mark-fricks

Tax Cuts Extended: What the One Big Beautiful Bill Act Means for Retirees

Tue, 29 Jul 2025 15:09:25 GMT

The new federal budget bill makes the 2017 tax cuts permanent, creates a temporary senior deduction, and raises estate exemptions, but also adds $3.4 trillion to national debt while cutting social safety nets. On this episode of Retirement Roadmap, Mark and Evan Fricks explore what these changes mean for retirement planning and identify strategies to maximize the limited window of opportunity created by today's low tax environment.

Evan Fricks:

What does the new budget bill mean for you? Hey folks, welcome back and thank you for joining us. Welcome to Master Plan Retirement Consultants Retirement Roadmap. My name is Evan, with me, as always, retirement planner Mark Fricks. During today's show we're going to discuss what the newly signed federal budget bill may mean for older Americans and retirees and its impact on your retirement tax strategy. There's a lot to get through here, Mark. In fact, we were discussing before this show if we were really going to go through this thoroughly. It's going to take multiple episodes.

Mark Fricks:

Four episodes.

Evan Fricks:

We're going to really try to the first half plow through just a 10,000-foot view of what we'll be discussing and then the second half try to get into more of the details of how that actually can impact retirements.

Mark Fricks:

Yeah, I'm concentrating more on the retiree. There's a lot of different pieces to the bill, as you know, as you just mentioned, but we'll hit most of those in the beginning, like you said, and then let's apply it to you as upcoming retirement or future retirement or current retirement. How it affects that, yeah.

Evan Fricks:

So, number one.

We already know our current debt situation in the United States at $36.2 trillion or something at this point.

Mark Fricks:

That was 20 minutes ago.

Evan Fricks:

That was yesterday, maybe.

So this bill is also introducing more of a debt impact. The bill adds an estimated $3.4 trillion to the national debt over 10 years, with wide-reaching implications for household finances and the broader community. What national debt over 10 years with wide-reaching implications for household finances and the broader community? What does debt have to do with retirement planning? We'll get into that a little bit later, but there's a little bit of a what goes around comes around, kicking the can down the road, so to speak, with this bill.

Mark Fricks:

Bills have to be paid. Government has to pay bills too. They just tend to put them on credit over and over again. That credit credit's getting bigger and bigger. So even though we've got a nice extension which we'll talk about, an unexpected extension of these tax cuts, right, a blessing there, but again it's going to affect us down the road, like Evan said, and we'll look at that a little bit.

Evan Fricks:

We've got some major tax changes. Now there are some calls to praise in this. We've permanently extended the 2017 tax cuts. This does benefit higher earners most, but lower earners may actually lose out on some of this. But nearly 70 tax provisions okay were included, including tax deductions on tips up to 25K, increased child tax credit, new deductions, things like that. But the 2017 tax cuts have now been made permanent, with an asterisk.

Mark Fricks:

That's right. Yeah, nothing's permanent in Washington. I think you may mention this later. But going back to the Kennedy years, it averages every eight to 12 years that cuts have been gone back up again, down, up, down up. So every eight to 12 years is going to be a change, and so this has been extended. But the only I wouldn't call it a guarantee but the only semi guarantee is that's going to go through at least the current administration.

Evan Fricks:

Yeah, absolutely. So, there's a lot of revenue recapture moves to offset the losses. Bill raises the state and local tax salt deduction cap. That was at 10,000. Now it's up to $40,000, but this is temporary, only to 2029, so you can basically choose whether you want to itemize deductions or not. If you do, you have up to $40,000 until 2029 and that goes away. Cuts to Medicaid we are ending green energy tax credits, there's some tariff loopholes that are being closed, just things like that. But there's really a mixed impact by income level. Okay. So the new senior deduction helps modest earners but excludes, like I said, lower income retirees who are already not paying taxes on social security likely.

Mark Fricks:

Yeah, it's hard to lower taxes when folks are not paying taxes. And I'm not saying that's bad, I'm just saying that folks that don't make much money, thankfully, are not paying very much, if any, in taxes. And so you know, when people say, well, you know it doesn't help the people that are in lower brackets, well, we can give them money back, I guess, but you know, at a zero tax rate. So it's a little bit of a political statement when people say that, but it does help a good bit, the middle of America for sure.

Evan Fricks:

Yeah, absolutely. And, like you said, you can't lower taxes if you're already not being taxed on your social security benefits in that sense, but with some of the programs that are being cut, then we do definitely see some of the strain on those lower income folks. But there is a phase out for the higher earners as well. So individuals who are 65 or older by the end of the tax year and have a modified adjusted gross income below certain thresholds Okay. So the deduction amount up to $6,000 deduction for each eligible senior, that's individual, $12,000 for a married couple where both are eligible. This is in addition to those existing standard deductions for seniors and so the phase out is the deduction begins to phase out for those whose incomes are 75k or above and is eliminated entirely at 175k for individuals and that doubles for couples.

Mark Fricks:

Right, right, and the phase out is, like I don't know, six cents per. Yeah, it's a weird formula, but it does phase out the more money you make, which is fair.

Evan Fricks:

And a really key takeaway, because there was a lot of rhetoric on both sides of this leading up to the passing of the bill there's no direct Social Security tax cut.

Mark Fricks:

Right.

Evan Fricks:

People say "why don't you want no taxes on Social Security? Well, you know that comes with a whole other barrel of monkeys to discuss. But this is just a bonus deduction that could help some retirees.

Mark Fricks:

Yeah, if you got rid of the tax on Social Security, you just lost part of the funding of Social Security, so you've killed it that much quicker. So they really couldn't do that. So really they came back door and said well, we'll give you a tax deduction that helps offset maybe some of what you're paying to Social Security, but Social Security taxation on that has not changed.

Evan Fricks:

And this is also temporary- this is till the end of the 2028 tax year, unless again renewed by Congress.

Something else we really need to consider as people planning for retirement or current retirees is the social safety net cuts. The bill includes nearly $1 trillion in cuts to Medicaid, Medicare and the Affordable Care Act. New Medicaid work requirements and stricter eligibility checks could leave 12 million more people uninsured by 2034. Supplemental nutrition assistance programs SNAP as we all know benefits are also being tightened. We'll get into this a little bit later, but really the discussion here is we need to be more self-reliant in retirement and make sure that we've covered all of our bases, but we'll get into the details on that in a bit.

There are weakened consumer protections and loan changes. The Consumer Financial Protection Bureau's budget is cut in half, potentially reducing investigations and refunds, like cracking down on illegal junk fees, tackling discrimination in housing, protecting service members and students from scams. Why do we bring that up? That can directly affect your finances. So we need to be a little bit more vigilant as individuals. It seems in that sense as well. While business tax cuts may boost the economy temporarily, they also come with $3 trillion in additional to national debt. Again, we need to include this debt discussion, because that's going to come up in our conversation later. Major spending includes $1 trillion of defense and immigration enforcement, plus $90 billion for the border wall and detention facilities. And again, we also know with the increase in SNAP we're also losing the temporary increase in SNAP. We're also losing our energy incentives for clean energy, tax credits, things like that. All right, so now the meat and potatoes of the conversation.

Mark Fricks:

If you'd like a transcript of today's show, just email us.

Evan Fricks:

I did all that in one breath. Okay.

So what does it mean for retirees? All right, so we have a colleague in the industry, Becky Swansburg, and she's said this several times the one constant in Washington DC is what, Mark?

Mark Fricks:

Change.

Evan Fricks:

Change, the one constant. Right. So tax rates and standard deduction made permanent. Okay, so for middle America, about 30% lower rates pre-reform from the 90s and the 2000s and now they're permanent. And again, we said that's permanent with an asterisk and government until Congress makes a change, because we know, as you like to say, tax laws are written.

Mark Fricks:

And let's really let's hammer that home really quick. The tax cuts in 2017 were big. It's one of the biggest tax cuts in history of the US Average American less 20 to 30% taxes. So that extension is huge. We've been looking at this date for a long time almost like in disbelief. When a Republican got the White House and the Senate and the House both got Republican, that allowed them to extend that, and so that's a huge part. A lot of negatives in the bill a lot of things that will increase debt and again, maybe it kicks the can down the road that much further, but it does give us a window of things that will increase debt and again, maybe it kicks the can down the road that much further, but it does give us a window of opportunity which we're going to talk about.

Evan Fricks:

There's a really interesting average here. So most permanent tax cuts last between 8 to 12 years. Historically, that's really reasonable when looking at our history. But we are in extremely volatile times and we're seeing the pendulum swing back and forth. Politically, very much so 8 to 12, volatile times and we're seeing the pendulum swing back politically with. Politically very much so eight to twelve. Let's maybe cut that down to eight to ten, or even less these days, we don't know, but we're so, so volatile right now. Okay, so we know we've also got the enhanced senior deductions. All 65 plus individuals have the opportunity for those tax deductions on top of the existing deductions. We we mentioned that earlier 6,000 single, 12,000 for couples, not permanent. 2025 to 2028 tax years, next four years. Why do we bring this up again? Roth conversions will need to be examined closely so you don't lose the extra deduction.

Mark Fricks:

Yeah, because there's an income limit and Roth conversions count toward income and so, just like other areas can be affected, it's not just your federal tax, but it could be tax credits, tax deductions, things of that nature. So you do have to be careful, and if you're working with somebody that doesn't understand this and all of a sudden, in April of the next year, you get this big tax bill from whatever source, which we'll talk about in just a minute that's a big no-no. That's not whether they're not knowledgeable, whether they're not fiduciaries and they just want to do whatever. It's always a good thing to convert, but you've got to use math, you've got to be strategic.

Evan Fricks:

Absolutely and combining that with SNAP as well over the next four years where your deductions might be coming from, trying to build in some Roth conversions leading to retirement at the same time or, in retirement, trying to balance that with Medicare and IRMA. There's a lot to balance here. There already was a lot to balance in retirement, Now there's a couple more layers. Absolutely. Some more good news $30 million estate exemption. So we've raised our estate tax exemption now to $15 million for individuals, $30 million for couples.

Mark Fricks:

That is now permanent with an asterisk high and just folks that may not be familiar with this is you pass away as an individual. Your first 15 million of your estate is estate tax free. After that it begins being taxed and not too many people have that much money that's mostly the very high and wealthy or semi-wealthy right but it can affect you. But I mean just a few years ago it was six million, before that it was three million. So anything above three million you were taxed at 50 percent. So that's a good extension against it. It's permanent until it's changed.

Evan Fricks:

Right. Did the majority of Americans need it that high? That's a different conversation, for sure, but the the risk that we were worried about was it going in the opposite direction and lowering it? Risk that we were worried about was it going in the opposite direction and lowering it? Because we know it was on the table to get to three million. Um, and you know you, even three million might seem like a lot for some people, but when you start adding in life insurance, IRA, 401k,

Mark Fricks:

Your residents...

Evan Fricks:

Your residence...

Mark Fricks:

Your rental house...

Evan Fricks:

Right, you get there real fast, yeah.

So we do want to take a moment, folks, while we're uh plowingowing through this episode, to point you to our website, masterplanretire.com . There you can schedule your complimentary consultation to discuss your own retirement. Have a series of reports ran for you as well. See where you stand. That's masterplanretire.com . Or call us at the office, 770-980-9262.

So the Medicaid and the SNAP cuts these are permanent. Why do we bring these up? We did discuss briefly earlier that our social safety net is starting to be pulled from beneath us. So why does that affect retirees? Well, obviously we need to consider long-term viability of our social safety net structure. In America, funding shortfalls are projected for the Medicare program. Currently we do not have enough revenue coming into the government or being allocated to cover all of the benefits that we owe people. So over the next century, the next 75 years, there's about a $78 trillion shortfall in Medicare and Social Security benefits alone. That's a big number, you think. 75 years, that's going to be our kids' retirement. There's one of two things that the government can do, or they can do both of them, actually, but let's think of the two options. One they can raise taxes or they can reduce benefits.

Mark Fricks:

And from what I've read, you pretty much have to do both.

Evan Fricks:

That's exactly right.

Mark Fricks:

One or the other one, I mean you'd have to raise taxes to the 1940 highest rate, which was 90%. Would we accept that? Probably not, but certainly. And it's not just federal taxes, it's all these little pieces that come together that you know, just like the IRMA or Medicare Part B that goes up every year, but it also increases based on income, and so that's kind of a hidden tax. People don't realize, and so that's just another piece I think will be introduced as we go through time. But I do think, absolutely, as you're hitting, that our kids and grandkids are going to be paying the price.

Evan Fricks:

So we already can anticipate an increase in taxes. I mean, we are at a historically low point in our tax history. There's really nowhere to go but up, especially when we start to dig into our deficit. But let's talk about the benefits. Who are they going to reduce benefits from Savers with more income? So it's critical we want to plan for Medicare and Social Security benefits. We need to include those, but we also want to ensure that we have strategies, income sources and long-term care protection. So if the government decides that folks need to take more responsibility upon themselves, it won't blow up our retirement plans.

Mark Fricks:

Yeah, so many people have so much money in IRA traditional IRA, 401ks, things of that nature and these are just ticking time bombs that, as they continue growing and if your kids inherit that, which hopefully they will they've got to take that money out over 10 years. What's their tax rate going to be? Well, they'll be in their 50s and 60s We've talked about taxes almost assuredly will be higher, and now they're forced to take money out of that inherited IRA along with whatever income level they're at. If they're forced to take money out of that inherited IRA along with whatever income level they're at, well, if they're in their 50s and 60s, they very well could be in their highest income bracket at that point as well, and that has just put a burden on them as well at maybe a rate that could be double what we're at now. So it is so critical. You know one of the stats I picked up here and maybe we're going to share that earlier, but in 2024 tax year we had $4.9 trillion in taxes come into the government.

The programs that are mandatory Social Security, medicare, medicaid the interest on our debt I'm not talking about defense, I'm not talking about any other program Going out was $4.9 trillion. Does that sound familiar? That's exactly what came in, so that doesn't include these things that they have to kind of look at every year like defense spending. Do we want to get rid of our defense Totally? We can't right. And so what about things that are passed in Congress over the year? You know new programs, you know funding more for FEMA because of more disasters, all this kind of stuff, and so there is no way you're going to avoid having a deficit every year which increases the interest payments. I think defense last year was $1.8 trillion.

Evan Fricks:

All of discretionary spending. So exactly Our mandatory spending, which is written in law, was $4.8 or $4.9.

Mark Fricks:

Yeah, so that's exactly what came in, so that doesn't include all the other stuff.

Evan Fricks:

Yeah, that's 1.8 additional, 1.8 trillion additional. Yeah, absolutely so. Do we think we are likely, as a nation, to decrease government revenue or increase government revenue?

Mark Fricks:

Well, again, they're going to have to do both. They're definitely going to increase. And see, you know, a lot of the people in Washington want to add more programs too. So you, you're going to have to have that much more in taxes to catch that up as well. I mean, literally, we taught a class, what was about two months ago, where the debt was 34 trillion yeah. Two months later it's 36 trillion, yeah.

And so this, this is just building upon itself, and you know, I'm not trying to alarm anybody, but we need to wake up and say what can be done today to relieve the burden when taxes do go up. And so, you know, there's a couple of things that I'm sure you're going to talk about, but I do want to kind of pound on this a little bit more. One of the problems is demographics. We have an aging population, more and more people going into Social Security, medicare, maybe Medicaid in many cases as well, so that aging population, fewer people working to pay into Social Security and with the higher income levels to be able to pay into taxes. So they're going to have to tax the seniors more to capture that back right. And then, like we just were talking about the debt and deficits that we'll have to pay more and more interest on as well. So that's two. That's just two things that have combined to come together to just explode the situation. So we're celebrating a little bit today because of the extended tax cuts, but it gives us kind of a window yeah, like we talked about, and the window which you may get into and I hate to step over your outline, but we've got, at least we think, four years to take advantage of the taxes on sale mentality, being careful, because again you get into messing up some deductions, you get into paying more for Medicare Part B, so what is that amount we can convert into some tax-free vehicle.

There's a couple of them out there that we really like to use. Roths are one of them. You pay the taxes as it converts into that Roth or other tax-free vehicle that is currently in an IRA and now it's never going to be taxed again to you, your kids, whoever inherits it. So whatever those rates are, when your kids are inheriting that Roth IRA, no taxes. You also don't have any required minimum distributions on a Roth, so you're not forced to take money out in older age.

And if I'm 65 now and at age 75, taxes go up tremendously. That's the age I had to start taking money out of my IRA. And what if I don't need it? I still take it out, and so that's a taxation as well. So this is the opportunity that we're really promoting today is to work with someone that understands. Not just, hey, I can fill out a form and convert some of my IRA to a Roth, but strategically, so I don't hurt myself too much now. Now there is a pain period too much now. Now there is a pain period. There is some pain now because you are going to be paying more in taxes because you are converting, but not as much as you'll be paying over the next 10, 15, 20 years and your kids will be paying over the next 10 years after that. So really work with someone that understands all of these laws, understands the changes that have taken place and understand the importance of tax-free income in the future and understand how to do it strategically.

Evan Fricks:

Absolutely, and right now, especially when people are looking at okay, we've just gotten these tax cuts extended and made permanent. What are you guys complaining about? Are we still harping on the Roth conversions? Yes, because now is the time to do it. If you are younger and you don't have as much to convert, now is the time to make sure you are allocating younger and you don't have as much to convert. Now is the time to make sure you are allocating your contributions to tax-free vehicles, roths, some of these other vehicles Marcus mentioned before. Folks, like I mentioned before, we're not on a low tax rate forever. Okay, we've got 8 to 12 years, historically on average, before a change in the permanent tax bracket. We're super volatile. Now it could be the end of this term, a presidential term, and again when we spoke about the pendulum back and forth is getting more and more extreme. What's the next?

Mark Fricks:

Yeah, and what Evan means by that too is the fact that in Washington, we have new people in Washington every two years. You know the House is every two years, the White House is every four and the Senate is every six. New people, and the majority changes almost every time in at least one or two of those places, maybe all three, like they did this last time. And so the changes come, and we all know that certain parties want to spend and certain parties want to save. Some of them have kind of merged together, want to do a little bit of both, okay, and so it's got to come from somewhere, otherwise our economy is going to collapse under the weight of the debt, and so this is not necessarily a problem for our children and grandchildren, it's a problem for our country and our economy. And so what happens in four, six or eight years we don't know. We're already with the extension will be eight years into the tax cuts. Right and so.

But help yourself now by getting that money into a tax-free situation and also being better diversified. You know I talk about an economy or going into a recession or whatever because of this debt. Be better diversified for retirement, don't just put all your money in the market and hope for the best, because we know we have a bear market every five years on average, and the average drop is 34%, and so it's not just about taxes. It's also about preserving your money. So when we are designing a portfolio for retirement, we're using multiple portfolios. We're using precious metals, gold and silver which react differently to the market. We use protected accounts that provide income, and so you need to look at it differently than you did over the last 30 years when you were growing. So this is a taxed discussion, but it's also a discussion about being prepared for whatever it could trigger.

Evan Fricks:

Yeah, and I also like when you discuss the political parties, it's not a Democrat or Republican conversation. You know you might be thinking, well, we'll just get another conservative the next year or next year. Elections have impact, but they really only serve to slow or accelerate this path where we can't afford to provide services to the demographic growth that is coming in the future. It's inevitable. It's really not a political problem. A lot of the future spending is just simply a math problem.

Mark Fricks:

It is a math problem and again it's going to take both chopping blocks. You're gonna have to cut programs. Nobody likes that. I mean, you mentioned cutting Medicare. You mentioned cutting Social Security. People are outraged. Of course they are. Well, let's cut defense spending. The world is getting really dangerous. You know it's tough to cut that. So what do you start cutting? Okay, well, you start cutting some of these other programs that's going to affect somebody else, but also, at the same time, they're going to have to raise. Economists tell us you've got to do both. You've got to cut spending and raise taxes. There's no other way around it. And the longer we wait, the more we've got to do with both.

Evan Fricks:

As if we didn't need more complexity to retirement planning. However, folks, if you would like to discuss your own retirement with retirement planning professionals, please do visit our website, masterplanretire.com. There we have conversations about your retirement hopes, dreams, fears, goals and then we run a series of reports, a 10,000-foot view of your own retirement. We put the key in the ignition and see okay, how far does your money go, stress that, test that and then have an opportunity to create your own retirement. We put the key in the ignition and see okay, how far does your money go, stress that, test that and then have an opportunity to create your own retirement plan.

Mark Fricks:

Including the impact of taxes on your future as well. So there's a button, a little green button schedule a meeting. That's complimentary. I hope you do that, but again, I hope today was helpful. A lot of information, we understand what's going on so hopefully you'll come see us. Until then, plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

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 MasterPlan Retirement Consultants a Registered Investment Advisor in the state of Georgia, Mark Fricks and MasterPlan Retirement Consultants are not affiliated with or endorsed by the Social Security Administration or any other government agency.

Maximizing Your 401(k): Hidden Strategies and Common Pitfalls

Tue, 22 Jul 2025 14:48:06 GMT

On this episode of Retirement Roadmap, Evan and Mark explore how to maximize your 401(k) balance and integrate it effectively into your overall retirement strategy.

Evan Fricks:

How can I maximize my 401k balance? Hey folks, welcome back and thank you for joining us. Welcome to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan and with me, as always, retirement planner Mark Fricks. During the show, we're going to look at how you may be able to boost your 401k balance and how it may fit in with your overall retirement plan, mark. A vast majority of Americans in 2025 have what we call tax deferred money A lot of that in 401ks, iras, things like that. It's a pretty considerable amount of their assets.

Mark Fricks:

That is the majority of their assets. That's the way we've been saving since 1979, when the ERISA laws came out, created the 401k and it gave workers a great opportunity to almost automatically save. You almost don't see it leaving because it's just not part of your paycheck. Kind of the same way we pay taxes right, but it's less painful. And then, of course, if a company matches, it's free money. So yeah, it's been a great way to accumulate money. It's in the market. Markets grow over time. You know the pushback or the negative is, of course you've got taxes as it comes out. But still it's a great tool and the more you can do with that the better.

Evan Fricks:

Yeah, when they came out in 1979, early 80s, they started rolling them out, doing away with more pensions, putting more of the responsibility on the employee versus the employer with pensions. They didn't put too many people through classes or hand them a handbook of 401ks and you or anything else like that you tell the story all the time. You didn't know what you were picking when they introduced this new fangled 401k. We don't get training as employees on how to invest or even what the rules are.

Mark Fricks:

And we still don't. They didn't in the beginning and they don't now. And so people are playing in the market to use probably not the best word in the world but they're playing in the market with very little knowledge. And so, as you said, I've told the story very quickly.

I think it was 1981, my first corporate job, and they came in after I'd been there six months and said hey, you can open a 401k. And I said, great, what is that? And then, and they didn't really know, you know the HR department, you know they're just like well, you just choose an amount of money to put in there, we're going to match this much, and then you just need to pick some mutual funds. I this much. And then you just need to pick some mutual funds. I said, oh, perfect, what's a mutual fund? And so it's just really blindly entering the market and not knowing how to maximize it, which we're going to talk about today, how much to put in there. And then, of course, when I got my next job, if I remember, I think I ended up spending what was in there. I wasn't educated about it and how to handle it.

Evan Fricks:

Yeah, you don't know, especially when you're young, in your 20s. It happened to me and I had some bills I needed to pay. I wasn't earning a bunch of money, my income was super low, starving artist early 20s and I saw my bills piling up and I saw a couple thousand dollars in a 401k. Hey, let's just do this. I'm young, no big deal. But once all was said and done on that phone call, on that withdrawal, seeing how much came out wasn't even fully vested the amount that was in there versus what ended up in my pocket.

Mark Fricks:

And you had no idea, and I had no idea, I was going to do that.

Evan Fricks:

I had no idea.

Mark Fricks:

You're like I can pay all my bills and when you get your money, you're like I can pay two of my bills. That's right, whatever it may be. Again, lack of education, and that's true in in a lot of different areas of retirement planning. We work with a lot of federal workers and they're not educated about their system and their pension and how their stuff works, which is why we teach so many classes for federal workers, both online. By the way, if you're a federal worker, visit the website masterplanretire.com , look under events and it will talk about upcoming classes for that and, of course, everything else we teach as well.

Evan Fricks:

So, starting out to maximize your 401k, first of all, don't stop auto-enrollment. Many employers start you at 3%. That might not cut it long-term, but you can boost your contributions each year, especially after a raise, to build a stronger foundation for retirement and legacy.

Mark Fricks:

That's the perfect time to do it. Pay yourself first. If you get a 5% raise and legacy, that's the perfect time to do it. Pay yourself first. If you get a 5% raise, bump your 401k maybe by 1% or whatever. Also, let's make sure you also have some cash as well, though let's be careful with this. If you're maxing out your 401k and you have $300 in the bank and you have an emergency, will you go to get the money? Either a credit card or a 401k, which is going to be a penalty. So do make sure you're feeding a little bit into a savings account as well. But again, maximizing that 401k is baby steps. Start off with what you can and then add to it as you can.

Evan Fricks:

And these days, especially if you are between jobs, trying to find a new position somewhere, looking at the benefits that the job provides can be a make or break for some people and check that out before you accept a job. Because if they're matching, have a good percentage that they're contributing, that can, for the long run especially, that can really be a great great deal and those that don't know.

Mark Fricks:

You know a good match is at least three percent. Five is a really good match and I know a few companies do even more than that. But yeah, that's a question you need to ask. It's not just about them asking you questions. Hey, what are you going to give me, because there are other jobs out there, Right?

Evan Fricks:

and that's a great segue to grab the match. If your employer offers a 401k match, contribute enough to get every penny that is offered on that match. That's free money, just for showing up and being smart, basically.

Mark Fricks:

Exactly. An example, of course, is again if they match 3%, then put in 3% as soon as you can and again, keep growing it.

Evan Fricks:

I mentioned earlier, when I made my withdrawal in my 20s on my 401k, I was not fully vested. Know your vesting schedule. Leaving a job before you're fully vested could cost you employer contributions. Think strategically beyond just this position before making that career move.

Mark Fricks:

Yep, yeah, again the vesting schedule. What Evan's referring to is the fact that the longer you work there, the more the match is actually yours, right, and so if it's a 10-year vesting or five-year vesting, I'm not saying you need to stay there that long, but do keep that in mind.

Evan Fricks:

Yeah, so Mark did mention be careful about contributing too much if you're not able to financially, but you do want to maximize those and make sure you can look at what you are able to do, work with your financial and tax professional to take full advantage of the limits. So there's up to $23,500, and that's not including the catch-up contributions. That's per year. That can go a long way when compounded over time.

Mark Fricks:

Yeah, and I know it's hard to do that in the early years. But as you get older, especially if you have kids, as they get older they maybe get out of college. That's why they have the catch-up contribution provision starting at age 50. You could put more in because, hey, you know they realize that in those early years you're just trying to make ends meet. Sometimes you try and get groceries paid. You know the kids are in daycare or whatever. So as you get older, always take a look at how much can we boost that up?

Evan Fricks:

That's right, and a lot of 401ks these days are now offering Roth options. See, if your 401k offers a Roth, that can be, but it comes out tax-free as well. But consider it carefully because once you start contributing to the Roth, you do not get that deduction that. You're the same as you would if you were putting it to the traditional side of the 401k, so that will affect your paycheck a little bit.

Mark Fricks:

Yeah, that's why it's a great time to maybe, when you get a raise, start putting that raise into the Roth, because you're not going to see a change in your paycheck. But, like you said, if all of a sudden I'm taking, say I'm contributing 10%, I say, okay, I'm going to put 5% into the Roth. From now on your paycheck is going to go down a little bit. So take baby steps, just do 1% or 2% at a time, say, hey, that wasn't too bad, I can do another 1% or 2% and go from there. So be very careful about that, be very strategic.

Evan Fricks:

Yeah, and you can still get your match. If you're contributing 5% and the match is 5% from your employer, you can contribute your 5% into the Roth portion. You don't have to put it in the traditional portion. However, employers still have to contribute to the traditional side. I don't, in my opinion, I think a lot of things would have to change before an employer would be incentivized to put their match into the Roth portion. They get so many tax breaks, things like that.

Mark Fricks:

Yeah, I don't see that happening, even if they start allowing it, which I think they may allow it now. I think I've seen one or two plans that maybe allow it, but from a standpoint of that match, they're going to put it into the traditional part, as long as I can see in the future.

Evan Fricks:

Yeah.

Don't cash out early, all right. So tapping into your 401k before age 59 and a half can trigger taxes and a 10% penalty, or worse, as we mentioned, with the vesting schedule earlier, it sets your future self back by cutting off compounding interest and shrinking your legacy potential. We know emergencies happen. Sometimes you don't have a choice but to go to your 401k but understand the penalties involved. There are some options before 59 and a half for pulling out penalty free from your 401k. There's first-time homebuyers. Certain medical or emergency needs qualify as well, but by and large you need to know the penalties in place there.

Mark Fricks:

And research that carefully because you know, maybe you think you do qualify, you take it out and you get a tax bill. It can hit you pretty hard, so be careful with that. Just know your options. Again, talk to your CPA, your financial advisor. We have the answers, yeah.

Evan Fricks:

And another interesting option. It's a little off the beaten path from what we're discussing but it's also on withdrawals. If you are 55 or older between 55 and 59 and a half and you decide to leave that employer and you have a 401k with that employer, as long as that 401k is still there, you actually can make penalty free withdrawals after 55 from that 401k. A lot of people who want to retire a little bit earlier maybe they're retiring at 55, they retire, they've got this 401k. But A lot of people who want to retire a little bit earlier, maybe they're retiring at 55. They retire, they've got this 401k. But they start maybe they're talking to an advisor who's not fully thinking or not thinking in their best interest they start rolling over their 401k to different IRAs to try to set up their retirement plan. Well, they just lost that penalty-free withdrawal because the IRAs themselves are still 59 and a half like 401ks. But that last 401k at your employer you have that liquidity for those four and a half years.

Mark Fricks:

Yeah, and that's why, when we work for folks from 55 to 59 and a half, we will leave some in that 401k. We'll kind of figure out okay, we got this many years, this much liquidity, let's leave maybe 20% in the 401k or whatever. Go ahead and get the rest of it to work in better ways and more diversification, but leaving some in that 401k or thrift savings plan or whatever. And again, I've seen so many advisors that I've had to come behind and kind of clean up messes because they rolled the whole thing over because they wanted to make the money on it or get the commissions on it or get the management fees on it or whatever.

Evan Fricks:

nd just made a mistake, or just didn't know, just wasn't thinking.

Mark Fricks:

Just didn't know, and that's where you know it's good to work with people that have been around a while, know all these rules and make sure they're again in your best interest. A fiduciary, yeah.

Evan Fricks:

Now speaking of leaving that job, roll it over.

Mark Fricks:

Don't start over so if you change jobs, a direct rollover into an IRA or a new 401k helps you avoid taxes and penalties while keeping your retirement savings on track and growing yeah, I don't like leaving a 401k at an old company and I typically like and again, every situation is different but you're better off in most cases having somebody take a look at it and it may be in your best interest to roll the majority over into a private personal IRA, because the the world is your oyster. You know, in a 401k, you know you're limited to 10, 20, 30, 40, 50 mutual funds in the world. You're you're unlimited. I mean, there's so many things you know, as I talked about in class.

You know you can buy a rental house in an IRA. You can't buy a rental house in a 401k. You can buy precious metals physical in an IRA. You can't do that in a 401k. You can get actively managed portfolios of individual stocks in an IRA. Most of the time you can't get that in a 401k. So it does open up the world but again, it's not always hey, let's do it all, let's do a portion, but when you change jobs, make sure you have somebody take a look at that that is a fiduciary again and see what is in your best interest. That's right.

Evan Fricks:

And a big one. Watch those fees. High fees can quietly eat away at your growth. Review your options again with a financial professional. Keep more money working for you. See, I think there's a confusion with 401ks. People think that they're generally low fee and they can be, but in general they're more on the higher end of fees, not only because of the plan itself, but each mutual fund without a 401k has its own individual fee and, like you've said before, if you don't read the prospectus on that mutual fund, you don't know what fee you're paying.

Mark Fricks:

Yeah, may be two percent. You know, and it's um kind of hidden in the prospectus. Uh, studied, studied down, I think about five years ago, determined that 401ks on average were some of the most expensive investment vehicles. And again we we want to use them because of the match and everything else, the automatic contributions, but again they can be pretty expensive. You start looking at those individual mutual funds. A nice international fund, 1.75 percent is coming out. You just don't see it. It's inside that fund. And so people come in and say no, I'm only paying 25 dollars a quarter as a fee, or what I said.

Evan Fricks:

Let's take a look at that and see for sure and it doesn't mean that a high fee mutual fund is bad for you. It kind of depends on what its track record is, what you need as far as diversification. But just keep in mind you are paying a higher fee for something that is not actively managed.

Mark Fricks:

Right, right and again. That's the benefit of many times moving some of that form of gate into IRAs, either when you change jobs or get a certain age or leave a company.

Evan Fricks:

Yeah, and I like that too, about the international funds or something that might be a little more robust. Diversify smartly. Don't fall into home country bias. Spread your investments across asset classes, tax treatment styles and global markets. Real diversification happens inside the portfolio, not across brokerages.

Mark Fricks:

And be careful if you work for a company that has an option to buy their stocks. I'm not saying it's good or bad, but I've seen some people come in here and 90% of their 401k would be in their company stock and I can understand the feeling of you know this is my company and I know it's strong. We have good workforce or whatever. But no company is perfect and you know there's a changeover. If you look at the Dow Jones over the last hundred years, every 20 or 30 years there are some different companies in there, ones that have entered it, ones that have failed. I mean you look at the GEs and companies big, huge companies that were too big to fail that failed, you know, or at least certainly dropped in value. So, as you said, diversify, including your company stock as well.

Evan Fricks:

Yeah, we see that around here a lot. We've got a lot of big companies in Atlanta. We've seen a lot of folks with Coca-Cola 401ks and they have a ton of positions in Coke and fortunately Coke's a relatively healthy company, especially the last few years. But that's the opposite of diversification. That's all your eggs in one basket. So, yeah, be careful on that. And that can be hard too. You put in, you have that loyalty to your company. You put it in for years and years. People maybe this is you or maybe this sounds strange to you, but people really do have an attachment to those shares, especially after years and years. They have that built-in loyalty. It can be really hard to pull the trigger. Then, on the other hand, some people are like it's time to retire, get rid of it all we're getting out.

So yeah, just keep that in mind.

