From Checkers to Chess: Mastering the Strategic Game of Retirement Planning

Are you playing retirement checkers when you should be mastering retirement chess? This episode unpacks a powerful analogy that demonstrates why traditional retirement planning often falls short.

When approaching retirement, most people arrive with what amounts to a checkerboard and a bag of identical checkers—assets that have served a single purpose during working years: growth. But retirement demands a more sophisticated approach. Like chess pieces with their unique movements and capabilities, your retirement assets may need specialized roles to create a truly effective strategy.

Mark and Evan walk listeners through the process of transforming those uniform checkers into specialized chess pieces. Some portions of your retirement savings might be dedicated to immediate income needs, others to long-term growth, inflation protection, or legacy planning. This multi-dimensional approach can create efficiency by assigning tools for each specific retirement challenge.

Ready to transform your retirement checkers into chess pieces? Schedule a complimentary consultation at masterplanretire.com or call 770-980-9262 to explore how a holistic approach could strengthen your retirement strategy.

Have a topic or question you'd like Mark and Evan to address in a future episode? Email us at info@masterplanretire.com or call 770-980-9262.

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Call 770-980-9262 to speak directly with someone about your retirement planning needs.

https://masterplanretire.com/

Catch all episodes of our podcast at https://www.masterplanyourretirement.com/resources/episodes

Listen to Mark Fricks on Saturdays at 12:00 p.m. on XTRA 106.3 FM WFOM.
Sign up for one of our upcoming events at https://www.masterplanyourretirement.com/events

Purchase Mark’s book, The Road Less Traveled: Turning Your Retirement Worries Into an Excursion of a Lifetime, on Amazon: https://a.co/d/4fx94Al

Advisory services offered through MasterPlan Retirement Consultants, Inc., a Registered Investment Advisor in the state of Georgia. Insurance, tax and commodities services offered through Fricks and Associates, Inc. dba MasterPlan Retirement Consultants. The aforementioned are affiliated companies.

Transcript

Speaker 1 0:06

is your retirement plan set up for a game of checkers or are you playing chess? Hey folks, thanks for joining us. Welcome back to retirement roadmap with master plan retirement consultants. My name is Evan and with me, as always, retirement planner mark Fricks. You know, mark, when I was in my 20s I used to teach chess to kids when I lived in New York I traveled around the city to different homes to teach. It was a fun way to get to know the city. Of course, at that time I had no idea that one day I would become a retirement planner and would draw some of the same parallels between chess and retirement planning.

Speaker 2 0:39

I think you taught children, didn't you Like three, four five-year-olds All the kids were arranged between three and eight. So, yeah, I got really, really good at beating children at chess. Man gave you a lot of confidence, that's right. But you used storytelling to teach it, didn't?

Speaker 1 0:55

you, yeah, yeah, which you know. I love storytelling as well. Yeah, that company's done really well since then too. They've been around for a while and it's all story-based. So you present the pieces and the rules, you know, one lesson at a time, as a new part of the story and introduces the pieces and the relationship. So it was. You know, kids just soak up stories, so they learn it was amazing to see how quickly they would learn.

Speaker 2 1:14

Yeah, I would love to see a session of that. Yeah, I think it would be just fascinating. But as it relates to today, what have we got going Well.

Speaker 1 1:21

We um a classic story. We've told before on this, but it was a couple of years ago and ali, who works with us, she thought it would be a good opportunity to bring that up again because it really does view the foundation of how we work and and how we view retirement planning. It kind of puts it into perspective and we tell the story a lot, whether it's with the new clients or in classes things. So, mark, if you would like to take us through the comparison of why are we discussing chess and checkers in retirement planning?

Speaker 2 1:49

Yeah, as you know, we teach a lot of different kinds of classes and usually what we do is we'll teach one subject. I mean we do holistic planning, as most folks that listen to us know, but it includes income planning, tax planning and tax strategies, social security maximization, federal benefits, so there's all these different layers. But at the end of each class we like to tell this chess story, to kind of bring it all together, and so hopefully that's what will happen in today's episode. So we always start out telling the story at. Basically, I say you know, when somebody comes in to see us, I kind of picture them as coming in with a checkerboard under one arm and a bag of checkers in the other, a little baggie. And you know, and I just I can envision that somebody coming in and people in the classroom, when I tell the story, look at me like what are you talking about? So, but it gets your attention and people love to hear stories, and so I say so the first thing we do as a staff and as planners is is we set up the checkerboard, we organize the checkerboard, we set it up as if we were going to play a game. We get all the black pieces on one side, all the white pieces on the other, perfectly aligned ready to go. On the other, perfectly aligned, ready to go.

