You Planned for College… But Did You Forget About Retirement?

Empty Nest, Closer Retirement: Turning Investment Advice into a Real Retirement Plan

Hunter Kelly introduces the Retire Early Retire Now podcast and shares the story of Mike and Sarah, high-income healthcare professionals whose daughter leaving for college made retirement feel suddenly close. Despite years with an advisor and strong habits like maxing 401(k)s and consistently investing, they had never built a full retirement plan beyond investment management and lacked clarity on whether they were on track. By modeling savings, contributions, spending, taxes, healthcare, and longevity, they learned they were in good shape and could become “retirement optional” around 58, reframing retirement as freedom to choose. Kelly explains retirement spending often follows go-go, slow-go, and no-go phases, and encourages listeners to define a timeline, estimate spending by category, organize and consolidate accounts, and ensure their advisor addresses planning, withdrawal, and tax strategy—not just investments.

00:00 Welcome and Resources
00:45 Empty Nest Wake Up Call
01:56 Investment Only Advisor Gap
05:34 Planning Starts With Life
06:13 Are We On Track
07:16 Have We Done Enough
08:26 Retirement Optional Timeline
09:45 Go Go Slow Go No Go
11:43 Clarity Over Numbers
12:58 Steps to Start Now
14:21 Organize Accounts
15:47 Questions Your Advisor Should Answer
16:42 Wrap Up and Disclaimer