Mark Fricks:

I don't know how many people remember Enron. Enron this has been many years ago and I don't even remember all the details at this point, but a company was so large, too big, to fail A lot of those folks in fact I think they had pensions with them as well A lot of the pensions failed their stock price, they went away and these people were just devastated. I think that happened with another tech company, I don't know, 15 years ago that had split off from, I think, bell South or when the breakup came about, maybe 20 years ago. But again, no single company is perfect and just diversify.

Evan Fricks:

Right Plan for RMDs Now. If you're younger and you're just trying to figure out how to maximize your 401k, maybe you're not even thinking about RMDs at this moment, but required minimum distributions once you turn 73 for most people right now. If you're younger, it's more likely when you're 75, but you're required to take distributions. That's from 401ks and IRAs, and there are some tricky things with that as well to consider. You can't aggregate all your IRA RMDs. You cannot do that with 401ks. Each 401k has its own RMD. You can't take the full amount from another 401k and expect the other to be covered. You got to plan for that, and not only to make sure you're taking them, but consider the tax implications as well.

Mark Fricks:

Yeah, and as to your taxable income, of course, that's why we love the Roth no RMDs on that. So if you don't need it, you don't take it, and so you just let it grow tax-free. And when you do need it, it comes out tax-free. So even if there was an RMD, at least it's tax-free, but not an RMD until you pass away and or your spouse has gone as well. Then whoever inherits it will have to pay. Take it out over a 10-year period, but still it's tax-free.

Evan Fricks:

That's right. You can start to see now how strategic some of these things have to be building RMDs into income plans, tax strategies, things like that. We do that every day with our clients and much more. We have to figure out how all of these money retirement aspects fit together, because we know if you make a change in one area it's going to inevitably affect other areas. If you are interested in discussing your own retirement folks, go to our website, masterplanretire.com , or give us a call 770-980-9262. We offer complimentary consultations to discuss your own retirement, no strings attached. We'll run a series of reports for you 10,000 foot view of your own retirement and see where your strengths and weaknesses are.

Mark Fricks:

Yeah, take advantage of it. These reports are very revealing. No, as Evan said, there's no cost, no strings attached. We're not trying to reel somebody in or whatever. We want to reveal to you where you're at, and then you take a look at that and go hey, I think I do need help. It's almost like going to a doctor Sometimes we're afraid to because we're afraid we'll find out something's wrong. The sooner you find out something's wrong in your finances and retirement, the sooner we can work on it and get it healthy. That's right.

Evan Fricks:

Another big part of the 401k. Know your time horizon. I've just talked about RMDs. That's a very specific age, but what if you're in your 20s or 30s? You need to know your time horizon, not only for well, mainly for diversification purposes, to make sure that you are allocated correctly. Because, let's say, you are in your 20s and you don't realize that most of your money and your 401k is in a money market or a bond fund or something really conservative. You're really missing out on the opportunity. You have to be a little bit more aggressive in your investments. On the other hand, let's say you are getting close to retirement and maybe you are in some really aggressive funds that are more aggressive than your risk tolerance. And hey, if I've got two years before retirement, I don't know if I can take a big market hit like 25% drop or something. Know your time horizon. Know your risk tolerance.

Mark Fricks:

Well, you know, bear markets happen on average every five years. So a bear market is a 20% or more drop in a major index Dow Jones S&P 500. And so if that happens every five years, it could be in three years, it could be in seven years. Even if it's not a bear market, it could be a correction which is 10% or more. You know. So if you're a year away and you lose 25% of your 401k, you're probably not retiring in a year and a half. You probably have to work a while longer. So again, if you're working with someone or this is something we do every day, as we can either manage a 401k or at least take a look at yours once a quarter or whatever, and say you know, we need to kind of lighten up on this. Hey, we need. You're 25 years old, we need to be more aggressive, or whatever it may be. So this is not a general recommendation, just kind of more of a general statement. Be careful with that time horizon, as Evan pointed out.

Evan Fricks:

Really important. Your 401k does not live in a vacuum. It is not in its own bubble. You need to start looking at your 401k of how not that your 401k is your retirement plan, because a 401k is not a retirement plan. It is an account meant for retirement clients who sometimes we roll over their 401k. Maybe they're not at that point yet and so they still have a 401k and then some outside accounts IRAs, roths, insurance products, whatever. All of those are tools. So if you are setting up your retirement plan, understand how your 401k fits with your other buckets. Just a real quick example would be maybe you have an opportunity to be more aggressive with some of these buckets over here. That's maybe actively managed aggressive portfolio. They're trading whenever they need to, and maybe your 401k. You're using that as maybe you're more moderate or you're more conservative. Just, it goes per client. It could be different for anybody, but understand how it fits within your overall retirement plan.

Mark Fricks:

Absolutely. And again, how much to leave in there? How much to roll over? When do you roll it over? Again, I do not like rolling over a 401k plan to a new company 401k plan, so get help with that. I'm not saying it's always wrong, but it's typically not a great idea. But Evan's exactly right. You've got other things going on. Something else we look at, evan, as you know, is let's say, somebody is putting in 5% into their company the 5% they're getting a match, but now they can put a little bit more in. Maybe put that into a or IRA that is being separately managed, up to $8,000 if you're over age 50. Is it $7,000 if you're under age 50? I don't memorize those kind of numbers, folks.

Evan Fricks:

It changes so often.

Mark Fricks:

Absolutely so. Again, that gives you an opportunity for different levels, different types of investing.

Evan Fricks:

Now, a reason you might want to keep some money or roll over your 401k to your new 401k. Maybe you are having financial difficulty or in debt or need to take a loan from your 401k. That's an option as well. You can take loans up to a certain amount from your 401k, but keep in mind when you are starting to move your 401k around if you have a loan on your 401k, do not exceed that amount when you're withdrawing.

Mark Fricks:

Yeah, you had to pay taxes on it, yeah, so you have to be careful of that.

Evan Fricks:

Mark, should I have an IRA and a 401k?

Mark Fricks:

Just as I kind of mentioned, I think it's a good idea I think if you get some extra money and you've already reached your match, always take advantage of the match. I think definitely having a couple of professionally managed IRAs. Again, you mentioned the actively managed portfolios. These are portfolios that are being computer monitored using algorithms and so they're able to hopefully try to look into the future a little bit better Not perfect, not risk-free, but performing, based on studies, and so that will give you again different flavors. I like different flavors of investments and so maybe I've got a dividend portfolio being actively managed over here, a growth stock portfolio over here, a sector rotation different flavors because different portfolios do different in different markets.

Evan Fricks:

It depends on the job you need to accomplish, and you don't know what tools you need for what job until you have a plan. That's right.

Mark Fricks:

That's right. So I hope this has been a helpful show. This is, I think, good information. You can always go back and re-watch it on the website masterplanretire.com . But any closing thoughts?

Evan Fricks:

Yeah, just go to the website. Obviously links to more videos of our radio show, but also retirement resources, seminar schedules, things like that.

Mark Fricks:

But come see us soon. Okay, until we see you remember, plan well and prosper, take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Avoiding the IRMAA Trap:

Tue, 01 Jul 2025 15:48:12 GMT

On this episode of Retirement Roadmap, Evan and Mark discuss how the Income-Related Monthly Adjustment Amount (IRMAA) is a Medicare surcharge that can significantly increase your healthcare costs in retirement based on income from two years prior.

Evan Fricks:

Who the heck is Irma and why is she so mean? Hi folks, welcome back to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. No, it's not your great aunt visiting from out of town. During the show, we're going to discuss Medicare's surcharge, the income-related monthly adjustment amount, otherwise known as IRMAA, as well as Medicare changes that may be coming in 2026. IRMAA Mark is an income-based Medicare surcharge that kicks in if your income from two years ago crosses a certain threshold. 2025 premiums, for example, are based on 2023 income. Why is this important?

Mark Fricks:

Well, a couple of things. Number one is when you leave a company. I would bet two years ago you made pretty good money and now you're retired, but you're going to pay a significant amount more for your Medicare.

Evan Fricks:

Part B. That's right. We're going to get into a lot of details about IRMAA, what to look out for things to consider, especially as you start to think about your retirement planning, Because we know there's a lot of retirement strategies that are going to fluctuate your income in a year and that can directly influence how much you're paying in IRMAA. And we'll look at the table a little bit as well and see okay, how much does it jump, depending on what your income level is?

Mark Fricks:

And the sad thing is there's so few advisors out there that say they're planners and say they're retirement planners, that don't even realize that exist, and all of a sudden they trigger these big premiums for one, two, three years and the clients are like why'd this happen? And the advisor's like I don't know, and it just yeah. That's why you've really got to make sure you work with a retirement planner that understands all the aspects.

Evan Fricks:

That's right. Even a one-time income spike, like selling a business or doing a Roth conversion that can trigger IRMAA, lead to significantly higher monthly premiums for both Part B and Part D. And, like you said, I mean we've got to consider that we're huge proponents. We've talked about tax strategies a lot on this show. We're huge proponents of Roth conversions. They're super important, but timing and strategy is just as important as getting that money to tax-free accounts, especially when you don't realize the areas that you could be affecting. Like you like to say, what you don't know is going to hurt you.

Mark Fricks:

Well, and that's why you can't put it on, set it and forget it, right? Right, because every year is different, like you just mentioned a minute ago, and so you have to look at every year in its own tax year, right, what I've taken out, what I'm going to need to take out, and that's why I prefer looking at the tax strategies toward the end of the year. We kind of know what you've spent, things like that, but it's not a have to thing, but it can certainly help.

Evan Fricks:

Well, it's better to look at the end of the year, especially if you're looking backwards and being like, oh, I shouldn't have done this earlier. I need to cut back on the last few months of the year. It's kind of like when you've got a lease on a car and you've got X amount of miles and you're on year three and you're like, oh man, we're getting real close to that limit.

Mark Fricks:

Here comes the bus.

Evan Fricks:

It's time for Uber for a little while.

So the surcharge I did mention, there are two separate ones. You pay more for Part B directly to Medicare and for Part D, you still pay your base premium to your insurer, but the IRMAA surcharge is paid separately to the government. Another interesting consideration is that IRMAA thresholds used to adjust for inflation, but some were frozen for years and the highest income tier won't adjust until at least 2028, so making strategic income planning even more important than ever, because you know, once 2028 comes, if you're in those higher tiers, you are going to pay more regardless. So again, I want to review. The 2025 IRMAA is based on your modified adjusted gross income from 2023, always two years prior. Medicare Part B 2025 standard monthly premium is $185 per month. That's a 5.9% increase from the year prior and, it's safe to say, most years it goes up, although we did have a drop a couple of years back, if you recall.

Mark Fricks:

Yep, yep, due to. Without getting into the weeds, they look at the overall cost of the Medicare program, specifically Part B, and then they kind of take some kind of an average across everyone that's on it, and there was some drug that came off this really expensive list dropped down to really, really cheap, and so many people were on it. It actually caused cost to go down a little bit that year. So nobody got an increase. I don't think they got a decrease, though. Does it ever go backwards? I don't think so. I don't think so, but at least not an increase.

But it's just another one of those hidden taxes that it seems like we find a new one every week. We teach a great tax class and it's getting longer every time we teach it because we find something. We call them stealth taxes. This is one of those stealth taxes that, unless it bites you, you don't realize it and it's probably, I'd say I don't know what the percentage is, but it will bite a lot of folks, especially that first year or two of retirement. So got to be aware of it. There's not much you can do about it, that first year or two if you were making great income and now you're making less.

But it can get, as you'll say in just a minute, significantly higher.

Evan Fricks:

Yeah, absolutely, We'll look at the table and some specific bracket changes, but again, the standard monthly premium being $185 per month Per person, per person, right. So if you're a couple, consider that the brackets can increase Part B monthly premiums by as much as $443.90. When you add in Part D, which can be a surcharge, up to an additional $85, you're breaking $500 a month extra per person within the couple Over $1,000 a month.

Mark Fricks:

That is so ridiculous. And hey, I understand if somebody's making Warren Buffett money, or even $400,000 or $500,000. But you've got folks that are not making that much money but yet they can trigger that again and, because it's a surprise, it hurts for at least a year or two right and we're going to discuss a little bit more too about income planning.

Evan Fricks:

But the majority of your tax bracket in retirement, the majority of the growth or the heightened bracket of that, is because most of us are getting our income from tax deferred accounts. So we're building up that tax bracket just to make our ends meet per month. So we're seeing that IRMAA affected there. So Medicare recipients will face higher Part B and D monthly premiums in 2025 due to IRMAA if they reported a 2023 income of $106,000 on an individual tax return or joint $212,000. Now, joint, that doesn't sound like it does sound like a lot of money, but it really doesn't take long to get there, especially if you're looking at some bigger movements, maybe in that year, like I said, selling a house rental property business, something like that.

Mark Fricks:

And you got a couple working and they both retire at the same time and they were both executive level type of incomes 200,000 plus, not that much. Then we had a couple of clients that got like a lump sum payout bonus at retirement. That was another $25,000, $50,000, whatever it may be. And you say, yeah, I'd love to have that. Yeah, I would too. But it also, you know, with every action comes a what equal and opposite reaction. That's right. Or maybe a better way to put it is with every action comes a tax, right, right, so it's just. It just piles on top of everything else and again, what you don't know, like you said earlier, can hurt you. And that's why we try to cover every aspect of every client we work with. We don't want surprises. Now maybe we're willing to accept it for a year or two, but if we know it's coming, we can plan for it. But all of a sudden you get that Medicare Part B bill and that Medicare Part D, which is the drug coverage, and it's a shock and a surprise.

You may have to take more money out of your IRA to plug some gaps. Now you've just thrown yourself into a deeper hole. So it's just this compounding effect.

Evan Fricks:

So just a couple of numbers. I did mention individual filers $106,000 or less, joint $212,000 or less, and that is Part B at $185,000. And then there's no Part D surcharge. If you go above $106 or above $212, then your Part B jumps from $185 to $259 per month, and then you've got an extra $13.70 on that, part D that's both per-person numbers, that's right.

That's right Now. If you're above $133K as a single filer or above $266K as a joint filer, then your Part B has jumped up to $370K already. The next tier above $167K single, above $334K joint, you're up to $480K and $0.90. And again, joint, let's go ahead and double that Above 200,000 for single or 400,000 for joint, that's $591 and 90 cents. And the highest is 500K or more for single filer and 750K or more, that's 628 and 90 cents per person. Now that you know, if you've got that much income, then maybe that's not your biggest deal. But again, some of these higher brackets might seem unattainable but they're really not when you look at certain life events.

Mark Fricks:

Yeah, absolutely. And you've got to remember too, again, it's going to continue. Is it at least two years that we'll continue? For that's right. So that's two years, that's going to continue. And then if you decide, let's say you're in retirement, you want to start doing some Roth conversions, that Roth conversion counts right toward that number. So you got to be careful how much you convert, not just because of your tax bracket but because of our friend Irma, right? And so it's just. Again, it's just multi-prong. We use the illustration sometimes of this 500 piece puzzle, all these pieces coming together and either you're missing one or one doesn't fit right and it messes up the rest of the puzzle. It's just, it just compounds upon each other. So it's again very important that you understand, you know what's happening. And, by the way, we're not including cost of supplemental, the supplemental policies which you know I don't I've not priced those lately, but I'm sure they start probably at maybe $75 to $100 a person.

Evan Fricks:

Yeah, right To reiterate that surcharge on IRMAA for the Part D is in addition to what you're already paying your carriers.

Mark Fricks:

So just great information, and information that's so timely to make sure folks are aware of what's going on. And again, I know a lot of people try to educate themselves. Say I'm prepared for retirement, I've read, I've Googled. But if you don't know what to Google, you don't necessarily know how to find what the problem is in your situation.

Evan Fricks:

That's right. So there are ways to avoid IRMAA. You can request a waiver If your income is dropped due to a life-changing event like retirement, divorce or death of a spouse. Just be sure to file form SSA-44 and provide documentation. Now that's huge. A lot of retirees don't consider that and so, like you said, if they're earning a salary and all of a sudden they go into retirement two years later, their big salary toward probably the highest they've earned, or at least close to it, in their life at the end of their career, their IRMAA is going to be based on that income two years prior. So you can request a waiver. The surcharge, again, isn't permanent, as you mentioned. It's recalculated annually. If your income comes back down, so can your premiums in future years. So here are three different ways to appeal to IRMA. One, you can request a new initial determination from Social Security. Two, you could submit form SSA-44. And then, three, call the Social Security Administration, that is, if there's anyone left to answer the phones directly.

Mark Fricks:

Leave a message.

Evan Fricks:

Yeah, and I actually have their number 800-772-1213. We'll see if that line is still in existence within a few months.

I would recommend pursuing all three. If an IRMAA appeal is denied, don't panic. Multiple levels of the appeal process provide additional opportunities to make your case. But lastly, there are some important deadlines for appealing to IRMA. You're only given 60 days to request an appeal. The 60-day clock begins when you receive your Part D IRMAA letter. The Social Security Administration assumes you will receive your letter five days after it's time stamped. How do you like that one?

Mark Fricks:

Let's take a look at Social Security and how they're behind the post office and how they're behind that's right. Yeah, good luck with that.

Evan Fricks:

So you are on a time limit. Do not wait. Be proactive in this. If you think that you can get an adjustment to your IRMAA or have it dropped altogether.

Mark Fricks:

And that's the Part D letter?

Evan Fricks:

Yes, yes, part D, which makes sense because they've got to go back and forth with the provider, probably a little bit as well, but I'm assuming that. Oh, here's another interesting thing to consider Higher premiums does not mean better coverage, because Irma is a surcharge that helps fund Medicare, not a ticket to extra benefits. Everyone on the same plan gets the same coverage. Listen, a financial services professional can help you plan ahead, manage income strategically and avoid unnecessary unnecessary surcharges, thus putting more control and more money back in your hands. Speaking of financial professionals, we are retirement planners. Folks, go to masterplanretire.com . You can schedule your complimentary consultation with us. In fact, there's a button you push on the website that'll take you directly to our calendar to schedule your complimentary consultation with us. We'll run a series of reports, get a 10,000-foot view of your own retirement. Where are your strengths, where are your weaknesses? Where do you need improvement? How can we make your money last your entire lifetime and create a holistic retirement plan? Again, that's masterplanretire.com , or call us at the office, 770-980-9262.

Mark Fricks:

And, by the way, if this IRma discussion has triggered something in your mind saying what else do I not know? Right? So you know this. This, uh, complimentary consultation, uh, we're going to look at all aspects of what's going on now. I'm not saying we're going to create a plan from day one, but we will start with exploration.

Uh, talking about your retirement, your, you know your situation, things like that, and we may bring up some items. Well, this might be something we're going to look at. This might be something else we want to look at in your situation and things like that. And we may bring up some items. Well, this might be something we want to look at. This might be something else we want to look at in your situation. And then we run the reports. We may even run some extra reports to illustrate some of these other situations. Yeah, absolutely so. It fits you, it fits where you're at, what your goals are, what your worries are, your concerns. So, take advantage of that. We have many, many people that take advantage of that every week and we are delighted to be able to do that for you. And, as Evan likes to say, even if you just take those reports, that knowledge you gain and walk away. We're glad we were able to help you. We love new clients but at the same time we love helping folks as well.

Evan Fricks:

That's right, yeah, and we really are education first with our clients in the entire planning process, but especially in our prospective clients. We want them to understand how we work, why we do the things that we do, and, especially if we're going through a retirement plan with you, we want you to know why we're recommending certain things and so that not only do you trust us because you understand it, but you have that peace of mind for the rest of your retirement as well.

Mark Fricks:

And that's kind of the purpose of these episodes. Yeah, Is that education? What are we looking at? How does this work? How does that work? What are some of the different? So many different. Various tools are available for you for retirement.

Evan Fricks:

All right. So how do we avoid IRMAA? So blanket statement lowering your modified adjusted gross income is the best way to avoid IRMAA, or at at least to reduce it. So there are some key ways to do that. For example, donating appreciated assets directly to charity can avoid capital gains taxes and, in turn, lower your modified adjusted gross income. So this is. These are appreciated assets like mutual funds, ETFs, stocks. Cash does not count. You can't sell them first, because then you've already captured that capital gain. It avoids the capital gains that the donor would otherwise pay if they sold the asset. Guess what? ? Q?s also count qualified charitable distributions from IRAs up to $100,000 a year.

Mark Fricks:

This may help reduce your current income yeah, I think the rule is that 70 and a half, 70 and a half, you can start, seven and a half you can do a QCD. This is basically from an IRA qualified account directly to a 501c charitable ministry, whatever you want to support, and you can do any amount up to a hundred thousand and you don't pay taxes on that money coming out. So you've got some money out of your IRA but you've also given to that charity you love to give to. I just had a discussion with a client a few weeks ago that it has turned 73, yeah, yeah, 73 this year. So she has to start taking money out.

So we talked about that and she's like well, I give to my church every month. I said, well, let's give straight out of your IRA. You're not going to pay tax on that money and it counts towards your required minimum distributions and so, just based on the amount of money she's given, they're probably going to save $2,000 a year in taxes. Is that a lot? It is to me. And it doesn't count toward, of course, their Medicare Part B increases and Medicare Part D or IRMA, as we're talking about.

Evan Fricks:

Now this is fine line with every part of this conversation. I mean, this is also assuming you don't need those withdrawals for income. But, for example, you gave the example of donating to a church tithing. If you're tithing from your Social Security check or your pension check, consider tithing from your IRA instead. That way you get the tax cut, the tax break there, and just be a little bit more strategic with how you're making those withdrawals. But if you need those RMDs or you need those IRA withdrawals, then you're in a little bit of a tighter situation, which is why planning ahead over time and creating a strategy is so vital.

Mark Fricks:

Well, and also, as you mentioned earlier, stocks or whatever that may have a high capital gains. We have several clients that have stocks that they've had for 25, 30 years and their capital gains maybe they paid $100,000, they're worth like a million. They almost can't sell them Because taxes on a $900,000 profit is huge. But what about? Every year you donate some of that stock to that charity and so you don't pay again. You don't pay capital gains because it's a gift to that charity. The charity doesn't pay gains on it when they sell it because they're a charity. So again, just so many people are not aware of this and when I tell them they're like their jaws kind of drop open why haven't I been doing this? I said, well, you didn't call us.

Evan Fricks:

Also another interesting consideration if you're still working and you have earned income now, this is age 65 is when you would start receiving Medicare. If you're still working and have earned income, making tax deductible contributions to a retirement account will reduce your modified adjusted gross income, potentially reduce or avoid IRMAA. Now, if you're a 65 and you're trying to reduce IRMA and also put more money in tax-free accounts, but then you're simultaneously putting into a tax-deferred account, that's a little bit of a balancing act.

Both of these aren't necessarily saving you. It's a very niche situation for it to really be a huge benefit, but again you've got to discuss that with them.

Mark Fricks:

Yeah, I think what we look at in that situation is where are you at in 10 years and 20 years? Where's the tax rate going to be? Where are you going to be? You know, and so we just have to be careful. And are you expecting maybe a big inheritance in the future? You know that may add to your taxes in the future. If you inherit an IRA, you know, from a mom, a dad, an uncle or whatever, then you're required to take money out of that over a 10-year period. So if that's coming, maybe we want more. We're willing to give up some tax savings here to get more money into Roths so we have less of an issue there. I mean, it's just this cascading, you knowading type of situation as we allude to a lot. Maybe it's a great time to talk to your parents about getting some of that money out of that IRA into a Roth, or send your parents to see us.

Evan Fricks:

We've got some other episodes. We have not even gotten into the conversation of why tax diversity is so important today, but you need tax diversity. As Mark likes to say, taxes are currently on sale, meaning they are historically low. Whether it feels like they are or not, our tax system is at a historical low bracket, or all the brackets are historically low, excuse me. Conversions are huge right now and again. We love them, but processing Roth conversions before Medicare coverage begins and or during gap years, which is between retirement age and your RMD age you've got to have a tax strategy on how to do that appropriately. If you can, the earlier you start the better. If it can be before age 65, then do it. Even if you know you're hitting that two-year window of when Irma will hit at 65, it's still worth it to start ahead of time, strategically, incrementally, because we need that tax and birth certificate.

Mark Fricks:

And again you can go back and file a waiver.

You know, try to get that.

But I think that's why it's so critical between ages of 59 and a half and 64 of really being aggressive in Roth conversions, because you're still not on Medicare, but at 59 and a half and 99% of the cases, you can roll over most or all of your account at work, even if you haven't left into an IRA, which makes it convertible. Now, typically, a 401k is not convertible to a Roth. You have to get into an IRA first. So now we've got it in an IRA, we've got a multitude of different investments to look at which your 401k does not. But more importantly, or just as importantly, it gives us that window of between I don't know three and a half to four and a half years to be more aggressive on the Roth conversion. So and if you've retired by 59 and a half, it's even better because your income may be a little bit lower, right, so you could do maybe even be more aggressive. So again, it's all a timing, it's a strategic decision, it's communication with our clients to see where they're comfortable from a tax standpoint.

Evan Fricks:

We talk about tax loss, harvesting a lot when you've got an account that's down, maybe sell it while it's down, so you're minimizing your capital gains taxes. But another concept is the exact opposite of that tax gain harvesting, realizing gains and deliberately paying taxes now, while the taxes are low.

Mark Fricks:

Yeah, and that's again. That's something else to look at. Capital gains are certainly low. They've talked about making capital gains rates equal to whatever bracket you're in, so that could greatly increase it. It's also important this is really another subject but if you have something that has a lot of gains in it, if you will pass that on to beneficiaries through a will or a trust as opposed to gifting it, then they get a big tax break. They don't pay capital gains on that item. So, again, estate planning comes into it as well, that's right, Absolutely so.

Evan Fricks:

Like your personal situation, folks, tax laws can and do change, potentially leading to new ways to reduce taxable income and avoid IRMA For your situation. Every situation is unique unto itself and please seek a retirement planner to help create a holistic plan for your own retirement.

Mark Fricks:

Yeah, and I love just what you said. It does change. We talk about how tax laws are written in pencil, and so every two years there's somebody new in Washington, right, there's a presidential election every four years. The House is every two, the Senate's every six. New people in the power shifts from one side of the House to one side of the Congress to the other. Always changes, so you really have to keep an eye on things Again. That's why our retirement roadmap is not static. It is a living, breathing document, so to speak. So we appreciate you being with us today. I hope this is helpful. I hope Irma triggered something. Hey, I didn't know that. I need more help If you do, masterplanretire.com , and until we see each other again, plan well and prosper, take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Time is Flying in 2025: Have You Caught Up With Your Financial Goals?

Tue, 17 Jun 2025 15:24:11 GMT

On this episode of Retirement Roadmap, Evan and Mark examine essential mid-year financial steps that could help you finish the year strong and brighten your financial future. Time flies by quickly, making it crucial to check in on your financial goals periodically rather than putting them off indefinitely.

Evan Fricks:

Are you caught up with your mid-year financial goals? Hi folks, thanks again for joining us. Welcome to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan and with me, as always, retirement Planner Mark Fricks. As hard as it is to believe, we are halfway through the year. During the show, we're going to examine some mid-year 2025 financial steps that could help you finish the year strong and brighten your 2026. I tell you, Mark, I think I'm avoiding the calendar. I don't want to know that it's halfway through 2025.

Mark Fricks:

I cannot believe it is halfway through 2025. And you know, great show, I think for the time it is, but again, time flies. It's amazing. We'll be singing jingle bells here before we know it.

Evan Fricks:

No kidding, and I think it's important to have a show like this to check in, because, especially when it feels like time is just going quicker and quicker and I have two little kids at home, so it also feels exponentially fast to me- Not so little anymore, though. Four and six. But you know they say what's the saying. My wife reminded me last night of the saying and it's the days are long and the years are short.

And that's kind of how it feels, you know, when you got the little kids, all the responsibilities. Sometimes it can feel, I mean it's beautiful, but sometimes the days can feel like, oh, my goodness, I don't know how I'm gonna get through the end of this day. But then, before you know it, another birthday for a kid.

Mark Fricks:

It's wild. Well, you know the saying. What's that? Life is like a roll of toilet paper. The closer you get to the end, the faster it spins.

Evan Fricks:

That's true. That's good, actually.

Write that one down.

Mark Fricks:

Maybe we can put up a diagram of that or something.

Evan Fricks:

But it's a great thing to do is to check in, because time does get away from us and especially with financial goals, it's so easy to say "I'll start, I'll start next month or "I need to put away more. Or I need to check in on my investments or I'll. I don't have time right now, I'll think about it next month and then, pretty soon, we could be years down the road and there are also very specific things to accomplish each year that you can get behind on, and if you stay on top of them, they can exponentially really set you up for a strong retirement.

Mark Fricks:

Well, I can say from personal experience, just talking about time, you know, when I was in my twenties and thirties and had my first corporate jobs and began starting some businesses and I'm like, first of all, I'm probably not going to make it to retirement, right, that's kind of your feeling when you're younger. But more importantly was, it's so far away and I've got priorities. Now I've got little kids at home, like you're talking about, I've got a new house payment, I've got you know, all this kind of stuff going on. And then that turns into ooh, my kids now have cars and I have insurance. Oh, now, now my kids are in college and it's just, it's not good.

If you put it off because of those kinds of reasons, you'll never do it. So go ahead and just start small. Start with, you know, 2% at work or something. If you get a raise, at least take half of that and put it into something at work or personal account or whatever. I have a short-term savings and then the long-term savings, short-term being for that air conditioning is going to go out, right. The long-term is, like I said, is for retirement and hopefully your employer or if you're self-employed, you can do your own thing.

But just start small. Start with something, because if not, somewhere down the road it could be 50, it could be 60. You're going to panic and you're going to be like I've not done anything or I've done way too little. And we have a lot of folks that come in here that have done a great job. We had other folks come in here that have practically nothing and they're in their 60s and we're just saying we'll do everything we can, but you're going to have to work this many more years, you're going to have to do this, and what if their health doesn't hold out? So we're not trying to scare anybody, we're just trying to talk reality here, and so I think today's show is so vital and I hope folks are listening and I hope they take it to heart.

Evan Fricks:

Yeah, it's never too early to start, and we'd like to say it's never too late, I wish that were always true.

I wish that were always true, and that's the sober reality, you know, there are always strategies, no matter what situation you're in, but there's so much more flexibility, so much more freedom and control the earlier you take the reins on the situation, which brings us to the very first thing you said, and putting away as much as, even if it's starting small, putting away as early as possible. Keep contributing folks and stay informed. So making regular contributions to your retirement account is essential, but also staying aware of changing rules can help you avoid missed opportunities and grow your savings more effectively.

Now the SECURE Act 2.0 has offered some new catch-up rules. There are new auto-enrollment rules. First of all. Starting in 2025, many retirement plans will automatically enroll workers at a 3% contribution rate. That's increasing annually up to 10% to 15%, but this doesn't apply to all plans, especially smaller or older ones, so you may need to enroll yourself manually, especially if you've been contributing for a while or been at this job for a while. Avoid missing out on savings and employer matches. Regardless, always try to check in, at least annually, with your plan.

Mark Fricks:

Yeah, I've talked to so many folks that didn't even realize, especially when you're younger. You graduate from college or get into the workforce. You go to work for a company and maybe you don't even realize they have a plan. You don't really realize what it's for. The word retirement is almost foreign to you because you're so young. Be proactive, check it out. If you're working for a corporation, if they haven't alerted you to their plan, ask them, do something. You will be so happy as you age.

If you start early, whether it be small or not, the magic of compound interest is amazing. And so you know. Plus you know if a company matches things of that nature, and so you know. Plus you know if a company matches things of that nature If you start early. And, by the way, if you're checking in at work or even if you've been participating at work. Check on the Roth option. Most companies now have a Roth option. I would much rather you put your money into the Roth portion. You don't get a tax deduction, but hey, don't worry about it. You'll never pay taxes on that money again, ever, that's right. And your kids won't pay taxes on that money if and when they inherit it. So but ask, check, be proactive. Take a little bit of time out of your week and do that, and again at this six month juncture of this year might be a great time to take a day and just look at all of this stuff.

Evan Fricks:

So with that new auto, enroll at 3%, that's fantastic. However, 3% is not the finish line. So if you're automatically enrolled, don't assume that's enough. Experts suggest aiming for 10 to 15% contribution rate. That can be difficult for a lot of people, but even small increases over time can make a big difference. Just as you said, mark, you get that raise. Maybe only take half of it home and do something with the other half, or live on the same budget if you can and put away as much as you can from that raise.

Mark Fricks:

And if you are behind, there are the catch-ups at age 50 and there's a significant amount of money $7,500, I think more that you can put in. Over that $30,000, give or take that you can put in. And then certain ages ages 60 through 63, you can do up to $11,000 and some change. That's exactly my next point.

Evan Fricks:

Catch up.

Mark Fricks:

Exactly right, but the point is this is that as you get into your 50s, hopefully some of your expenses are coming off the books. Maybe the kids are getting through college, maybe you're no longer paying for their car insurance and things like that. So as these expenses fall off, don't just say, hey, now we can buy that Mercedes or whatever. It may be Not saying anything wrong with that, buy a used one, maybe, I don't know. But a little bit of sacrifice so you can have that kind of retirement that would really I don't know, just be special. I mean something maybe you thought was out of grasp just a few years ago. So use those those years. Uh, if you are behind, don't lose hope. And so go ahead and get into those numbers on what you're saying.

Evan Fricks:

Our goal for retirement for all of our clients, regardless of where they come from, is to try to get them as close as possible to peace of mind, and I and I think that should be the goal for everybody who wants to stop working and then have just as much stress or anxiety in your life when you're trying to maximize your golden years.

Mark Fricks:

And that peace of mind comes from two things. Number one is knowing you've saved enough money, and that's one thing we do with our reports. Folks can go to masterplanretire.com schedule a complimentary consultation and one of the reports we'll run is do you have enough money to last a lifetime in retirement? And we're going to include what you're saving from now until retirement as well, so you have a real clear picture. And then we will of course do some stress testing.

masterplanretire.com schedule now button and basically these reports will illustrate not only, hey, it will last a lifetime, but what if taxes go up? And maybe not even what if, but when taxes go up, what about higher inflation? What about bear markets? What about long-term care situations, healthcare situations, all of these things, so that we kind of know what to work on, so to speak. So a great thing to take advantage of masterplanretire.com schedule now button or give us a call at 770-980-9262. But I mean having a clearer picture of, hey, I'm headed in the right direction or maybe I need to save a little bit more. We'll again give you peace of mind now, but also, because of the planning we do peace of mind in retirement as well. That's right.