Setting Up Your Financial Chessboard

Speaker 2 3:07

Okay, and so what we call that in planning is we're organizing their financial holdings. What do they own? Is it an IRA, is it a Roth? Is it a brokerage account that's not qualified? Whose name is it in Approximately? How much is in it? I like to add a purpose to it, if there is a purpose. Unfortunately, most people don't have a purpose to their various funds except, hey, maybe retirement one day. But as you know, when we do planning, we have a purpose for every account.

Speaker 1 3:34

Well, you say we organize that. We quite literally organize it with a financial statement.

Speaker 2 3:38

A beautiful financial statement, again, just like the chess board, beautifully laid out. Who's the beneficiary on each account, right? Just like the chess board beautifully laid out. Who's the beneficiary on each account, right? Is there a TOD or a POD? If you don't know what that is, it's payable on death or transfer on death. You can actually add a beneficiary to a non-qualified account, like a checking savings brokerage account avoid probate right.

Speaker 2 3:57

And so now we have everything they own on one sheet, and so when they come in to see us, we're able to that's one of the things we give people that come to our complimentary consultation is you're completing the financial statement so you know where you stand. Because if you don't know where you are, how do you know how you're going to get where you want to be, right? And so now we know where we are. So now you're picturing. Hopefully, as you're driving, you're not closing your eyes, but you're picturing a fully set up checkerboard. So what happens next? Well, what we do is we start replacing each checker piece with a chess piece, and so, if you think about it, all the checkers move in the same way. They have certain moves they can make, and so every piece has the same function. And you know, I kind of relate that to folks that have worked at a company for a few years. They've accumulated a 401k, a thrift savings plan, a 403b. Most people that come to see us have one or two larger accounts typically a retirement account, right and so all those years they've kind of been like a checker piece, in the fact they only had one job and that was to do what? To grow. You put money in, hopefully, your company puts money in Over time, the market grows, and so that was the job of those checker pieces, right. But as you near retirement, that has to evolve, that has to change. And so what I mean by that is when you are approaching retirement I'd say at least a couple of years beforehand it's never too late, by the way, but maybe even five to seven years before you are thinking of retiring is we need to start redesigning those checker pieces and replacing them with chess pieces. So the difference if you've not ever played chess or maybe you're somewhat familiar with it, each chess piece has a job. If you want to move diagonally, there's a certain piece. If you want to jump over other pieces, there's a certain piece. Everyone has a job, so that when you're playing chess.

Speaker 2 6:00

It's very much like a battle in the fact that you, what do you attack with? What's the best way to attack and what piece is best to use, right, and what position is that piece in? So now, just like retirement, you have many different pieces coming together to solve that retirement puzzle. And so that big account I mentioned earlier, that one or two or three bigger 401ks or thrift savings plans that were designed to grow now need to do several different things in retirement. So what are some examples? Well, let's say one.

Speaker 2 6:34

Maybe you need a bucket of money we like to call them buckets, people that listen very often. Maybe one bucket of money needs to create some short-term income because maybe you're not ready, maybe you're not old enough, or maybe you want to delay turning on Social Security. So now you've got a steady income stream. Because this particular piece or bucket is exclusively designed for a certain amount of income for a certain amount of time. It's the perfect piece for that attack in retirement. Maybe you need another account that has a longer term income goal. Maybe you want income because, as we age, inflation tends to bring us a larger and larger income gap over time, right? So that's a different kind of account or a different kind of bucket to produce long term guaranteed income, and maybe even one that produces rising income to keep up with inflation.

Speaker 2 7:29

Ok, so that's, that's at least two different kinds of accounts or chess pieces. Right, we? We definitely still need some growth, right, there's things we want to do that's not part of our income. But maybe I want to go to Europe, maybe I want to buy a boat, maybe I'm going to need a new roof in two years, right? So these are different kinds of portfolios. One's a short-term growth, maybe a backup to savings. Yeah, you know, I've got, I've got some extra money in savings. I'm earning a one, two, three percent on. I'd like to get four, five, six percent on that still be liquid, good backup. That's a conservative portfolio. I've got another one that's a moderate, because there's some goals in my life, maybe two to five years down the road. Totally different kind of portfolio right, you can't mix all these in one bag and pull out pieces efficiently. It's all about efficiency. We can take a certain amount of money and just make it much more efficient by assigning a job to each account or each bucket, and so the relationship to the chess board is again each piece has that job, what's most efficient for that? Because the goal in chess is, of course, to save the king. If the king is captured, the game's over right. And so all these pieces, really their main job, is to capture and protect right. So in retirement, it is to produce income but still have some growth going on.

