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Welcome to getting to your retirement exit. I'm your host, Jenny Jones, and I'd like to thank you for joining me here today on podcast 26. Wow.
It's been a whirlwind of a 30 day since the last time I came to speak to you, but a lot has happened. But I want to go ahead and get right into our segment on this podcast, Episode 26 and today's episode wanted to talk to you about finding your retirement number. Finding your retirement, number, now that's a pretty loaded statement, right, for someone who just stumbled upon this podcast or like, hey, yeah, I want to know what my retirement number is.
I'd like to know. And, you know, I have some good news for you and some bad news for you. Let me give you the good news. The good news is you're going to learn more about your retirement number today than you've probably learned in a long time. I mean, there are lots of sources out there. They're putting things out. Hey, go here, punch this number and punch that number in. Let me give you the bad number.
There is no magic number.
I hate to tell you that there is no magic number, but I'm going to give you three things to help you determine your retirement number.
Now, you know, you may pass this podcast link off to someone else. They may say, hey, I was able to come up with this number. And you said, well, gosh, to my number is this number.
So let me let me help you out, because this is being recorded and you baby look back on it later. And this is gosh, he made a lot of sense. I alluded to a lot of these areas in Episode 22. That would be a pretty good episode to go back and listen to because it'll it'll bring some clarity to some of the I started talking about it then and I wanted to kind of finish it up here. I even said in twenty-two that I wanted to dove deeper into people trying to find their retirement number now.
I think traditionally, you know, it's been well, hey, I'll retire at 65, right, and or I'll retire with once again if I can know if I can make anywhere between 70 to 80 percent of my income.
All those numbers are fine. Those are good benchmarks of the old right of the new retirement age.
I don't think those benchmarks are holding up very well. And let me explain some reasoning. Why?
Because of the cost of inflation. Right. And a lot of these bills were put forth the stimulus package.
Someone's going to have to pay for that. I know our tax dollars are going to have to pay for that. So those are going to be adjustments that where you thought you probably could retire in the past. You may not be able to retire. A lot of that has forced people into early retirement. Some numbers have changed as far as Social Security. As a result of that, you may not even get the COLA or the cost of living adjustments moving forward as a lot of things, because still they still don't have that quite figured out for Social Security.
But I digress. What I want to do is share with you.
You know, three areas are three points to help you get and find your retirement number.
OK, so let's start with there are three areas, and let's start with the most glaring one. And the biggest fear that most people have going into retirement is let's start with medical costs. Right. So. If you're fortunate enough to have work for an employer who provides medical or you will have medical once you retire, after you do 20 years or twenty-five years and you're a certain employer, then they cover your medical costs. Right. And or they cover your medical expenses or you have it at a discount.
There's a couple of different ways that can work out to your favor, but that is a huge indication of, you know, do you have enough? Do you have if you don't, let's say you don't write. And if you do, that's another story. I don't want to drive too much into that because I think you're batting a thousand if you have that part taken care of by a former employer or when you do your Étretat. But if you don't, that cost is anywhere between ten to twelve thousand dollars a year.
And that goes up at a pretty nice clip as well. So you got to be prepared for that costs, which is a moving target and medical costs or just going to see the doctor. Your primary physician is one cost. And as I'm working with my clients, I see a lot of changes. And I think even I shared in Episode 22 how my parents said, wow, this is going away now. We have to pay for that cost.
Well, when I went into retirement, that cost was covered and it changed right. In medical colleges overnight for you as well. Definitely. When it comes to pharmacy costs. Right. And or medication. And that is one of the things. What should be factored into your retirement number. Right.
Hey, am I on any what do we call. I had a medical professional I was talking to the other day and they call it forever MDs. Right? They call it forever MDs. Right. What does that medication that the doctors told you you'll be taking forever? Right. What is the cost of that? You know, if it's outside of something you were born with or something like that, that's one thing. But if it's a blood pressure medicine or anything like that, those costs could change.
And that's why the battle with preexisting conditions was so important when it comes to changing all these health plans because preexisting conditions, someone could have been born with a condition and the medication may have covered it prior.
But if you go into one of these new medical plans, the preexisting condition may not be covered. So that has a lot to do with cost and that's a big deal, especially going into retirement. It's very important to know that. So the medical profession told me, she said, hey, it's it's forever medicine. Figure out what that is. If that is that's a big cost to you. Now, some of the medicine can be controlled, right?