Evan Fricks:

So, speaking of those catch-up rates, so at age 50 in a 401k, you can contribute an additional $7,500 to your 401k. Also, in IRAs and Roths that are individually held, you've got an extra thousand dollars there. So that 50 and up is a really important milestone. Age of okay. I have the opportunity to put a lot more away in these retirement accounts. Am I able to do that? How can I maximize that? Now with Secure Act 2.0, there's new age contribution bonuses between 60 and 63, and it is 150% of that 7,500, which comes to $11,250 in your 401k as additional catch-up bonus. So that brings the total limit to 401ks in those age ranges to $34,750 in 2025.

Mark Fricks:

If you're able to do that now that's another question because that's a lot of money to be able to put away, but the opportunity being there is really powerful for retirees, again a great, a great catch-up time and maybe you can't do it starting age 50, but as you again get into your mid-50s, as again more expenses hopefully drop off, um, you know, maybe even at that point, as the kids begin leaving the nest, think about maybe downsizing, spending a little bit less money on your house and your, your electricity and all that kind of stuff. Maybe you know, I mean, I love new cars, I love new used cars, but maybe not having one every three to four years, maybe, like my last one. I made it last, uh, ten and a half years. Yeah, you know when I, when the dashboard started looking like christmas trees, yeah, it was time to to make a change. But you know it felt nice not having a car payment for you years type of thing, so that was extra money I could save. So it's the little things and I don't want to get up here and sound like, hey, live on bread and water or whatever, but track your spending for a couple of months and see where your money's really going. That Starbucks coffee for six bucks I can make it at home for 50 cents. Again, not fussing, not trying to make people feel bad, but if you really want to think about your future.

It's the little things. Get those credit cards paid down. Not only do you not want that debt in retirement, but what you're paying for them while you're working. The interest rates are crazy. House payments I'm fine with You're paying interest, typically lower, on something that's increasing in value Cars, if you have to, okay, but definitely the credit cards and those high-interest loans. Stay away from those as much as you can. I'm just talking about again having a family meeting and going over your budget and saying this is really what we're spending. What do we not need to be spending money on? Not trying to make you suffer, but a little bit of sacrifice now could be a great 25, 35-year retirement.

Evan Fricks:

A couple extra notes on the employer plans and then we'll move on. There's faster 401k access for part-timers. So part-time employees now qualify for 401k plans after two years, which was three previously, as long as they work 500 hours each year, even small contributions from part-time work can compound into meaningful retirement savings. Then the last thing I'll say if you have a pension, if you are blessed enough to have a pension, know your numbers, know your projections, know your estimates, know what to expect. That's going to go a really long way, especially when you start getting down to planning your income in retirement. Next point, and we'll move away from the 401k.

Mark Fricks:

I got to say something real quickly, though. We do have a client that is I think he may be 80 now and he works part-time. Not because he needs to, they're fine. He just keeps them younger, keeps them active, gets them out of the house and he contributes to a 401k plan. At work, you have the opportunity why wouldn't you?

And probably all of it, all of his income, is probably going into the 401k plan because he really doesn't need it. Is he maxing out the Roth? I don't remember. I hope so We've talked about it Time to schedule a meeting. Exactly. But yeah, he doesn't need the tax deduction, so certainly I've told him to put it that way. But yeah, 80 years old and contributing to a 401k.

Evan Fricks:

Yeah, that's great. So plan for a long retirement. That would be my next point. Especially right now you're about halfway through the year, many people underestimate that retirement can last potentially 30 plus years and growing. With a strategy to fund decades of living, health care, inflation, well-prepared retirees can fall short. Working a little longer can also boost savings and benefits, and I think that's the biggest thing is understanding that our time horizon, no matter who you are across the board, is typically growing. Now we have health concerns. Some people have family history where they've passed earlier, but with health care advances, technology advances, we're seeing people project their ages more and more and more higher, higher, higher. That's not going away. Hopefully it's not going away, but that's the reality we live in right now.

Mark Fricks:

Well, and you're seeing really both ends of the spectrum. People are living longer, but they're also retiring earlier, yep. So now you get another two to five years retiring earlier. In many cases I know federal workers who we work with a good bit.

Evan Fricks:

People retiring in their 50s. That's half your life.

Mark Fricks:

They can retire at 56, 57 years old, if they have enough years in with a full pension and full benefits. That's a long time. And then you live longer and you know, maybe or maybe not, those last few years may not be the best years because we are living longer, but they're. You know this is causing more complications Alzheimer's, dementia, mobility you know problems as well, which means more health costs, and so it's really expanding a problem. That and social security is. You know it's not really keeping up with inflation. So there's just a lot of things to look at and that's where those reports come in as well. The complimentary consultation reports will reveal all of this, and so, again, you'll know not what to worry about. It's like going to a doctor. They tell me I have high blood pressure. I can go home and worry about it. I can say, all right, doctor, tell me what to do about it. That's what I want to do, as opposed to just kind of hiding my face, closing my eyes and hoping for the best.

Evan Fricks:

Yeah. Do you have an income plan? Have you began projections on an income plan? Have you even considered that? Start by taking stock of your retirement income sources social security, do you have a pension? Do you have a 401k, iras, roths? Where can you create income where there currently is none in your retirement? Have a plan. If you've not done that for yourself, I highly recommend you go to a retirement professional. Obviously, we'd be happy to have those reports ran for you, but an income plan is, by and large, one of the most important things as far as your longevity in retirement is concerned, and make sure you go to someone that is a true retirement planner, not just an investor, not just an advisor that manages your money.

Mark Fricks:

They really need to understand all the areas of retirement. I've counted between 12 and 15 different areas that need to be addressed in retirement. Not everyone applies to everybody, but most of them do apply, and so you got to look at all these areas because they all fit together. I used the illustration the other day with a client that it's like these old 500 piece puzzles that my mom used to put together when I was a kid and she'd leave it set up for weeks on a card table. She'd come by and put in three or four pieces at a time, just when she wanted a break or something. But your retirement picture is very similar. It's a puzzle and all the pieces have to come together and the worst thing is basically If you miss them two or three pieces. It's pretty frustrating when you finish the polo. So anyway, it is many pieces coming together. So make sure. The whole point is make sure that you have somebody that can sit down and run all these different reports. Don't leave anything out.

Evan Fricks:

One of our favorite words Roth. Okay, do you have a Roth? Are you currently contributing to a Roth? You're halfway through the year. You have Roth contribution limits for the year. Are you able to maximize those? Are you able to take advantage of this year as much as you can? You have until, technically, until April of next year to contribute for 2025. Are you maximizing your Roth If you do not have a Roth? If you can't, even if you are unable to contribute to a Roth, at least open a Roth. Why is that, Mark,?

Mark Fricks:

You want to start the clock ticking, okay. So there are certain penalties in a Roth in the first five years. So if you get it open, put $100 into it or whatever, just to get that date of it opening. Then the five-year clock starts ticking. After five years it's totally penalty-free if you're 59 1⁄2 and older, okay. So even if you're 50 or whatever, I'd open one and start putting $25 a month into it or something, just to get that ball rolling.

Evan Fricks:

But there is a clock ticking that has penalties on it, and the Roth is just a small portion of the overall tax strategy. Do you have a tax strategy in retirement? Have you considered that for yourself? Have you looked at what your projected tax bracket will be in retirement? Whether you look at it or not, I guarantee you one thing you don't know what it's going to be. We need a tax strategy in place. We need a conversion strategy. The simple truth of the matter is the majority of baby boomers and retirees for the next 10 plus years or more all have a tax problem because the vast majority of workers in today's American workforce society have put away their money in tax-deferred vehicles, meaning every withdrawal that they intend to take in retirement is going to be taxed at whatever rate they are at at the time, and every withdrawal adds to that total income tax burden.

Mark Fricks:

And just so we're clear. You know you're saying well, have I put money away in a tax deferred? If you're in a 401k traditional, if you're in a traditional 403b, a traditional thrift savings plan, a traditional 457, these are all pre-tax accounts. You get a deduction but you're going to pay taxes, as Evan said, as it comes out. And, by the way, over those 30 years, 40 years, it's grown very large as well. Even if you don't need that money, the IRS slash government forces you to start taking it out between the ages of 73 and 75, forced taxation. And so again, those Roth type accounts, whether it be a traditional Roth or some other accounts that we use, that money is coming out tax free and they don't force you to take it out. So if you do need it, it doesn't matter what your tax bracket is, it's coming out free. So they're so powerful, that's right.

Evan Fricks:

Another point rebalance your portfolio with age. Everyone has a different time horizon. When are you going to retire? What's your risk tolerance? Are you going to be using your investments immediately in retirement, or are they going to be able to season longer because you have other sources of income at your immediate retirement? Everyone's got a different situation. Everyone has a different time horizon for their investments, but you need to make sure that your portfolios are rebalanced to your risk tolerance and your time horizon.

Mark Fricks:

Yeah, and that's something that you probably need help with. Again, that's something we can help you with. It's not just as simple, and most accounts, or 401ks, things like that, will have what we call life cycle funds or freedom funds or whatever.

Target date funds Target date funds and you just say, okay, if I'm going to retire in 2040, I'm going to put all my money in the 2040 fund. Nothing wrong with that. I think that's probably a nice choice if you don't pay much attention to your account. If you do pay more attention or you need more help, I think there are better ways. But that's definitely better than just sticking in a money market or two or three funds or one fund and just letting it ride. So we help our folks every day with their at-work accounts, making sure that they are properly allocated.

Evan Fricks:

Two more points. We're going to try to rush through these while still keeping some good information in here. Number one you've got to plan ahead for health care costs, and again, that's just saving and putting away. Many retirees underestimate out-of-pocket medical expenses. We've said this before. The average is about $165,000 over one lifetime, so that's $330,000 for a couple. That's healthcare costs alone, not including long-term care costs, which is a whole other conversation. Both of those healthcare and long-term care need a strategy. Some of the older strategies no longer work, so talk with a professional. That has to be part of your overall retirement plan and then finally have open legacy conversations. Talk to your loved ones about your financial values and legacy wishes. Start with general goals. Expand the conversation over time. Include your financial advisor to ensure alignment and clarity. Ensure alignment and clarity. Here's a question, a check-in for the mid-year for you Are all of your estate documents current? Do you have estate documents? If not, that needs to happen.

Mark Fricks:

Yesterday, you know, one of the things we see all the time when folks come in to see us is if they have documents. They were created back when their kids were little or they were getting ready to take a trip or something like that. Now their kids have it Now their kids are yeah, exactly, and so the documents have old language. They don't have the right tax language. They don't have today's language about digital. You know items, how you can get into somebody's bank account things like that.

Evan Fricks:

I had a conversation with someone the other day who also and a lot of people believe this still believe you can just write something on a piece of notebook paper and have it notarized and that that counts as a will. There are so many wills getting kicked out of probate these days. Make sure you do it the right way. Don't cut corners on something as important as your estate documents.

Mark Fricks:

And even documents done by an attorney if they're not a specialist in estate planning. We're seeing mistakes there as well, and it's not just the documents. You need to plan around the documents, by the way, get documents, but we build the plan around to make sure beneficiaries match up with your wishes, to make sure we reduce taxes, reduce probate which reduces probate cost and problems and your will being advertised all over the place. So have a plan around it as well. We do that as part of our holistic planning, so don't put it off. That's really important. I'm glad you brought that up. As far as the documents Don't leave your family a mess, you may think you have a long life ahead. I hope you do, but I could walk out tomorrow and pass away and I want to make sure my stuff's together.

Evan Fricks:

That's right.

Mark Fricks:

That and pass away, and I want to make sure my stuff's together. That's right. That's your mid-year checklist for 2025, folks, thanks for joining us. Glad you did join us and until we see each other again, plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Living Too Long: The Financial Risk

Tue, 10 Jun 2025 20:51:06 GMT

On this episode of Retirement Roadmap, Evan and Mark discuss how longevity risk presents a significant challenge for retirees, with medical advancements potentially extending lifespans and creating decades-long retirements that require careful financial planning.

Evan Fricks:

Are you at risk of outliving your money? Hi folks, welcome back and thank you for joining us. Welcome to Master Plan Retirement's Retirement Roadmap. My name is Evan. With me, as always, retirement planner Mark Fricks. Mark, we're going to talk about longevity risk today.

Mark Fricks:

Longevity risk. That means being too tall.

Evan Fricks:

That's exactly right. Too tall. The doorways are too short.

Mark Fricks:

I don't have that problem.

Evan Fricks:

Yeah, so it's actually a huge.

You know, we talk about income all the time in retirement. We talk about tax planning, all this other stuff. But longevity risk plays into it all, because there's a possibility you could mess up and live too long.

Mark Fricks:

It is, and we actually had clients in yesterday fairly new clients and we were talking about longevity and your family, health and things like that, and they were like we think 90, 90, whatever. And then we just started having the conversation about technology, medical technology especially. And how many years ago was it where, if you had a heart attack, you were in the hospital for 10 days? Now, if they don't get you out of the bed the next morning and you're gone, it's like, well, you know what went wrong. We've got hips that can be replaced with a very small incision now going, I think, in from the front, if I remember correctly, and people are out walking the next day. But also, I've done a lot of research on this lately, but the last I read, they're researching and hopefully getting close to being able to clone an organ, your own organ from your DNA, which means it would not be rejected. Imagine growing a new liver, a new heart, whatever in a lab and then going in, they're, putting it in and you walk out.

And so I've read that scientists say that the human body is designed to last 120 years, except for mobility. Well, most of mobility has been solved, of course. Now we have the memory issues and hopefully we're getting closer to that as well, and I'm sure we're going to talk a lot about all of this as we get into today's show. But I used to, in a class I taught, I would start the class by saying I want everyone to write down what age you think you'll live to, and then I would spend about 10 minutes going over research, going over advancements, and I'd say now, write down your age. And everybody would write down an age like 10, 15 years further down the road. So who knows what's going to happen over the coming years? Who knows what's going to happen in our lives personally? I mean, we could check out tomorrow, right, but you also have to plan for the longevity which we'll talk about today.

Evan Fricks:

Yeah, and these clients we spoke to yesterday actually, kind of informed, going this direction for today's episode. We asked them their family history, what their health is, things like that, and they're in a position where they don't really have heirs other than each other. They want their money to take care of the other one, whoever is the survivor.

Mark Fricks:

And then spend it.

Evan Fricks:

And then spend it and it's like, if you, what do you say? Rather tongue-in-cheek, but still, if you can tell me you're a COD, I'll make sure you spend all your dollars right to that date. If you know your checkout date, we'll make sure it's down to zero at that point.

Mark Fricks:

But nobody's ever taken me up on that.

I don't know if it's something I want to put money on. So if you just sign this paper that way, I'm not liable if you live too long right.

Evan Fricks:

But it's very real. And then some people do have more heirs that they want to take care of. It's difficult when, maybe you're 85, 90 or whatever that end-of-life age and if you run out of money it's a really hard time to go back to work.

Mark Fricks:

Yeah, and that's probably the biggest fear we see when people come in here is outliving their money. I mean, I would imagine if we took a survey of folks listening today it would be 9 out of 10 would say running out of money. And it doesn't really matter how much money you have.

Evan Fricks:

Well you're absolutely right. Many retirees fear outliving their money more than death itself. So, like you said, longer life expectancies, now averaging, I didn't realize it was this high now, averaging nearly 79 1⁄2 years for men and 82 for women.

Mark Fricks:

I didn't realize we'd gotten that high. To be honest with you, financial planning has got to account for decades in retirement. Well, if you've got a couple one, it's almost always inevitable that one will live Outlive the other. I mean, we normally don't die at the same time and many times it's another 10, 15 years. So we have to take into account the age of the couple. So you're talking about two people and again, those numbers you just gave, if you were to Google life expectancy for a 60-year-old, it would be another five to seven years Because if you made it that far, you're more likely to live that much longer because you have child mortality rates, you have just growing up and things that can happen.

And so now you're looking into the 80s and again, that's just the average. That's not saying that's it. That's saying that's the average person. Do you take care of yourself? That's taking into account lower class that tend to not eat as well. That takes into account people that don't exercise, people that smoke, people that you know, all these bad habits. That's all of us. So you start thinking about yourself and how you take care of yourself. Hopefully you do and what you do to you know, to maintain a good lifestyle, add years.

Evan Fricks:

Yeah, and then that's step one. You have to estimate your personal timeline. I mean, there are also places you know your health, you know your family history. You can be honest about that stuff. But there are also online resources.

Mark Fricks:

Estimators, or whatever.

Evan Fricks:

There's a social security life estimator or expectancy calculator and the Blue Zones true vitality test. Actually you know the spots, the Blue Zones where people live longer. That's true, but you've got to understand your family history, your habits, lifestyle choices. Obviously all of that plays into longevity, but know your number. So this is a general. This is a very broad, blanket generalization. But most retirees now believe they'll need around 1.5 million to retire comfortably and that's a 15% increase from last year. That's way past inflation.

Mark Fricks:

Wow, I wonder where that came from or why. It may be because of the way the economy is.

I think that's part of it, even though inflation was not that high. But still, you start thinking about where you're at now and we were talking about this the other day with some clients as well is, behaviorally speaking, the way people think is where you're at now and we were talking about this the other day with some clients as well as is, behaviorally speaking, the way people think is where you're at now is where you're always going to be, so related to the market. If the market's bad now, oh, it's always going to be bad. If the market's great, oh, it's always going to climb. That also applies in your personal life, too. Where you're at right now.

Right now, I'm really struggling. I'm having to clip coupons, or so I'm going to need more money, or maybe things are really going great hey, I don't need as much. But right now, with the way the economy is, I think people are thinking a little more negative from that standpoint. So, and and and do you know? I appreciate you saying that's a very general statement.

We've got folks that are not going to run out of money based on everything we've done, and they have half a million dollars. So how much are you spending? Where are you living? We've got people that are maybe living with their kids in the basement, nice little apartment suite. Other people have two homes, so it's a very broad statement, but something we deal with every day. It's so critical to know what kind of money you need and how is it going to last and what strategies can we take to make sure it does last. And that's one of the fun parts, I think, of our job. It really is coming up with these designs, these strategic plans that take into account all the things that can happen and still have an assurance that money is going to last a lifetime.

Evan Fricks:

Yeah right, and you know, like everything else, we typically start with income. But a general rule to consider for yourself again, another broad, blanket statement but you've got the 80% income rule. That's just a starting point. So you're aiming to replace about 80% of your pre-retirement income, but you've got to adjust it based on your goals, your health potential for a long life, especially and this is a big one if you're planning on retiring early.

Mark Fricks:

Yeah, and so personally, what I would do is I would start with 100%, but make sure it's 100% of what you bring home, Because some of what you make you probably put into your 401k or thrift savings plan or whatever. Part of what you make may go to other things, maybe extra life insurance at work. Part of what you make may go to other things, maybe extra life insurance at work. So look at what comes in every month or year or whatever and say that's what I want coming in in retirement.

Evan Fricks:

I'd rather guess high than low, Especially if you're early because you might not have health insurance so you're 65. There's so many extra factors playing in to the equation when you retire earlier.

Mark Fricks:

Yeah, and a lot of people say, well, my house will be paid for when I'm 65. But what we're finding is a lot of people are downsizing and they're not getting enough money out of their current house to downsize, so to speak. Right, If you're listening on the radio I'm using air quotes, by the way so downsizing doesn't necessarily mean you're spending less money, and maybe you want to live in a place that's a little more desirable for seniors. Maybe it's a mountain town or down in Florida.

Evan Fricks:

Or even a 55 and up community. Those aren't cheap.

Mark Fricks:

Those are not cheap. And just the homeowner's fees. I'm hearing like $400 a month, $600 a month, $900 a month just for the homeowner association fees, so you can get all these extra things. And so I would use 100% and say you say I'm always going to have a house payment. Hopefully you won't, but go ahead and go with it. Guess high, don't guess low.

Evan Fricks:

Well, another point to that. I don't want to get off on too many rabbit trails, but we don't meet too many people who want to take a pay cut in retirement. A lot of people work really hard, save for years and years and years. They want retirement to be their golden years. They want to be that time to cut loose and enjoy and not worry so much, not take a pay cut. So the next step would be to maximize your Social Security strategy. It's a foundational income source in retirement. We've just recently had a Social Security episode. Go check that one out if you haven't seen it yet.

Delaying benefits from age 62 to 70 can boost payments up to 77%. You should consider for yourself what works for you. Obviously, if you need the money, you got to turn it on. But considering your lifespan, your history and family, how long you think you're going to live? 30 years is a long time to lock in a lower amount. If you're a couple, consider splitting a strategy like 62 and 70. One takes it earlier, one maybe takes it later, the larger of the two. So that's also a legacy planning strategy. If someone were to pass away with the larger amount, that larger amount gets passed on to the survivor. There are a lot of strategies to consider and again, like everything else we always say, say it's very specific to your case and where you need it to fit in.

Mark Fricks:

Yeah, because if you, if you think about working some after retirement, doing something that's fun, you enjoy, uh, you're limited on how much you can make if you turn on social security social security before full retirement age, which for most of you is age 67. So that's got to be taken into account because you'll be penalized. Also, you have to take into account from a standpoint of spousal benefits. Now, this is a Social Security show, okay, episode. But spousal benefits, which is benefits that your spouse would get. If they are getting less than half of yours, or if they don't qualify for Social Security, your spouse can actually get half of yours. Okay, a lot of people don't realize that, but they can't get it until you turn your zone. But also, theirs does not grow anymore after age 67. So I would prefer to go ahead and get the spousal benefits turned down at 67, no more growth left. So what do you do with the other spouse? How old are they? It can really get complicated and you know we do have a certification in social security planning so we can answer those questions for you. Just don't think it's set it and forget it. Hey, let's just turn it on, because I'm retiring this year at 66 and eight months or whatever it might be. Have a plan and maximize that. I mean, we have great software that helps us, but mostly it's our experience, because we know what people say, what they do, where they've been.

We've got many, many clients that we've walked through that path of turning on social security, watching how it works. In fact, one of the things I would recommend folks do is visit the website masterplanretire.com . We have a schedule, a meeting button Almost every page has that and our calendar will pop up. You'll get to choose a time for a complimentary discussion about your situation, and it can include social security. You know we've been thinking about turning it on. Should we? Should we not? We can have that discussion right there.

Okay, gather enough information to be able to at least give you some guidance and then, if so desired, we can run a series of reports to show all the different areas that could affect what your decision-making, your strategies and that's complimentary too, and so that is so invaluable. People walk away whether you become a client or not, that's not of the utmost importance, it's knowing where you're at, and that way you have a better idea of how to get where you want to be. So, masterplanretire.com , or give us a call , 770-980-9262, and schedule again a time to. We'll start with a chat Zoom chat, face-to-face phone chat, whatever and we'll see where it goes from there. But that is complimentary, so take advantage of that.

Evan Fricks:

Yeah, I mean it's obviously. We're a business, we love new clients. It's one of our favorite things. New clients are great, but they are really valuable consultations.

You get a 10,000 foot view of your own retirement. You can see your strengths and weaknesses laid out for you. And that's no commitment from you. That's just showing up and speaking to us and we'll run that for you. Take advantage of it. It's really helpful. Another point for longevity risk to consider annuities for guaranteed income. Now, despite mixed opinions, we've actually had our last annuity. Specific episode was probably about a year ago. Might want to do another one, but we know that I don't know. What do you say about 85, 90% of the annuities out there? You wouldn't touch with the 10-foot pole, but the good products are fantastic and they're the most popular financial product right now. Period.

Mark Fricks:

Billions of dollars flowing into these, and the reason is is because they give you a lifetime of income. The right ones, Okay, and and that's what we're looking for is is whether I live to be 88 and there's money left over and it goes to my spouse or my heirs, or whether I spend all that annuity money. It still keeps sending payments just like social security, Okay, Maybe even stronger than social security. Well, there's so much flexibility and there are so many different products that can be payments. Just like Social Security, okay, Maybe even stronger than Social Security.

Evan Fricks:

Well, there's so much flexibility and there's so many different products that can be designed for different uses Just for the personal use of the person we're working with. Make sure you don't just walk into an insurance agency and say I need an annuity. It needs to be part of a plan, just like anything else that we recommend, anything else we discuss, any portfolio or any strategy. It's all got to work with your overall plan. You can't just throw an annuity out of the wall and hope it'll stick.

Mark Fricks:

It'd be like walking into a auto repair shop or auto parts place or whatever and say I need a water pump. What kind of car, I don't care, just give me a water pump. I'll make it fit. I mean that's bad, Okay, don't do that. But I'm pump, I'll make it fit. I mean that's bad, Okay, don't do that. But I'm serious. I've had people walk in. I'll say why did you buy this annuity?

"A friend of mine was selling them.

Evan Fricks:

"I heard you're supposed to for retirement.

Mark Fricks:

Yeah, or read something or whatever, and I'm like, well, this one doesn't really fit your situation. You're also locked in now. You may not. Maybe it's gone. You know some are short, some are long, but don't, yeah, don't let somebody sell it to you. It needs to fit your situation, yeah.

Evan Fricks:

There are annuities that have beneficiaries now, so even if it's turned on, the income is streaming, if there's still money left after you pass away that can be passed on to a beneficiary. There are also annuities that the income has the potential to grow with inflation or greater than inflation, which is huge for longevity risk. There are just so many tools. There are long-term care benefit riders that you can put

Mark Fricks:

Where your income increases if you have a long-term care need.

Evan Fricks:

But again, we talk about this all the time. We don't push product, we push process. We've got to create a strategy, but there are so many options that it can get overwhelming and it has to fit within your plan and they get complicated, I mean.

Mark Fricks:

That's why we try to bring it down to the level that these are the four benefits. This is the one or two. Everything has a negative, right. I mean every investment has a negative, everything has a negative. So you weigh the positive with the negative and then you take those positives. How does it fit your situation? How do we negate the negatives and make it perfect for your situation? And many times it might be a solution of two or three different annuities for a client, one's for short-term income, you know, to bridge a gap, maybe until social security or whatever. Then maybe another one kind of laddered, so it starts in, maybe in eight or ten years when a greater need is there. Whatever, I mean, every situation is different, but most of our clients have two, three or four, each one that works a little bit differently, to fill a need.

Evan Fricks:

Yeah, and you have to. That brings us to the next point. You need to adopt a flexible withdrawal strategy and really, for us, the greater point is we create an income plan for our clients. You have to know where your money is coming from. We have to have that guaranteed income, which is what annuities can provide, which is what pensions, social Security, the guaranteed income. But you also need to adopt a flexible withdrawal strategy because you also need market money. You also need money that's going to grow. It's the old have to versus hope so money.

Mark Fricks:

Yeah, have to money, which is your income. You have to pay the light bill, you have to pay the car payment or whatever, but then your hope. So money is money, that is. I hope we can take a vacation next year. If the market's up, I can take some money out. I need a new roof. Should I do it this year or next year? When the market's up this year, let's take the money out this year and so that's backup money. And so that's why as I think we've said this before in an episode most people have one or two big buckets of money and they're 401K, they're through a savings plan, 403b, and they have one job all these years and that's to grow. You put money in. Hopefully somebody matches it. Market grows over time, but in retirement there are six, seven, eight different jobs that need to be done. You can't do that with one big ball of money.

Evan Fricks:

Yeah, and I'm begging you, if you hear nothing else, do not just turn on withdrawals from your market account, from your 401k, from your IRA, unless you have a withdrawal strategy. You need to adjust your withdrawals based on market performance helps preserve your portfolio, providing stability. Flexibility through retirement Diversity within retirement accounts helps provide options in any market. So, for instance, the first half of this year it's real rocky, taking from a moderate to aggressive 401k holding, even more conservative holdings, mutual funds, I mean.

if you're locked into those and you can't change your investments more than quarterly or anything else like that, that's not a withdrawal strategy. You're kind of locked into locking in those losses in your account.

Mark Fricks:

Let's take the last few months. I call this a sideways market. One day I'd be up 300, one day it's down 400. Imagine if you're getting $1,000 a month from your stock market account for retirement. What day is that coming out? Is it the day the market's down 400 or the day it's up 400? I don't know. You don't know. And that's why you don't want a steady income flow from market money. You want it from stable money, whether it's protected growth or an annuity or whatever. You want that to be stable. You want that to be guaranteed. I don't want to wake up every morning looking at the stock market wondering can I do a withdrawal today, my lot bills do, or whatever, or knowing it's going to come out on the 15th every month. And in the middle of the month you're looking at the market. What's it doing? Because it's coming out in three days. Two days, one day. What kind of retirement is that? How can I just? It would cause me so much stress.

Evan Fricks:

Yeah, and you know, and this is, we're just speaking of small pieces. Of a big Of a huge strategy and plan, but you also want to ensure that your different buckets of accounts have different time horizons Because, just as Mark said, if you need money soon, you don't want to pull from a bucket that's super volatile. But that volatile bucket is a really great 10-year bucket. I'm not going to touch that for 10 years. I know in 10 years it's going to be up. Maybe that's my long-term care planning bucket, or something like that.

Mark Fricks:

Well, also the money that we do in the market. Of course we have actively managed accounts. They're computer driven algorithms, and so we like different flavors. So our typical client might have three, four, five, six different portfolios. One does great in this kind of market, another one does great in that kind of market, so there's always something that should be up, and because if you look at any market, there's always something making money. 2008, 2009, when the market lost 56%, the S&P gold was up 500%. So most of our clients have a little bit of a gold portfolio, right. So right now I'd say probably two thirds of our portfolios are in positive territory, and the ones that aren't, it's because they're more of a heavy growth bucket. But guess what? Next year they'll probably skyrocket. So again, it's all part of that putting together that income and growth plan.

Evan Fricks:

So we only have a couple minutes left. But one of the biggest risks to longevity of your money long-term care. You've got to plan for long-term care before you need it folks. With 70% of people over 65 likely to need long-term care, the plan is essential. Nursing home costs an average of $8,669 per month. That's nationally. It's over $9,000 in Georgia for a private room. Medicare doesn't usually cover them. Generally over a hundred, generally, excuse me, only a hundred days. Relying on personal savings or family support can create emotional and financial strain. We also know that that tends to drain the bucket real fast. There are a lot of options. You know one, one really popular one these days, exploring long-term care and hybrid life insurance options.

Mark Fricks:

Yeah, there are hybrid tools out there now the old, exploring long-term care and hybrid life insurance options. Yeah, there are hybrid tools out there now. The old traditional long-term care policy was kind of like a health insurance policy If you don't use it you've wasted your money. Those have gotten very difficult to get. They've gotten very expensive. They're going up every few years. Only a few carriers left for that. But there are some hybrid tools Again. We mentioned earlier an annuity that could double or even triple your income if you have a long-term care need Again, a hybrid life policy where the death benefit can be used for long-term care and you don't pay for that rider unless you utilize it. And then it comes out of those payments 5% or so. We might need another alert episode.

That might be a whole episode, but ask us about it. Schedule that time. masterplanretire.com . If we've hidden, hit any button. If you've had experience those people that have had experience with family members, loved ones, with a long-term care situation, whether it be home health, whether it be whatever they know the toll, they know the cost and so, yeah, that's that's got to be part of your plan.

Evan Fricks:

Yeah, and there are a lot of other options too. If you're lucky enough to have an HSA, if you have a high deductible health insurance plan, those can be super powerful in retirement. Again, you might want to consider part-time work or phased retirement. Not everyone is just calling it quits all at once. Sometimes it's easier, not only financially but emotionally and psychologically, to phase out your retirement, maybe work part-time.

Mark Fricks:

We're seeing more and more clients that are doing that. I'm just not quitting because people are retiring earlier. If you retire at age 60, that's pretty young, so you might want to do something with your time. It could be volunteer, but it could be making some extra money as well. That's good, great episode, we. It could be volunteer, but it could be making some extra money as well. Yeah, that's good, great episode. We've enjoyed you being with us. Tell your friends about it, but in the meantime, until we see each other again, plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Beyond the Check: Reimagining Retirement When Social Security Isn't Enough

Tue, 03 Jun 2025 17:32:22 GMT

On this episode of Retirement Roadmap, Evan and Mark discuss how Social Security has reached a milestone with the average check surpassing $2,000 monthly for the first time in June 2025, but this achievement highlights serious concerns about retirement security in America.

Evan Fricks:

Are you ready for Social Security history to be made? 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. The average Social Security check for retired workers has indeed surpassed $2,000 for the first time in June 2025. The milestone is a significant event in the history of the program, as it marks the highest average monthly benefit ever. The average check for June 2025 is expected to be over $2,000, based on the statistical snapshot issued by the Social Security Administration. That's a new milestone.

Mark Fricks:

It is, that's, I guess, a natural occurrence. I mean between cost of living adjustments, people paying more in, because when you make more money you pay more in. So it's going to push that number up year after year, that's right, that's right.

Evan Fricks:

So it's harder to judge what the lowest number is going to be with all the deductions how much people have paid in and spousal benefits, everything else. However, in June 2025, the maximum payment will be $5,108 per month for those claiming at age 70.

Mark Fricks:

I was going to ask what age? So 70, just over five grand, that's not a bad paycheck 60 grand a year, you know. But you don't have to wait for it. You don't have to wait for it and that's the question we are always asked. That's the discussion we always have with our clients and prospects is when should I take social security, right? So it's always the bigger check if you wait longer but you have fewer years to get it. But $5,000 a month. If you have a couple and if the spouse is getting anywhere near that, you may be looking at six figures for that.

Evan Fricks:

That's right.

So Social Security is the largest federal government program and one of the most successful. Truly, it provides income from millions of retirees, dependents, survivors and disabled workers. However, it's not without concern. Not only are we making history with a bump in the average monthly benefit, we've got a lot on the table with Social Security these days, the first being the Social Security dollar simply isn't what it once was. It's losing the race to inflation.

Mark Fricks:

The formula for the cost of living adjustment which we used to teach in class. It was like an extra 15 minutes to the class and I was just like people are glazing over. It is a complicated formula. It's designed to not keep up with inflation. You know and it's great, by the way you know, several years ago there was no cost of living adjustment. So once you got what you got, you got what you got from now on. So at least we have some adjustment. But pretty much like any pension, they almost always lag behind. So there ends up being what we call an income gap somewhere down the road. If you don't have one now, you're probably going to have one later because it is not keeping up with inflation. And this again it's the formula. It's the consumer price index that they use. It doesn't really count everything in inflation, but it's designed that way and they're thinking about tweaking it even further down so it won't keep up even as much.

