going to the office. I set up a transfer that came out of my investments for my living expenses. So, it kind of felt like I was getting a paycheck. You know, money was still there.
Roger: I was going to ask how you created paycheck. So, you basically simulated the automatic deposit of a paycheck.
Sam: Yes.
Roger: What was the initial strategy of creating that paycheck. Were you selling things every month or were there cash reserves?
How did you do that?
Sam: It's a combination of those things and I leave that to my capable team that handles it. But I know that there is a certain amount of selling off, but that's done strategically in terms of things that perhaps are not performing as well.
I do have certain amount of cash reserves that they keep in hand, and I have my little account at my nearby credit union that is like my safety that I like to have a certain amount of money in that.
Then there's some strategizing on their part in terms of the tax implications of what is sold and what is not, and honestly, I don't discuss that with them all the time. That happens kind of behind the scenes for me.
Roger: Then when we were chatting, you had a pretty serious boyfriend.
Sam: Uh-huh.
Roger: If I recall, there was some figuring out your retirement, but our retirement in the goal setting. And we'll have links to the episode with Sam in our 6-Shot Saturday email, so you can go revisit that if you'd like. So that changed, I understand.
Sam: Yes. We're still friends.
Roger: That's good. But not having any joint plans together.
Sam: Right.
Roger: Did that change your entire retirement plan in any way?
Sam: No, not really, because he and I were pretty financially separate, even when we were together all those years. So, it really, it did not.
Roger: Okay.
You went through two bear markets, a really quick one during COVID, and then last year, or I guess two years ago now when this airs, 2022, was there any change to the things that you did as a result of those?
Sam: Well, some of that corresponded with the restrictions of COVID life too.
I will say one of the things I wanted to do was spend time My elderly parents, and my dad actually passed away in November of 2019. That changed my life in a big way because the responsibilities for my mother increased tremendously.
My Ideal, when I was retiring, I thought I'm going to travel, I'm going to do all this stuff. Well, the pandemic came, my responsibilities increased and just personal choice, my daughter has had 2 children since then, and I'm lucky that they all live in the same town. Both of my adult daughters and my 2 grandchildren and their husbands all live here.
So there's just it's like all this stuff comes up that you don't want to miss. So, I am not spending money as much as I thought I would on travel, but I have been on some good trips. I have done some things that I wanted to do, and I'm looking more towards that now in 2024.
I'll tell you what, I'm not getting a new car so that I can travel. Those are the kind of decisions that I make.
Roger: My next question is how this is 5 years ago; you had a retirement plan. Does it look anything like your plan today? Does it look anything like the initial plan?
Sam: It does, but there's been some tweaking. You know, I've done a little bit of research on the long-term care aspect. I know these are not necessarily your favorite thing, but with some annuities, with some guarantees.
Roger: Why do people think that? I'm not against annuities at all.
Sam: Well, it was I was like, oh, I don't know. I don't know about those annuities, but, you know, we talked about it, and they had some guaranteed return rates that were pretty favorable. In terms of sort of reallocating my money, and this was one of my big lessons in retirement I have to share this with you. I just didn't plan ahead, but I had a piece of property that I'd long wanted to sell. I think we probably had talked about that in terms of part of the funding for my retirement.
Well, I ended up selling that property in 2021. Great, I had all these conversations around how much money is enough money, but I sold it for what I thought was a fair amount, not even really thinking ahead to something that I know you've discussed at length now, which is the ramifications for your Medicare and what your income is because I Should have thought a little more, but you do it when you do it.
But two years look back for the IRMAA, I am paying for that right now. But good news is it's just for a year. But, you know, some of these kinds of lessons, you know, getting enrolled in Medicare and what your income is, these are all things that I've had to learn on the fly.
Roger: Yeah, and your advisor, I'm sure, they're helping you think through some of those things as well. IRMAA is not the best friend to have visited your house, but shouldn't stay long, and unless it's not that exorbitant, right?
The first level is an extra thousand dollars.
Sam: But it was a shock. Yeah. I was like, you have to be kidding me. I'm in the highest tax bracket for IRMAA? I already looked at what it'll be after the year, and it's going to go back down.
Medical expenses have been a big thing for me in these 5 years of retirement. And I just have this mantra of, oh, wait till I get to Medicare. My rates are going to go way down. Well, they didn't this year. I turned 65 just this year.
So, yeah. Those are just the lessons that you pick up and you absorb it, and you just keep going.
Roger: What is something specific that you were surprised about in retirement? For retirement?
Sam: How easily I adapted to slowing my pace, which has nothing to do with money.
It's all about my lifestyle. I really appreciate being able to wake up in the morning, and there's many days I have to set an alarm. I have an incredibly busy life, but I thought I would just go and go and go and go. I really have been able to slow down, and I love waking up on my own schedule and doing what I want to do during the day.
It's just it's a whole different feel in my body and as opposed to when I worked, and there was this constant pressure to be going and performing and doing it all and doing it all perfectly and now I'm just a little more laid back.
Roger: A lot of people struggle with two things on the non-financial side. one is, what am I going to do every day? The second is, I need to have a purpose.
What would you tell them?
Sam: I'm still working on part B, the purpose. I wanted to be in my community and have an impact there, and I'm still looking for the thing that I really want to do. I had started something before the pandemic that became a victim of the pandemic, I was working at a legal clinic for the homeless, and that program ended during the pandemic and hasn't resumed.
