Five Tips to Flip Your Retirement Switch

Five Tips to Flip Your Retirement Switch

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  Five Tips toFlip Your Retirement Switch Dr. Barbara O’Neill, CFP®, AFC® Owner/CEO, Money Talk Money Talk: Financial Planning Seminars and Publications https://www.moneytalkbmo.com/ @moneytalk1
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  Financial Educators Can BeMillionaires, Too! (Part 2) If you “walk your talk” If you maximize savings opportunities If you have time and compound interest on your side Then, what?
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  Three Book Sections Financial Transitions  Social Transitions  Lifestyle Transitions Amazon Link: https://www.amazon.com/gp/pr oduct/1620236869
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  Book Inspiration #1
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  Book Inspiration #2 Researchpresentation at 7/18 ASEC meeting about Spending in Retirement Described some retirees with a unique “problem”: they saved their whole life and are not comfortable spending Speaker quote: “We need financial education to teach people how to ‘flip a switch’ from saving to spending”
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  Book Inspiration #3 Grasshoppersand Ants in Retirement article (Finke, Guo, & Johnson, AAII Journal, 6/18): https://www.aaii.com/journal/article/grasshoppers-and-ants-in- retirement Describes thrifty “ants” who spend less in retirement than they are financially able to “Habit formation hypothesis”: people get accustomed to a certain lifestyle and spending habits are hard to break
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  There are Many“Switches” That Need to Be Flipped in Later Life (Transitions)
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  Some Transitions AreLike “Dimmer Switches” and Change Over Time Working Spending Investment asset allocation Downsizing Disengagement/engagement activities Simplification
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  Five Financial Switches
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  Spending Down Savings Step outside of your spending comfort zone  Automate savings withdrawals  Answer some hard questions:  Why did you amass savings if you aren’t going to spend it?  If you don’t spend your money, who will?  What are you waiting for?
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  Creating a “Paycheck” Set up automatic withdrawal plans (e.g., mutual funds)  Create a bond or CD “ladder”  Purchase an annuity Tweak the “4% Rule” for personal circumstances
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  Adjusting to Changesin Income  Income will either increase or decrease If it decreases…there are catch-up strategies: Work longer or during retirement Spend less Consider “geographic arbitrage” Tap home equity Reverse mortgage Sale-Leaseback
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  Managing Income Taxes Request income tax withholding services Consider the impact of RMDs and widowhood  Determine your new marginal tax rate  Time elective cash withdrawals Consider hiring a tax professional
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  Ramping Up Philanthropy “You can’t take it with you” Check out potential charities  Specify a purpose  Plan your donations (gifting budget) Use tax-advantaged strategies (bunching, QCDs, donor advised funds, charitable trusts)
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  Three Lifestyle Switches
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  Answering the “What DoYou Do?” Question  Dodge the “R words”; don’t let other people impose their social clocks on you  Practice “identity bridging” Continue valued commitments Develop a new “elevator speech”
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  Changing Time Orientation  Dosome ROLE calculations  Consider adopting an older pet Designate a pet guardian; set aside money Spend lavishly on “lasts” (if possible)
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  Changing Mindset: Invincible toVulnerable  Accept vulnerability (e.g., immune system) Stave off disease and delay Follow healthy lifestyle recommendations Get recommended vaccines/screening tests  “The greatest wealth is health” (Virgil, BC)
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  Questions and Comments? @moneytalk1 [email protected] https://www.moneytalkbmo.com/