You could, you know, with diet and exercise. They say that because preventive medicine is very key, especially going into retirement, because you may get into retirement, find out you really actually can't afford to retire. So you may have to go back to work. But are you medically able to do that? So that is a big factor. That's one of the biggest factors when it comes to deciding on what your retirement number is, because it might be like, hey, you know, I want to get out while I'm still healthy.
I think sitting at this desk every day or going out and having a labor job may be detrimental to my long term health. So maybe I want to transition to another profession or something like that, OK?
And so and that leads me actually into probably my second most important point.
And those two go hand in hand, hand in hand medical costs. Again, ten to twelve thousand. If you don't have it covered now, either through yourself or through your spouse, maybe one spouse has it. Maybe it's discounted for the other spouse, but try to make sure that that's lined up, trying to make sure that that's taken care of. Nothing else. Factor that into your retirement cost. Right.
And the the second one is health. Your health will determine your number as well. Right. Can I still continue to work? Do I have a medical condition that doesn't that's not going to allow me to continue to work. Right. What if I have to go back to work? And so when people are trying to figure out what is my number, I have half a million, can I retire and all that. That's the quantitative side of retirement planning is what I sit down and I have discussions with my clients.
That's the quantitative part about retirement. Quantitative is knowing the numbers. Qualitative is very important as well. Qualitative is. Really, the lifestyle and or the life you will live when you go into retirement, that is the problem. When I say when we talk about all these online retirement calculators, I'm just punching in numbers. Well, I'm only punching in qualitative numbers. I mean, quantitative numbers. I'm only punching those in, you know. Do you have this how much you have for this?
How much is this cost? You know, it doesn't talk about the quality, right? Most retirement, I'd say most of the calculators I've ran across, I'd say greater than 80 percent of them online. Just that know, maybe a client of mine says, hey, what do you think about this retirement calculator? And they've had me look at it or that I used to use basically before I even got into the practice. And I go and look at them and have some of the major websites and I'll look at the numbers.
They're all quantitative numbers. That means they can only because numbers don't lie right. When you put numbers down, when you when you add them and then you add the future cost value, you had the present value of the dollar today against a future cost of the dollar later on. Those numbers don't lie. Once you put them into the formula and you do the math, those numbers are not going to lie. They're going to return the numbers back to what they are.
Right. And so that's that's important for you to know. It's really more about your quality. I'd say it's more of the quality than it is the quantitative because the quantitative is you'll probably get some type of retirement, whether it be Social Security. Well, that's unfortunate. That's a whole nother podcast. But you will get some type of dollars if you've done any type of savings. Right. And I think to get with a retirement professional or reach out to us at retirement chat dot com and we could talk further on that and discuss that a little bit more.
What will it look like for me? I have three retirement buckets, right? So a person may come to me and or a client may come to me and says, hey, listen, I have three retirement vehicles that I was saving it with in the last 30 years of my work. And one of them was an employee that I worked for. When I first got out of college. I did maybe ten years there. Right. And so they have a four one K that's there.
And I don't know, maybe it has about one hundred fifty, maybe a quarter of a million in it.
And, you know, so they still have that bucket.
So I call them buckets because any time I'm explaining and sharing and lecturing or having different workshops, I call a bucket because they're easy to remember. So that's one bucket. So we'll call that bucket our, you know, traditional IRA bucket. Right.
So then there may be another bucket that you had when you went to your second job and your second job. Your second job is your work for you maybe gave them another five years. Right. But what was different at the second job is a second job said, hey, we're going to give you a small pension if you stay here, at least, I don't know. Twenty years. Right. We're going to give you a pension and it's going to be a multiplier of whatever your highest income was times two point five percent or something of that nature.
Right. I'm just giving you some scenarios.
That's another bucket. Right. So you have two buckets.
One of them is a traditional IRA. Right. And the other one is a pension and or a defined benefit plan. Right. So the first one is a defined contribution plan. Right. Because you contributed to that one. But the second was a defined benefit plan where the benefit was defined for you. We're going to pay you two point five percent of your last high salary that you made over the last 12 months. So that would be a pension.
Any type of pension is going to be more than likely in the form of a type of annuity. Right. And an annuity in all purposes to make it as simple as possible for this podcast.
And again, I always say at least once and every podcast, consult your own professional for advice. If you don't have that. We have an a very affordable package here. If you wanted to connect with us at retirement chat dot com.
So a pension is a form of an annuity.