Evan Fricks:

Yeah, so Social Security, first of all, was never meant to replace an entire paycheck. In fact, somewhere around 40% of a replacement on average is what it was supposed to do. In your retirement, once you walk away from work, with the extinction or process of elimination of pensions, that erases another guaranteed paycheck that was meant to work in accordance with Social Security. Now, the majority of our workers in America are reliant on 401ks, which are not a guaranteed amount. In fact, you don't know what it's going to be when you retire and you also don't own it all either, because of taxes, right.

Mark Fricks:

Think of it as a three-legged stool. Okay, you've got leg one is Social Security, leg two were pensions and leg three was your own personal savings. So back in 1979, when the ERISA laws were passed, the 401ks came out. Companies began replacing pensions with 401ks, and so one of those legs have become very wobbly or non-existent the pension leg. So now the leg that is left, but besides social security, is that 401k or your savings or whatever it may be. And, yes, that can do well over many years if you stick with it, if you don't borrow too much from it, if you don't spend it when you change jobs, all that kind of good stuff. But it's still, like you said, it does not guarantee a paycheck. It doesn't guarantee a paycheck replacement. There are ways, through planning, to better ensure that I mean that's a good way to say it that payment coming in, but it's, you know, the responsibility is now on the worker to make sure that happens.

Evan Fricks:

So I did mention Social Security was never meant to replace an entire paycheck. Again, we said around 40% or so. Social Security is the foundation of retirement income for many of our older Americans. Nearly 90% of people over 65 receive benefits and for 40% of them that accounts for more than half of their income. More than half. For about one in seven. It provides over 90 percent of what they live on, according to the social security administration.

Mark Fricks:

Yeah, and that's not going to get any better.

It's not again between the fact that it's not keeping up with inflation um, inflation being a little bit worse over the last few years. Um, again, so many folks you know every study I've read people are just not putting money away and so they're retiring with very little nest egg, especially if you're self-employed. It's even harder If you work for a corporation and they have this nice incentive to match. It becomes much easier. You don't see the money coming out of your paycheck, right, but self-employed or small companies tend to be a little bit less aggressive on something like that. You really have to be intentional and that's why, when we work with small business owners, that's one of the first things we bring up when are you saving your money? And I realize that many times. Hey, the value of my business is part of my retirement. I get it, you know, and I think that's great. But again, it would be nice to have another leg as well, and I think that's great, but again, it'd be nice to have another leg as well.

Evan Fricks:

Yeah, consider that last fact. For about one in seven, social Security provides about 90% of what they live on. So we already know many retirees are living on the edge. The median benefit, while it's great news if we're hitting average around $2,000 per month, it's simply not enough to cover the basic expenses in many parts of the country. And also consider that one in seven is providing 90%. What are the odds, actually, I should have looked into it, what are the odds that they've even achieved their full benefit at full retirement age?

Mark Fricks:

Exactly, and there's so many different factors that come into play and we're beginning to see more and more of parents living in the basement of their children, of you know, some lower income apartments coming along. I mean, you start looking at these senior living apartments. They're expensive, you know, buying houses now are expensive, and so we're seeing some very creative ways. Maybe we have three or four seniors getting together and renting a house together and being roommates, which actually might be kind of good because you share common interests, so but also being able to split those bills a good bit. So you had to become creative, and I don't, I don't know what the answer is. I mean, again, social security was never meant to provide everything in retirement. And if you're 60, 65, 70, I'm not going to say it's too late, but you certainly have lost a lot of years in saving, and so what's the solution? And so that's when you start getting creative.

I think we had a show, an episode about a month ago, talking about some ideas about retirement and how to make the most of it and things like that. So it is an issue, and now we've got social security beginning. The trust fund is beginning to disappear, which is going to put it more in jeopardy, may cut benefits a little bit. They're not going away. We've had a show all about how social security is not going away, but it could be a little bit smaller benefit for many folks coming up. So there's a lot of issues going on there and I wish I had a lot of good solutions. I've got a lot of good ideas, but the problem is getting it through these stubborn heads in Congress where they each want something of their own and they are not willing to give up something.

Evan Fricks:

Yeah, absolutely, and I would like our listeners and our viewers to consider this. Consider your personal budget now, whether you're in retirement or working towards retirement, consider your personal budget. Could you survive on $2,000 a month? Could you survive on $4,000 if that was just supplemental, or $5,000 a month? Could you survive on four thousand if that was just supplemental, or five thousand dollars a month? Could you survive on that with a lagging increase in cost of living?

It was not keeping up with inflation over the over 10 years or more. That's the median average of two thousand. We see immediately that there is a need for planning beyond Social Security.

Mark Fricks:

Absolutely. And again, the sooner you start. And again, if you're listening, I don't care if you're 60, 65, 70. We have one couple that are in there. She's in her mid-60s, he's approaching 70. We've just put a turbo plan in place. They're getting their debt paid down, they're putting away every penny they can. They're saying, hey, we're gonna sacrifice for the next five years so that when we're in our 70s and you know may not can work anyway, right, whether it be part-time or at all. They didn't, they didn't keep putting it off and say, well, it's too late for us, it's not too late. I mean, there's all little things we can do to to just optimize, to put a little bit more power behind certain accounts or certain methods and strategies and things like that. So you know, if, if there's one key point to take away from today, whether you're 45 or 65, start now.

Evan Fricks:

Yeah, with everything going on in social security and us discussing how tight so many American pocketbooks are right now, I want to bring something else, and I don't mean this to be gloom and doom, but concerning the elderly, the elder poverty in the U.S. So, here's kind of a sobering fact. The U.S. is already the highest among G7 countries, which is Canada, France, Germany, Italy, Japan and the United Kingdom. We're already the highest among those countries as far as our elderly poverty. We have the highest population of elders in poverty.

Older women are especially vulnerable because they tend to earn less. They tend to live longer. They tend to have fewer retirement savings. Social Security is often their only source of income. Without it, elder poverty in the US would be much worse. So consider the potential cuts on the line for Social Security and those people who are already are most vulnerable in our society and what that could mean, and then add in Medicaid and Medicare cuts to that as well, and then what kind of a bigger issue do you have on your hands? This information is also according to Kathleen Romig and research at the Center for Budget Priorities.

Mark Fricks:

Well, and it's such a hot potato politically and we're not taking any side of the fence here. I'm a big believer in not having huge government. I think the power should be in the people's hands. But these are the countries you mentioned have more safety nets too, and so where's the balance? I mean, I've mentioned a couple of times about healthcare.

I know as a small business what we pay, and it's just astronomical. It doubled in the last year. And so whether you're getting your health insurance at work and you're having to pay money toward it, whether you're having to go on your own, whatever your situation is, even under Medicare, your Medicare Part B is up at I think it's $185 per person this year. So a couple's paying $370 a month just for Part B. That doesn't include your Part D, which is drugs, your supplement, or whether you go to an Advantage plan or whatever. There's a lot of out-of-pocket.

So that's the other thing that me; folks that are retired and own nothing but social security. Once they pay that and buy food and a place to stay, it's almost like there's nothing left. And so what do you do if you have health issues? What do you do? Do you just put off going to the doctor. I've had people tell me before that they get a prescription and it's so expensive they skip every other day because they just can't afford a full month's supply, or split them in half, exactly, exactly. And so again, we're not here to talk politics. For sure I don't profess to be a Republican or a Democrat, I'm a capitalist.

Evan Fricks:

Well, I actually love that. That's really important to say. This is not so much a political conversation, because many of our past administrations, guys, this solvency of social security has been a conversation for decades.

Mark Fricks:

They've been kicking it down the road forever.

Evan Fricks:

The potato's getting hotter at this point because we are approaching 2033 or whatever the current estimate is.

Mark Fricks:

When I first started teaching Social Security classes, I was warning people. Then that was 18 and 20 years ago.

Evan Fricks:

It's foolish not to look the situation in the face at this point, without some real consideration of, okay, what happens if?

Mark Fricks:

And I think we've lost the ability in our government to negotiate. I was a big fan of Ronald Reagan. He didn't get everything he wanted. He gave up. If you go back to history, he'd give up this, which you know was more of a democratic thing to give up to get something that was more along his beliefs, and vice versa. They were all statesmen and stateswomen that were willing to do what was best for their country. So this is not political. This is where we as a country we've become so divisive and probably we need to leave this subject now.

But but you know, let's pull that back around to retirement and Social Security and surviving, and so I don't have the answer Again. I've got some great ideas, but we can't kick it down the road anymore, right? So, uh, by the way, um, a little slight change of topic here let's do mention the website. Okay, because there are solutions on the website, there are tools, there are resources to help give you guidance. They're not all the answers. I don't believe that you can go to any website and have it answer everything, whether it be medical or anything else. You need professional help either. You know whether it answer everything, whether it be medical or anything else you need professional help, whether it's financial, medical, a CPA, for taxes or whatever it may be. But our website, masterplanretire.com , has some great tools. We've got many, many episodes like this on it that you can access through podcasts, through YouTube or just the recording or whatever it may be. We've got a checklist, whether it be a survivor checklist, whether it be a retirement checklist, a federal checklist If you're a federal worker.

A lot of turmoil there. What are these people doing? I'm having two or three meetings a day just with federal workers that are trying to make critical decisions. So masterplanretire.com , that's also a place. You can push this little button. It says schedule a meeting. So why would you want to schedule a meeting? This is complimentary. This allows you to chat with us, to share your concerns. Maybe we've brought up some concerns for you today. Maybe we've said some things that have triggered some worries. Don't just stifle those. Approach them, meet them head on, meet with us, have a chat, talk about the good, the bad and the ugly, and then let us run some reports for you to see really where you are at. Maybe that's not a worry that you thought was, but maybe something else is a worry that you hadn't considered MasterPlanRetirecom. All you have to do is call 770-980-9262.

Evan Fricks:

You know I'm going to have to remember that in my daily conversations if the conversation is getting a little bit too close to being political. I'll just mention the website. That's a pretty good move.

Mark Fricks:

Moving on and there's nothing political on the website, by the way, and I don't think there's anything political here except we're saying we need a solution and we need some people to come together and come up with those solutions and understand that it's going to take both sides coming together. This is nobody's fault. This is a whole lot of parties and a whole lot of positions over the last 20, 30 years that should have been solving this a long time ago.

Evan Fricks:

Well, we do have a bipartisan page on our website, and that's the federal employee page.

Mark Fricks:

That's true, that's true, that's true.

Evan Fricks:

However political, that would be. All right. So the yet unknown. Let's talk a little bit on social security solvency.

Mark Fricks:

So again we I think we've talked about this in a couple of shows, or at least one episode, but people misunderstand what's going on with social security. Okay, Social security is funded three ways. The first way is by folks that work that pay into the FICA tax. If you're working for someone, you pay in is it six and a half, I think six and three quarters, something like that. The employer pays in the same percentage for a total of 12 plus percent. If you're self-employed, you pay in the whole 12 plus percent. Part of that goes to Medicare, Part A Part of that goes to a few other areas. Part of that goes to medicare. Part a part of that goes to a few other areas. Part of that goes to social security. That's funding way one. Funding way two are folks that are on social security. Uh, part of the tax they pay on their social security goes back into social security, so they're kind of paying their own way as they go. Is that that fair or not? I'm not here to say that, but that's leg two. Leg three is what we call the trust fund. That's a fancy word, for it's not really a fancy word, is it? The trust fund is basically a savings account. Yeah, I won't do that. So it's a savings account that has accumulated over the years. When there were more people working than there are now, there were like 16 people working for every retiree. Now it's like two and a half to three, and so there's not enough funding going in from the other two sources, so they're having to take money out of savings. The trust fund, which is mean, means that the trust fund has been dwindling for the last 30 years plus. Okay, so they're estimating the trust fund will be empty by 2032, 2033, somewhere in that time range. Okay, so that doesn't mean social security is going broke. It still has the other two legs, two other funding sources, but it means 21% of the funding will be gone. So, theoretically, if nothing is done, your check in the mid-2030s could drop by 21%. So it's not going away, it's not going under. It could be a cut in benefits. Now, again, we've talked about this. There are six, seven different things on the table being discussed. Some are raising taxes, Some are lowering benefits, some are changing benefits, changing inflation, raising the retirement age, all of this kind of stuff. So it's on the table. Okay, Now what's the difference? What's going to end up? Who knows right, but I hope something ends up Again.

I want to be able, when I'm 75, 85, and 90, to still be getting a check and know what's coming in. Folks that are 35 and 40 would be even more concerned. We've actually had some folks. When we do our planning they say, just leave Social Security out of my numbers, let's just pretend it's not there anymore. But you know, they're blessed to be able to do that. If it works, they are blessed. And then it's just gravy Absolutely. And they've worked hard to make that happen many times, so that, and so it's kind of fun to do that. But I do tell them I don't think it's going. It is the biggest program we have, you know. So I don't know how they could ever get rid of that. And think of the people that would be on the street if they did away with Social Security the disabled folks, the elderly, the semi-elderly, I mean so many people. Now you've got a much, much larger problem. So again, I'm very confident. But the sooner they do it, the sooner they're going to not have to bite such a big bullet.

Evan Fricks:

And at the time of this recording there are no dramatic cuts being proposed. But as it currently stands, doing nothing is doing something bad, because it's a problem that's got to be solved. There's discussion about possibly raising the retirement age. For retirement age, people are living longer. I'm sure people don't want to wait that much longer, that much more time, to receive a check, but at the same time people are living longer. Our lifespans are increasing. Possible cuts to Social Security taxation but again that's going to have to get paid from somewhere. Possibly more taxation, raising FICA incrementally over time. There's a lot of options on the table, but right now the inaction is the most concerning part, because if nothing happens then it's just going to drop. 21%-ish now is the average.

Mark Fricks:

And I will say this if they do raise the retirement age. So when it first came out the retirement age, full retirement age was 65. The average life expectancy was 62. So it was kind of like, well, hopefully you die before we have to give you any money, right? But now that we're, our life expectancies are in the upper seventies to mid eighties, depending on lifestyle and male, female, things like that then. And we've only raised the retirement age to 67.

So I see that going to 70, but I don't see it affecting people like over the age of 45 or 50. They will phase that in. So if you're retirement planning now and you're 52, I really don't think it would affect you. But the problem is this that's not going to really affect the money of social security for 20 years. If you say everybody under 50, we're going to affect, but if you're over 50, that's 25, 27, 30 years away. So what's it going to do for today's problem, today's situation? Nothing. So that's a concern with that, not that they should or shouldn't raise it, but it's not a solution that's going to help us over the next 10, 12, 15 years.

Evan Fricks:

Yeah, as retirement planners, income is often not always, but often the first hurdle we have to tackle when creating a plan for a client. So, with social security as a currently guaranteed income stream, with all the questions on the table, I ask our listeners and our viewers what would happen if your retirement plan, what would happen to your retirement plan if social security was suddenly removed from the equation, or even significantly reduced?

Mark Fricks:

Again. That's what we got to mention a minute ago. Take the responsibility, and we have clients that do that. We have prospects, we have kids of clients that come in and see us and you know, step one is them coming in to see us. So many of our clients say I really want my son, my daughter, they're in their 30s and in their 40s. I want them to come see. You Just can't get them in here and I know you're busy. I mean, gosh, at that age, kids running around, you know, college approaching, I get it OK, working your tails off, but if you can just take some time and just go ahead and say where am I at, what should I be doing to get where I want to be? And, by the way, let's aim for not even worrying about social security, and that would be a great way to start. So the younger you are, the better, the quicker. But yeah, it's a small percentage of people that have the time to do that or take that responsibility to do that.

Evan Fricks:

And I know it's been a little bit of a heavier episode topically. But topically or per topic- topically is a cream, isn't it? But here's the good news, Social Security is not a retirement plan, A 401k, an IRA, a Roth. Those are not retirement plans. Social Security is but one of a dozen or more areas of retirement that must be addressed, and not only addressed, but they all must work in accordance with each other.

Mark Fricks:

You know, I've got to mention these reports we run because it's amazing. Every time I look at them we'll show a perfect world report and they may not ever run out of money, or maybe they run out of money in their nineties or whatever, which we can fix that. But then you apply one stress test. Let's just say taxes go up by 15%, which I think they will All of a sudden they're running out of money in their 70s. You add a little bit higher inflation, they're running out of money. So there's these dangers that we really have to pay attention to and we got to work on all of them. So that's why we stress all of them as well.

So I hope you take advantage of that complimentary consultation. Push that button at masterplanretire.com . Uh, give us a call 770-980-9262. Again, today's show might've been a little bit heavier but we'll lighten it up next week. But in the meantime, until we see each other again, plan well and prosper.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Debunking Dangerous Retirement Myths

Tue, 27 May 2025 22:20:00 GMT

On this episode of Retirement Roadmap, Evan and Mark explore eight common retirement planning myths that could potentially derail your financial future and explain why these outdated beliefs may no longer apply to today's retirement landscape.

Evan Fricks:

Do you believe a retirement planning myth that is endangering your retirement plan? Hey folks, thanks for joining us. Welcome back to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. We have a series of retirement planning myths to discuss, some of which could derail your retirement. You may be surprised to find out. You've been believing a myth for a while. Mark: We come across many myths and just beliefs that are either old and outdated or just completely unfounded.

Mark Fricks:

Quite often, yeah, it's all about everything from what we used to believe, because my granddaddy retired that way. It could be something that has just been spread around the radio so long, or magazines nowadays. Social media, water cooler talk... the modern water cooler as well.

So there are a lot of things and you know, when we teach a class or we're face to face with a prospect for a client, those will come up almost every time and we're like, hey, I hear what you're saying, but think about this and try to steer them in the right direction, Because it is typically a long-held belief, maybe from their parents and grandparents as well.

Evan Fricks:

Sure, so we're going to kick it right off with one that is probably originated in the 90s. There was a study back in the 90s known as the 4% rule, so the myth number one is everyone should follow the 4% rule. So basically, the 4% rule again. It's been around since the mid-90s. It's a popular retirement savings strategy. It suggests retirees can withdraw 4% of their total retirement savings every year, adjusting for inflation, and their retirement dollars should last roughly 30 years.

Mark Fricks:

Yeah, that's one that still keeps getting spread around, and what they're basically saying is, if you've got this equity account with a mixture of even some bonds and things like that, that, if you take out 4% a year of that balance, you've got a pretty good chance of your money lasting 30 years 90 something, percent, 97% or whatever, which is fine. But a lot of things have happened since 1993, I believe, is when the study was done and so they redid the study, they being Morningstar, one of the world's largest researchers of investments. Every investment has been around all of that kind of good stuff, and so what they found with their new study was what we now call the 2.8% rule. So now you need about a third more money for the same math to work. So instead of maybe 700,000 to get 30,000, now you need over a million dollars to get the same thirty thousand dollars, and even still it's not guaranteed.

So that's why we and many planners have moved away from stock market based income models into other kind of models that produce better income than 2.8. Every model we use produces at least 4% to 5%, many of them 6%, and almost all of them guaranteed at that percentage, and so just be careful. I still hear it on the radio. Sometimes I still hear it around social media or whatever. A lot has happened over the last 20, 25 years from a standpoint of market volatility, and so that's what's changed that rule, more ups, more ups, more downs. So when you're taking money out and we hit a 30% bear market, you are just sucking the life out of your principal, and so it's going to disappear much quicker.

Evan Fricks:

Yeah, people refer to the 4% rule as a rule and it really was never meant to be that in the first place. It's more to be a guideline. So if you consider the fact that, yes, now it's actually 2.8%, which I guess doesn't flow off the tongue quite as quickly, as easily as 4%, but if it's 2.8, that also doesn't account for individual circumstances, unique circumstances to that client or account, market fluctuations, personal spending habits. It's more of a guideline, of a starting point for folks to kind of wrap their head around income and retirement.

Mark Fricks:

And think of it this way. If you are, you know you've got one big bucket of money which used to be your 401k or your thrift savings plan or your 403b. Most people have one or two larger buckets and you're using that like that. Even if you're doing 2.8%, things come along. It's not just monthly income, it's that roof that you might need to replace next year. Well, that's another 20 grand coming out.

I just read this weekend heating and air systems are going to go up by 35% because of new regulations that the new administration is trying to get rid of. But they want to move to a higher level of refrigerant which only two companies in the US have a patent for. And it's just things like this, I mean. But you replace these things, whether it be a house, whether hey, I wouldn't like to take a nice trip type of thing, or whatever. So that kind of just piles on top of that 2.8. So that's why we, as part of our planning technique is splitting off that income source from the other things we need periodically, and that way we can really measure how much we can take out for those extra things. Hey, I want to reward myself this year and go to Europe because we've made good money in the market this year, not so much. I think we'll go to Duluth or Snellville or somewhere like that, which is which are nice places, by the way. That's that's.

that's a positive.

Evan Fricks:

Yeah absolutely Myth number two, and you're going to like this one. We get this one a bit: Social security is bankrupt.

Mark Fricks:

Yeah, we've tried to straighten this out a couple of times. I still hear it a lot Social security is not bankrupt. It's not going bankrupt. To explain that, let's dig just a little bit.

So Social Security is actually funded three ways. Number one is funded by current taxes. So when I work I pay into FICA. That goes into Social Security. Some of the money that people that are getting Social Security pay in taxes goes into Social Security. So two of the feeders of Social Security are current taxes. The third feeder is what they call the trust fund.

I call it a big savings account. So for many years there were 16 or 18 people working for every retiree. Now that's down to about two to two and a half, and so they're having to take money not borrow, but take money out of that savings account to make the difference. The savings account is shrinking. It will be gone. Not borrow, but take money out of that savings account to make the difference. The savings account is shrinking. It will be gone, they think, in 2032 to 2034. And so what will happen is payments will be cut by approximately 20 percent because they no longer can use the trust fund. That's all that is.

They are trying to fix it. There are about seven proposals on the table. I have faith in our Congress that they will come together and get that fixed, because I don't want anybody getting a 20% pay cut, including me. Okay, but it's not going away. I've had so many people say I'm going to go and take it because it might not be here. No, it'll be here unless something super drastic happens, and if something that major happens, we have bigger problems than that. So I cut in funding or the amounts you might get, but it's not going away.

Evan Fricks:

Yeah, there was a study by Nationwide and turns out that about three in four think social security will run out of money, the fear that social security is going bankrupt. The problem with that is that it may push people on the verge of retirement to start collecting their benefits earlier than they maybe would have, which doing so would result in a reduction of up to 30 percent in their monthly payments, since you can generally get a bigger benefit if you delay your social security.

Mark Fricks:

Yeah, and, of course, it all depends on life expectancy and all that kind of good stuff. We have a lot of discussions with our clients about this. Uh, there's more than one way, especially if it's a married couple. Take one a little bit earlier, one later. Whatever, there are reasons for doing that. Also, are you working part-time in retirement? You take it too early, you lose some of your social security benefits, so why take it? So a lot of factors come into play, so please get help on this. This is not a Google solution. There's too many things coming together and it's all based on what your needs are in your life, and so get help with a fiduciary that has training in social security benefits, which we do.

Evan Fricks:

Myth number three is also social security related: Social security will cover most of my expenses.

Mark Fricks:

Yeah, I'm sure you've got some stats that I don't memorize, but so many people are relying on it almost for 100%.

Evan Fricks:

Yeah, and it was never meant to replace your paycheck. It's designed to replace about 40% of your pre-retirement income.

Mark Fricks:

So what are people relying on it for? Now, the average, do you have that number Like 70 or 80%? That supplies like 70 to 80% of their income, that they need.

Evan Fricks:

No, it's intended to only replace 40%. I'm not sure what it actually is.

Mark Fricks:

I think I've read it's about double that.

That is what people are actually, the average person is actually depending on from social security, which is why it's so vital that they not get a pay cut, because we've leaned further and further on this pool of money that is beginning to run dry. So that's why you know, take into account your own, you know responsibilities when it comes to retirement. If you need to work a little bit longer to fund your 401k a little bit longer, if you want to maybe work part-time for a while, I myself, if I ever do retire, I don't know that I can sit at home. Most people can't.

Most people need to be doing something productive, whether you're getting paid for it or volunteering or something. But yeah, be careful with that. With Social Security again, some of the changes that may come would be cost of living increases. So if you're relying on it for 80% or 90% of your income and you don't get much of a bump one year even though inflation goes up, you're getting further and further behind. So lots of things affecting that. Please, it's never too late to start saving money.

Evan Fricks:

Yeah, some of the misconceptions, I mean they've been around for a long time about how much Social Security is actually supposed to replace. But back in the day we had pensions and Social Security, two reliable sources of income. Well, we know that pensions have largely gone away at least the vast majority of them and they've been replaced with a 401k, which is not a guaranteed amount, a set amount of money, and that responsibility is now in your hands, folks who have the 401ks, the TSPs, the 403bs, all these good things. It's up to you now to determine how to make that money work for you over 25 plus years in retirement. It's no longer reliant on your pension and your former company.

Mark Fricks:

And that's why a lot of times I'll refer to it as my grandfather's retirement versus today's retirement. Again, he had a great pension. He worked 30-something years for the mill, right, you know, he had a mill house. It was a very nice little house. It was perfect for them. It was paid for after a while.

Cds were paying 5%, you know, savings accounts were paying well, and nobody was in the market. I mean, in the 50s, 60s and 70s the IRA and the 401k had not come out yet. So the middle American mostly they were not participating in the market because they didn't have that easy conduit into it, and so they were again just kind of riding this three, five, 6% wave of money. But again, that pension probably covered 50, 60, 70% of their needs, and then social security kicked in the next 40 or 50,. They were in good shape, you know. And then they passed away right, I mean life expectancy much earlier, and so maybe they were five years in retirement, maybe 10. But nowadays we've got people 20, 30 years in retirement, and because we're living so long, guess what Health issues those are cropping up more and more. We didn't live long enough to. I'm not even sure Alzheimer's existed. It was probably called getting senile or something like that Just a different world we live in, and it's not something that I would encourage anyone to do on their own.

Evan Fricks:

Yeah, and on the social security conversation if you have not visited ssa.gov, downloaded your own social security estimate to see where you are, I highly recommend doing that, especially in your pre-planning stage for retirement. While you're online, you should also go to masterplanretire.com . There you can schedule your complimentary consultation with one of our advisors. That's an opportunity to run a series of retirement outlook reports for you. It's essentially a 10,000-foot view of your own retirement and then we will stress test that retirement. We will test your retirement against bear markets, against higher taxes, against the passing of a spouse and many more items. That's completely complimentary. Feel free to take us up on that. We'd love to hear from you. masterplanretire.com or 770-980-9262. You ready for myth number four?

Mark Fricks:

Real quickly on social security.

Another great reason to check out your statement. Actually, look at the statement, don't just look at the little readout on the initial login. Pull up your statement because it will give, on page two or three, all your years of history of earning and we have found over and over again that social security will miss a year. And so it's 35 top earning years. Okay, earned income over 35 years. If you're missing four or five years, those are zeros and that will lower your average as well. Get it fixed, the sooner the better. Do a check, do a self-audit, double check that for yourself.

Evan Fricks:

Number four: cash is king. In times of uncertainty, many people liquidate their holdings and move to cash. They're betting that it's safer than being beholden to the whims of the stock market. May move funds to CDs, bonds, money markets, things like that.

Mark Fricks:

Which is fine if you've got clear signals that the market's going down. You haven't waited until the market's gone down. You want to sit on the sidelines. Our money managers do that fairly often. But they get the signals, they get the algorithms and they can see hey, we need to rest some of our money. They never go all to cash. I don't have anybody that ever goes all to cash, but even our government workers. We'll advise them maybe move to G Fund for a few months. We'll give you another notice when we get more signals and let you know to get back in. But we have seen.

I can remember after 2008,. It was years where I'd see people sitting in almost all in cash eight and ten years later, which means they totally missed the recovery, plus another 40 or 50 percent on top of that. Don't let fear drive your decisions. If fear is a problem, if greed is a problem, let somebody else manage your money. You know I have a little bit of hard time managing my money. I hire money managers to hire, you know, to manage it because again it takes that emotional aspect down of it. I trust them. They have a long track record.

Evan Fricks:

Let them do their job and they'll work their way through the windings of the stock market and make money long term, yeah, a portfolio of all cash is not going to keep up with inflation, over 30-year retirement, with rising health care costs, inflation, cost of living increases. It's better to have money spread out inflation, cost of living increases. It's better to have money spread out stocks, cash and bonds. And again we have this conversation all the time. It's what the account needs to do. What's the account's job? Of course, if you need immediate income, that's not going to be in an aggressive portfolio, but maybe your long-term 5-10 year bucket that's for long-term growth can remain in the market and remain more aggressive even in more volatile times times

Mark Fricks:

Again over time, the market makes money.

Evan Fricks:

Myth number five: long-term care insurance or nothing.

Mark Fricks:

What I hear you saying is that's our only choice Long-term care. We have steered folks away from buying the insurance because it has got to be very difficult to get. It's very expensive and clients that have bought it years ago still get letters every two or three years where the cost is increasing. That happens four or five, six times over a 10 or 12 year period. They can't afford it anymore, so they paid for it for 20 years. Now they drop it.

So there are tools out there and again, if you've got a planner that specializes in retirement planning, they will know of some tools, just like we do that you can incorporate long-term care coverage into other tools so that you're not just paying for long-term care insurance. It's just almost like a trigger that gets triggered and whether it's built into an income plan, whether it's built into a life protection plan or whatever, I love those tools because I don't feel like I'm spending a client's money. We're utilizing a client's money and for many purposes. Built into one tool, that long-term care rider is a very powerful tool.

Evan Fricks:

Yeah, absolutely, and it doesn't even have to be a long-term care rider. It can just be a specific bucket, specific account with a certain timeline. You do need to prepare, but we've seen how many clients who have been paying in for a long time with these long-term care policies that they had before they've ever met us Several, are being offered a buyout. One of our clients was offered a buyout of $50,000.

Mark Fricks:

I think it was $50,000, $40,000.

Evan Fricks:

They'd had it for 25 years, which, if you consider that amount, that's about half how much a long-term care has cost.

Mark Fricks:

They probably paid in $60,000 to $70,000, but that didn't count the fact that they could have made money on that money. So they're trying to buy them out because they don't really understand or know. They don't have a good handle on how long people are going to be in in facilities. It seems to be getting worse and worse because we are keeping them alive, we're trying to give them a quality of life, but it's also costing a lot of money, and so it's just I don't know where it's going to come to you. I really don't. I'm hoping the government doesn't have to get involved, but people are just floundering with some of these issues. So make sure, especially if you're middle to upper middle class, you make a little bit better than average income. You don't want to lose all of your assets to Medicaid and not have a legacy to leave your family or your spouse enough money to live on because the state came and used up all your money for long-term care.

Evan Fricks:

And now this is also not a recommendation by any means that if you have long-term care insurance, that you should drop it. Not at all, because it actually can be a huge blessing for you, especially when you find some folks who've had it for a long time and it's still a good policy, one of those stronger carriers. We're not saying get rid of it. In fact, many people have great experiences with it when it pays out the way it's meant to. However, when you're strategizing, moving forward, the landscape has changed, so you really need to have a fuller viewpoint on your long-term Know your options. Yeah, know your options. Myth number six: financial plans are for rich people.

Mark Fricks:

Wow, that's a good one, yeah, so. So it's almost like saying you know, only really really healthy people need to go to the doctor. That's good. You need to go, period. You know we have people we work with that have very little in investments, in investable money. They need help more than anybody. We need to squeeze every dollar out of there and really show them what they can spend. Maybe they need to budget, Maybe they need to work part-time or whatever, but have a plan. No matter how much money you have, you certainly need one if you have a lot of money.

Wealthy people are afraid of running out of money. The wealthier people we work with, but that middle class, somebody that worked at Lockheed for 30 years, somebody that worked at Southern Company for 30 years or whatever they've saved all these years. They've got a decent nest egg. They go well. I'll just turn on my social security at this age. I'll just take money out of my 401k over the next 30 years and we should be okay.

Should's not a plan, Hope's not a plan. So put it in writing. You know what it does, Evan. As you've heard our clients say, it gives them absolute peace of mind knowing that they've got a lifetime of income plus growth over here, and plans for hey, if I lose my spouse early, if taxes go up. These are all strategies we put together. Why not have that peace of mind to have a plan? So don't be afraid to. You know, I know as a guy and speaking for a lot of men, a lot of times we're afraid to look for help. Many times it's the female that drives the couple to see us, you know, and that's okay, you know, but yeah, yeah, don't be afraid to at least have a chat with us.

Evan Fricks:

Yeah, that's good.

Myth number seven: estate planning doesn't apply to me. So estate planning, including even drafting a will, is one of those things people just put on the back burner or think, oh, my assets aren't large enough to need any of this. But you're not considering, not only the trouble you're leaving your heirs but the costs that it might eat into your legacy.

Mark Fricks:

I consider this in two steps. Step one is having the right documents. That's a good step in the right direction, but it also needs to be incorporated into your overall financial plan. That's what estate planning is. It's not just creating documents. So make sure you work. So we have attorneys as part of our team because we do some of the planning with them. They give us advice on how to set that up, they write the documents, but now it's integrated with your other holdings. It's integrated.

You know, do you need a trust or a will? Have you updated some of your beneficiaries because they don't go through the will or trust they go through. They don't go through probate. That's a better way to put it. So it needs to be an overall plan and also we're beginning to see more and more of these wills that people do online or do through some cheaper attorney website or maybe done by an attorney that's not an estate planning attorney are not working. They look good, you know they feel right, and then they get a probate and the judge says I can't accept this because of this or that. So it's up to the probate judge to decide if the document is any good and maybe it was written 30 years ago and that maybe was no good.

I have somebody come in here with a three-page will. I already know it's no good. There's just not enough language in there for today's digital assets and getting into people's bank accounts and other things that have not been addressed in the past. So getting into people's bank accounts and other things that have not been addressed in the past so many people's will was done 30 years ago when their first child was born or something like that. So not only that, getting it updated, but making sure it integrates with everything. So I think if you've got a house and $50,000, that's still going to be a mess for somebody. If you don't have a will, You're dying without a will. It's a much longer process, more expensive process.

Evan Fricks:

Myth number eight, we've just got a couple minutes so we'll try to knock these last two out fast. Myth number eight: I can set my financial plan and forget it.

Mark Fricks:

Yeah, you can, you shouldn't.

But you can. Things change, life changes. That's why we meet with our clients officially once or twice a year, because we understand that things change. Sometimes they'll call us this has changed. We need to see y'all make adjustments. It's not in concrete, it's not in stone. It's designed to be flexible. Hey, if I lose a spouse, my income just dropped. I've got to take a little detour If this happens or that happens or whatever. We've talked about it, we've planned for it, but now we actually got to change those widgets or change those levers or whatever to make sure that it keeps up with the evolving lives, evolving tax laws, all of this. It is always something you got to keep up with. That's why we love working with folks, because we help you keep up with it. It's not like you've got to sit down on New Year's Day and make a bunch of changes. We've got that plan and we guide you through it, pretty much like your CFO.