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Transcript

0:05

​And welcome back to The Retire Early Retire Now podcast, where we help high income earning families turn great income into long-term financial freedom. I'm your host, hunter Kelly, certified financial planner and owner of Palm Valley Wealth Management. And before we jump in today, if you enjoyed this podcast, the best thing you can do to help support this podcast is take five seconds to leave a five star review on your favorite podcasting app, or share this episode with a friend who you think might benefit from it. And if you're someone who's wondering whether you're actually on track for retirement, you can always schedule a free consultation with me using the link in the show notes. All right. Today I want to start and tell you a story about a couple that reached out to me recently because their daughter leaving for college triggered a realization that happens a lot with high income earners They suddenly realized retirement was much closer than they thought. They could see the light at the end of the tunnel. And so a few months ago I got an email from a couple named Mike and Sarah. Mike is a physician. Sarah works in healthcare as well, and their daughter is getting ready for college. Mike sent me an email and wrote something, that really stuck out to me. Hunter. I think we've done a lot of things correct financially, but honestly I have no idea if we're actually on track for retirement, and this is a common theme. If you've listened to the last couple episodes, most people feel like they've done things correctly, but they still have anxiety or they need some peace of mind that, hey. Is what I've done the last 10, 15, 20 years, enough to help me reach my financial goals, especially when you have that long time horizons. So he went on to say, we've been working with advisor for years. the advisor helped manage their investments. Their portfolio was diversified, but realized something recently. They have never actually built a retirement plan or discussed anything outside of investments, with their advisor. They had investment advice from their advisor, but they didn't have the clarity or the peace of mind that they were looking for. So when we first sat down, I asked them what made them reach out, and Sarah told me a story about them just thinking about their daughter getting ready for college next year. they were sitting there, they were talking about it. And at the kitchen table, Sarah looked over at Mike and said, Hey, we're 50. Our daughter's going to college, and in a handful of years she's gonna be graduated, starting her own life. And then she asked the question that stopped them both. What are we gonna do here? Now, now that we're going to be empty nesters, and this is very common for couples that are in the thick of it, right? I think about my situation relative to theirs. My kids are, six and three. So I still have what feels like an eternity away before my kids go to college. But really it's 10 to 12 years and we're, we're in that same phase of life, right? And so it can come up quick and if you don't plan for it, if you don't think about it, then you can, lose that piece of mind about what is coming next, right? and I can see how that can easily come up. Right. because suddenly retirement didn't really feel so far away for them, it felt very close and they realized something. They had spent 18 years planning for, Activities with their kids and getting their kids prepared for college and life and everything else, that they hadn't really spent much time thinking about retirement outside of contributing to, their retirement accounts and things of that nature. So here's the interesting part. Mike and Sarah actually are the type of people that most people would assume that are financially competent and have. Everything together, right? They have a household income, about$400,000. They had been doing all the right things for years, maxing out their 4 0 1 Ks. They had a brokerage account, or they have a brokerage account funding kids, college investing. Consistently. Their advisor had always focused on investments, and this is what I see a lot if. People have been working with advisor for 15, 20 years. if they're more of an older philosophy, they care more about asset allocation, rebalancing, portfolio performance, but. Oftentimes they never really sit down and discuss what actually matters to the client. And there's questions like, are we on track? Have we been doing the right things? What does our retirement timeline actually look like and what will we actually be able to spend in retirement? we had a long discussion about how they have reached out to their advisor, and their advisor just has, not been receptive to some of these questions and things of that nature. So this is not uncommon, right? if you have an older advisor, they're more, investment focused, right? and not that they're necessarily bad people or anything like that, it's just how they kind of do things. These aren't actually getting at what needs to be answered. All right? These are, these are planning questions. They're not investment questions. And so we sat down in the first meeting, I told them, uh, something that I tell a lot of people, investments are important, right? But investments are just like tools. If you outperform the s and p 500 by 5% every year for 20 years, but you still can't retire. What's the point, right? And so the real goal is building a plan that answers life questions. And so instead of starting with the portfolio, we start with talking about life. What life wants to look like or what they want their life to look like when retirement, starts. And so the first question we start to try to answer is. Well, are we on track? And this question is almost, one that everyone an or everyone ask in some form or fashion. Are we gonna be okay? Are we on track? What's my time horizon look like? All these sorts of different variations of, are we on track? And you can't really answer that question without understanding current savings, future contributions, retirement spending, taxes, longevity. Healthcare. so we, we spend a lot of time on that upfront and we model everything out. and they realize something reinsuring, and this is something I see a lot. They're actually in decent shape. They feel good about their picture. And so again, what the previous advisor failed to do is give them clarity on their situation. Where is our point A? And then start to work on how do we get to point B? But they have never seen that full picture before. and so that started to give some reassuring feelings. Question number two, we wanted to answer is. Have we been doing the right things? Right? So along the lines of are we on track? Did we do the right things to, to stay on track or get to where we've been? So a lot of people fear this moment. they worry about all the mis, they focus on all of this mistakes they've made, whether that be house purchases or cars, or credit card debt, or this or that. Mike and Sarah had done something incredibly powerful. They had consistently saved inside of their employer accounts and other investment accounts for over 20 years. And so they did the hard part, already. Consistency is one of the most underrated wealth builders. once we got organized and put everything into a strategy, it became clear that they were farther along than they had realized. And again, I see this a lot, especially with high income earners. With high achievers, uh, they always feel like they're behind. not always, but a lot of times they feel like they're behind and, they've actually done a lot of things correct and are a lot further along than than they think they are. And so now the question is, well, what does our retirement timeline actually look like? Mike originally wanted to retire somewhere around 65. Sarah hoped to retire around 60, but once we ran the plan, they realized that they could actually become. retirement optional around 58. And this completely changed how they thought about their future because retirement doesn't always mean stop working. sometimes it means having freedom to choose. And we talk about that a lot, especially on this podcast. This is the, the. Podcast for this type of thing, right? And so oftentimes couples come to me and they say, Hey, I don't necessarily want to retire at 55, but I wanna have that option to either slow down or stop if I want to. whether that be health related or, just a choice of your own, whatever that may be. That traditional retirement of I'm gonna stop and play golf every day, doesn't seem to be a common theme, at least in my practice. Right? And so. They just want the