Right. And an annuity, like I said, in the most simplest forms is a vehicle that's going to pay your structured vehicle that's going to pay you for the rest of your life as long as you're walking this earth. Right. Well, how long is annuity lasts? Well, it lasts forever. Right now, there's two to three different flavors for annuities. And I want to keep that on the surface, because I think I may do a podcast just on annuities, but to keep it on the surface is a lifetime annuity, which pays you as long as you live right.
A living benefit, it pays you for as long as you're on this earth. If you're still above ground until one hundred and three, the annuity is still paying you. Right, if you elect for it to pay you that way. So some people like to say, hey, I don't want a lifetime benefit. Right. I'll accept less to make sure the annuity lives on. If I if I actually die in the next three years, so say I retire.
Right. And then I have this I have this annuity that kicks in, annuity starts paying me. But it only really benefited me for three years if I died three years later. Right. But I got the max out of it because I say we're going to give you four thousand dollars a month. I'm using these just hypothetical numbers. We're going to give you four thousand dollars a month for the rest of your life. Oh, yes, I love that.
I'll take that all day. All day. Right. Well, three days, three years later, or even a year later, you pass away. Well, you didn't win the insurance company one because you took the higher payout versus, hey, I'll take fifteen hundred and I'll have it pass on to a beneficiary. And then it could take, I guess, another fifteen hundred. Right.
That's two different ways you can set up an annuity so you can do a lifetime income, say pay me, I'm the beneficiary. I want to be paid for the rest of my life. As long as I walk this earth then I'll take the higher payout. I need that for a month. Versus, hey, I won't take the full lifetime. I'd rather separate that out and have a beneficiary built into it that I'll take fifteen hundred and if I pass away before my spouse, then my spouse could take the rest of it and she could take the different she could take the fifteen hundred or she could take the fifteen hundred that I would be getting and it would kick in and it would go to her.
So that's just in a nutshell. I just wanted to give you those two.
There's a lot of different flavors and twister's and sweeteners and and and Ryders, what we used to call them and I used to do insurance and annuities. There's all these different sweeteners you can add on, right? You can add this. You can add Wil's, you can have training wheels, you can add CD player, you can add power windows, power locks. You can do all of those dress up your annuity really, really nice with different features.
Just makes you understand what those features are. But the core, the way an annuity works at its core is you can take a lifetime which has a higher payout and that'll be for you, the person, the actual beneficiary. It will be for you for the rest of your life once you trigger the payouts.
And you'll be long as you're walking this earth, you can be two hundred years old. They're still paying you. Right. And that's kind of how the annuities are set up. Or again, for the last time, you could say, hey, I don't want I can't I'm not going to be able to do the four thousand because I don't have good health and I don't even know if I'll be around another two years. So why don't I save that and have my spouse make that or the beneficiary get those those particular payments.
And so you won't get four thousand, you may get twelve hundred, you may get fifteen hundred, but your your spouse or your other beneficiary will probably get more likely the second half or maybe a little bit less than the second half. But that's the best of both worlds. All right.
So that's one of the things that you could possibly do.
But it's important to know that whatever your health is, those are those kind of help you put your numbers together.
So. So what is my number? What is my number? What is my retirement number? Well, there's a lot of factors you need to be looking at. Right. So you can make a decision today. I don't know the numbers and I don't want to be discouraging in this podcast, but most people that retire and do nothing, you know, they don't their their life expectancy after that. I don't know what the numbers are. I don't even want to get into that.
But I do know a person should be retiring trying to do something. I don't care if it's getting up, going and playing bingo every day or something like that. I think you need to have an active lifestyle to be able to see grandkids. You want to travel, do those types of things. All of those things are important. That gives you an active lifestyle and allows you to have, you know, creates longevity because, you know, you're keeping your mind active.
You keeping your body active. Right. Those to allow you an opportunity to live a little bit longer and eating healthy. Right. So obviously, you're going to eat healthy. Right, because that keeps your medical costs down, keeps the pharmacy and or your pill stack down. Right. And I remember my grandmother as she was starting to get older.
Right. I remember her when I was younger. She was always working. She was very hard worker. Right. And she used to work very, very hard. And I used to see my grandmother. I was she was a model before me. She's like she really, really worked hard.
But as she got older and I saw an older state, every time I would go and visit her, I would see the top of her dresser and the pill jars.
It just became more if I go one year, there's two jars up there, you know, then I go the next year there's another additional jar.
So every year that I go, there's more and more jars. I'm calling them jars. But the pills and tablets or or the ones you put Monday, Tuesday, Wednesday and and put the pills in them and things of those natures that was expanding as she got older and as she kept living, she they were putting her on more and more meds. And that's one of those things that the medical costs continue to go up. And that's why the the part B to Passey, to Part D, all this medical and a medical plan.