From Checkers to Chess Pieces

Speaker 2 8:47

And, by the way, we haven't talked about tax-free buckets. I might want to put together some Roth buckets that I can convert into. Hardly anyone has enough Roth money, so I want to have a particular type of bucket I can convert into. Maybe I need to do some backdoor Roths because I have too much income. That's another bucket I need to use to transfer into and then transfer out of, you know, 30, 45 days later for a backdoor Roth conversion. And so there's so many, you know.

Speaker 2 9:16

As you know, evan, we have clients that have six and eight different buckets. We have clients that have 16 and 18 different buckets, depending on how much assets they have. 16 and 18 different buckets depending on how how much assets they have and how many different things they want to do in the future, maybe. Maybe you want a legacy bucket. Uh, you know, this is for my kids or my grandkids, or or for my legacy, uh, to leave something you know. So I kind of set that to the side. Um, it doesn't mean I can't touch it necessarily, but that's what that's reserved for, you know, really long-term growth, or maybe long-term growth for a long-term care. So now, if you can envision this chessboard set up and now the pieces are beginning to move and do the things you're supposed to do income, growth, things like that but we're not done yet. Okay, so I don't know.

Speaker 2 10:00

Those folks that have seen maybe Star Trek or something, you may remember that their chess boards had multi-levels. The one I usually see is three levels, and so retirement chess boards are actually three to four levels tall. So we just talked about the first level growth and income. What's the second level? Tax strategies. So now these pieces have their job, but also they can move from one level to the other. So if we're converting, maybe it moves down to the first level, maybe some money moves up to the next level, back and forth.

Speaker 2 10:34

Hopefully you're beginning to envision how complicated this can be, why it's become so important over the last 30 to 40 years that you don't just have an advisor that helps you during the growth years, but that you graduate to a true holistic retirement planner as you approach retirement, because it is so much more complicated. A lot of brokers and advisors. If you call them up and say, can you look at my tax situation, how can I improve it for retirement, there probably won't be a lot of help Not all of them, but many of them. If you ask them when to turn on social security, I've had people tell me they'll say I don't do that. Okay, so that retirement planner, which is our entire goal, is all about these many pieces coming together.

Speaker 2 11:18

So we've talked about two levels. The first one, growth and income, the next level being, um, the tax strategies. The third level for most folks is estate planning or legacy planning. And folks, I'm not just talking about having the right documents in place. I'm talking about not only the right documents do you need a trust, do you need a will, powers of attorney but also that they are properly connected to your other two levels. Are the beneficiaries lined up? Does the titling need to be changed? Maybe it's better to have this title than that title, based on how you want to leave that money.

Speaker 2 11:53

So one of the great things about our website, by the way, if I could just shift gears briefly here, masterplanretirecom, is that as you start thinking about all these levels, we offer complimentary consultations, that not only will we set up that financial statement for you, but we're going to run six, seven, eight different reports to show you how these levels could affect you if you don't have them properly laid out, what if taxes do go up? What if inflation increases? What about bear markets? What's the effect of bear markets on your money? Those are all things that these different pieces help alleviate. Do you have that problem? And so, masterplanretirecom, there's a little green button schedule meeting now. Also, give us a call 770-980-9262. We'd love to chat with you. Set up again a complimentary consultation. Let's kind of find out where you're going, what are your dreams, your goals, what are your fears about what could happen in the future, both personally as well as macro, the economy itself, and how can we help avoid some of that as well. So hopefully you'll visit the website, give us a call and take advantage of that.

Speaker 2 13:01

So, getting back to the levels, we've talked about growth and income. We've talked about tax strategies, the third one being making sure you have the right documents in place, the beneficiaries are lined up. How do you make sure you avoid probate. That's additional cost to your heirs? How do you avoid heavier taxes when you retire? There are certain ways you can minimize taxes as you pass away, or your spouse passes away, things of that nature. How do you leave money to the next generation at a lower tax rate? So that's another whole level and again these pieces are moving between levels as well as back and forth. For sure, one other level I want to talk about.

The Multi-Level Retirement Game

Speaker 2 13:40

This does not apply to everyone but folks that work for the federal government and some state agencies as well, but definitely the federal government very complicated. They have another whole level of benefits and, evan, as you know, we go teach classes both on the web but also face-to-face all around the southeast, and it's amazing that federal workers know so little about their benefits, I mean major pieces of their benefits. They're like I didn't know that existed, or I don't know anything about my 401k, which in the government is called our Thrift Savings Plan, and so that's another level for federal workers. Is that next layer of benefits? How does that interreact? How does your pension interreact with your income plan and your growth? How does it interreact with turning on Social Security, the first supplement, your health insurance. How does it interact with turning on Social Security, the first supplement, your health insurance? How does it interact with Medicare Part A and Part B Another whole level.