I've redefined my purpose as being I'm raising future good citizens because I am working with my grandchildren and supporting neighbors and my local community, not in a bigger way, but I still feel like I want to get that figured out.
But as to what I do every day, oh my gosh. I just can't get to everything I want to do every day. Part of that is because I'm just moving so much more slowly through my day. I'll look it up and it's already 10 o'clock and I'll think, well, I should get on with it.
Roger: So, the key is you'll figure it out and it doesn't have to be a huge change the world purpose.
Sam: No, it doesn't. I'll be honest, I spend a lot of time thinking about values and how I want to spend my time and where I want to spend my money.
One thing we haven't talked about is health, and I am lucky that I am healthy and I work on that. I work out, I walk, I cycle. I do yoga. I keep myself busy trying to be healthy in part for myself, of course, but also because of those grandkids, oh my gosh. They want you to lift them up all the time, and you have to squat down all the time, and help my mom, I want to be able to physically walk with her and help her do some of the things that she's doing. So, there's a reason to stay physically fit.
Roger: Okay. What about as you look forward in being single since your long-term relationship ended, do you have any concerns or what planning are you doing for your future self from a retirement planning standpoint.
Sam: In terms of having a partnership?
Roger: In terms of dealing with, you're there for your mom, right? If you need assistance, whether it's long-term care in the formal sense or assistance. Obviously have your daughters, I guess, as a support network.
Sam: Yeah. I am counting on them to be helpful, but I'm also counting on me planning, I talk to my contemporaries quite a lot about this. We all want to make our decisions for ourselves before it's too late and we can't do it. Of course, something can happen and that option is taken away from you.
But, you know, I think we're all planning financially, and then we're thinking about our living environment. I have friends, I live in a house that doesn't have a lot of stairs, but I have friends who do, and they're talking about aging in our homes, and what modifications can we make to that so that we can be ready for that and or knowing about places that you might want to move while you still can make that decision yourself.
Roger: Well, you sound wonderfully happy, and it sounds like retirement was a little bit different travel wise, but because other priorities took place. Any last word you want to share in this update?
Sam: Well, I want to tell you that I've been on two really killer bicycle Trips.
Roger: Oh, well, yeah! Tell me about them really quick then.
Sam: Yeah. I went on a bicycle trip where I rode with my younger daughter. We rode from Prague to Vienna last year in 2022. Then this year, I rode the Greater Allegheny Passage from Pittsburgh to Cumberland, Maryland here in the United States with my cycling group. So, I'm with a group of women that we all ride.
Roger: This is road cycling.
Sam: Yes. It was.
Roger: Then how long does the one this year take or in 23?
Sam: Well, the ride itself was 6 days. So no, it was four days. The one in Prague was 6 days.
After you've ridden all day long, it's nice to pull up and hand your bike off to somebody and go into your well, in the case of Europe, into my castle to lay down at night and have a hot shower and stuff.
Roger: Well, awesome.
Sam: I'm not into roughing it. I had to camp in the Greater Allegheny passage, and I'm here to report that I am not a camper.
Roger: Maybe a glamper, but not a camper.
Sam: Right.
Roger: Very important distinction there.
Sam: Yeah. But no, I would just say to everyone, don't be afraid because you can't anticipate everything that is going to happen. I had to course correct tremendously when my father died, when the pandemic came, you know, there's just always going to be life and you'll be thoughtful, you'll talk to people, you'll read books, listen to podcasts, and then you'll figure it out.
Roger: Thanks so much, Sam, and have a great 24.
Sam: Thank you, Roger.
TODAY’S SMART SPRINT SEGMENT
On your marks, get set,
and we're off to take a little baby step you can take in the next seven days to not just rock retirement, but rock life.
Alright, in the next seven days, I want you to have a discussion of how you're going to manage cash flow, whether you're a detailed budgeter or whether you just spend whatever is in your checking account.
If you're by yourself, you can do this. I want you to reaffirm so you have some intentionality about it. But if you're married or have a partner, I want you to just have a general discussion of how this is going to work and what some upcoming extraordinary expenses are going to be this year and what your income looks like.
You don't have to get to an overall solution. It's just an open discussion and dialogue so you can begin the journey of figuring it out together.
So often, we, one, think we have to have a solution at the end of every meeting. That is not the case. It's about the dialogue. So often, we think we're all on the same page, but then 6 months or a year goes by, and we forget What we're doing from a cash flow standpoint and one partner thinks something and the other one thinks something else, but they don't have a discussion about it and then it can rear its head in some way.
So just have an open dialogue about it. That's your task for the next seven days.
CONCLUSION
Oh, I am really excited about next month's theme. FIRE. Financially independent, retire early. It's a big movement in America, which I think is really healthy, very intentional. It's great to see younger people being intentional about financial stewardship.
Next month, we're going to explore that with retirement coach Kevin Sebesta, who retired at like, 41, I think. We're going to dissect what does fire mean? What is financially independent retire early movement, and what can we learn to apply to our retirement plan so we can rock retirement. Alright.
The opinions voiced in this podcast are for general only and not intended to provide specific advice or recommendations for any individual. All performance references are historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Make sure you consult your legal, tax, or financial advisor before making any decisions.