That's why the pharmacy and all those prescriptions are those are big those are big decisions that they need to make when it comes to providing medical care or free medical care for everyone. So that's a very, very big, big deal. So two things we talked about already. Let's go back and to a recap, first thing we talked about was the medical costs. If you don't have that figured out, I suggest you going into retirement and your medical costs of, hey, I'm going to have Medicare.
Medicaid, I wouldn't bank on that. The reason why is because you're going to probably eventually run into a situation where you do have any property or anything like that. They have a look back, period. You can eliminate that. You can't sell it. So it gets very complex when you say, hey, I'm just going to let the medical system take care of me, I don't know. I think that's a bad bet. If that's your only bet, then that's the bet you make.
But I'm not going into retirement with that being my number. Right. I don't want that. I want I want my no my medical no to be the medical costs of anywhere between ten to twelve thousand a year and medical costs or being able to cover that costs. Right.
And when I'm working with clients and they some have come to my workshop, I'm starting to do a workshop now.
I'm going to start doing because I'm seeing these decisions being made and they're too late by the time a client comes to see me. Man, if you came two years ago, you became five years ago, we'd had you on point. And so now I'm starting to do a couple more live webinars. One of them I will be doing is the four one K lunchbox. Right. I'm going to be doing that. So if you go to the four one K lunchbox dot com, you're going to start seeing these live webinars.
And I'm doing they're only going to cover it through a lunch period and they're going to be live. And so I'm doing that because I'm trying to prevent people from making some of these mistakes. So I will be doing that. And I'm trying to help people get to these these issues, because by the time they show up in my office, it's like we're out of time.
We can't even make those adjustments now. And so I'm going to be offering that I I'm not really certain on the cost it be very, very affordable because there will be life. So there will be a small cost of that, but going to be very affordable, something probably less than 20 bucks or something like that. But it'll be a good 60 Minutes action packed. And one of the things we're going to cover and I will not cover here because it's beyond the scope of this podcast, I will cover the one mistake that eighty five to ninety five percent of our retirees are making every single day.
And so I'll cover that on those webinars if you find me or if you join me on one of those webinars. Again, it's the four one K lunchbox because there will only be over the lunch period. Sixty minutes for lunch. I'm going to put some things together for you and you will be able to take advantage of that. OK, so I wanted to put that in there. So we talk about medical costs, we talk about health. Your health will determine that depends on what you select.
If you do have an annuity or if you do have a pension, they're going to call you and say, hey, you need to make a decision. How do you want to take your pension? Do you want annuity? Certain, right. Do you want do you want to take an annuity just for your for your benefit or do you want to take for a time period? They're going to have some questions for you. You need to be able to make those answers.
And again, retirement chat, dotcom, you could ask us and we'll help you make a determination and you're going to make the determination. We're just going to ask you some questions and we're going to say, do you think that's beneficial for you? But we'll be able to help you digest what it is they're asking you. Very inexpensive for that. I want to say maybe that's twenty or thirty or forty bucks, I don't know, with my I.T. person setup for that.
So that's that's very affordable. So. So that's your health will determine. That's part of your number. It goes into effect your. No, the medical costs goes into factor number. And the last one is I kind of bring this to a close is the most important one. And I wanted to save it for last, because if you've been following any one of my podcasts, I always save the juicy stuff to the end and I save what we call the nuggets or the golden eggs.
I always have that one last one. So this is that one last one.
If you are part of your number, the most important piece of figuring out what your number is, is your mortgage.
Right. And yours as well. What I need that's that's a lot. I mean, when you say mortgage, well, your mortgage will help you make a determination on your number.
So let me give you an example. Right. And this has been more beneficial to more people than I have known probably in the last three to five years. I really started getting honest when I became certified in debt and debt management is your mortgage, right? And then the rates are favorable now switching to a fifteen year mortgage, right. Thirty year.
I mean, I'm in California. Thirty years traditional for everybody because the real estate here is just astronomical. But to switch to a fifteen year with the. Rates as low as they are, I would be running to the bank or the reify place just to be able to get a refired to go down to a 15 year mortgage. Now is your chance. Now is your opportunity. And I say that because when you go into retirement, you actually go into retirement.
You want to be as thin as possible as you want. You don't want as much debt on your back as you could possibly handle. There's no way you should go into retirement with the same amount of debt that you had while you were actually working. That's something that I cover in my in my my retirement policies, statements that I put together for my clients. We talk about that we debt is one. It is a major thing. It's a major issue.