Speaker 2 14:34

So hopefully you're beginning to see that this is not just something simple like, hey, I'm going to, as Evan likes to say, turn on the keys to retirement and just take off and hope everything's hunky-dory right. There's so many things you have to consider to make sure, because it's not like we're going to be retired for five years. Most of those, you folks out there, you're going to be retired at least 20, 25, maybe 30, 35 years, and so the possibility of running out of money is greatly increased. We have, because we're living longer, a lot more healthcare costs, a lot more people in long-term care. So those are all parts of those layers, that chess game of retirement that we've been talking about.

Speaker 1 15:15

Yeah, it's really good the visual of replacing the checker pieces with the chess pieces, because, yes, a lot of the story is about finding the right tool for the job, the specific perfect tool for that perfect job, the most efficient what have you? But the overall story, the chessboard, is about creating a retirement plan and a lot of people think, unfortunately, that an IRA is a retirement plan. Or deciding when to turn on social security that's my retirement plan. Or I have this annuity, that's my retirement plan. None of those are retirement plans on their own. A retirement plan, or I have this annuity, that's my retirement plan. None of those are retirement plans on their own.

Speaker 1 15:49

A retirement plan is all encompassing, it's comprehensive, it's holistic. It's like the story of driving to California. If you want to take a trip to California, you could just start driving west and what you get to California? Eventually, hopefully, maybe, but if you want to plan a trip to california, you're including your stops. You're going to take on the way. What is your trip like versus someone else's? Are you a sightseer or you? Let's get there as fast as possible so I can enjoy it when I'm there. What kind of vehicle am I driving? Are we rving? Are we taking the miata? You know?

Speaker 4 16:23

do we have?

Speaker 3 16:23

this yeah, do we have the tools?

Speaker 1 16:25

in the back or are we just going to wing it because we have our AAA membership? I mean, there's so many things to consider. We're a Prius right Hopefully not across the desert.

Speaker 1 16:33

But yeah, it's about creating a retirement plan and that's the foundation of everything that we do. And you mentioned it at the beginning. Which I think is really important to consider in retirement planning, and that is the term holistic retirement planning, which can be a funny word to attach to a financial firm or, you know, financial industry period A holistic financial plan. What does that mean? Well, it's exactly what you mentioned. Just like with the different layers of the chessboard, there are three or more main areas of retirement planning and each one of those is like a pie chart of individual pieces.

Speaker 1 17:06

So we've got our money management and that's in most financial planners. They operate in the money management world. They will invest your money. We'll do this, but it's not just putting your money in a portfolio or investing in mutual funds, is it Mark? It's creating that income plan. Where's your money going to come from in the first five, 10 years? We have to supplement in the future because of inflation. That's a lifelong income plan and that's an actual physical, written document Social security, pension planning, all that good stuff Under money management. Also, that long-term growth, short-term growth, whatever the need may be. There are a lot of elements within there. And then we look within the tax planning circle Tax strategy looking ahead, not behind.

Creating a Comprehensive Plan

Speaker 2 17:48

Right, and that's why we like to call an IRA or a Roth a tool, not an account. A plan, I'm sorry, not a plan. A plan is a combination of many tools and so those tools, that tool bag you have each tool has a job. If I'm going to hammer a nail, it's going to be the hammer. If I'm going to saw something, it's going to be the saw, as opposed to just having one tool in your bag, that big 401k, and trying to do everything with that as you build your retirement. And so I know we're giving a lot of different kind of illustrations here, but it's so important and so many people you know we have people come see us when they're 75 years old, so it's never too late. But every day that you delay getting that plan put together makes it a little bit less efficient. And so hopefully, you've done a great job over the years of saving money, having that good-sized 401k, that Roth, but it's never too late. But even if you have that's step one, that's the accumulation period. Now it's totally different. It's what I heard not too long ago. It's not the size of your retirement nest egg that matters, it's how much income can it create in retirement. So, yeah, the bigger it is, the more income. But that's not the rest of the story. The rest of the story is there's ways to squeeze even more income out of that nest retirement nest egg than maybe just again taking money out of a stock portfolio, which can really accelerate your losses and make you run out of money even quicker. So just so many different and it's you know.