Evan Fricks:

Last one. We'll try to plow through it while we still have time: I will be in a lower tax bracket in retirement.

Mark Fricks:

Yeah, almost never happens. Most people want at least 80% of their income coming in at retirement. Most of them want 100%. You've got to remember when you're working, you've got money coming out for health insurance. You've got money coming out for your 401K or thrift savings plan, and so what is your net income and do you want to maintain that? That's going to be a different tax bracket, plus, as tax laws change, it could be higher. The fact you've got to take required minimum distributions. You're forced to take money, have an ira that can put you in higher tax bracket. If you lose a spouse, you're in a higher tax bracket. A single tax bracket is higher than a joint. So there's so many things and we rarely see somebody stay the same or get a lower tax bracket, especially with taxes going up in the future, so much money being spent. So, yeah, don't let that be part of your philosophy. Make sure that you keep up with that.

Evan Fricks:

That's good. Folks, thanks again for joining us today. Remember, check out MasterPlanRetire.com to schedule your complimentary consultation.

Mark Fricks:

We've enjoyed today, I hope this has been helpful for you. Until we see each other again, remember plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Shockproofing Your Retirement: Essential Safeguards

Tue, 20 May 2025 18:33:57 GMT

On this episode of Retirement Roadmap, Evan and Mark explore the unexpected financial shocks that can derail even the most carefully constructed retirement plans and discuss strategies to help prepare for these challenges.

Evan Fricks:

Is your retirement plan shockproof? Hey folks, thanks for joining us. Welcome back to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. Transitioning to retirement is an adjustment both financially and emotionally. With big changes already happening, there can also be unexpected shocks to your retirement plan, Mark. We know that once we've got a plan in place at some point, inevitably there's going to be some adjustments that have to be made. Where we get into trouble is when we don't consider some very big parts of the plan that need to be taken care of ahead of time.

Mark Fricks:

Well, you know people that come to us. Typically, unless it's children of clients or typically 50 and older, they've lived enough life to know things change, you're right, and just as much as during life, they change probably even more in retirement. You're talking about 20, 25, 30 years of life, and then you throw in things that may not happen as much during your earlier years, like health issues and things like that. So, yeah, absolutely, we have to plan for that, or it's got to be flexible. Right, we got to be able to shift gears. Maybe it's a slight detour, maybe it's a total 180, whatever it may be, but you got to be prepared and we go ahead and look at that as we're talking to talk about today, ahead of time, so that we're not necessarily surprised. I'm not saying it's a great thing to have to do, but we do need to be able to maneuver that and change that a little bit, because there's definitely some areas we're going to talk about today.

Evan Fricks:

Some of these will be shocking and maybe not have been considered before by our listeners.

Some of them, "oh yeah, of course that's part of a retirement plan, but maybe we don't realize how devastating it can be to a retirement plan. So the first one we all know health care costs are going up, so that's our first financial shock. However, lately I'm noticing one of the more common reasons clients are delaying their retirement is because of health care.

Mark Fricks:

Well, you know, Medicare doesn't kick in until 65. And first of all, that's getting more expensive, right, Medicare, Part B and Part D and all that is getting more expensive. Government's kind of talking about do we want to cut some benefits or whatever, but until 65, that's a big consideration. A lot of our clients are retiring before 65. And so, whether it be one part of a couple or both the couple or whatever it may be, you've got that situation of, and we just had this discussion with a client yesterday. You know their big concern was you know, if I could retire now I think he's 57, 56, something like that what am I going to do about health insurance? And so we explored some options. There are options available If somebody were to get laid off, there's a possibility of maybe some benefits coming from the company if they have seniority.

But that's not going to last probably very long. 18 to 36 months might be the max. So there are some other things we look at. We have some other ideas that we look at, but that is a major consideration and when you consider that healthcare inflation is more like six to six and a half percent, it's not going to get any better. I don't know where this is headed. I know just as a company. Our group health has more than doubled over the last 18 months. It's been wild. Yeah, it's just crazy. And so in retirement, when you're maybe on a more fixed income, it's even more critical.

Evan Fricks:

Right.

And we have that discussion as well. You know there are a lot of other resources to go to. The marketplace is a place, is something to consider. However, that is income-based and if you have a lower income for a while in this transition period, then that might be worth it. But if you're also using this period, maybe you're 60, somewhere around there using this period to prepare for retirement, with things like Roth conversions or things that are going to impact your income for that year, then that might not turn out to be such a good place to go.

Mark Fricks:

It's got to be closely watched and you want to make it part of that retirement budget. So that's something we examine when we're creating that income plan. Again, we've had several people come to us whether it be federal government workers or whether it be just anybody in the open public sector that have suddenly found out that, hey, they're paring down the economy right now is a little weird, a little sideways. And so there are companies either not hiring or they're cutting back, and many times it's that middle to upper middle management that gets cut. And so these are a lot of the folks we talk to age 50 to 60. And all of a sudden they're like do I retire? I'm this age, what about health insurance? What about income? Have I got enough saved? All of these questions come into being, but healthcare is certainly probably one of the bigger ones.

Evan Fricks:

And if industry-wide those positions are being cut, it's hard to find a position that pays the same amount and reenter the workforce. Let me give you some tangible numbers here. So Fidelity says that the average 65-year-old in 2024 will spend $165,000 on health care throughout retirement, so that's over the course of 20 plus years. However, fidelity also found that Americans estimate their retirement health care costs at $75,000. So that's less than half of the reality, and a couple's average cost in retirement is $315,000.

Mark Fricks:

Yeah, let's talk about where that comes from. A lot of people are like, well, I'll be on Medicare. Well, so Medicare Part A is hospital. We've had Medicare shows before but, briefly, it's paid for over the course of your lifetime when you pay into FICA. But Part B is paid for in retirement and right now it's around $185 per person. So if you're a married couple that's $370. And that goes up almost every year a percentage, and so just do that math every month for 25 years. You can see what that would cost. Well, we still got Part D coming in, which is the drug coverage. That typically is not cheap.

Many people want the vision and the dental. You know a lot of things and even hearing, and you start looking at the cost of hearing aids and you know a crown replacement. All of this. You kind of want the insurance for that and I felt like I'm missing something. You know, oh, the supplement you know a part, you know G or whatever it might be is an additional cost. Now some people go to the Medicare Advantage it is cheaper but it's changing as well and then deductibles, things of that nature. So that's a real number $365,000. Is that what you said? Give or take?

Evan Fricks:

$315,000 for a couple

Mark Fricks:

$315,000. Yeah, that's real money, and so that's something, we've got to plan for it. We got to make sure we have the income coming in to cover the unexpected, which is why I love overages in our income plans when we have more coming in than we need. That's a beautiful scenario.

Evan Fricks:

Well, and maybe you know, if you look okay, retirement could be 20, 25, maybe even 30 years, so 315,000 spread over that many years. Okay, maybe I can break that down and look at it, but then you're considering that's one element of retirement.

Mark Fricks:

Right, one element and then we're going to go over some more, I'm sure. But yeah, that's just one piece of the puzzle that comes into play. And again we've got some clients that all of a sudden they've got three or four health issues in a row and it stacks up over a course of, you know, it typically happens in a year or two. Then they're kind of good for a few years. All of a sudden barrage hits again, and if it's both of them, that's even more. You know more of a problem.

So if you're not planning for health care costs, you're not planning.

Evan Fricks:

Number two along a similar avenue as health care costs, and that would be long-term care. An estimated 70% of US adults who survive to age 65 will end up needing some amount of long-term care insurance.

Mark Fricks:

What percentage was that?

Evan Fricks:

70% of US adults who survive to 65, they'll end up needing some amount of long-term care in their lifetime, but the cost involved could be catastrophic. So long-term care costs vary significantly, with average annual costs ranging from $47,000 to $131,000 or more, depending on the type of care and location. So Genworth's most recent cost of care survey puts the average annual cost of home health aid at $77,792. For the assisted living community, a little bit lower, the annual price tag is $70,800. But then there's nursing home care, with an average price tag of $111,325 for a shared room and $127,750 for a private room. Even a brief nursing home stay could empty a moderate income retiree's bank account.

Mark Fricks:

Let's not be fooled, Medicare does not cover long-term care. It'll pick up some cost in the first 30 days, a little bit more cost in the next 30 days, some skilled nursing but long-term, past that point don't think Medicare is going to cover that. There's a little bit of a misunderstanding about that. So what do you do? Well, as we've talked about before, we're not big proponents of the traditional long-term care insurance. It's gotten really expensive, hard to get, doesn't cover nearly as much as it used to, and clients that bought it 20 and 30 years ago they're getting a letter every two or three years saying we're going up 10%, we're going up 20% or you can cut your coverage and it gets to the point they have to cancel it. So we're not going that route.

There are some new tools available and we've gotten into them before. We won't spend a lot of time on them. But it needs to be part of your plan. It needs to be part of how can I increase my income if a long-term care need is triggered? And there are two or three tools we're using. They're working pretty well. In fact, one of them works really really well, but you're not putting out a lot of money to pay for it.

It's kind of a rider on another account.

And so definitely if your advisor or if you do have a planner, if you don't have a planner, you need one, not just an advisor.

But if they're not talking to you about long-term care and how do we take care of that in the future, you're missing out on another element of what could really derail your retirement. And then you have the double whammy. Right, Evan, you've got let's say, I'm in assisted living for a while memory care, nursing home, seven-year period, spend half a million dollars of my assets and my spouse now I probably am going to pass away in the near future. After that, right, I pass away, my spouse is left with a lot less money than we had and she loses some of her income. Right, one of the Social Securities goes away. If I'm on a pension, some of that might go away, and so it's that double whammy that we plan for with every client to make sure that we have some kind of strategy in place.

Evan Fricks:

Yeah, so use that opportunity, folks, to go to our website, masterplanretire.com , see where your strengths and weaknesses in retirement are. We offer complimentary consultation to anyone interested and basically that's an opportunity to run a series of reports. We'll see if you have a long-term care need or a health care need. We'll see if your income will last through retirement. Are you protected with bear markets or higher taxes or inflation? How does that affect your retirement? We'll run all of those reports and more for you, masterplanretire.com , or call us at the office 770-980-9262.

Mark Fricks:

The nice thing about the website is that, first of all, treasure trove of resources. But secondly, there's a little button that says schedule a meeting and you push that meeting and our calendar comes up. You pick when you'd like to have a phone chat, a Zoom meeting, a face-to-face whatever, like an initial chat. I call it a fireside chat, but we don't have a fireplace in here, so that's kind of a little misleading there. So a cup of tea, cup of coffee or whatever. But really what we're looking for is what are you concerned about? What are you worried about? What do you see coming up that is like oh, you know, I'd like to retire, but and we want to hear about that but we also want to hear about your goals and your dreams as well. And how can we meld those together? Take care of the issues but at the same time fulfill your goals and your dreams in retirement. Those reports are the beginning of the process of discovering where you stand.

Evan Fricks:

That's great. Number three: home repairs. Now that's something that we don't consider as much, but we see that quite often. How often do you get a call or an email "hey Mark, I need money for a porch or a roof or HVAC or whatever. It happens quite frequently, and here's the thing A lot of these folks, if they're staying in their home during their working years and they choose to stay there in their retirement, by that time that house could have been aged quite a bit. There might have been a buildup of repair need. Homeowners are often advised to budget 1% to 4 percent of their property's value for upkeep and repairs. But that guidance applies to general maintenance, not large repairs like replacing a roof or HVAC.

Mark Fricks:

A week doesn't go by that I don't get a phone call or an email that says we need $10,000, $20,000, $30,000 because this has happened to the house. It seems like it's every 20 years. That seems to be kind of the life of an air conditioning or a roof or you know, and then, 40 years, you start getting into foundation issues and things like that. And so a lot of these discussions that I have with clients are and I just read an article about this the other day. I've been having this discussion for a couple of years, but it was about should you rent in retirement? You retirement, and when you think about it, you can get some rent protections.

What I mean by that is many leases will limit increases. If you're in a complex, all you can do is make a phone call and whatever's broken will be fixed. They probably have a gym there, a pool there, the whole bit. Many have garages and stuff, and some of of them are catered to the over 50 crowd and so it's worth exploring. Some people are like no, no, no. Well then you can take the equity out of your house, maybe paid for, but at least has some equity put that into an income producing tool that pays your rent, you see, and now you don't have that. I need $10,000 for this or $20,000, then you can call us and say I need $10,000 to go to Europe. So much better, right? I'm not saying it's right for everybody. This is certainly not a recommendation, but we do have those discussions and, again, if you're not talking to your retirement person about some of these things, you might need to get a second opinion.

Evan Fricks:

Another smaller consideration: If you're used to making some of these home repairs yourself, as you age that might become more and more difficult. So you need to pad extra income for professionals to come in to take care of that for you.

Mark Fricks:

The two things people tell me when they get close to retirement is number one I don't want to manage my money anymore. And number two I just don't want to have to fix everything that goes broke in my house every two weeks or whatever, and so, again, it's something to consider. Yeah.

Evan Fricks:

Number four shock: the cost of aging in place. It was once fairly common for older Americans to downside or relocate in retirement. These days it's an important question Do you want to age in place or move? A growing number are opting to stay in their homes that they know and they love as they age. So an AARP report states that 75% of Americans age 50 and older want to age in place. 73% hope to stay in their communities. However, aging in place often means making changes for safety reasons, and retrofitting a home could get quite expensive. So, for instance, fixer F-I-X-R says homeowners spend an average of $3,000 to $15,000 to remodel their homes to age in place. But the cost you incur will also depend on the scope of the work that needs to be done. Simple adjustments like replacing doorknobs that can cost as little as $350, while major structural changes like widening hallways or selling walk-in showers things like that that can reach 50,000 or more.

Mark Fricks:

We're not even talking yet about the upstairs. Right, where's the adult bedroom? Is it upstairs? Do you have to maybe build a bedroom downstairs? Do you put in an elevator? I mean, this just gets to be so... Is it better to move? Well, I know in most areas that we deal with you can say we're going to downsize. That doesn't mean you're downsizing in price, because many of these newer homes that are built to one level maybe a 50 and older community, or maybe not, maybe just an older ranch that needs to be redone you're spending probably almost as much money as you're getting for your older home.

Evan Fricks:

And multiple generations are seeking those types of homes out.

Mark Fricks:

They're getting harder to find, absolutely, and they're trying to build some, but these new buildings are a lot more expensive because of inflation and again, you know supply and demand. So it's funny. People will come in and say, yeah, we're going to downsize and I say, have you checked the prices yet? And they'll come back. We may need to take a second look at this for sure.

Evan Fricks:

Yeah. So if you know ahead of retirement that you prefer to live out your days in your current home save for eventual renovations, you can incorporate that into your retirement plan. Like everything else we've discussed already, the more details you have, the better job you can do saving ahead of retirement so you're able to make whatever changes are necessary and create a safe living environment.

Number five: legal or scam related issues. So we know that elder fraud is huge and it's just getting worse and worse. Financial fraud, identity theft or costly legal disputes can be devastating, especially for older adults who have less time to recover from their losses.

Mark Fricks:

Had two phone calls in the last, I'd say nine months, of clients, and these are smart clients. One was a physician, one was an engineer type. They both got scammed out of a significant amount of money One $10,000, one into six figures. And so, I mean again, they're not stupid, they've read the articles, but it is so critical that you keep up with this kind of stuff. And if you're not sure, I mean they have classes. In fact we'll be interviewing, I think pretty soon, someone that deals with cybersecurity. So make sure you stay tuned for that episode coming up. But it's a critical area and that's why we try to educate our clients on that.

Evan Fricks:

We've even had once or twice thankfully it hasn't been more than that but we've had emails from strange addresses asking for money.

Mark Fricks:

It looks like our client. You know all that kind of good stuff, and so we've learned to do a phone call, verify it, that's right and say is this really you and I'm like I don't need money this week or whatever it may be? You and I like I don't need money this week or whatever it may be. So just more and more layers. You know people complain about security and and, and you know having to get a code and all that kind of stuff. It's going to get worse. Yeah, we're already seeing other layers for our stuff because we want to be extra careful.

So just stay up on that step, on that kind of stuff.

Evan Fricks:

Elder fraud includes a variety of scams targeting seniors with tech support scams We've seen that so many times Identity theft, of course, romance scams you think about somebody who might be single and older, feeling lonely, romance they can be extra susceptible to those kinds of things.

That happens a lot.

Absolutely Fake investments are some of the most common Government impersonation. How many times have we gotten the IRS? I've been getting the text saying I have a violation for the Peach Pass.

Mark Fricks:

I've been getting those too. You've gotten those? Yeah, yes, I have, and I did go on the site to double check and I don't. But yeah, I was getting them probably once a week for a while and I can see people and I've on on some of the social media sites about people following that link and stop just in time. You know, before they start putting in, we need your credit card to pay this, fine, or whatever it may be.

Evan Fricks:

There was a FedEx delivery one that was going around for a while and I think a fake Microsoft. I mean there's, they're endless and there's gonna be. There's gonna just be more and more. And, keep in mind, with the advent of AI, the problems are only going to get worse. Use identity theft protection, monitor your accounts, consider freezing your credit, have legal documents in place: your wills, your powers of attorney, healthcare directive and, just like Mark said, be cautious with your phone and online solicitations.

Mark Fricks:

And if you're not sure, ask your eight-year-old grandson or granddaughter.

Evan Fricks:

I think they need less internet. So these are just some of the lesser considered areas of financial concern in retirement, but you have to include them on a list of points that can be comprehensive, that have to be covered by a successful retirement plan. So, in conjunction with the things that we've mentioned already, consider market volatility in retirement. You've got the risk of sequence of returns even down to timing when you can retire. Do you think many people were eager to retire the first half of this year, or March, about 2007. Or 2000s? Well, they didn't know then.

Mark Fricks:

That's what I'm saying. If they retired, many of them tried to go back to work, but the positions are closed because you're laying people off, and so be careful with that. I'm not saying don't retire. I'm saying have a plan in place that the market could do anything in the next year, have accounts that are stable, that you can take income from, and then we'll let the market do its job over time.

Evan Fricks:

Right, absolutely.

Another consideration: taxes and retirement. We talk about these things all the time, but it's for a very real reason. Taxes can eat up as much of your income as a market drop. We know that most Americans who've been putting away into employer-sponsored plans for their entire careers, most Americans, the vast majority of baby boomers today retiring have a tax problem, a huge ticking tax time bomb, as you like to say.

Mark Fricks:

Yeah, Ed Slott, a colleague, a fairly famous CPA, that's always writing books about taxes. He tries to warn people. You know, all this money built up in these 401ks, IRAs, thrift savings plans or whatever that are pre-tax, which is the way we saved for the last 40, 50 years. There's a mortgage on that amount of money. So when you think about your balance, I want you to do it right now. Don't close your eyes and think if you're driving, but think about how much you have in your IRA or pre-tax accounts and subtract anywhere from 20 to 40%. That's the real value after taxes. And so now's the time, where taxes don't sell, to begin having a tax strategy. And again, if somebody's not talking to you about this, they're not doing the full job. We can show you the report, and when people see that report about taxes, just going back to the old tax rates accelerates how quickly they run out of money. So you need to see that so that you're attuned to it, so that we can then have a strategy to do something about it.

Evan Fricks:

And there wasn't consideration... It wasn't until about 2022 that we started thinking about the "I word again, and that's inflation, cost of living increases, that's a consideration in retirement. Add a couple of these together. What if you have a combination of higher taxes and inflation, or bear markets, which are guaranteed to happen every four to seven years, historically right.

Mark Fricks:

Absolutely.

And so you've got these things coming together. If you don't have a strategy for every area, that one area that you don't have a strategy for could be the one area that totally destroys your retirement. And I hate to see people. I've run into people at places. At Walmart I ran into a guy that was in his 80s, had to go back to work at Walmart because he was running out of money from poor planning. So that was a true story and it was just a sad story. And he said I can only work so many days because my knees are gone, but I got to do it and so it's a true story, it happens.

Evan Fricks:

So there's some more ideas for concerns that you need to consider in retirement to make sure you have a full and complete retirement plan. Every point we've mentioned today we deal with regularly and we see the impact on clients who are successful with it and maybe those who are not.

Mark Fricks:

So I hope you'll consider this. I hope you'll visit the website masterplanretire.com , schedule a time with us. It's complimentary and it will enlighten you as to where you're at and how to get where you want to be. So until we see each other again, remember plan well and prosper, take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

When Career Plans Crumble: Strategic Options for Pre-Retirement Layoffs

Tue, 13 May 2025 14:39:33 GMT

On this episode of Retirement Roadmap, Evan and Mark dive deep into the strategies and considerations for those experiencing job loss within five years of retirement. Rather than making panic-driven decisions, we explore how to take stock of your situation, protect what you've built, and potentially discover that retirement is closer than you think.

Evan Fricks:

What if you're laid off right before retirement? Hey folks, thanks for joining us. Welcome back to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan and with me, as always, retirement planner Mark Fricks. So what if you are laid off right before retirement? Consider a time when you're approaching retirement. Five years or less. Retirement is on the horizon, but your timeline has been abruptly cut short. With the tumult in the federal employee sphere, Mark and I have been working through these options with clients and prospects alike. We've seen a lot of this lately, Mark.

Mark Fricks:

A lot of emails, a lot of phone calls from our current clients that haven't retired yet from the federal government. A lot of their colleagues are asking hey, who do you work with, who do you talk to? Who knows the federal benefit world? Which is a totally different or another layer upon already what can be a complicated retirement. So a lot of contact. Of course we teach the federal classes, so we're getting more and more people coming to those. We're actually getting invited into departments of the government to teach. You know the department heads are inviting us in.

Hey, my people need to know what's going on, how it works in retirement. Should they pull the trigger or not pull the trigger, timing issues and also, as you know, just, we never know what the next email is going to say that comes from the government into the, you know, to the employees. There's always a change or, you know, maybe the courts have ruled something. So a lot of confusion for sure. But even in the corporate world, you know, there's always changes happening as well. So we're going to talk about that whole realm, I believe today?

Evan Fricks:

Yeah, absolutely. We're going to take a 10,000 foot view and then also get a little bit more specific on actual steps and things that you need to focus on. But the very first step you need to do is take stock, be organized. What do you have? Where are you? I'm hoping that within five years or so of retirement, you have started some pre-planning. You have maybe a timeline, some goals and objectives in place, but you definitely want to make sure that you're organized, have a solid financial statement in place, but number one priority is protect what you've built, so stabilize your finances. That comes down to cash flow. Make sure you have an emergency fund aim for six to twelve months of expenses, severance and unemployment. Maybe you could use these as a bridge. Look into those possible benefits. Spending; maybe you need to cut or pause non-essential spending. Travel, subscriptions, luxury expenses, these are all 10,000 foot view considerations for you if you were to have to navigate this sort of situation.

Mark Fricks:

Maybe you can start looking for something part-time. It may not be something you want to do forever, of course, but maybe just to bring in some extra money. While you're trying to decide do I retire, do I keep looking for another job, or what can I do? A lot of times when companies lay off, they will go back and hire folks part-time, kind of on a consulting basis, to save so many as well. So maybe check with some competition things of that nature, and I'm sure we're going to get into it. But also, you know, how do you handle your 401k or thrift savings plan as well.

Evan Fricks:

Another thing that we have been... It's already a huge deal in retirement, but it's becoming more and more forefront of people's minds because it's getting more and more expensive. That's health insurance. So if you're under 65 and this is a consideration for you you're not yet eligible for Medicare. Cobra can extend your employer's coverage for up to 18 to 36 months.

However, I did speak to the expenses of healthcare right now. Cobra is not cheap. The marketplace we often recommend people to check that out to bridge gaps. The marketplace we often recommend people to check that out to bridge gaps. Offer cheaper and that's absolutely that's. Another option is see what your spouse's plan has to offer and join that if possible. So if you've got a short time frame, you really want to have some smart planning and that goes down primarily. I mentioned this before reassess your retirement timing. Can you still retire on time? Mark and I meet with clients and prospects alike, always evaluating. This is what we're looking for, this is what we're shooting for. But can we retire earlier? Can we retire later? What does that look like? What changes may or may not need to take place?

Mark Fricks:

Yeah, a lot of that is just what we do from the very beginning, which is making money more efficient, and we've had so many people that have come to us and said I think I can retire in five years and because of all the levers we pull and all the strategies that we introduce and utilize, that they actually are able to retire sooner. So maybe your calculations are, ooh, I can't retire, but then we take a look at it and really do a deep dive into where you're at and where your spending is and things of that nature, and what can we get rid of. Maybe you can go ahead and pull that trigger. Hey, you know, I was waiting. I was going to wait two years or one year or three or whatever, but based on what these numbers are telling us and what we can do with those accounts, might be able to retire now. Might be a kind of a bad news. Oh now good news scenario.

Evan Fricks:

Right, and there are plenty of retirement reports you can run that are available online, but you really need to take the opportunity to speak to a financial professional, specifically a retirement planner, because they're going to have so many more considerations that this linear report on your IRA or Roth or whatever, is going to be able to offer you Some of those options. We're going to start to walk into now, some more specific considerations, but the first thing you need to do is rethink your retirement income sources, and that comes down one to being smart about withdrawals and timing of social security, you know two big things that can affect retirement a lot and of course that incorporates is all incorporated into an income plan, which is the first thing we put together for our clients as we start working together is where is it coming from?

Mark Fricks:

Maybe we need to go and turn on, if it's a couple, maybe one of those social securities, if they're eligible. I don't like to turn them both on early, but we look at the numbers and then we let the clients make the final decision. But that's certainly a source you can go to. Maybe you turn it on for six months and all of a sudden get another job. Well, you can actually turn it off or reset it, pay back what you got, Because if you're 62 or 63 and all of a sudden you get a job and you're like, wow, I'm making $50,000, $100,000, whatever it may be, you're going to be penalized on your Social Security. So you need to either stop it, adjust it, let them know, or reset it. You have one year to reset your Social Security. So, again, if you turn it on, you can actually pay it back and it goes back to being a larger check every year. You wait, and so that comes into play. And then the other thing you mentioned was income standpoint, was Social security timing?

Evan Fricks:

You don't want to be forced into taking it early if you have other options and you really need a financial professional to help look at what kind of options might be in front of you. And as far as options on withdrawals from retirement accounts like 401ks and IRAs, there are some specific things to consider for each of those account types. So if you're 59 and a half or older, you can access retirement accounts without penalties. Those 55 and up may also withdraw penalty free from the 401k tied to their most recent employer. That's a gotcha that a lot of financial advisors will ignore. If they just want to roll all of your money out of your 401k and you're under 59 and a half, you might lose that option to some liquid penalty free money.

Mark Fricks:

That right there tells me they either are not knowledgeable or they're not a fiduciary, or they're just trying to get your money in some account.

Yeah, so I'm going to take all that thrift savings plan money or all that 401k money or 403b money, roll it into iras with us so we can manage it, and then you're left with a penalty if you try to access those iras. So, very important, rule 55 and older at your current or latest job, you can actually access that money without a penalty. So we always like to leave a little bit in there. I say a little bit we, we, we do some calculations what you think you will need over the next one year, two years, whatever the time limit or timing may be. So very important to understand that. And again, why you want to get started earlier with working with someone that is knowledgeable, that is a fiduciary, because they will point out things like that. That can get you, can absolutely get you.

Evan Fricks:

There are other early access options that may be worthwhile to consider, like SEPP, which is substantially equal periodic payments, but those come with long-term commitments and limited flexibility. We might get into that option a little bit later. But have you also achieved your full retirement age, considering your employer benefits? Maybe you have a pension. If you are a federal employee, you do have a first pension and depending on how long you've worked will depend how much you're going to get paid for the rest of your life post-retirement. What benefits do you have being offered to you through your employer? Make sure that you look through all that as well.

Mark Fricks:

Yeah, and if you're being laid off a lot of times, there will be a package. Negotiate the package, don't just, especially if you're middle upper management, make sure you get with them and say, okay, you know this is a have to thing. I hate that this is happening. But you know, is it possible to pay my health insurance for the next year or six months? Do I get a severance package? How is that paid? Is it over time? Is it a lump sum? So many different things. What about my pension? Can I take it earlier? If there is a pension there, like you said, with the federal government, there are options to take it earlier, a lot of rules around that. So, just to sure you make good decisions, don't panic and again, we hold a lot of people's hands through this kind of stuff.

Evan Fricks:

Well, there are a lot of choices to make and a lot of times folks don't know what's better for them, even coming down to survivor benefits on a pension. Sometimes you need it, some people might not need it, and then they're paying for something for the rest of their life that they don't actually and something they may not ever use.

Mark Fricks:

If they pass away you know after the uh, the spouse then that money's wasted as far as that paying for that survivor benefit. So understand all the rules about that for sure another consideration would be to avoid irreversible income moves.

Evan Fricks:

So don't rush into tapping income sources that can't be paused or adjusted. Instead, consider using savings potentially home equity, but that will get a little bit more complicated to consider as well Downsizing as a more flexible bridge strategy. Annuities you know, once you annuitize an annuity, that's on forever, so make sure that that's where it needs to be before you turn it on and you're going to be getting the maximum amount that you were expecting from that. Annuity Pensions and also some pensions have the option to freeze as well.

Mark Fricks:

Freeze, or also maybe a lump sum option where they can roll the whole amount into an IRA.

Then you have the choices of how to take it, when to take it. Maybe create your own pension with a specially designed annuity that will pay out and can be stopped. Sometimes two. Many of the options they could stop. Start maybe at least once, or maybe just do withdrawals, as we may or may not get into later. The importance of having an income plan is where it's coming from, because you want a stable source, you don't want to be taking money out of a volatile stock market and you probably want to put the brakes on a lot of your investments. I don't mean go money market necessarily. I just mean go more conservative and, again, have a plan for where that money is coming from, whether it be short-term, long-term or whatever it may be. I come back to that word again efficiency, the efficiencies of your accounts. Reassess your social security, timing, the efficiencies of your accounts.

Evan Fricks:

Reassess your Social Security timing. You know claiming Social Security. Maybe you feel panicked or you might need that, you know what. Let's just turn it on now. I lost my job. Maybe we can retire early. However, you're going to cut your benefits by up to 35%, while in fact, delaying past full retirement age boosts them up to 8% annually until age 70. So, again, a layoff may force a change in plans, but talk with a financial services professional before making any permanent decisions.

Mark Fricks:

Yeah, and just to mention the website real quickly, because there are a lot of resources on our website. We have checklists for retirement things of that nature. So make sure you visit masterplanretire.com that again a lot of episodes on there as well. Also, there's a button on there that says schedule now or schedule an appointment, and basically what that does is opens up our calendar to give you a chance to have a phone chat, zoom call, a face-to-face meeting. If you're in the area, that we can help you start taking a look at where you're, at what's available to you, and then we can also run some reports as well to see if you are ready for retirement. It'll be a higher foot view, as we like to say a 30,000-foot view, but then we can take a look and say, okay, we think that this might work a little bit better. We've got to watch out for this or whatever, and that's all complimentary, and so we'd be glad to do that for you. You can also reach us at 770-980-9262. I hope you take advantage of that.

Evan Fricks:

I did mention the SEPP earlier substantially equal periodic payments that allow for penalty-free withdrawals from IRAs at any age. However, they're inflexible and once you turn them on you're locked in. So, basically, do you know the formula off the top of your head on how much you have to take out? Annually?

Mark Fricks:

It depends on your age, but it seems to be between four and 6%.

It's like an early RMD almost.

Yeah, it's called 72T. It's something el se it's called because that's where it's found in the IRS code. But it is a way of getting out four to 6% from an IRA with no penalties, but you have to do it for at least five years and even if you pass age 59 and a half, you still have to keep doing it, whichever is longer, for at least five.

Exactly, at least five years or until you're 59 and a half. So if you started at 50, you've got to do it until 59 and a half, type of thing. So be careful. Again, a lot of advisors don't even know about this. I've got a lot of CPAs that don't know about this opportunity. So another way of working with someone that understands. I mean, we've been in this business a long time, we've seen a lot of different scenarios and so we have a depth of knowledge and if we don't know it, we know where to get that information for you.

Evan Fricks:

A pretty substantial client base at this point and we only have a handful of people that are doing 72Ts.

It's a very specific to your plan strategic scenario. So again, this is something that you don't want to just jump in with a unless you've consulted a financial advisor, retirement planner, specifically for your plan.

Mark Fricks: Just a little caveat on that. It is also a way of getting some of your IRA money into.

Roths.

You , can Can 72T out, put into a Roth or a specially designed tax-free account and that's a way of doing conversions in addition to a regular Roth conversion. That's right.

Evan Fricks:

So the overall theme to this section is stay strategic, not reactive. This stage of life is about planning, not panic. Think long term and avoiding boxing yourself into a financial corner. You've worked hard. Now it's time to protect what you've built. Another option for consideration: a bridge job. You could stay in the workforce strategically. This could preserve savings, extend your benefits, redefine what work is in retirement for you. So early retirement isn't necessarily your only path. Explore part-time, fractional, passion-based work that brings fulfillment and purpose without the full-time grind.

Mark Fricks:

And maybe health. Insurance.

Evan Fricks:

And maybe even some benefits.

Mark Fricks:

Depending on how many hours you work. There's some companies out there that will give you health insurance with 20, 25, 30 hours of work week, so that's a huge benefit.

Evan Fricks:

It's incredible how much, even on reports, a little bit of part-time income can extend a retirement on an income plan.

Mark Fricks:

Yeah, it may not be that you can save a lot of that money, but you're covering your expenses and letting your other money grow for that much more time, and so again. So if you're in that position, maybe we get. We position your money in a different way than because you're not pulling money from it. So every plan is different, Every scenario is different. It's just something we have to work numbers and walk through and talk through.

Evan Fricks:

That's right, that's right. So the last section to consider is your mindset and your emotional stability. Accept the shift. If you're being laid off and you're close to retirement and you know what, this is not part of my plan or my time horizon that I have been working towards. Accept the shift and don't panic. This is a transition, not a failure.

Mark Fricks:

Well, anybody that's been on this earth a little while knows that life is not going to go the way we want it to go. That's life.