When I'm sitting down with my clients, this is. Listen. He can't go in there when all is dead, so you need to make a decision, you need to make a determination and the biggest debt is for shelter. If you get that down to 15 years and when you do the math on it, it's probably maybe an additional seven, eight hundred dollars.
Right. And that's not as important as wondering what shifts and what changes when you go into a 15 year from a 30 year. And I'll probably cover a little bit more news on my other podcast, which I talk about data, talk about investments, to talk about real estate. That's the Financial Evangelist's podcast, where I'm giving you a whole nother perspective, looking at different investment and retirement vehicles and different things of that nature. That's the financial evangelist's. I will dove deeper into this.
Actually, you have my word. I'll dove deeper into this.
But if you raise your 15 year if you raise your 30 year mortgage, you lower to a 15 year, let's say your monthly payment goes up seven, eight hundred, actually as low as interest rates are. Let's put you at another 950. Right. Once you raise it to nine fifty. You said, oh, there's more money going out there, so much more happening behind the scenes, which are mortgage originator than you may think, see 30 year mortgages, banks and or lending institutions?
No, probably no good. Well, you're not going to pay off a 30 year mortgage. Right. So let's say you're I don't know. Let's say you're 40. Right. And you have a 30 year mortgage and you're only five years into it. Right. They know you're not going to pay off a 30 year mortgage. That's why so much interest in the front end, right, is so much interest, the principal was barely even touched and you'd have to do the numbers.
I think I have a YouTube video out there. I actually just did the numbers. And it's just crazy, right? So you'd only have maybe let's call it let's let's use a dollar to keep the numbers. Very simple as I bring this to a close. Let's use a dollar.
You're paying on a 30 year mortgage. Really, you're only paying maybe 15 cents to the principal.
And the rest of it is going to the interest, and I wanted to keep that as simple as possible, but let me tell you what happens when you do a 15 year. When you do a 15 year. Then maybe. Sixty percent. Is going towards the principal and maybe 40 percent is going towards the interest. That is the most dramatic difference that you will see and as far as me doing this on a podcast, that is the easiest way that I can explain it to you.
Right. You're paying more. Right. But more is going towards the pay off of the mortgage. You do not want to go into retirement with a mortgage on your back. Right. You don't want to have 30. How am I going to pay his 30 years? My thing is man up or woman up at this point, why are you still in your working years and get to that 15 year? The interest rates are astronomically low. Astronomically low, so if you're going to get me if you're going to give me all my savings account where I can't make money from the interest that I have in my savings account, then I'm going to make money off of you and reduce my liability as far as my mortgage off the interest of the same low interest rate.
See how that see what happened here. You're going to lose money by trying to save it in the interest rate environment, that's paying you almost zero percent, but you're going to take advantage of that. Where the debt is is not on your side and you're going to use that interest rate. Wow, that was a mouthful. I just dropped that one on you. That one is major. Right. And that's the reason why I started doing these quick lunchtime webinars and so people would know so that they would understand some of the major moves that are happening.
So, again, this has been Jenny Jones. I talked about the three ways to figure out and determine what your retirement number is, because based on what I told you about the medical costs, about the health and the mortgage, you're going to be able to figure out what your number is.
Don't go around paying for no expensive person to tell you what your number is. You know where your number is right now. Today, you just need a systematic way to put it together. And I think we have the perfect retirement blueprint. That's one way we can help you. Just put it together for you real quick and show you least what your your success rate will be based off the numbers in the buckets you have set up. Now, we can put that together for you.
Very inexpensive, no long term commitments. We can put that together for you and help you figure that out. So, again, this has been Jenny Jones helping you get to your retirement exit. I'm glad you joined me today. I will have some more classes that will become available because we are now want to give you this announcement as major announcement. We are now in the iTunes. We have an app that's out. It's called TVE, my retirement exit dot net.
It's TV dot, my retirement exit dot net. And I will be putting some of these classes like we talked about, moving to 30 year to the 15 year. I will be giving you visuals. All of those can be downloaded from the app if you get the app. Now, we have a special. You can get the app for four ninety nine, I think for lifetime, but you got to get in on it now. I think it's going to go up to nineteen ninety nine, but we have a special and again it's TV, my retirement exit.
Donette, I'm trying to bring you guys a lot of information and a lot of education. Thank you for joining me today here on the My Retirement actually getting to your retirement exit podcast. Episode twenty six. Thank you so much. Enjoy yourself. Be safe out there. Good bye for now.