Speaker 2 19:18

I think the reason we love work, evan, is that every plan's different. You know, as Evan likes to say, we don't have plan A, b, c, d and E on the shelf. We have about 400 plus plans, because that's how many clients we have, and so every client has a different plan. Everybody has a different situation. Everything works differently. Now we have a lot of the same tools, but we probably have I don't know 40 or 50 tools we can use, and I'm not even counting maybe all the various portfolios we can use as well, because every portfolio can grow differently in a different market. So, as I've been saying lately, I don't want just a vanilla portfolio. I want a chocolate, a vanilla, a strawberry and a pistachio, because every market's different, and I want at least some of those portfolios making money even in a bad market, because there's always something making money in every market. 2008, gold went up a combination of gold and silver 80% 20% went up over 500% in 2008 when the market dropped 56%. And so that's when we transitioned folks and we still have people. We keep some of our money in gold and silver because it's always going to react differently. So again, there's so many.

Speaker 2 20:27

We can have a dozen episodes on the different tools we use, but what I'd rather do is sit down with you and let's run some reports and let's see what your issues are. Then we can start and again, this is complimentary Then we can start talking about kind of how these come together. I'll give you a complimentary copy of my, of our book. That is about all we've talked about today in the various tools to give you hope that hey, you know, I heard on the radio you got to have, you have to have a million and a half dollars to retire. That is so bogus. I mean it.

Speaker 2 20:59

Every situation. I've got people that are happily retired with $300,000, you know, and they're they're having a great retirement. And we got people with with five million dollars that are afraid they're going to run out of money. So we set up a plan so that they won't. But everybody's different. Everybody has their own worries and concerns and and that's why every plan is different. But again, just um, I just can't hammer home enough to get help. Make sure you find a fiduciary, make sure you find somebody that is holistic planning, that knows from A to Z everything we've talked about tax strategies, social security planning, income planning, portfolio design all of this coming together to make sure that you have squeezed every bit of lemon juice out of that limit of retirement. Hopefully it's not a limit. Hopefully it's more like an orange, the sweeter yeah.

Speaker 1 21:49

I mean, and retirements are getting longer, we're living longer and retirement could quite literally be the second half of your life. I mean, gosh, your parents are in their 90s and Papa, your dad, retired in his late 50s, mid to late 50s.

Speaker 2 22:07

So he's been retired 40 years, give or take.

Speaker 1 22:10

Yeah. So that's a long time to plan for and a long time to walk away from a paycheck, a long time to leave the door open for. How many different presidencies, how many different economies how many?

Speaker 1 22:23

there's so many things, and then they're also within that 30 year period or so. There are so many different stages of your own life. There are so many different stages of what you need, what you have to do, what you're able to do, desires, things like that, and we have to. That has to be all encompassing. We have to take into account all of those elements.

Speaker 2 22:44

It wouldn't be nice to know. You have a plan, regardless of what happens in your life Exactly. You know, we go ahead and say, hey, if this does happen, we have this tool that will step in. If this happens unexpectedly, we have this tool that steps in and can help us with that particular situation. And so it's the what if? Scenarios, like Evan talking about the trip to California what if I break down? Okay, well, I've got AAA. Okay, what if I lose my driver's license? Well, I've got a copy saved in the cloud or whatever. And so, whatever could happen, I've got a what if or a go-to plan. And so it takes a lot of that.

Personalizing Your Retirement Roadmap

Speaker 2 23:17

You know, real quick story. I'll never forget the first time, after we opened our firm, my first client passed away. His widow called and said you know, jack passed away. What do I do? I say you go home and grieve, you do the funeral. We've got a plan. We'll talk in a few weeks. So, again, a plan for everything. So we hope you enjoyed today's episode. We covered a lot, but yet it all kind of falls into this one. Do you have a retirement roadmap is what it comes down to.

Speaker 1 23:46

So any, final words no, that's it. Thank you so much for joining us folks. Check out the other episodes as well. A lot of different topics that will fall under this overall scheme that we've laid out today.

Speaker 2 23:57

Absolutely, but until we see each other again, remember, plan well and prosper, take care.

Speaker 4 24:05

This was Retirement Roadmap Radio with Mark Fricks of Master Plan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretirecom or call 770-980-9262. Thanks for listening and remember plan well and prosper.

Speaker 3 24:24

All matters discussed during this show are for informational purposes only. Each individual situation may vary and the opinions expressed here may not apply to everyone. Materials presented are believed to be from reliable sources and no representations can be made as to its accuracy. All ideas and information should be discussed in detail with one of our qualified representatives prior to implementation. Advisory services offered by Master Plan Retirement Consultants. A registered investment advisor in the state of Georgia, Mark Frick's and Master Plan Retirement Consultants are not affiliated with or endorsed by the.