And you have, yes, so you have to roll with the punches. I'm not trying to belittle this, I'm just saying that it does. You know, if I've got, if I have a curve ball thrown at me, I go looking, you know, for help. You know if it's a personal crisis, I might go to you know, my pastor or something. If it's a tax situation, I go to my seat. So you go seek help mentally, emotionally, financially, whatever that it calls for. I've had people go to counseling when they get laid off and stuff to kind of work through their feelings and things like that. So don't be afraid to do that. I know, as a guy, sometimes I'm like I don't need help, but you know, maybe you do.

Evan Fricks:

Many people work in different ways after a quote, unquote retirement age. Just remember, you still have options. Take care of your mental and emotional health first. Stress at this stage can also affect your decision making Panic decisions. You know, one of the biggest factors to people losing money when managing their own money is because they have emotional responses. Fear and greed One of those two. Those are the biggest contributing factors. So the first thing that you could do is tap into your professional network. Reach out to former colleagues, managers and work acquaintances. A simple phone call, coffee chat or message can lead to unexpected job opportunities.

Mark Fricks:

That's where most jobs come from. That's right. So many people have gotten jobs from getting on. It could be LinkedIn with friends and colleagues, or they've just kept in touch with folks over the years. Don't burn bridges, right. That's one of the reasons you don't burn bridges. But they may not have a job where they're at, but they may have heard of hey, so-and-so is doing this or that or the other. So certainly get on Facebook with friends and let them know that hey, this is what's going on. Seek that out. I'm sure these job boards work. I've just never known too many people personally that have gotten a job on a job board, but I know they work. But still, those relationships are much more powerful.

Evan Fricks:

It seems like the more powerful jobs, the more lasting jobs come through relationships, but of course that's. You know that's not every case, but in the sake of posting online, you know you would want to take the opportunity to polish your digital presence a little bit, update your LinkedIn profile or create one if you haven't done so yet. A professional online presence acts as your modern day resume and it opens doors beyond your immediate circle, so that could be helpful.

Mark Fricks:

And depending on what level of job you have or that you're seeking. I mean, many folks now are hiring people, of course, to punch up that resume. I wouldn't know what to do when it comes to social media If I had to look for a job there's so much out there and so many ways to present yourself I'd probably have to hire somebody to come in and Ever since Microsoft got rid of Clippy.

Evan Fricks:

Now I have no idea how to update my resume.

Mark Fricks:

I have no idea what that is.

Evan Fricks:

You don't even know who Clippy is. That's a cartoon character.

Mark Fricks:

That is, it is actually.

Evan Fricks:

Another consideration is to start before you're forced to. If you're even slightly unsure about your job security, begin networking now and also everything we've discussed before. Start organizing and taking stock of where you are. Don't wait for a layoff to start making career connections or exploring your options. That's a great point.

Mark Fricks:

I've heard of many of our clients that, hey, this is rumbling in our company, we just got bought or whatever, and they go and start putting feelers out and finding the next opportunity. Or again, can I retire, yeah, so come back to that question again.

Evan Fricks:

And Mark mentioned a little bit of this earlier. Lean on your personal circle. Friends can offer emotional support, shared experiences and helpful advice. Their encouragement might be the confidence boost you need to move forward, or even move forward boldly. And I would also say, use the time to pause and reflect. You know, if you have a financial cushion, consider taking a short breather. Use this unexpected break to reflect on your purpose, explore passions and realign your next career or life step with what matters the most to you.

Mark Fricks:

Yeah, it sounds difficult to do that because you're like I know when I've been. You know when I was much younger and was between jobs or whatever. It's a little bit of a panic initially, but really just grab hold of that and then just say, okay, you know, let's do a reset. Let's think about was I even happy doing what I was doing? Maybe I can afford to pick up some online classes or whatever, brush up some skills, add some skills or whatever. So it is a good time to kind of reset, refocus and again, you know those people around you, whether they be professionals or friends or whatever, can really give you that help. You know the help that you need to. Let's think about this.

Evan Fricks:

And if the concept of pausing for a minute in a quote-unquote crisis where you're about to lose your job, if the idea of pausing for a minute seems completely foreign or impossible and maybe you say I don't have that kind of savings ready, I don't have that kind of nest egg where I can afford to not hit the ground running immediately, then that's also a great opportunity. Maybe you should speak to a financial professional, discuss budgeting, discuss how to save and move forward for your own retirement. We mentioned so many different things, from employer benefits and options that you can do with your withdrawals, timing of all of these things and how they all work together. It's critical that you understand how each area works with other areas, Because when you make a change in one area, it's inevitably going to affect other areas. You need to speak with a retirement planner, especially if you're close or within five or 10 years to retirement. Beautiful time to sit down, get organized. What are my goals? What are my dreams? Dreams? What am I afraid of? How do I get to where I?

Mark Fricks:

need to go. Yeah, I think half our job, evan, as you know, is almost counseling. It really is calming folks down, letting them talk, letting you know, hearing what they've got to say and then giving them the assurances. Well, let's take a look at this. We really think that that we can get the situation, get our heads heads wrapped around it and really maybe find a way to get you retired or at least getting closer to that point. Again, our experience has shown that on their own, folks are not able to be as efficient. You can Google all you want and it will give you lots of information, some of it bad, some of it good, some of it does not. Most of it does not apply to you. What is your situation and how can we further improve what you've got to make it more efficient? I've used that word several times in this episode, but we need to squeeze as much lemon out of that lemon as we can, and I think there's more in that lemon than you think there is than you think there is.

Evan Fricks:

I think more folks more often than not folks when they come to us to look at their own retirement options, they can, for the most part, don't realize that they actually have the ability to retire. You just have to walk through the process and have your case analyzed, and if you're not able to, then we'll show you the steps to get to where you need to be.

Mark Fricks:

Yeah, I hope you'll plan to come see us take advantage of the complimentary consultation. Thank you for joining us today. Remember, until we see each other again, plan well and prosper, take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Market-proof Your Retirement: Income Strategies for Any Market

Tue, 06 May 2025 14:10:32 GMT

On this episode of Retirement Roadmap, Evan and Mark discuss how the traditional rules of retirement planning have changed dramatically in recent decades, calling for new strategies to generate plans for reliable income regardless of market conditions. Increased market volatility since 2000 has rendered the old "4% rule" obsolete, now reduced to 2.8%, while tax implications, sequence of returns risk, and the shift from pensions to 401(k)s create additional challenges.

Evan Fricks:

Do you have a retirement income strategy that works in all markets? Hey folks, welcome back to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. Steep market downturns expose weaknesses in retirement income plans. That was especially true earlier this year when the S&P 500 tumbled some 20% from its high. If you can't pay basic monthly expenses like rent, electricity, prescription costs, food and gas with cash at the ready, you'll have to make a withdrawal from other accounts. The problem: you'll be withdrawing from accounts that hold assets that are worth less than they were before the market sell-off. Mark. In some ways, our company was founded by a failing market.

Mark Fricks:

Yeah, the dream of MasterPlan came in 2008, the Great Recession, when clients were coming into my former firm and just not knowing what to do, because every day we'd come into the office and the market was down again, and down again, and down again and maybe a bump up and then down again for the next five days. And it's not just the fact that they were watching their accounts dwindle I think S&P lost 56% over about an 18-month period but it was the fact that many of them were taking money from those accounts and as they're taking money from those accounts and they're losing money, they were in a position to probably never be able to recover. And so sitting in front, and this is a very personal story for me, sitting in front of these folks that are in their 60s, 70s, even 80s, and trying to explain this away and not really having an income plan, was difficult, and I spent the next year or two just reading and talking to colleagues and trying to figure out what are we doing wrong? And that was the old traditional income market.

The model was hey, maybe get some good dividend paying stocks? Well, dividend stocks are not guaranteed. Ladder some bonds? Well, bonds have really stunk over the last 20, 25 years. So you're talking about a 3% to 4% flow. That's not a lot. And again, even in bad times even the best dividend paying companies can stop dividends, and there's a good percentage of them that So where does your income come from? That was the birthing, if you like that expression, of MasterPlan and where it came from and why. I think income planning is the number one thing we do.

Evan Fricks:

Yeah, and there's a big baby boomer-specific problem. Defined benefit plans transition to defined contribution plans. What do I mean by that? Late 70s, early 80s, companies began replacing pensions with 401ks and with that they did not provide education, they did not provide a means of understanding not only where to invest, but what to do with that money when it's time to actually use it. Not only did they take away the companies', take away their own personal responsibility for that plan to pay in the future, they put it on the employee. You no longer know what exactly you're going to have in retirement. Where it was defined benefit at one point, now you just kind of hope that it builds enough to last once you hit retirement. The other problem, which and I think we'll both agree is the biggest problem, is, all of a sudden you're putting into maybe up to 20, 30 years of your employment, your career, into a tax deferred bucket. So because a portion of that goes back to Uncle Sam, when you withdraw it you also don't know how much actually belongs to you.

Mark Fricks:

Yeah, I'm going to go back to what you said there at the beginning. The education, I think, was the biggest problem. It did not dawn on people that they've taken away one of the legs of my three-legged retirement stool. Now there's still Social Security and there's still retirement savings, but that third leg, which is a very strong leg of a guaranteed pension, many times with the cost of living adjustment was gone and people didn't realize that. And I think the way it was sold.

I remember my first corporate job when, you know, they brought me in and said, hey, you qualify for 401k, and I said what the heck is that? I had no idea and the way they explained it was very poor. And so I picked out one or two funds. I didn't even know what a fund was. I mean, I was like 19 years old and I didn't even know what a fund was. I didn't understand it. And so, yeah, I signed up for it, but I didn't know what I was doing.

And so here, something that was supposed to replace one of the legs of the stool or add to it ended up being the weakest part.

And then tying that back into what you said toward the end there about the fact that every dollar that comes out of that traditional 401k is taxable and if you can tell me what your tax rate is going to be at retirement or in 20 years or whatever, we have an opening for you here at Master Plan to hire you and bring you on. But we don't know. But we do have a pretty good idea that it will be higher and that mortgage you talked about having in your 401k or IRA or whatever can be dangerous. Because, again, we've said this before when you think about the balance in your 401k or IRA, traditional, subtract 20, 30, or 40% from it because it doesn't all belong to you. So what do you do about that? Well, that's where you introduce a tax strategy into that income plan, which is probably the two most important things we do.

Evan Fricks:

So why do I bring up 401ks? Well, for one, the vast majority of baby boomers, their retirement savings are coming from 401ks, which are, generally speaking, the vast majority invested in mutual funds, maybe company shares, the like, but that's market money Meaning. If you are relying on that big bucket of money that is in the market for your retirement income and you have to take withdrawals regardless of where the market is, you are digging into your principal in a down market. We want to take a little bit more of a 10,000-foot view of some concepts before we get into some ways on how to plan for an income strategy that works in all markets.

And the next thing I want to discuss is the 4% rule Mark. So we've talked about this one before. 4% rule is basically a study that was done back in the 90s 94, I believe and it states that at a withdrawal rate of 4%, that's identified as being optimal to last through 30 years of retirement. So if you have a retirement account, regardless of the size, you can withdraw 4% of that account per year and it will last 30 years in retirement.

Mark Fricks:

Yeah, and that was done by Morningstar, one of the leading researchers of investments, and probably every stock that's ever been out there, every bond, everything. So they did that study, like you said, in the mid nineties and that's kind of been the rule 4% and even that's not guaranteed, it's like a 97% chance you won't run out of money with 30,000 a year and that's without increasing your amount coming out.

Evan Fricks:

So if it was $30,000 a year that you needed in retirement, your account, your retirement account, would need to be $750,000. Right, that's that 4% of $750,000. It's funny Articles, even now when I'm browsing around seeing what's popping up that might be a good cool subject to talk about in the show. They're still using rule, 4% rule, still mentioned constantly, and there's a problem with that.

Mark Fricks:

There is a problem with that. They redid the study in 2013. That was after the tech bubble, after the Great Recession, after the lost decade from the year 2000 through 2009. That was the first decade that we were actually in the negative a little bit and redoing the study they came up with. Now it's not quite as smooth. It's the 2.8% rule, right.

Evan Fricks:

Based on Morningstar and their same study that they did, so, 2.8,. You probably have the numbers. I have it right here. Yeah, so 2.8% a year for 30 years means your retirement account can no longer be $750,000. It actually has to be as big as $1,071,429.

Mark Fricks:

So another quarter of a million dollars plus in that account, and that's not taken into account the tax rate, right? Is that clearing 30,000 or gross? That's a gross of 30,000. So what are you receiving based on what the tax rate is? We don't think that's going to change. You know, let's be clear about this. I think that first decade of the new century was not an anomaly. I think it was a kind of a precursor to the way the world is now. I mean, things are different. First of all, it is truly a world economy. Now, what happens somewhere else does affect us. What happens on social media affects us, whether it be an administration throwing out the tariff word, maybe it's a bunch of people just getting together to crowd fund a stock or drive up a stock price. It's computer trading. It's actively managed trading. Now trades are happening in nanoseconds. No longer do we have a broker calling somebody up. Well, I wouldn't say no longer, but it's less often it still exists.

It still exists, yeah, calling you up, leaving them a message I really want to sell this and buy that. You call back the next day, you miss them and before you know it it's four days later. They finally make the trade, whereas the computers that are generating trades are happening instantaneously, and so the price has changed. The premise has changed from a standpoint. So what I'm getting to is the volatility of the market, I think is here to stay, and and maybe even more volatile in the years ahead. So that adds another layer of problems to that income flow coming out. The next rule may be 2.2%, I don't know, but regardless it's still not guaranteed. We think it will last that long, based on market conditions. And so, as I tell our clients, has your money become more efficient or less efficient, and has it become less efficient for producing income?

Evan Fricks:

And I believe we've shared these numbers before, or at least referenced to them, but to give the listeners a bit of a clearer picture on the stock market and the change in volatility. Over the years From 1980 to 1999, the S&P earned an average annual return of 17.75%. That's an average by the way, 17 plus percent. The worst calendar year in those 20 years was negative 9.73%. I can retire in that market.

Mark Fricks:

I think anybody could retire in that market. Just about. It was a great 20 years, yeah, and part of that was because of Reagan coming into office lowering tax rates. That spurred the market. So it was a good two decade period, so tell us about.

Evan Fricks:

Well, so 2000 to 2020, and we're not even including two drops, two big drops from 2020 to 2025. So the numbers from 2000 to 2020, the S&P earned an average annual return dropped down from 17 to 6.06% average annual return, with the worst year being a negative 38.49%.

Mark Fricks:

Which was, of course, 2008. Amazing. So, 6% versus almost 18%. It's a third of an average barely beating inflation of 3.5% to 4%. But also, again, the wide swings. One of the things we share with our clients is a comparison between the two markets, and just the swings of the last 20 years versus the swings of 80 to 99. It's just so evident of the differences that's going on. And then the worst year being less than 10% loss versus 38 plus percent loss huge, and that's why people's lives were changed in 2008 through 2011. People went back to work, people delayed retirement, a lot of people laid off. It was a devastating time and will it happen again? I don't know. You know we had the Great Recession, the Great Depression. I don't know, but I do think volatility is here to stay. Yeah, absolutely.

Evan Fricks:

And, folks, this is a real problem. Most people have these issues that we're discussing. If they've been working a regular kind of nine to five career, they've got those 401ks or whatever. If you've got tax deferred retirement accounts, you do have an issue, a need for an income plan. So if you would like to speak to an advisor concerning your own retirement remember we offer those complimentary consultations just for you you can go to our website, masterplanretire.com , click a schedule now button, go directly to our calendar, find a time that works best for you. You can also call our office at 770-980-9262.

Mark Fricks:

What's great, by the way, about that consultation is some of the things we're talking about will reveal if you have a problem. Do you have a problem if taxes go up? This report will reveal that. Do you have a problem if we continue with the history of our bear markets, which we will? Bear markets occur an average of every five years, with an average drop of over 30%. Do you have a bear market strategy? It's not important if you're 25 or 35, you're putting new money in, but if you're within five, seven years of retirement and you have a 30 or 40% drop, you're going to be further away from retirement. So what is your strategy? Develop it before retirement. Develop it three, five, seven years before you retire. And I've just named two of the reports. There's several other reports that will reveal again where your dangers are. So take advantage of that masterplanretire.com .

Evan Fricks:

All right, so we've discussed a few different concepts. One, just the volatility of our markets, the fact that we've got a lot more losing years, or the average loss is a lot more the risk of sequence of returns. Now, that's withdrawing funds while asset values are low. So if you're withdrawing from your market account when the values are already low, you're locking in your losses, you're depleting your savings faster than expected. We talked about the 4% versus 2.8% rule. Why do we discuss all that?

Oh, also taxes. What's your tax bracket in retirement? You've got, you know. These are all gross numbers, meaning we've not taken taxes out yet. So if you've got social security, maybe another source of income or other withdrawals we were only talking about $30,000 a year that income rate is going to continue to grow and tax your withdrawals from your tax deferred accounts even more, okay. So, dealing with retirement income shortfalls Again, most of us start with one big bucket. The first thing we got to do, though, is reduce our withdrawals early on. If we can avoid locking in those losses by withdrawing less during a downturn, consider delaying large purchases, simple budgeting, discretionary spending in the first few years or and Mark, I think you'll like this one better plan your income strategically to come from a guaranteed source that is not jeopardized by market fluctuations.

Mark Fricks:

Yeah, it's like adding that leg we lost. That pension leg we lost. We replace it with what we call a personal pension plan. That's right, and so you've got to be very careful here. You want to work with a fiduciary, but it is a very specific type of annuity. A lot of people hear about an annuity and they've heard stories. The problem is that there are a lot of bad annuities out there, and so you got to be very careful. Which one would you use? But what we want to use is one that has a fixed principle. In other words, the principle can't go down, only growth on the upper side. That follows the market up, so we can get better returns than an old fixed annuity. But also, I think, more importantly, that it can provide has the ability to provide joint income if it's a married couple. So if one passes away, the income does not change. Some of them actually increase almost every year, so it keeps up with inflation. But really the final piece is low fees, and if you pass away and there's still money in it, it's not lost, it goes to heirs, and so it's all the different things that used to be wrong with annuities.

And I love to ask people do you have an annuity. They say, well, no. I say, do you have social security? Yes, I qualify for social Security. You have an annuity. Annuities are built off of the language and the concepts of annuities. Social Security is, I'm sorry so.

Annuities have been around, as you've mentioned before, since ancient Roman days, supplying pensions, I think, for retired military, and entered this country in 1759. So inherently they're not bad. It's the one. It's kind of like a car. You buy the right car for the right purpose, for your purpose, it's great. You buy a junkie car or a car that doesn't fit what you need, it's not great. So just make sure again, you work with a fiduciary. I love that. Guaranteed income, no matter what the market's doing, no matter what's going on in the world, you've got an Aplus rated insurance company that has five pillars of strength, you know. So the best companies don't fail. You don't have to worry about that check not coming. You can pay that electric bill. And I'm not saying I'm not recommending an annuity for everybody out there, for sure, but it is part of our education process and part of our planning. If it's the right fit for the right person, an an annuity is not a retirement plan.

Evan Fricks:

It is a tool. Out of a tool bucket that has other tools with specific jobs. Which brings us to our second strategy, is using a bucket strategy, especially for non-income withdrawals. But let's look at that for a second. Most people again have a big 401k, maybe a few big IRAs, but they've all got that one job and that's just to grow. In retirement, you can't have one big bucket doing all the jobs you need to accomplish in retirement, whether it's short-term, long-term income, short-term, long-term growth, tax-efficient, tax-free income, whatever. You can't do it all in one bucket. So we divide our assets into buckets.

This is a very simplified version of this concept but, for instance, short-term income savings, conservative actively managed portfolios, potentially money markets that's one to two years of expenses to five year as far as the risk tolerance, and then long-term would be more aggressive, especially if you need some long-term growth for future long-term care needs or just to keep up with inflation. That could be five plus years more aggressive. You're able to be more aggressive because that bucket's not meant to be touched for five or 10 years. So we know we can allow a little bit more volatility and aggression in some of those buckets. And again, an annuity is just another bucket that can provide guaranteed income so that when we need that paycheck to come every month, it doesn't matter what the market's doing. Now, remember, the answer is not more accounts, but accounts with specific jobs.

Mark Fricks:

Yeah, one of the stories. I don't think I've told this one on the radio. I came up with this one the other day, so I've been hired as the new coach of the Atlanta Falcons Congratulations.

And the reason they hired me is because I have this great new concept I want to take the best athlete that you can have, which may be like a wide receiver or a cornerback, but I'm going to fill the field with them. They're all going to be that same kind of athlete. Am I going to win? No, all going to be that same kind of athlete. Am I going to win? No, because that particular athlete may be a great athlete, but can they pass the ball? Can they block? Can they hike the ball? Can they punt? No, I want a specific type of player for each position to make the best team I can possibly have.

And so it's the same thing with your money. I've got one job, like you said, while I'm working, that's to grow. But as I get closer to retirement, all these different jobs and we have clients that have six, eight, 10, 12 different buckets, everyone with a different job. And you know, as you know, probably at least once a day I'll get a call or an email from a client saying, hey, we need to repair the basement, we need to go to Europe or whatever. I want to go to Europe, we need $10,000.

We don't just pull money out of a bucket. We look at the buckets and see which ones has profit, which ones has protected principle. What's the best place to take it from? Do we want a tax-efficient withdrawal or a taxable withdrawal, depending on their situation and the future plans? So it is not just hey, let's pull money out of that big 401k or whatever. Very strategic and, in these kind of days, even more strategic. Yeah, and what's great is these portfolios you're talking about. Every one's a different flavor. The 401k is all vanilla or chocolate. I want a chocolate, I want a butter pecan, I want a pistachio. Why? Each one works different in a different market. We've got several of our portfolios right now that are up in this market because they're designed to work the opposite of the market, whereas others are down because they're more growth oriented. That's okay. They'll come stormy back next year when the markets recover, and so we've got different again, different ways of growing and protecting money that all become part of that plan.

Evan Fricks:

Yeah, it lets you draw from safer buckets while waiting for markets to recover. Really simple, yep. Try to tap non-market income first. So Social Security, pensions, cash savings or annuities those are more dependent and dependable during volatile markets, even precious metals, even precious metals Another thing that we put some of our clients in as well. We've got precious metal buckets, whether it's physically held or within IRAs as well. We have both possibilities, just depending on the need. Again, it's very specific to you and your situation and what you need. But precious metals are great in weird you need, but precious metals are great in in in weird rocky markets. They're also good wealth insurance because you know we, we know the that the dollar does not. Uh, it's not based on anything anymore right not back anything.

Mark Fricks:

As an example 2008, uh, when the market was down 56 over an 18 month period, a combination of gold and silver was up 500%. That's why they call that wealth insurance, because it's going to do the opposite of the market long term. I'm not talking about every day. The market goes down, gold goes up necessarily, but we know over the last year gold's up substantially over 30 something percent.

Evan Fricks:

We just hit a new high recently. That's what happens in rocky markets.

Mark Fricks:

Uncertainty generates returns in gold and silver, and world uncertainty does as well. So just another bucket. You can't have everything in gold. You can't have everything in real estate. Again, it needs to be spread out so that there's always something making money in the market. It's our job and our money manager's job to find what that is.

Evan Fricks:

There's a lot of other considerations as well, as we run out of time. We've covered some of the big concepts of what we deal with, but you also might consider delaying Social Security if possible. Waiting increases your monthly benefit. If you can delay until 70, that'll maximize your guaranteed income, which helps reduce reliance on market-based assets. We've talked about this before as well. Consider part-time work. Even part-time income can greatly reduce withdrawals during the bear market. It gives your portfolio more time to recover. Reallocate investments cautiously, preferably with a financial professional. Maintain your target asset allocation. Avoid panic selling. Yeah, exactly, mental shift Retirement as a long-term phase. So remember, retirement can last 25 to 30 years or more. A bear market at the start is not ideal. That is certainly concerning, but your portfolio still has time to recover if withdrawals are managed smartly.

Mark Fricks:

Great, great, great episode. Thanks for joining us and until we see each other next time, plan well and prosper

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Unconventional Retirement Strategies

Tue, 22 Apr 2025 19:58:20 GMT

What if your dream retirement looked nothing like the standard Florida condo and golf course scenario? On this episode of Retirement Roadmap, Evan and Mark dive into wildly unconventional retirement strategies—some absurd, some surprisingly practical—that could transform how you envision your golden years.

Evan Fricks:

Should I use a robo-advisor for my retirement planning? Hey folks, welcome back to Retirement Roadmap with Master Plan Retirement. My name is Evan, with me, as always, Mark Fricks, so we have kind of a funny topic today. I asked AI to give me the weirdest retirement plans possible and I've got a list that we're going to go through today and see how valid they are. Now they start really weird. I will say, and I progressively say okay, now make it more practical. Now, let's make it a little bit more practical. And so we get to some actual pretty interesting topics.

We have a lot of clients who have a lot of really interesting plans in retirement as far as how they want to live where they want to live, how they want to live where they want to live, which some of these actually reminded me of some of our clients.

Mark Fricks:

Some of them, I hope, are never our clients but we'll see when we get to those or we can correct them. Yeah, exactly. So let's walk through these, Mark, I'm looking forward. So we did not have a pre-radio show meeting today. No, no, Evan said I'm going to spring this on you and we're just going to take off with it. So this should be fun. So I hope you hang around.

Evan Fricks:

So this is skipping the boring 401k, Roth, IRA talk. This is strictly what are the weirdest retirement plans that we can come up with. The number one is starting a cult of hobbies. So what if you retired and started a cult based on knitting, salsa dancing or, conspiracy theory, gardening? Do you think you have to be extra charismatic for that one?

Mark Fricks:

Well, that helps you have to have people like you and trust you. I don't know what to say about that, so I'm trying to imagine a cult of gardeners. We almost have something like that up the road from here. Yeah, we sure do.

Evan Fricks:

There's a community garden yeah beautiful place.

Mark Fricks:

Lots of people that work there. I don't think they're a cult. Not accusing them of that. I would love to participate, by the way, but yeah, just as long as they don't bring Kool-Aid. So really weird.

Evan Fricks:

Yeah, really weird out of the gate with the first one. The second one I actually kind of like, so bear with me. Retire in a haunted house, Okay. So why do all retirees go to Florida? Let's talk about moving into a spooky Victorian mansion and turning it into an Airbnb with ghost tours.

Mark Fricks:

That's actually not a bad idea. I mean it's not a retirement plan, but it's a retirement destination and that type of thing, but I kind of like that. Yeah, I mean, you know it would do really well to Halloween, but I think it'd do great. All year long they have these shows, you know, poltergeist and ghost chasing and all that kind of good stuff. So would you have to make up some stuff or just let it naturally happen, is the question.

Evan Fricks:

Well, that's a good point, because if you go somewhere like Charleston or Savannah or someplace, pretty much everything's haunted.

Mark Fricks:

I think Savannah is supposed to be one of the most haunted places. I don't know, you know, if you believe in that or not believe in that. I know that certainly there are other things going on around us that we don't know about. So yeah, who?

Evan Fricks:

knows Not a bad idea, and I like that Some of these are kind of combining business and domicile, which actually I don't mind at all.

Mark Fricks:

Well, what's interesting? We had a show not too long ago and we talked to our clients about this as well. What are you going to be doing in retirement? We just add this to our list.

Evan Fricks:

Yeah, Some of these. I'll put a little check mark next to Now. This next one, I feel like, is a little bit self-serving. Speaking to AI, they said AI-powered retirement. Could you retire and let an AI live your life? Auto posts on socials, AI friends, even AI investing. I don't know what that means at all, so sorry.

Mark Fricks:

AI. It sounds like you just sit in a sofa and just kind of let AI run your life. What's that?

Evan Fricks:

There's a movie with Bruce Willis where, basically, he's in a capsule and everyone's AI in the metaverse, which brings us to the next one retiring in the metaverse and buy digital land. I don't know what that is, digital mansion, host school lan parties with virtual grandkids. That sounds terrible. Weird, but maybe that's the direction we're going. Okay, two strikes on AI on those two. I like this next one's kind of interesting. I don't know if I like it for myself, but it's interesting. Extreme nomad retirement. So sell everything, buy a camel right across the Sahara or do van life in Antarctica. Well, so we have.

Mark Fricks:

You're getting a little more familiar, we do have some clients that retire in RVs and just travel the rest of their lives, or many, many years. I mean, it's not a camel and I'm not sure if an RV would work in places that have a lot of sand. What was the second part of that after the camel?

Evan Fricks:

Van life in Antarctica, which understandably can't work. However, I did know someone when I was younger, in my 20s, a friend of mine. He's a photographer and he lived in Antarctica on a base for a while just taking pictures for a project. Oh wow, I don't know if you want to retire there.

Mark Fricks:

Well, I was just reading about this group of scientists that are at a base, you know, totally enclosed, almost like you're on the moon. You almost can't, you know, get out some, but not a lot. But apparently there's somebody, one of the scientists or, beginning to go a little weird and start to threaten other people and even sexually harass them, and they can't get, they can't get to them. So it's, yes, it's, and I guess it was a matter of time before that happened, either in space or under the ocean, or I hope you trust the guy you're in the space station I think it's 12 of them up in this base here, so weird dynamics, and I'm sure they put them through all kind of psychological tests.

But yeah, this next one's cool, I don't know.

Evan Fricks:

Again, this isn't really a retirement plan but time capsule living. So retire and pretend it's the year 1972 again. No smartphones, only vinyl. Bell-bottoms required.

Mark Fricks:

There's a store in my community. They sell all the hippie stuff. You know, the weird Mexican skeletons, sugar skulls, yeah, these macrame vests. There's always incense burning and the store is full of stuff. So you can go there and just load up, right and just take it back. Get rid of all the you know, get you one of those TVs I used to watch when I was a kid that you know had the antennas.

Evan Fricks:

Yeah, I could do without the plastic couches.

Mark Fricks:

Yeah Well, get a big bean bag there you go. Not bad. And posters, fluorescent posters, poster oh, those were long Black lights.

Evan Fricks:

I think the no smartphones is the thing that I really like about that one.

Mark Fricks:

Yeah, I think yeah. No email, no Facebook.

Evan Fricks:

All that good stuff.

Mark Fricks:

So this next one also hits a little too close to home. Are these surprising you too? Yeah, a little bit.

Evan Fricks:

So doomsday retirement. Go full prepper mode, Underground bunker, Hydrophonic excuse me, Hydroponic. Hydrophonic would be interesting. Go full prepper mode underground bunker, hydroponic tomatoes and a library of survival books. I feel like that's not as far away as it seems.

Mark Fricks:

There's probably some people doing that.

Evan Fricks:

Well, we live near Dallas Georgia and if you guys want to Google bunker in Dallas Georgia from a couple years ago, it's something really interesting, that big warehouse downtown. You remember that?

Mark Fricks:

Well, I know some of the things they're doing nowadays. I mean, they're really nice and they're very expensive, but I gotta have sunlight, that type of thing. Now, if I thought we were in danger and had that kind of money, sure, but to retire there, for, oh, you're not allowed to leave.

Evan Fricks:

Oh, I don't know, are you cosplaying or is there actually a reason that you're down there? You know they sell these really top-of-the-line bunkers now that I've seen on Facebook and other socials, even with booby traps and stuff. Really, yes, I'd be too nervous that I'd do that to myself in the dark.

Mark Fricks:

There was a bunker show that would come on, kind of like you know, Bunker Living or whatever, and they would show them constructing it and all the things in it. And again, very expensive, Aren't they taking ICBM silos and making them into apartment bunkers? I?

Evan Fricks:

have seen some of that before. I don't know if it's a trend, but they've definitely done it.

Mark Fricks:

Wow Okay.

Evan Fricks:

All right. So I've got one more on this list because a couple of them are just too ridiculous to even mention. Last one is kind of interesting Revenge tour, retire and visit every person or place that wronged you and calmly say I turned out fine, thanks, all right. So we see that, okay. The next thing I did was I don't know how many people listening have used AI, but it's kind of interesting. You can take them on little tangents and narrow it down. So the next thing was I said okay, that's good, thank you for those answers, but let's try to make them a little bit more practical. Okay, so the next series are a little bit more practical, or we'll be the judge, okay, and if we need to throw in some discussion about Roth conversions, just so we're on topic a little, bit more.

Mark Fricks:

We can do that. Well, this is all. This is retirement.

Evan Fricks:

I mean it fits the genre. Maybe it will inspire you listener to think outside the box. That's right. This one's not so weird. Actually, buy a decommissioned school bus and convert it. Live the rest of your days in a fully tricked out bus, complete with a composting toilet, solar panels and a spice rack that rattles ominously on dirt roads.

So it's like a level above the Partridge family A little bit, but that's actually huge right now there are whole communities that convert school buses and do festivals and stay together and camp at grounds and stuff like that. My cousin was RVing with his family for a year.

They did the same thing your parents, so it's not uncommon. We have clients who RV as well. It's not bad at all, just as long as you make sure that you've got your stream of income where you need it to be. And I would think that the older you get, you start to have to think a little bit more about health care.

Mark Fricks:

Yeah, there is that, and even I don't want to get too much in the weeds as far as planning, too much in the weeds as far as planning. But if you travel a lot, what about your documents like your healthcare directive and your financial power? You have a nned for one in 50 states?

Evan Fricks:

Yeah, do you want those physical ones? How wise is it to have a physical document on board with you.

Mark Fricks:

Would it be better to have digital? I suppose I don't know, but there are people that do that a lot. We actually have a client that is having a 1969 Volkswagen van converted back to a hippie van New engine, new everything and she's going to use that to travel across the US. Is it one of the camper versions? I'm not sure if it's got the elevated roof or not, but it's just her.

Evan Fricks:

And she has that free spirit. I don't know. You have to tell me after I'm not sure. Uh, number two start a pet sitting empire, but for weird pets specialize in parrots, iguanas, sugar gliders and emotional support tarantulas charge premium rates become the go-to.

Mark Fricks:

I like that one. I actually saw a lady on an airplane that had a support rooster, really yes.

Evan Fricks:

I guess anything's legal if you try hard enough. If you have the right documentation.

Mark Fricks:

They have pushed it to the limits, that's for sure, but we should sit here for a minute and think of other weird animals, let's not?

Evan Fricks:

no, let's not. Uh, number three, actually this isn't too far off. Uh well, we'll get to this. So retire into a theme park job for perks, so work part-time as a character actor or a tram driver at disney or universal free park entry plus health insurance, plus churros weirdly genius that's that's actually.

Mark Fricks:

I have a friend that I went to high school with. He was a teacher and in the summers he would go to Disney World in Florida and work. But now that he's retired he goes down there for like six months and works and he's not a character, but he does whatever, I don't know, Walks around and he may work in a shop or whatever. A lot of people do that.