freedom to choose. And this is a very common thing. People want options. People want freedom. they don't want to feel like they're trapped, where their income is dependent on, on their lifestyle. They want, their income, independent of their lifestyle, right? And so the next question is, I know you say we can retire at 58, but what does that retirement spending actually look like? this is another big surprise for a lot of families, you're spending pattern in retirement often looks a little bit different than it does while you're working because every day is Saturday, right? We broke it down into to three phases. This, and this is not a novel idea, by me by any stretch. this is something that I stole a long time ago from an advisor. And so you have really three phases, right? You have the go go years where you're traveling, you're doing all the things in retirement, you want to go, go, go'cause you're still young, and you have the energy to go experience life, right? Whether that's helping grandkids, just enjoying your freedom. Enjoying your hobbies. again, traveling experiences, whatever that may be. And then you have the slow go years where maybe you travel every now and then, but you need more breaks'cause you're getting a little bit older. you have more routine. Maybe you have grandchildren that you want to spend more time with at sporting events or activities, whatever that may be. And then as you age and get older, you have the no-go years, right? Your lifestyle has slowed down quite a bit. Maybe you have higher healthcare costs, whatever that may be. and so once we kind of understood. How retirement would go. We can run the numbers and make them look much clearer where there is maybe a little bit more spending up front. and then it slows down as life slows down, right? And most people would think, oh, I'm just gonna spin in a linear fashion. But no, a lot of people, a lot of couples, especially early on retirement, spend more because they're traveling and doing all the things that they've been wanting to do with that freedom. Maybe they just haven't had, because of work or, or whatever, right? And so, uh, I often find that people spend more upfront in retirement and then it starts to taper off. And so about halfway through the planning process, Sarah said something interesting. She said, I thought this process was all about figuring out if we had enough money. Then she pause. But really it's about understanding what our life can look like and. She's exactly right. Financial planning isn't always just about numbers. It's about giving those couples clarity and confidence in what they've already built, especially if they're already close to retirement. Right. How do we finagle. What they've already built to give them the life that, that they want to live. Right? And so if you listen, if you're listening and your kids are approaching that college age, and you're like, Ooh, retirement isn't really that far away, this is a stage of life that often, Makes you realize that hey, retirement planning is not, something that is this, this thing that is unattainable or way out in the distance that I can barely see it's something real and that process or that retirement where, where I need. That point B of where I need to get, really take some planning, to make it become real or at least gimme the peace of mind that it will be real at one point. And so here are a few things you should start doing now. if you're starting to. Get closer to that stage of life. Start with your timeline. Ask yourself, when would you like to make work? Optional, right? or when would you like to retire? And what is your ideal retirement lifestyle look like? Is it, say, is it your current lifestyle now? Is there more travel involved? Is there more hobbies that maybe cost money that are involved? Give yourself some clarity around timing. This changes everything. number two, break into categories. You're so think about retirement spending, and again, if you're 15, 10, 15, 20 years out, retirement spending is kind of. It's, it's hard to to estimate. You can take your best guess, but if you're in that five to seven year window, you can start to get a good idea of what retirement spending will look like. So you can just break it into categories of what are my fixed expenses? How much do I want to travel, what do I expect my healthcare, to look like, taxes? And then if you're needing to help family or anything like that, what are our core. Core expenses that, that we will need to pay for, and make sure that we have planned for knowing your expenses. Knowing your spending target is the foundation of your plan. Next, we wanna organize all of our assets. So if you have lingering 4 0 1 Ks everywhere because you had a handful of different careers or jobs along the way, getting those consolidated, whether it be into one 401k or an IRA, brokerage accounts, and then any other investment accounts that you may have just kind of hanging around, whether you're organizing that through a data aggregator. Or if you're organizing that through, just consolidating the physical accounts. Many people underestimate this stage of organization, but really simplifying your situation can help you give, get a better understanding of where you're at versus having everything scattered around. I think the second episode of this podcast ever was about the desk drawer theory. and so this is something that. That I stole from my last firm or a term that I stole from my last firm. People have, this the thing that I called the desk drawer theory, where they have all these statements, and things of that nature. And a lot of this stuff is digital, so I should maybe come up with a better name for it. But, when they have multiple 4 0 1 Ks and IRAs and insurance policies and this and that, and they just have it shoved in their desk drawer, they don't really know what they have. That one of the best things you can do is just get all that stuff organized, get it on a data aggregator, combine some of those accounts that you can combine, so you have a better picture of where you're at, so that you can really know where you're going, right? And so the next thing is to ask yourself, do you know the answers to these questions? Do you know your retirement timeline? Do you know your retirement spending? Do you know the withdrawal strategy that you want to take? Do you know your tax strategy? Especially if you're a high income earner? how do we start efficiently withdrawing this money and not kill ourselves in taxes? So if this conversation with your advisor always revolves around your investments like it did with Mike and Sarah, something's missing, right? and they should be answering all of these questions, giving you peace of mind on what your situation looks like. what does your tax situation look like? How does this fit into my plan? How are we gonna start taking withdrawals off of this, and really much more. And so if you have a hard time reaching out to your advisor or they're, they're really just focused on investments, then maybe there's, there needs to be a change there, right? So Mike and Sarah came to me wondering if they had done enough, but by the end of the process, the question changed. two, instead of asking, are we on track, they started asking, What do we want the next 20 years of our lives to look like? And that's the real goal of financial planning, turning uncertainty into clarity. If someone, if you're someone who is approaching this life stage where you can start to see. Retirement at the end of the tunnel. and you're wondering, If you're wondering the decisions that I made, the con contributions, the investments, are they all putting me in the right spot to be on track? and you're just wondering that you can always go to my website, Palm Valley wm.com. We can have an initial conversation. You can look at. The process that I have built called the Palm Valley Pathway, this is the process that I have found that helps clients get the most clarity outta their situation to help them meet their financial goals. You can click a schedule call with me. Again, that first call is always free. We have a conversation, see if it makes sense for us to work together, and I can try to add as much value as I can in that initial conversation. if you like this podcast, go ahead again and share this with a friend that you think would help, and leave a five star review on your favorite podcasting app. And we will see you in the next one. This podcast is for educational purposes only, is not meant to be financial or investment advice. Please do not make decisions solely based on this podcast alone. Please seek professional help when considering your own situation.