Evan Fricks:

A lot of retired folks in Florida do that I think if I was a character, I'd want to be in the off season, so I wasn't sweating so much.

Mark Fricks:

There's a lot of water weight I'd pass out. Yeah, but actually I think my parents, when they lived in Florida for a while in the winter, would work some part-time work, or at least try to, so that's not unusual at all.

Evan Fricks:

Well, you had an interview a couple months back with a couple of our clients who do national park tours and live and volunteer and work on the national park grounds and they get free room and board, work 20 hours a week and they become like family.

Mark Fricks:

If you want to see that episode, it's about six weeks old, so it's going to be on our website, which happens to me be masterplanretire.com . If you go under episodes, you'll see 40, 50, 60 episodes I think 75 now, if I remember correctly. Podcasts are there. Youtube videos of these radio shows are there as well. But if you'll go back about six weeks, we interview that couple about what they do each summer and just how they become a community with the people that are there volunteering as well as the people that work there. It just really is a cool thing to do.

But back to the website, masterplanretire.com , under episodes. But, more importantly, there's a little button that says schedule a meeting. Why would you want to schedule a meeting? Well, one of the things we love to do is run a series of reports for folks complimentary to see where you're at and see what kind of stumbling blocks could be ahead of you in retirement, because that's what you want to address. So take advantage of that. Our calendar pops up. You're able to choose a time date, zoom, face-to-face phone call, whatever works, but take advantage of masterplanretire.com . Or you can give us a call, whatever works, but take advantage of masterplanretire.com or you can give us a call 770-980-9262 .

Evan Fricks:

So this next one. We also know someone who's done something similar to this. So live on a cruise ship or a cargo ship. Now, actually, I have a great uncle who did that with his wife for a while. Instead of a cruise around the world, they stayed on a cargo ship, which takes like three to six months to come across right right book back-to-back cruises for less than the cost of a nursing home, especially the cargo ships, or hitch a ride on working vessels for crew member ambience well, we actually.

Mark Fricks:

There are people that spend 365 a year on a cruise ship. They'll be on one for two weeks. Get off that and, at the same port, have the, the next one, get back on it and really, if you do, you know more of the bargain suites. Your food's taken care of, Some of your drinks are taken care of. You have medical care available on board. I don't know if I need to say this or not. They actually have a morgue on board. By the way, that's another topic for another show. But, yeah, you got. You got desserts, you get all this kind of stuff and somebody you know people to keep an eye on you. You have a swimming pool and I've heard less than certainly less than like an assisted living or a nursing home or something like that. For sure.

Evan Fricks:

All right, so I'm going to do one more on this topic before I go to the next group. This one's interesting too. Create a retirement commune with friends, buy land together, build many houses, share chores, invent your own holiday traditions like Taco Wednesday and Passive, aggressive Game Night. I don't know about the games. Well, we talk about doing that as a family of three generations doing something like that.

Mark Fricks:

But a retirement community would be interesting because you're all the same age, same interest. It's called the Villages, by the way.

Evan Fricks:

Yeah right, that exists right outside of Orlando.

Mark Fricks:

A few more people than what we're talking about, but that's kind of cool and you could share. You know, maybe internet and that kind of stuff as well.

Evan Fricks:

So yeah, make sure it's driving the business.

Mark Fricks:

As long as it doesn't get weird.

Evan Fricks:

Well, that's the problem with some of these is, I think they're. Let's move on the opportunities for strangeness are there.

They have potential. Okay, so I narrowed this a little bit more. Weird but smart retirement moves for 2025's economy. So let's see how well AI did on this one. Okay, this is similar to the last one Co-housing with other retirees or young renters. Rising housing costs Offset them by converting your home into a retirement house share. Each person gets private space, but shares kitchen utilities, netflix, et cetera. Bonus of one roommate's tech savvy and helps with online banking. I think it's a great idea If you could stand it.

Here's the one thing. Before you move on, just think about the retirees we know: how many of them want to have roommates?

Mark Fricks:

Well, the ones that are good friends. They've recommended they're good friends, so those four would fit together nicely. But can you find four more or six more or whatever, because you are in the same house and you have separate bedrooms? Because I'm aware of a situation similar to this the caretaker lives in the basement, otherwise everybody's upstairs, they share meals, they take turns cooking, doing laundry. But again there is that you know, as we get older and I'm getting older, so I can attest to this we tend to get a little more cranky, a little bit less willing to deal with other folks and their intrusion. So it would have to be the right group of folks, but I wouldn't mind that.

Evan Fricks:

So this next one is a real conversation that I've had with a couple of folks. Retire to a country with lower costs of living but with remote income Places like Portugal, mexico, parts of Southeast Asia are more affordable. So combine that with remote freelance gigs editing, teaching, english, consulting and you stretch your dollars way further.

Mark Fricks:

We have a client that lives on the beach in Panama. Every time we meet via Zoom, she turns her little laptop around and shows me the beach and the ocean and she's living a lot less and, yes, yes, we're going to great for her. I actually subscribe to international living. I did it for one year. I just wanted to see what it was about. I could talk to my clients about it, things like that. I've heard Costa Rica's great, although it's beginning to get a little more expensive. But there are dozens of countries and yet. But you have to look at several things. Number one is safety. Number two is there's many countries like Costa Rica that are not in the hurricane funnel or whatever you want to call it track. They've not been hit by a hurricane for hundreds of years. So that's important. Insurance, how's their healthcare? A lot of things to consider, but a lot of folks are doing that.

Evan Fricks:

Something else to consider. If you are taking income from a retirement account, there's potential. It's different for every country. There's potential for it to be taxed in America as well as wherever you live.

Mark Fricks:

Yeah, that's something you want to consider, because I would not want to do that. But again, some of these countries we've mentioned are very friendly toward Americans. They like us coming out and spending our money right and things like that. They get jobs, you know, servicing restaurants, whatever. So, yeah, very popular.

Evan Fricks:

Yeah, very popular. This next one seems like it would just be an aspect of the commune that we were putting together for our clients Barter-based living or time banking. So join a local time bank or skill trade community, offer babysitting, tutoring, repairs, et cetera, etc. In exchange for groceries, rides or services. Beats spending cash. Again, this is community dependent could you do that?

Mark Fricks:

like in a? Like a small 55 and older community, we have separate houses. I have so many ideas that if I just had the funding for i- we're not legally selling stock, by the way we do not have a prospectus on that, so please don't ask live-in property caretaker or house sitter.

Evan Fricks:

People with second homes need security and maintenance. You get free rent in sometimes amazing places in exchange for watching a house and maybe walking a dog.

Mark Fricks:

Some even pay a stipend I've done that on short-term trips, like for a week. Go take care of a friend's uh home or whatever, and walk their dogs and lay by their pool. So it's a good gig. Fridge was full, wine cabinet was full, all that kind of good stuff.

Evan Fricks:

The next one we kind of touched on a little bit already. But split retirement works, seasonal gigs half the year, so think Amazon Camper Force National Park Work we spoke about that Campground Host tax prep gigs work three to six months, then chill the rest. Keeps income flowing and benefits your social security timeline.

Mark Fricks:

And we do have a couple of folks that do the tax thing. They'll work January through April and sometimes they'll need to maybe come back in October to do some. You know the extended filing, but they don't have to. It's got to look for them. So rest of the time you can travel, do your retirement stuff. We have so many ideas for our clients and we add new ones almost every day. Just like some of this stuff is not that far off In fact some of it makes sense but things they can do, whether it be three days a week or three months out of the year, you know whatever works for them. We have that discussion with almost every client when we get close to retirement.

Evan Fricks:

That's one of the fun things about the job is everyone is so different, comes from a completely different background, as we all know. Every retirement plan and need is different, but some of the ideas and the things that we hear clients do are envious. They're really cool ideas. This next one is interesting because it's also really great for younger folks too. But invest in a duplex, live on one side, rent the other Beats a nursing home or apartment. Keeps you in control of your space. The rent from the other side helps cover retirement costs Well, probably covering the mortgage more than anything else. Starting out at least, or house a younger family member to help out.

Mark Fricks:

I was just going to say maybe somebody a niece and their husband or vice versa that will be able to drop in on you Not full-time care, but drop in, keep an eye out, things like that. That's a great idea. I like that, which is similar to parents living in a basement of their kids or something as well, but a little bit closer proximity. I like that.

Evan Fricks:

So the next one convert a hobby into income with an inflation-proof angle. Let's see what AI thinks. That is Gardening, sell microgreens or herbs at a farmer's market. Sewing, upcycle thrift store clothing for Etsy cooking, host small private dinners. Post-pandemic supper clubs are trending again, apparently. These keep costs low and have high margin potential.

Mark Fricks:

Yeah, one of my favorite places to go is our antique flea markets or antique markets, and so you have like 200 booths inside this big building and every booth is a different person runs it and they pay maybe $200 a month to rent the booth and they bring in stuff they find all over the place and it's not full-time. They'll drop in on maybe Sunday afternoon, fix up the booth a little bit. They don't have to be there though.

Evan Fricks:

great little gig yeah yeah, retire to a college town. I think this is also very specific on the personality of the retiree. But you have have access to culture, affordable health care via teaching hospitals Again, I don't know if I want to do that or not but often lower cost of living. You can even audit classes and stay sharp. Offer cheap or free.

Mark Fricks:

Yep, yep, we talk to our clients all the time. Go take a class, it doesn't cost you a thing. In Georgia, maybe, many places that's true. You don't get credit, but you can take a cooking course or a literature course or a writing course or whatever and just enjoy it, and even if you fail it doesn't matter.

Evan Fricks:

Yeah, utilize state and local programs aggressively. So there's a lot more programs out there that are available for retirees. If you just do a little digging, many people overlook senior property tax exemptions, low-income energy assistance, public transit passes, free recreational classes, et cetera. In this economy, every $100 saved counts.

Mark Fricks:

Well, I know this area. We have so many senior centers where they can go and get all kind of. You know they have games and fellowships and parties and all that kind of stuff, interest groups, all sorts of things like that. And hopefully they're adding pickleball soon, you know so. Yeah, I think that's going to happen for a while. A pickleball community?

Evan Fricks:

Yeah, there you go Last one and again this is kind of we've talked about this a little bit downsides to multi-use RV or tiny home Park strategically. Fuel is expensive but you can go semi-nomadic, stay put on a cheap long-term lot or live seasonally in different affordable areas Think Arizona in winter, michigan in summer. Off-grid solar makes this super reliable.

Mark Fricks:

I think I could live in a tiny house. I think I could.

Evan Fricks:

I totally could Apartment living. I miss that actually.

Mark Fricks:

Well, actually, when you lived in New York, you were in a tiny house a couple times, but you only buy what you need. You don't buy this junk and stuff like that. I love your list. I love using AI to put that together.

I know some of them were silly you left out the most silly ones but love the ideas, so that was a fun show. We are glad you joined us. Hope we'll see you next time Again. Lots of episodes on the website, but in the meantime, until we see each other again, plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Retiring in Turbulent Markets: Is 2025 Still Your Year?

Tue, 15 Apr 2025 21:12:47 GMT

On this episode of Retirement Roadmap we discuss how market volatility in 2025 doesn't have to derail retirement plans if you've properly structured your income sources and diversified your investments. Proper retirement planning involves creating stable income buckets that aren't totally dependent on market performance, allowing retirees to weather economic storms with confidence.

Evan Fricks:

Is 2025 still your year to retire? Hey folks, welcome back and thank you for joining us. Welcome to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan and with me, as always, retirement planner Mark Fricks. So, during this episode we'll consider if those who wanted to retire in 2025 may need to reconsider, and we'll also touch on how those running behind on retirement savings can still catch up. Mark, we've had a pretty exciting year four months into 2025.

Mark Fricks:

Yeah not too many phone calls, but a few here and there, right, but mostly just watching the markets and how quickly they can turn on one or two words. Sure, absolutely, which has always been true, by the way, it's worse now because of social media and so many talking head shows out there. It is a little bit worse, but the more we look at the history- I found a great article the other day about the history and how every time we have a correction that's motivated by emotion, there's a recovery. You know pretty quickly. Don't leave the market. We're going to talk about all that today, of course, but just don't let emotions, you know, run your portfolio.

Evan Fricks:

Well, 2025 feels shaky for retirees. I mean, they can't help but feel it. With markets down, inflation still lurking, 401k is taking a hit. It's no surprise that many are second guessing their retirement plans.

Mark Fricks:

Well, it's not a great time to start taking money out of an account, a retirement account, when it's down 10, 15, 20%, for sure, and so many times when people retire, that's the first thing they start doing is supplementing their income retirement income with one of their stock market accounts, which is not how we do it. So we have different rules about that, but that's what a lot of people do. It's the old-fashioned way. I'll just turn on my IRA or whatever and yeah, that's dangerous and imagine retiring in 2007. In 2008, 2009, 56% drop. You'd go back to work. You'd almost have to. So I don't think that's where we're headed today, for sure, but certainly this is a year of unrest until they work out all the tariffs and things like that. So, the simple answer is, unless you've been preparing for retirement for a few years and have said it with a true retirement planner, you may want to reconsider pushing it down a little bit.

Evan Fricks:

Yeah, absolutely. Well, you know, just like you said, it all depends on your setup. Every person is different. Whether 2025 is a bad year to retire, it comes down to how much you've saved, how you plan on withdrawing your money, what lifestyle you plan to live. Every situation is different, just like all of retirement planning.

Mark Fricks:

Absolutely. And again, hopefully those that are listening are working with someone and not just an investment broker or something like that, or an insurance agent, somebody that really looks at all eight to 15 areas of retirement to make sure it all comes together. One of those most important areas is income planning, and we don't use a moderate or aggressive stock market account to produce income. We use tools that are stable, that have guaranteed principle, and you don't have to worry about the market. It's going to produce same income regardless of what the market does. People that get started with us one year, three years, five years away from retirement. We just progressively move them into that position and by the time they hit retirement, it's just a, it's a set it, it's turn it on, let's get going.

Evan Fricks:

Yeah, that's right and you know you got to be aware of the sequence of returns risk. I mean, the problem is when you don't have a plan, when you're not planning for your income buckets or accounts and you're just pulling from market accounts. You are at the mercy of the stock market and the economy. What's going on right there. You're not planning and taking control of your own retirement. Sequence of returns risk, pulling from your investments during a market dip, that can lock in your losses early on, which is bad news for a long-term income.

Mark Fricks:

Well, and the old way of doing it was either, again, taking it out of the stock market and maybe more conservative. So I've gone heavy bonds. Well, bonds, historically over the last 30 years, are barely producing two to 4%. That's inflation, barely you know. Or maybe you know the old fashioned way of hey, I'm going to buy a bunch of dividend stocks, and if you don't know what a dividend is, it's a profit shared by the company that you own stock in. So for every stock you own, maybe you get $10 or whatever it is, and that's great in good years.

But as the economy and the markets, when they hit those downtimes, dividends drop too, and so again, that's not a guaranteed income stream. And again, our best dividend portfolio is producing about 3.5%. Again, that to me is not enough income. We like these tools that produce 5% to 6% income and it's guaranteed regardless of the market. So again, it's the sequence of returns. I'm glad you mentioned that.

That's a real risk because we know over time the market goes up, but it goes up in this fashion, and so if you're taking money out every month or every quarter, are you hitting a dip or a height or what? And we don't know. And that's the unknown, which is why we want that stable bucket. And again, you need to be prepared now and not wait till, hey, I'm retiring next week. It's never too late, so don't not call us but a true retirement planner that can have you know when do you turn on Social Security. Again, how do you develop that income plan? And then all the other pieces that fit together with that tax strategy, long-term care strategies, healthcare strategies, medicare consulting I mean, I can go on again for another eight or 10 items, but they all matter. But really, as I think we've said before, I think the most important thing is a solid income plan, right?

Evan Fricks:

Right. And another note don't panic and go all cash. Jumping ship when the market is down means missing the recovery. Now that doesn't mean you can't hedge with some cash. Some of our more aggressive portfolios actually have a portion in cash right now. However, if you're all in cash and you lock in those losses, not only are you locking in your loss, but you're missing out on the recovery. History shows those who stay the course often come out ahead. In fact, one of my clients, he, in 2008, that market drop scared him and he moved all to cash in his 401k and you know, with money market funds. So he was. He was earning less than inflation. He was earning something. He wasn't keeping up with inflation. I didn't meet him till 13, 14 years years later. Actually longer, 15 years later and he still had a healthy 401k. He had over half a million in there. But just thinking about how much he missed out on all those years of market returns.

Mark Fricks:

I'm thinking over 500% Probably. I think it's the number that's popping in my head that if he had just stayed, even though there was a drop, he didn't need the money, he wasn't retired. Leave it alone. Again, it depends on your age depends on a lot of factors.

These are not blanket recommendations.

Here's the other thing. You can't blame someone for that either, because we were all given 401k s back in the late 70s, early 80s. That's when they rolled them out. All of a sudden, we moved from pensions to 401k s. Did they give us courses?

No, training no.

Evan Fricks:

How to handle that, did they tell us? Okay, there are two big emotions that are going to control how you respond to your 401k. That's fear and greed. You got to tamper both of those. They both work against you. Yeah, you really should be managing your co-workers 401k and he can manage yours, so you can take a step back or just do the opposite. Don't actually do that, folks.

Mark Fricks:

The comedy episode. Just do the opposite, because everything I've ever done is wrong. Let me do the opposite. Everything I do will be right now. But really, I mean that's what Warren Buffett says.

The world's greatest investor is when do you buy? When there's blood in the water, the worse things get, the more you should buy. And now, um, you know he went to cash recently. I bet you right now he's getting back into the market and buying some stuff. Um, gosh, I mean, so many stories I could tell we won't, we don't have time.

But again, that's why, uh, we use professional money managers that do it for our clients, do it for us, because we don't want to be involved in the emotional aspect. We want those computer algorithms that are reading what's happening, trying to look ahead into the markets and making the right moves as quickly as possible. The portfolio you mentioned, that's pretty aggressive. They're 25% in cash now, but they didn't move 25% in cash three weeks after the drops. They moved very quickly, almost immediately, and they did not catch a lot of those drops that occurred. So it's not about and that's the problem with the 401k you can only make a couple of moves a month, and so you may have to wait another two weeks before you make a move. That might be good. It keeps you from making a move because all of a sudden, the next day it's up again.

Evan Fricks:

Well, we already saw some recovery recently after the extension of the 90 day extension for the tariffs.

Mark Fricks:

I think the last stat I saw and I may be off on this a little bit, but I think 90% of our gains in a year come in a 10-day period. I think that's correct and I'm not saying 10 days in a row, Maybe one day in February, one day in April, whatever. So if you're out of the market one of those 10 days, you've missed a big percentage of the gain for that market. So again, I'm not talking to somebody that's 62 retiring next year. That's a different setup, but I am talking to folks that are forties and fifties. And then as we, like I said earlier, as we start getting five years away, we start changing some three years away, start changing some more one year away. Big changes, retired boom, we're set up.

Evan Fricks:

It's all it's ready to go. Yeah, so not really speaking to our clients right now. If you've not spoken to a retirement planner, you've got to plan for flexibility, and I'm going to be careful about making blanket statements, excuse me, because, again, we say this over and over. These are not one-size-fit-all answers, but you know, if you have not really planned for retirement, if you can cover two to three years of expenses without touching your investments, hey, you're on a solid spot. You don't have anything to worry about. Otherwise, it might be wise to wait a little longer and ride out the storm. If you were thinking of 2025 as a retirement year, some real key factors to consider. One where is your income coming from? Do you have an income plan?

Mark Fricks:

As we've already mentioned, and that's how important it is. We will talk about that in every other show, every other episode. We'll talk about that because, again, knowing where your income is coming from for the next 30 years by the way, it's not set in stone, it's very changeable, very flexible, but being able to look ahead and say no. I talked to a guy one time and he did not become a client, he was very much a do-it-yourselfer and he basically had already retired. He'd been retired about a year and he admitted to me that he pretty much wakes up almost every business morning in retirement looking at what the market's doing, because he's relying on the market for his income.

Evan Fricks:

What kind of retirement is that 25, 30 years of doing that in retirement is not comfortable.

Mark Fricks:

I don't know. They go back to work.

Evan Fricks:

Yeah, it's stressful, wow. So 2025 could be a good year to retire if you've been saving consistently, managing debt, keeping your investments diversified, having those income buckets prepared. Inflation right now is relatively tame. It doesn't always feel like it when you're buying eggs, but inflation is relatively tame and market dips don't have to derail your plans if you're prepared. In fact, most of our clients have their income buckets prepared way before their retirement. In fact, yesterday we met with a couple who we've been with us for a long time. They retired earlier this year.

Mark Fricks:

Happy loving life. They could not quit hugging us. They could not quit thanking us. Uh, if it had been for guys, we would not be able to retire at this point. No stress, I mean, just it was beautiful. I've known them for probably 40 years through church and everything else, and we've been working with them I think we figured up 17 years but just it was so good, it was such a great ending to yesterday to to meet with them and they were making some final changes on their trust as they, as they enter retirement. But just it was so good. It's so rewarding, yeah, yeah well and.

Evan Fricks:

But they didn't retire in 2025 on a whim. You know they had a plan in place for it. Like Mark said, we've known them for 17 years, so we started working with them on their plan a long time ago. That's so much time to prepare and uh for accounts and build towards your goal in retirement because they know where their money's coming. They know where their income's coming from this year and it's not their market, and the money they do have in the market.

Mark Fricks:

They don't need it, right. So. But one of their accounts was up yeah, a good, a good bit and they needed to buy a car within the next two months. So we left alone most of the market accounts, but we went to their precious metals account, right, which was up significantly and and was able to buy almost a brand new car, uh, with what they had grown by. So that was really cool too.

We always want a place we can go to that's going to be up. I've never seen a market and historically I think this is true is there's never been a market where there's not something that's up. So we want a little bit of everything so that if we need money, we can go to that particular bucket that is up and grab it. Otherwise, the income is coming from the stable bucket and it's never going to be down. So again, diversification when you're 25 or 30 is hey, have some large growth, small growth, small cap, these types of things. But diversification in retirement is much more involved, and then you even get into tax diversification. So, by the way, I want to make a quick, I guess, announcement here, or commercial break, whatever.

Make sure you visit our website. It is a treasure trove of resources for retirement. Bookmark it. It's masterplanretire.com . Lots of checklists on retirement.

Every episode we've done over the last couple of years is on there via podcast, via YouTube. Of course, our radio show as well. It's every subject in the world as it pertains to retirement. But also there's a little button on there. It says schedule a meeting.

This is a complimentary meeting to figure out where you're at, talk about your dreams, your goals, your fears. What does your retirement life look like? We talk about that for several minutes and really want to explore what your ideas are. Maybe you've talked about it before and you and your spouse are looking at each other like you know, I don't know. Do we want a second home? Do we want to move? Well, whatever it might be.

But, most importantly, we will then run you a series of reports that will tell you again who you truly are when it comes to numbers, and I think it's a big relief. It's like going to a doctor and you know, yeah, they may find something wrong, but you can't fix it till you find out what's wrong. So that's what these complimentary meetings will do. I hope you'll sign up for it, evan, and I will meet with you one or the other or both, depending on the schedule. And again, it's just a good chat and then some reports that will help you out. By the way, the phone number is also 770-980-9262. So if you like to talk to a live person, give that a try. 770-980-9262.

Evan Fricks:

Yeah. So if you're thinking of retiring in 2025 or even subsequent years, do a pulse check on your retirement before calling it quits. Ask yourself some key questions Are you maxing out your retirement accounts? Is your living situation affordable? Can you emotionally handle market swings without a paycheck? Are you completely reliant on market swings on whether or not you're able to retire? If you're behind on saving folks, it's not too late. You can use catch-up contributions up to $31,000 or $34,750 for ages 60 to 63. But if you're over 50, up to $31,000 in a 401k in 2025. Even small increases in contributions, especially with employer matches, can lead to big gains over time.

Mark Fricks:

And even if you're maxing out your 401k or 403b or thrift savings plan, you can still do a personal IRA or Roth individual like through a company, like us, or something up to $8,000 if you're 50 and older. So if you really are making good money maybe the kids are through college you've got that extra money that's come in. That's $38,000 to $42,000 more you could be saving right now, plus whatever the match is.

Evan Fricks:

So that's some heavy-duty saving right there and maybe you do need to work a little bit longer. That's the case for some people. Sometimes we talk to someone who just cannot bear to think about going into work one more day and we have to work with them and figure that out. But maybe working a little bit longer and automating your savings is the way you need to go. A couple extra years on the job can really make a difference, building your nest egg and lowering debt, or maybe cutting back.

Mark Fricks:

Or maybe even cutting back for a while. A lot of companies will let somebody work less hours and keep most of your benefits or just walk away because you can't stand the company and go find a part-time job.

Evan Fricks:

We just had a big episode on that the power of part-time work, not only financially, because it helps supplement retirement income, but emotionally, and it's hard to make that huge shift in your lifestyle, sometimes to just completely cut off what is, for many of us, our largest social circle through employment.

Mark Fricks:

Well, Evan and I, we love what we do and I know I mean I've been doing this a long time. If I just woke up one morning said I'm done, I really don't know what I'd do in my life. I mean, I love teaching, I love doing the episodes, I love sitting in front of a client and designing a retirement roadmap that fits their needs exactly. It's just so many things I love doing. Not crazy about the paperwork, but everything else so. But we got great people here that do a lot of the paperwork. That's the good news. But yeah, so I don't see myself now. Will I slow down eventually? Probably because I'll have to right's. It's hard to imagine now.

Other people out there like they're like, hey, when I hit 60, I'm done, I am done with this, and that's fine too. Everybody's different. But we have other clients and we've talked about this or they're afraid to retire, they're afraid their health's going to deteriorate. Yeah, which is why we talk about what are you gonna be doing? Let's talk about us. Come, come up something to do. And again, we had a whole episode a couple weeks ago about that. So you going to be doing? Let's talk about it, let's come up with something to do Again. We had a whole episode a couple of weeks ago about that, so you might want to go back and listen to that one if you missed it.

Evan Fricks:

Yeah. So retirement is not a one size fits all. So whether you're ready now or thinking of punting to next year, it's more of the numbers. Yeah, the finances are incredibly important for longevity, but it's about confidence as well. Emotional confidence, flexibility, creating a next chapter you're genuinely excited to live, because if you're afraid to retire, that's not the retirement that I want to enter into. I want to make sure I'm confident and I have a plan.

Mark Fricks:

Yeah, that's stress free. That's one of the reasons why a lot of folks want to retire is stress. Stress at work, and so you know it helps us live longer without the stress. So having a stress-free retirement will extend your life span, I believe for sure. So that is important.

Evan Fricks:

A couple other things that you could do leading up to retirement. You know you did mention the B word earlier budget to help boost savings. Hopefully we'll blip that out.

Yeah, we'll blip that out Again everyone's situation is different what they're able to do. But 50-30-20 rule is a common rule to use, Basically 50% for needs, 30% for wants, 20% for savings and debt. If you're able to start there, that's a great place to start and then you can adjust as you move along, help you catch up a little bit.

Watch out for sneaky investments fees. This is one we don't talk about too often, but management fees might sound small but they could delay your retirement, especially if all of your money is in a 401k or something else like that. I bet you most of that investment is in mutual funds. You say, well, my 401k has got a pretty low fee. Yeah, the 401k itself might have a low fee, but those mutual funds within your 401k each have their own fee associated with them as well, and you probably don't know what they are unless you read the prospectus for each individual mutual fund, and I don't know too many people who have ever done that. Now not many, and those fees run from a half percent up to over 2% per fund.

Mark Fricks:

And so there was a study done by the government a few years ago and they said 401K, 403Bs were the most expensive investment vehicles. So that's why we're very quick to take a look at that under a fiduciary responsibility and see about rolling that out. A lot of people may or may not know this, but when you turn 59 1⁄2, even if you still work for that company, you can roll out a portion or all of that 401k into an individual investment account. Make sure you use one under fiduciary where there's no commissions built in, no hidden fees, just that one management fee. That's right on the top. You see it when you open your statement, so be careful that it eat it away, like you said.

Evan Fricks:

And if this is a season that you feel like you need to tighten your belt a little bit, you could hunt for hidden savings. Review insurance policies, phone and cable plans, unused subscriptions. I know most of us are guilty of that. You might find money hiding in plain sight and maybe even cancel that fifth streaming service you forgot about.

Mark Fricks:

I've talked to people that have been with the same insurance company like for car and auto for like 20 years. You should shop that every three years. There's no loyalty left with insurance companies. You could be with them 20 years, have two accidents and you're gone. It doesn't matter, you've been there 20 years. And so I love using independent agents because they represent multiple companies, kind of like we do, and so you get the very best rate to develop a relationship with that agent. They're always shopping for you. They have your back because they don't work for the insurance companies, they work for you. But shop it. Don't be afraid to shop it and get the very best rate. Combine them Like auto with home. You get a discount as well. But that's just one example. You touched on several things that are important.

Evan Fricks:

Well, it's tax season. Right now. Put your windfalls to work. Instead of spending your tax refund or bonus, send it to your IRA. Pad your emergency fund.

Mark Fricks:

Uh future, you will thank you and be very careful about and you mentioned this earlier, alluded to it, Evan, be careful about putting all of your money in your 401k, especially if you're under 59 and a half. You still need that savings on the side and that you've got to get to that. You can't get to your 401k without a penalty under 59 and a half, so be careful.

Evan Fricks:

Uh, that's to spread out your savings. Yeah, and we mentioned this throughout this entire episode, folks, but if you have not started considering your own retirement plan, start the conversation. We are retirement planners, but there are other retirement planners out there. Get help somewhere, even if it's just a consultation. We offer complimentary consultations A lot of places do but you need to get at least start that conversation. Get an idea of where your foothold is.

Like Mark mentioned earlier, with our consultations, we give basically a 10,000 foot view of your retirement. We organize your accounts. We run a series of reports where. Where are your strengths, your weaknesses, what do you need to look out for? Whether it's tax strategy, bear markets, like we've discussed a lot today. When are you able to retire, social security reports. All of this has to work together. Mark mentioned a little bit about our clients who came in earlier to tighten up their trust documents. Is your estate plan in place? Folks, all of this has to work together. It's something we do. We're happy to work with you. Come on in-office, we'll buy a cup of coffee or we could do something via zoom as well, but if we can help you, folks, just come have a conversation with us we have people that listen to these episodes from across the country.

Mark Fricks:

We teach classes across the country, so this is not just about Metro Atlanta. We work with folks in multiple, multiple states. I think we're up to about 25 states now that we work with folks in, so don't worry about where you're at, you know. Give us a call Again. We could do a Zoom. I can do a phone call with you. Whatever works for you to take advantage of that complimentary consultation. So visit masterplanretire.com , get that scheduled, and I think that pretty much wraps us up for today. Hope everybody has a great week and until we see each other again, plan well and prosper.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

The 10 Scariest Things About Retirement (And How to Face Them)

Tue, 08 Apr 2025 20:46:28 GMT

On this episode of Retirement Roadmap we examine the most common retirement fears that prevent people from planning effectively and offer practical solutions to address them.

Evan Fricks:

What are the scariest things about retirement? Hey folks, thanks for joining us. Welcome to Retirement Roadmap with Master Plan Retirement Consultants. My name is Evan. With me, as always, retirement planner Mark Fricks. Today we're going to discuss the scariest things about retirement, things that keep people from facing their retirement plan, putting off planning, maybe even keeping folks from retiring when they may be able to. Mark, how big of a factor does fear play into a retirement planning?

Mark Fricks:

First of all, is this like, an early Halloween show?

Evan Fricks:

It's sort of halfway there.

Mark Fricks:

Yeah. So really, the folks that we talk to, the folks that we meet with, that's some of the first things that we ask: what worries you, what scares you, what bothers you about retirement? And I think it's very important that we touch on those items, because these are real, these are very common. Don't feel like you're the only one that's worried about this particular thing or that particular thing, but also we may bring up some things that you really hadn't thought about worrying about. So I don't know if that's good or bad, but there are solutions, and so you can't solve something until you face it and take a look at it and get to work on it. So that's what I think today's show is going to be really great, powerful, all that kind of good stuff.

Evan Fricks:

One of the first things we do with new folks who walk into the office is discuss hopes, dreams, fears, next six months, two years, five years and beyond. A lot of times we find that folks haven't really discussed them or thought about them with themselves or with their spouses.

Mark Fricks:

Well, and we also find that people that we don't work with so this would be maybe a friend from church or a neighbor or whatever and you start talking about this and then they start talking about I'm retiring or I have retired and it's like they ignored all of it. It's like they just turned on a switch. You've mentioned this before, just turn on a switch and just take off, head through retirement and hoping it all works out and hopefully it does. But there are so many things you can do to maximize the efficiency of your retirement assets and other things related to make sure that these issues, if they do, arise.

And hey, we've been in a business now for 15 years Happy celebration coming up for us here shortly but so we've seen a lot, and even before that, I've been an advisor for 15 years before that, and so you see a lot of the common reoccurrences of the problems. But now we're beginning to see, as our clients age, that they are coming to fruition, some of them, and we're seeing that, hey, these tools are working, these tools are giving them peace of mind, and because we meet with our clients once or twice a year, we don't see them for a year or so, and then you can really see a change in their aging and things they're doing and how they're evolving into retirement. So, without getting too deep in the woods, this is a real subject. I hope this is helpful. In fact, I know it'll be helpful and don't ignore it. I think that's the whole point.

Evan Fricks:

Yeah, absolutely. Well, number one you alluded to it a little bit: running out of money. I mean, that's the big one. In retirement planning, one of the most common and legitimate fears is running out of money during retirement. If you haven't saved enough, or if unexpected expenses arise, or maybe even mismanaging your withdrawals, the thought of not having enough funds to last through your retirement years is terrifying. This fear is particularly strong with longer life expectancies, inflation, rising health care costs, tariffs, you name it.

Mark Fricks:

There's a lot going on right now, there really is, and I always relate this back to my grandfather and his retirement. I was probably, you know, 10 years old when he retired. So I can remember visiting my grandparents outside of Rome, Georgia.

He worked for a mill and he worked there for 30 something years. He had a pension, a good, solid pension. He had social security. He wasn't in the market, you know, most people weren't in the market until the 401K came out and the IRA, and so his money was in CDs and savings, his house was paid for and he lived about seven years, and so none of these things You just kind of went into retirement and hoped you lived long enough to enjoy it. And so today is so different. Like you said, we're living much longer. Because we're living longer, we have more health issues, and then the fact that, again, most pensions are gone and we have a lot of federal workers that we work with and listen to us, and so they have a great pension program, but most of us don't have that, and so that's something that's missing as well, and we're relying more on the market. Markets do what? Markets go up, markets go down, and so if you're trying to take money from a market, that's another area of worry.

Evan Fricks:

So it's all that coming together almost like a perfect storm. Another area of concern, I mentioned already: health care costs.

Mark Fricks:

One of the screens or PowerPoint slides we use when we teach is the difference between normal inflation and the inflation of health care. And inflation of health care is about two to two and a half percent faster than regular inflation. And so not only that, but you know folks have this misconception that, hey, I'll be on Medicare, everything's taken care of. Not so fast, my friend. As an example, one of the things it doesn't cover is it doesn't cover deductibles. It covers some of them, but not a lot of them. A lot of the newer drugs coming on board are priced at full price. Those aren't covered very much. There's just a lot of costs.

But I think the one cost a lot of people don't think about is the premiums from Medicare, part B. Right, they start this year. They're around $185 a month per person. So if you're a couple, you know $380, give or take, and that goes up almost every year, anywhere from 1% to 4%, and so you can see those add up over the course of a year and years. If your income is higher, that premium is higher as well. So the latest study I saw and you can correct me if I'm a little bit off, but I think the average couple is expected to spend $335,000 in retirement on those types of costs.

Evan Fricks:

I was about to say the same thing. I thought it was around 300,000 plus, so that sounds pretty close.

Mark Fricks:

Yeah, and this is not including long-term care cost here. This is strictly medical cost. I've got my parents that are in their 90s and they're at the doctor every week and they're paying out-of-pocket co-pays and deductibles and things like that as well. If they're not at the doctor that week, it's a good week. But we're living longer, and then you get into things like Alzheimer's and things like that. That creates another issue that has exploded and so I'm not sure if we're gonna get into long-term care separately, but certainly health care costs. You've got to plan for those absolutely, and it's difficult to.

Evan Fricks:

You can't predict how much health care you're going to need in retirement or how long you're going to live. We'll talk about longevity risk as well, but that brings us to fear. Number three, deteriorating health. Aging brings health challenges, it just does, and the fear of facing serious health issues or physical decline without the employment or health insurance coverage; that's overwhelming for folks. The the potential for chronic conditions, especially loss of mobility, requiring assisted living...

Mark Fricks:

That can create anxiety about the future yeah, I think I'm gonna start keeping track of how many of our clients have had a knee replacement, a hip replacement, a shoulder replacement. It's almost automatic in your 60s or 70s, depending on your job, but also just depending on your lifestyle. Maybe if you played football younger or whatever, but this is almost a common occurrence. Now how many clients will tell me "oh, I've had both knees replaced, I'm so glad I did, but the cost of that is tremendous. Now, out of their pocket probably not a huge amount, but again it continues adding up and they have therapy. Again, I'm not trying to scare people or depress people or anything like that. I want us to be aware so we can plan for this type of thing. And you know, we see our clients over the years, as they come in, as they deteriorate, as they age, you know, and it's just, it's part of life. We're living longer, but it's certainly something that has to be planned for.

Evan Fricks:

I've said this in a recent episode as well, but on this topic: healthy living is a good financial investment.

Mark Fricks:

That's a good point. Yeah, you did talk about it a few episodes ago about taking care of yourself. Exercise, stretching, the right diet all of this keeping mentally active as well can make a huge difference and a lot of our clients, they retire, they start now, they have time.

So, they'll start going to the gym and things like that. Some of the advantage programs will pay for a gym membership. So you know, find something like that. I know it's hard when I quit exercising to get back into it, but it's so important, it really is. Or play pickleball, that's blown up, absolutely.

Evan Fricks:

Fear number four: loss of identity. Now, many people associate their identity with their careers, especially in our Western society. That's culturally how we introduce ourselves most of the time in conversations. So when retirement hits, it's not only the daily work routine that changes, but also the loss of purpose, sense of self. The idea of no longer being that person who contributed to the workforce can lead to feelings of depression, anxiety, things like that.

Mark Fricks:

Yeah, if you've been saying for 30 something years "I'm an engineer or I'm a tech IT person or whatever, and all of a sudden you walk up and they say, what do you do?

I'm retired, that doesn't really describe anything about you as opposed to my job.

Now, my job is not my entire life, it doesn't tell you everything about me, but it's kind of a starting point and lets me know oh so you're in this field, you must have this education or be doing that or whatever. But it's hard for me to imagine saying I'm retired and you know, I've told my clients I don't really plan on ever retiring until I get chased off or don't know where I'm at or something like that. But I love what I do, but it is a big part of who I am and I spend a lot of time each week, you know, just like Evan, working with folks and doing what we do and learning something new every day, which keeps our mind active as well, and so it's hard for me to imagine that. Now some people are very proud to say I'm retired, but I bet they come back around to saying, well, what did you used to do, you know, and it kind of comes back to that. I've heard that many times as well, so I think that's a great point. I really do.

Evan Fricks:

Well, the next is related as well from leaving an employer in a social circle, that's, social isolation. Without the built-in social interaction of work, retirees feel lonely or disconnected. The fear of losing social ties, becoming isolated, is a real concern for many. The loss of coworkers as daily companions, along with friends or family members who are still working, can leave people feeling like they have fewer folks to rely on. And it's true. Our communities have become more and more limited to our employment and churches, things like that. But those are not built in necessarily. You have to go out and be active in those communities.

Mark Fricks:

Yeah, and you know, Evan, that's really changed since COVID as well. Now more people are working at home and so there's less of that. So I don't know what the effect of that is and we may not know the effect for a while, but hopefully people have learned to be involved in other places if you are working at home most of the time. But also I had this discussion with someone the other day and started reading up on it. Social gatherings have become less and less. Like a lot of our clients, either their friends have passed away or maybe even they've passed away. A lot of people aren't doing funerals anymore. They're doing maybe just six or eight or family members around a grave or whatever, as opposed to 200 people in a church or something. Even reunions I'm seeing less and less high school and college reunions happening. It's almost like people are less desiring to get together with other folks, and I'm not sure if that's because it became a habit? Maybe, I don't know, that'd make for a great theme paper or term paper or something, but that's happening as well. So I think you have to try even harder in retirement to get involved, and I have a lot of my clients and your clients tell us about volunteering I think that's a great thing because you do get that gratification or doing something where you make a little bit of money but still stay involved in more than one thing.

I think it needs to be more than just one activity. Whether it be your neighborhood, some of these senior neighborhoods, they all become a group. I was just talking to a couple this morning and they sit on their front porch and just have neighbors walk back and forth, stop by, have a glass of wine with them, chat what's going on, just being social. And especially if you're single, if you're widowed or divorced and retired, that can be almost dangerous and you really need to make a conscious effort to get out there. So I do want to remind you real quickly of our website. Yes, just like most folks, we have a website, but it's more of a resource. It is a retirement resource. I hope you'll visit it, bookmark it, because there's always something new masterplanretire.com . There are guides, there are checklists about retirement, there is information about upcoming classes, both in person, face-to-face, but also video, zoom-oriented type of thing. But also there's a little button that says schedule a meeting and you say, well, what's that for?

Well, we do offer a complimentary consultation. It starts with a chat 30 minutes. Again, what Evan mentioned earlier your thoughts, your fears, your goals Some people have never thought about them before and then, based on that conversation, we will run a series of reports anywhere from six to nine reports to see where you're at now and how to get you where you want to be. And then we stress, test it what happens if taxes go up? What happens if your spouse predeceases you? All of these different categories, because if you don't again confront the problem, you can't have a solution for the problem. So we want to find out where that wound is, where that high blood pressure is, where that high cholesterol is, and treat it and have a plan for it. So again, masterplanretire.com , or give us a call at 770-980-9262, option two, if you can remember that or there is a nice phone tree that will guide you but that will give you a chance as well to schedule something with one of us.

Evan Fricks:

Absolutely. The previous two points, as well as this one, all circle around not having purpose or lacking purpose in one's life. This next fear is just right out of that same topic. It's boredom or, more importantly, lack of fulfillment. If you haven't planned your time carefully, retirement can quickly become monotonous. You might fear becoming bored, losing the motivation to stay active. We talked about health. Not having anything meaningful to do, period, Something to get you out of bed in the morning. Many people also worry they won't find new hobbies or passions to replace the ones that work used to provide, and we know when we don't have purpose. So many of these things are affected by something that simple your social circle, your depression, your health physical and emotional. Yeah, lack of fulfillment.

Mark Fricks:

And some of our clients we do see deteriorate quicker than others, and I think these are the clients that aren't doing what we're talking about today. I mean, we can actually see over the course after their retirement and you've heard this before that many folks pass away after retirement. There's a reason for that. It's not because they retired, it's because they didn't enter retirement with these thoughts in mind. So don't think I can't retire because I'm going to pass away. Just make sure that you shift and transition into that new phase appropriately and make sure that these things we've talked about today that you've taken into heart and really done something about them.

Evan Fricks:

Yeah, so previously, the very first fear we discussed was running out of money. Now, this next fear is a very specific way of running out of money, and that's outliving your savings, which is also known as longevity risk.

Mark Fricks:

Yes, and this is increasing every year. And as it increases, it not only and of course now we're talking, you know, if you're a couple, you know one of you is probably going to live to age 85 or 90, right, maybe both of you like again my parents but this is increasing almost every year. And not only are we having to have more years of money, but inflation always outpaces Social Security, it always outpaces pensions, so we're falling further and further behind, plus the health care costs increasing. All of this coming together and the fact the longer you live, the more likely you are to have additional health issues.

So, you know, sometimes our clients jokingly say I'm going to live to age 85, and then you know I'm going to put a pillow over my face or something, and that's horrible, you know. But they, yeah, something like that or I don't know, let's not get into that today, but they say jokingly, but they're scared of aging. And again, if you've got this other stuff going on and you've got a circle of friends, then it does help all of this, even with, you know, when you have bad health, you know if you've got a neighbor that come by and check on you because you've created a social circle. They care about each other, you care about them, you take them a meal if they need it, all of this kind of circles around Sometimes it's a church organization or their volunteer organization where you become close to people that care about you and I think, again, that just comes back to all of this.

Evan Fricks:

But I think Evan and I have a very unique perspective on this, because we are seeing these folks every year to six months and we see some of them progressing much quicker than others. Yeah, the next fear is burdening family. So another common fear is becoming a financial burden on your children or other family members. You might worry about needing care or assistance in your later years, especially if you don't have long-term care insurance or the financial means to support your needs.

Mark Fricks:

Yeah. So a lot of our clients will make it very clear I do not want to be a burden on my children. You know, I want them to enjoy their lives. They're raising children. By the time I pass away, they may be close to retirement anyway. I don't want to be a burden. Now, some of them have a plan. They'll say, hey, we've already talked to my daughter. They have an in-law suite in the basement, they want us to come, they want us to be with the grandkids, all that kind of stuff.

But the problem is is, if you get to a health point, to where they're having to actually take care of you on a daily basis or something like that, that can be really difficult because, as we've seen before a caregiver, the stress of taking care of a loved one, can actually reduce your lifetime, your life expectancy, and so, again, if it's a plan, that's great, but just be careful with this.

Whether it be long-term care tools that we use that can actually double your income if you have a long-term care need, whether it be some other tools we use to make sure those are covered, even if you do end up wanting to move in or the kids want you to move in, you still want to be able to bring in outside help so that they are not hey, what if they've got kids in college and maybe a kid in high school and they're having to help take care of you? To me that's not fair. I would not want to do that to my children for sure. So I want to try to make sure I've got something lined up, but it's a real problem and issue and it's not going to go away.

Evan Fricks:

Yeah, the next fear is not being able to enjoy retirement. So some retirees feel that, despite saving for years, they won't be able to live the life they envisioned during retirement. You know, this could be due to a lot of things. We already discussed unexpected health issues, financial setbacks, or also maybe just realizing retirement isn't as fulfilling as they had hoped. On the financial aspect, one thing that you should do as soon as possible is set up an income plan. That way you know where your income's coming from and you can determine, okay, what actually is my quality of life quotient. Where am I on what I need and how much money I have and how far it can take me.

Mark Fricks:

Yeah, I can't tell you how many times that I'll be meeting with a client and I'll have to give them permission to spend money because we have a plan. They're not used to having a plan like this because when you're working you could lose your job or something like that. But in retirement we set up guaranteed income flows and so you know those aren't going away. So this other money that's designed just to be there, have permission to use it, and we talk about that. And I had somebody just the other day and they're fine, they have a great income plan, they have great guaranteed income sources. They're not going away. If one of them passes away, they continue on.

So why not enjoy some of that money you worked so long for? Take that trip to Europe, take that cross-country RV trip, buy that Porsche I don't know what it might be, but seriously, and we talk about that and I try to give them permission because you know, a lot of the folks we work with have done a good job of saving. Why, how? They've been diligent. So now, all of a sudden, for them to start spending money is almost against their nature, and so we try to give them permission to do that, and how to do it and where to take it from.

Evan Fricks:

Right. The next fear, and we're experiencing this right now market volatility and economic uncertainty, and we're experiencing this right now, market volatility and economic uncertainty.

Mark Fricks:

Yeah, so I saw a great article the other day. It talked about the history of the stock market and how it showed we basically had a I think it was every bear market of correction we had. They occurred like every three to seven years. The average one only lasted nine months, and so you just have to kind of stick with it. That's why we have different what we call buckets of money. Some are going to be available that have a protected principle, so if the market's down, that's where you go for money. The other ones are going to be up and down at different times, but they try to work separately One's up in a good market, one's up in a bad market or whatever to make sure that there's always something available, because we're retirement planners and consultants and we're able to really make sure that our clients are never at a disadvantage, because you don't want to be down 20% when you're retired.

We use a lot of different tools and so we don't get too many phone calls when the markets are bad. Out of our hundreds of clients, I've probably talked to three or four folks and even then they were like I know, I'm okay, I just want to hear your voice and know that we're prepared for this and I said yes because of this, that and the other. And so it's a different way of looking at money. If I'm 35, I let it run, but if I'm in my 50s or 60s or closer to retirement, you want to be set up appropriately for retirement, not for growth. Totally different plan.

Evan Fricks:

Absolutely, and everything we've discussed today are things that we do have conversations with our clients about, and they're ongoing conversations because, just as life has different phases, even retirement has different phases beginning, middle and pre-retirement, and your goals, your dreams, your fears they'll change throughout that process.

Mark Fricks:

So often they change. We'll have a client come in and it's all set up. They've been with us for five years and all of a sudden we've decided we want to move to Costa Rica. They had never talked about it before We've decided. Or this has happened, or now we have to raise a grandchild. There's so many things that can change, which is why our plans are definitely flexible. So really appreciate you guys being with us today. I hope you enjoyed this episode. There's more listed on the website masterplanretire.com . But until we see each other again, remember plan well and prosper. Take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.

Working Beyond Retirement: The Benefits of Part-Time Jobs

Thu, 03 Apr 2025 21:52:05 GMT

On this episode of Retirement Roadmap we explore the financial and emotional benefits of part-time employment during retirement, discussing how it can both extend retirement savings and provide a sense of purpose during this major life transition.

Evan Fricks:

Should I consider part-time work in retirement? Hey folks, thanks for joining us. Welcome back to Retirement Roadmap with MasterPlan Retirement Consultants. My name is Evan and with me, as always, retirement planner, Mark Fricks. So retirement looks different for everyone. When some folks retire, they're ready to cut the cord on their careers completely and dive headfirst into their new phase of life. For others, such an extreme change can be intimidating. Even if you don't necessarily need the income, part-time employment can have many powerful benefits in retirement. Today we'll discuss some of those benefits, as well as some ideas for potential part-time employment in retirement. Mark, part-time employment has a lot of benefits. We're seeing it more and more actually in retirement.

Mark Fricks:

You know, I was thinking about that before the show and I think one of the reasons, actually two reasons I have, number one is we do work with a lot of federal employees and they qualify pensions fairly early, many of them age 56, 57. That's early, you know, you're still very young. So that's, I think that's one reason. I think another reason if I can give our, our firm, a little bit of kudos here, is because of the way we work, we, we squeeze every bit of income out of assets. We've maximized the efficiency of the way we work. We squeeze every bit of income out of assets. We've maximized the efficiency of the income production and it also accelerates the ability to retire, and so I think those two things together, we are seeing more and more folks that are retiring earlier, which I think promotes the part-time work.

Evan Fricks:

Yeah, we're going to talk about how financially it can be beneficial. Before we jump into that, I think also as far as a sense of purpose for folks, it can be really hard to, like I said before, cut the cord completely and completely shift into a new phase of life, from employment which could have been decades long in a career, and then to go from nothing. People don't realize that often our jobs, our careers, are the primary social circle that we have in our lives. Our sense of purpose, especially in Western culture, is very wrapped around what we do. Oftentimes, when we meet someone new, the first thing they say "what do you do, bob? Or whatever. So it can be really shocking.

Mark Fricks:

It's part of who you are, it's part of who you've been. I've really enjoyed getting to watch our clients as they transition from working to retirement, and especially that last year, and I kind of interview them and we talk about it. I've had some clients cry because they're afraid, you know, "I don't know what I'm going to do. Am I going to just die because I've quit working or whatever? And so we've discussed that. But most of them have this mixture of emotions. They were excited, scared. "Am I going to have enough money? We show them they will. It's just all these emotions and it's really interesting.

I find it really eye-opening to talk about all of this and to help them through that transition, because I feel like there's three segments of our life. There's growing up, you know, which could be to maybe age 25 or 30 for some folks right. Then there's those middle years of adulthood where we maybe have kids and have our major careers. You know, many of us get married and have a home. It's just kind of a different feeling and it seems like it lasts forever. Then it's over in a you know, in a flash. And then that third phase to me is retirement. Is, you know, 60-ish and beyond which now is lasting, you know, 20, 25, 30 years or more.

So if you have spent like you said, if you spent these 30 something years, 40, I mean I've worked some kind of job since I was like 10. Now I was cutting grass, but a real job since I was 15 or 16. And so all of a sudden just stop and kind of like you said, just jump off that cliff or mountain or whatever it may be. I remember a client several years ago. They were both, I think, early 60s and they both retired on the same day and they woke up the next Monday on the beach. That was their goal. And never worked again and it was perfect for them. But many folks are concerned about that again because of what's it going to do to their lives physically, emotionally and all of that. So I think this is a great subject to talk about the reasons why you might want to work part-time and maybe even some examples of what you could do.

Evan Fricks:

You also don't really know, not everyone, and this is not a reflection on a relationship between a couple, but you've spent an entire career where one person may have been out of the house. The majority of the day

Mark Fricks:

... or both of them out of the house,

Evan Fricks:

or both out of the house and all of a sudden you come back in, your dynamic might shift a little bit. Maybe easing into that is also a better way.

Mark Fricks:

There's one word you used that shouldn't fit there.

Evan Fricks:

What's that?

Mark Fricks:

Might.

Evan Fricks:

Might. Right Right.

Mark Fricks:

That dynamic will shift. It depends on how much right and how they handle it. You know, interesting today in today's world, so many people working from home, since COVID, it's become less of an issue. I was talking to somebody just the other day and a fairly new client and they were talking about how, yeah, I've worked from home for, you know, 15 years. My wife is used to me being here and she was a stay-at-home mom and so that's kind of a no-brainer. I'm sure he was probably in the basement or upstairs half the day, but he could come down anytime he wanted, so that would be less. But we also had a couple that actually divorced after their retirement.

He came home and, they already had issues, Ok, this wasn't the only reason, but he came home and all of a sudden he started trying to run the household. And and and you know, and she had been running the household just fine, thank you very much, and, but it was part of other problems they had. But still, that was kind of the final straw from that. So I guess something you've got to to talk about, which is where the part-time work may come into play.

Evan Fricks:

Absolutely. So on the financial side, first of all, it's it's quite apparent part-time work can extend your retirement funds. Number one you're supplementing your income. Part-time work can provide a steady stream of income, depending on what kind of work it is. Reducing the need to deplete retirement savings quickly, so maybe you don't need to pull from those IRAs or those Roths so quickly. That 401(k) you can let those continue to grow. You have a different timeline, your immediacy. Maybe you have a little bit more of a long-term horizon, time horizon on those investments.

Mark Fricks:

Right, and I think you would touch base on this but also be able to delay taking Social Security, which will become a larger check as well. Again, I don't want to steal bullet point three or four. No, no. That pops into play as well.

As we know and, by the way, we actually have an online webinar coming up on Social Security. Might be a great time to learn more about that, but every year you wait and delay Social Security, there's an increase in that payment of 6% to 8% for the rest of your life. So, again, that part-time income of $20,000 or $30,000 a year may allow you to do that.

Evan Fricks:

Yeah, building a financial cushion and continuing to do so if you're not using all of the income, if you're not depleting all that income per month, also able to save more, just as we're able to hopefully extend our IRAs and Roths, certain accounts like annuities, income producing accounts. The longer you wait, they tend to produce more income, so there could be more time to allow certain policies and contracts to mature before you use them. There's a lot of benefit to that. Also, just flexibility. You can choose. You have more options when you have a little bit extra income there.

Mark Fricks:

Yeah, and you touched on this, you can, as long as you have earned income, you can contribute, instead of taking money out of your IRAs and 401(k)s.

You can contribute to those because you now have earned income again. And if you don't need a lot of it, you can put that much more. And if you create your own business, you can do something like a SEP or a SIMPLE or some kind of an IRA that has higher limits. So instead of doing $8,000 a year, if you're 50 or older, you can do $15,000, $20,000, $25,000 a year into these accounts.

Evan Fricks:

And, depending on who you are and what your strategy is for retirement, there's also opportunity for tax strategy. In that time, if you're earning part-time income, you're probably not earning as much as you were in your peak earning years right before retirement, which means you probably have more likelihood to be able to contribute to a Roth. Also consider contributions. Since you're earning less that year, the taxes on those conversions might not be as high as they would have if you were working full-time. So a lot of opportunities to explore.

With part-time work. As Mark mentioned, you also have an opportunity to potentially wait before taking your Social Security benefits, which, as we all know, all that's going to do is let it be a little bit bigger by the time you're ready to take it. That's another strategy to keep in mind. However, a gotcha that we need to also keep in mind: If we are working part-time and we are below, we have not reached our full retirement age for Social Security. Most of you, that's age 67. Most of us 67, right.

If we've not reached our, what is it, FRA? Full retirement age, then there's a limit to how much you could earn per year, and this year it's a little over $23,000.

Mark Fricks:

So that's money you're going out and getting a W-2 or 1099 because I work for somebody, okay, so you have to be careful with that. That's another reason not to turn on Social Security if you're working part-time and think you'll make close to that or a little bit above that, or maybe a lot above that as well. So that is something you have to be careful of and I think you're going to mention this later. So, um, you also may actually be able to add to your Social Security account. So, yeah, you know, in many cases not, because, uh, basically, your Social Security is, uh is a formula that includes your highest 35 years of earnings, Social Security, FICA earnings.

Okay. So probably, if you're making $30,000 a year part-time, you've made more than that most of those 35 years. But think about this: If you retired at 60 and you only have 30 years of FICA earnings, you have five zeros. So putting something in those zeros even if it's only $25,000 or $30,000, could potentially increase that expected amount, not only because you waited, but because there's more money in your bucket. That's right. So possibility.

Evan Fricks:

And again, it's all strategy, all timing, everyone's different. But if you're thinking, well, if I'm working part-time but I can't take Social Security, why would I retire? But if you could maybe spend down some of that IRA money early and you can delay Social Security, not only are you getting a bigger guaranteed Social Security check, but you are lowering your RMDs in the future.

Mark Fricks:

There's just a lot of angles to look at. Yeah, just another way to get some of that IRA money down, whether it's converting to a Roth or some other tax-free type of account. Or again, people do not realize the impact of required minimum distributions. So, starting at age 73 to 75, depending on your date of birth, you know, by that time maybe your IRAs have built up quite well. That RMD, I mean we've got clients having to take out $20,000 a year.

We have others having to take out $60,000 and $80,000 a year on top of their other income required fully taxable. So having a tax strategy early can be really helpful.

Evan Fricks:

If you want to discuss your own retirement or are curious about what your retirement would look like, especially with part-time employment, feel free to reach out to us at masterplanretire.com. You can schedule your complimentary consultation there. It'll actually take you directly to our calendar to find a time that works best for you. gain, that's masterplanretire.com or call us at the office, 770-980-9262.

Mark Fricks:

Hey I was thinking about something this morning on the way in. Just want to mention, if you're driving around listening to this show or at home listening to this show, keep in mind that we have many, many episodes that we've already recorded on every subject that you can just probably go to your pocket it's probably in your smartphone. All the major podcast servers have our shows on there. You can go to our website and many, many past shows, all kinds of topics on there. So if you're loving today's episode, look back. Also on our website or the YouTube same episode you just get to see us.

Okay, I don't know if that's a positive or a negative, but there you go. So if you're not liking today's show, there might be a better show on the podcast as well. So look back and see if it's something you like better, but I'm sure you're loving it, so let's keep it up. Again, masterplanretire.com also a great place to go to schedule a time to meet with us to discuss your situation, your goals, your concerns, your fears and that's complimentary, so take advantage of that.

Evan Fricks:

So we discussed some of the benefits to part-time employment and retirement whether financial or emotional, psychological things like that. So how about some ideas for part-time employment in retirement? I love this part. Yeah, so we do see a lot of different options. Obviously, everyone's got a different situation, different skill sets, but sometimes I'm really surprised by the things people find that they are interested in and they end up doing for work. So we're just going to run through a list of things, kind of talk through it, maybe give some ideas from our own experience with interaction with our own clients.

Mark Fricks:

Well, the first thing I would do is look at myself and say what do I really enjoy doing? Yeah, and.

Evan Fricks:

If you have the freedom to do that. What an excellent opportunity.

Mark Fricks:

Yeah, yeah, so I've always wanted to. I love plants. I've always wanted to work with plants. I'm going to get a part-time job at Pike Nurseries or Home Depot or whatever. So we're going to go through these, by the way, but that's the first thing I would do. Is what would I look forward to getting up? Maybe the job I've had in the past, I just got tired of it. So what do I want to do? What would fulfill me and still give me flexibility to do the other things I want to do? So take off there.

Evan Fricks:

Number one part-time or freelance work. So freelancing. If you have a particular skill, whether it be writing, graphic design, consulting, web development, freelancing can offer flexible work without the commitment of a full-time job. I have a gentleman. I've been speaking to who's become a friend. Actually he is an audio engineer at a radio station, but he also has picked up for years before he worked at the radio station he's at now. He's just worked out of his home, he's got his little setup. He's really fast and the amount he can churn out in a short amount of time as far as voiceover work, commercials, things like that, that's something that he can carry with him from home, basically whenever he wants. Exactly. Whenever he wants.

Mark Fricks:

Under his own terms and the whole thing.

Evan Fricks:

Yeah, so if you have skills that are similar to that, we have another client, without mentioning any names, but after he retired, his company or a similar company, brought him back on for consulting and it was incredibly lucrative that him stepping in as a consultant.

Mark Fricks:

It probably didn't have the benefits, right, like health insurance and stuff, but they make up for it, yeah, and if you're 65, you've got health insurance and, also, even though they may not have a 401(k) for you, again, you have earned income. You can do your own IRA or Roth or something like that. So, yeah, that's a great example.

Evan Fricks:

Really many retirees take part-time jobs in retail, customer service or teaching. These can provide steady income, reliable income with fewer hours.

Mark Fricks:

Yeah yeah. I'm not sure what examples you want to give. I'm going to give some examples I've seen over the last several years. This was not a client. I was at an auto repair shop and I noticed this auto parts store. Their truck pulled up, obviously delivering a part that they were working on a car with, and this gentleman that looked to be in his 80s climbs out, delivers the part, gets back in and drives back. What a great job. You know to just be delivering parts around town. It's better than delivering pizzas, which may be fine for you too, by the way. I'm not cutting it down. In my world, I'm not sure. Cause its daytime and that type of thing.

Another example was again kind of the plant thing. I had a client, a female client, loved plants. She got a part-time job with a company that took care of plants in corporate buildings. And she'd go in and water them, pull the dead leaves off, things like that. It was like three days a week. She loved it. So just a couple of examples that popped in my head. I'm sure more will enter my brain as we continue.

Evan Fricks:

Number two: rent out property or space. You know a lot of people. I've been speaking to someone yesterday actually two separate client meetings yesterday. One gentleman is about five years from retiring and he's using this opportunity now that he's at his peak earning years, to start developing rental properties, things like that, so that he has something to carry him through retirement.

So, whether you want to rent a building, rent a space, I have clients I spoke to yesterday as well who have been, they have an extra apartment in their home that they have been letting their children stay there for a reduced rate. Now all their children are on their own and they're independent. They don't need that for their children anymore, so they're looking at ways to rent that out and rather than Airbnb or Vrbo or some of these that you know, you've got some that you see some positives and negatives to those. They actually turned me on to a nurses only or healthcare worker rental site. The Traveling Nurses, which is amazing because, one, they typically aren't home most of the time other than to sleep. So, and then there's also a little bit more accountability because it's that nurse's site. Interesting options. All the best ideas come from the clients anyways.

Mark Fricks:

So they tend to be, you know, take care of property and things like that. Don't have to worry about somebody trashing your place, probably not having wild parties at night. But a great little basement suite with a separate entrance is a great setup. But yeah, that's a great idea.

Evan Fricks:

If you've not already considered renting that out in the off season or when you're not using it, that's also a great option as well. I've got online businesses here. There are a lot of different e-commerce stores that you can start, handmade goods, we all know about Etsy, vintage Items. You can source them, find them. You can do your own online boutique shop and actually choose your items. There's a lot of options there, especially if you are crafty or there's a hobby or you have a skill or a talent in a craft type of art or something like that.

Mark Fricks:

Well, eBay as well. It's kind of old-fashioned, but people sell all kinds of things on eBay, and I enjoy going to antique malls. So I've bumped into a few retired folks that have rented a booth. And their hobby is, during the week, going and finding antiques and then bringing them in and selling them in the booth. They don't have to be there all day. They come in maybe on Saturday morning, maybe straighten things up, add a few items, then leave, and somebody else is there, you know, running the cash register. And I mean I don't know what they make. But the booths I've visited are there for a long time. They're not moving in and out, so they must be making some money.

Evan Fricks:

Well and even blogging and YouTube, online blogging, YouTube videos. If you enjoy writing or making videos, you can monetize your content through ads, sponsored posts, affiliate marketing, things like that. It does typically take a little bit of startup time to build that audience, but that's certainly a viable option.

Mark Fricks:

But there are consultants, by the way. That will teach you and help you get that promoted. Yeah, you know, and you have to pay them some money, but it shortens that timeline of getting your content out there. So that's great as well.

Evan Fricks:

Number four: another option will be investing. We talked a little bit about real estate investing, but we've got investing in things like dividend stocks. That is helpful. However, you must keep in mind dividends are not guaranteed, so if you're looking at a guaranteed monthly income, dividends could be a little bit tricky.

Mark Fricks:

A lot of our clients will keep a little pot. We're managing most of their money. But they'll keep a little pot of money to kind of play with and I don't know. Buy some Bitcoin and buy a little bit of dividend stock and try to find the next up-and-coming company or something like that. We've got one client that has developed an entire system and he was really really doing well until one point. Then the market went sideways. But still he's done fine and he enjoys it.

Evan Fricks:

Peer-to-peer lending, so platforms like Lending Club that allow you to lend money to others and earn interest?

Mark Fricks:

Well, I don't think there's a guarantee, but yeah, again, this would have to be money you're not afraid to lose. Yeah, but it would definitely, I think is an opportunity, maybe a miniature angel investor type of thing situation, depending on how much money you have. Just talking to friends and family and things like that, of folks that you know that might want to start a business. That's great. At least you know who they are, their character, things like that. Again, be careful, you know. There's one thing you said you know never lend money to a friend, you know. But so make sure everything's in writing and it's for a specific purpose. They have a business plan, all that kind of good stuff. But certainly an opportunity. Again, just don't put out so much money that you harm your retirement.

Evan Fricks:

Right so number five: teaching and tutoring. Online tutoring if you have expertise in a subject you can teach or tutor online. There are platforms like VIP kid or chegg c-h-e-g-g where you can tutor students. Music and art lessons if you have artistic or musical talent, consider teaching lessons in person or online as well. It's amazing how many artists have moved, especially with Covid, with the shutdown on venues and everything else, moved to online lessons. There's so much available now as far as...

Mark Fricks:

It's so much easier, you don't have to travel. You don't have to, you know, the musician didn't have to rent a room and I don't know. It's a great idea. I love the way things are moving that direction. So absolutely, yeah.

Evan Fricks:

Self-publishing. You a writer? Do you love to write? Have you ever considered publishing? Putting on Amazon Kindle Direct? They allow you to publish and sell books online, often with a flexible schedule. Guides, books, memoirs. They can provide passive income if they sell over time.

Mark Fricks:

That's a great idea. You know a lot of our clients travel and some of them just go to some exotic places. What a great idea to write a travel blog about where they go and then share those experiences and helping other people see the world or tips on how to travel to that particular place. I like that.

Evan Fricks:

Number seven: sell crafts or hobbies. We talked about that a little bit with Etsy. Etsy shop. If you like knitting, painting, woodworking, really anything it's amazing what you can find on there. But it's something I didn't consider photography.

Mark Fricks:

I think I'd heard that a long time ago, but I had never really followed up with it. That's the great idea, though. I know I've purchased things off of there and somebody had to take that photograph right?

Evan Fricks:

But another really cool one is create an online course. That reminds us of another client of ours who's earning a lot of income because he created an online course.

Mark Fricks:

It's so cool and it's actually a course that is required to be taken. It's a continuing ed course. Won't name the profession or anything like that, and he does it with a touch of humor. So basically, once he gets these 10, 8, 12 courses recorded, people buy them and they pay through PayPal, and really he's not doing anything else, he's just collecting money for this continuing ed course. And they get great reviews too. They do, yeah, they really do. So well, I think we're out of time. We appreciate you joining us today. Remember our podcast as well as our radio show on YouTube. But I guess the best thing to say now is schedule an appointment, masterplanretire.com, and until we see each other again, plan well and prosper, take care.

This was Retirement Roadmap Radio with Mark Fricks of MasterPlan Retirement Consultants. To schedule a complimentary consultation, go to masterplanretire.com or call 770-980-9262.