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Episode #469 - Retirement Plan Live 2023: Their Goals For Rocking Retirement (Rosie & Dwayne)
Roger: Setting big goals is great, but they have to be the right goals or they become a trap.
Welcome to the Retirement Answer Man Show. My name is Roger Whitney. I am your host. This is the show dedicated to helping you not just survive retirement, but actually have the confidence to lean in in rock retirement.
This is week two of our retirement plan live series with Rosie. Last week you got to meet her. This week we are going to use those values that she identified for her and Dwayne, and create goals that represent the values that they have. Goal setting is important because it starts to frame the issue of what you're trying to solve for, and if you get your goals wrong or if you make them too rigid, you truly can become trapped. So that's what we're going to do now.
As a reminder, we're building this out with Rosie and I throughout this month. If you want to join us live to see the results of the retirement framework we're going to build for her, you can go to livewithroger.com to register for that event. We'll be on a live webinar or whatever you want to call it, online meetup, where you'll get to ask questions and see the analysis as to whether Rosie and Dwayne are okay on their current trajectory. So go to livewithroger.com to go ahead and do that.
We're going to chat with Rosie about goals. We're also going to answer some of your questions. So why don't we get started here.
RETIREMENT PLAN LIVE
Welcome back Rosie.
Rosie: Thank you. Good to see you.
Roger: Good to see you too. Is there anything from our last conversation that is an open loop or insight that you had that you want to share?
Rosie: No other, I think we got through most of what I was thinking. I think the only other thing is when we talk through the goals or the dreams, I maybe need to dream a little bigger than I did, but that would be about it.
Roger: I have found that we always need to dream a little bit bigger than we do.
So that's what we're going to do today. We're going to, you know, so last week we heard a lot about your story and Dwayne's and established your values, which should drive the goals, right?
Goals are a way of expressing those and living them, right? That's what we're going to do today. You did some pre-work for this so I'm just going to talk through this with you, okay?
Now, as you just mentioned, in this stage of the process and I know you work with an advisor and you have a plan in place, the way I would suggest you approach this is looking at everything with fresh eyes and not be trapped by what's created before. By looking at it with fresh eyes, it doesn't limit thinking anymore.
So, for this goal, this exercise of establishing your goals, you've sort of hit on it already, usually we don't dream big enough because we're trying to be reasonable by what we intuit or have seen in the past is possible. So I'm going to challenge you as we go through this to not do that. The reason I'm going to do that is not because I think you can have everything that you dream up, but I think the first iteration, it would be really nice if it did fail because you threw so much at it. That will help you prioritize a little bit better rather than have things left unspoken.
Does that make sense?
Rosie: Yeah.
Roger: Okay. Okay. So, we're going to start with the base, and the framework I want to use is, what is a base great life? So that's not a rice and beans minimum dignity floor, but what is the base amount that covers utilities, housing, normal clothing, normal eating out, occasional travel, et cetera.
The only thing I'm going to exclude from that normal living expense is healthcare because we'll count for that separate.
So, do you have a number from a base great life, what it costs to live the life of Rosie and Dwayne?
Rosie: Yes, I have kind of like the needs, wants, wishes.
Roger: Yeah. So, we'll call this the needs category, excluding healthcare.
Rosie: Okay. Okay. Excluding healthcare only issue being we typically go by the wants budget.
Roger: That's okay. That's okay.
Rosie: Okay, so excluding healthcare. I would say it's like a monthly 5,000 net.
Roger: 5,000 net of taxes. Good qualification. So about $60,000 a year.
Rosie: Net right, on the needs.
Roger: That's going to include, I got to pay my grocery bills, I got to buy a pair. New pair of shoes, I got to pay my insurance and my real estate taxes. Maybe it is going out to eat. Just a base great life. If you could live on only that, it wouldn't be that you're huddled in the dark.
Rosie: It wouldn't be that, but it also wouldn't be what we're accustomed to. It wouldn't be what we typically use.
Roger: Understood. Okay. Okay.
Rosie: It'd be like if we had to, we could do this.
Roger: You could still smile. I mean, you would maybe feel like you wish you could do more, some days.
Okay. So, we're going to use 60,000. How much visibility do you have into that number? Are you a budgeter or is that a swag?
Rosie: No, that’s pretty detailed. I'm a budgeter.
Roger: Okay. So, you feel pretty good about that 60,000 number?
Rosie: I don't feel good about it at all, but I know where the number came from. I know what it means we would need to do.
Roger: Okay. Well, does it have some eating out?
Rosie: It does, because I think it's crazy to think you're not going to eat out at all, but it's minimal. You know? It's half, maybe not half of what we normally do, so maybe that's not the right budget.
Roger: So, what base great life? Now I'm not saying minimum dignity floor, I'm saying base great life. What number would you intuit that should be?
Rosie: Okay. So that to me would be a little bit closer to maybe what we do now. Base great life, I'd call it. That would be more like 85, yeah, 85.
Roger: Then now we're going to account for some travel separately, right?
Rosie: Oh, okay. Well travel's in that number. Okay. So. So we have to bring that down a little bit more like 72.
Roger: Okay. Let's go with 72. We're not dialing in a engineering exercise at the moment, right? So, we don't want to lose momentum. Let's go with 72, and then we'll add in healthcare. Now the two of you are not on Medicare yet, so roughly what do you spend a month on healthcare?
Rosie: It's been 1100 this year. 1100 a month.
Roger: Okay, I'm making notes and I'm going to stick with that, and we'll have some estimates that I throw into our analysis when we are live together April 2nd. So, we got about 72,000 for a base great life, healthcare of about $1,100 a month currently.
What else would fall into that needs category? That it's obvious you're going to have to do it and it's pretty important.
Rosie: You mean home maintenance type things?
Roger: If you have things that are out there, yeah, I mean those things always pop up. I don't know if you budget for those or not.
Rosie: I do. I do. Is that what you're kind of talking about, the things that you know you're going to have come up, but you don't know exactly what it's going to be.
Like auto maintenance, home maintenance, even entertainment, sometimes you don't know you're going to go to that concert.
Roger: I wouldn't know if I'd get that granular at the moment, but like a new car, you know, you're going to have to buy one every six years, all those types of things.
Rosie: So, we kind of have that built in. You know, a little bit of medical expense. So, we got 1100 for insurance, but then, you know, we have a little bit in there because occasionally we have to pay some.
Roger: Yeah, and what I'll actually do there, Rosie, is in the analysis, we'll bake in some just natural out-of-pocket expenses.
So, is there anything else in the needs category? It's like, yeah, we got to do this. I already know we do.
Rosie: We also have a separate category for yard maintenance because that seems to be high, and pool maintenance. They add up.
Roger: So, they're included in there. I'm trying to think of things that would not be included in.
Rosie: Oh, I hope there's nothing not included in here, so. I just want to make sure I'm taking out what you think we need out.
Roger: We'll stick with that. So that's a base great life for Rosie and Dwayne.
72 grand a year after taxes, plus $1,100 a month for healthcare.
Rosie: Except I also had the travel in there. A little bit of travel. Yeah. So, you, do you want to keep the travel in there?
Roger: Well, let's go to the wants category, the more discretionary category of travel.
Does that make sense? In an ideal world, you're able to do the travel, but you want to know. So, in the 72,000 there was a little bit of traveling, so how much of travel was in there?
Rosie: Probably say a thousand a month or so.
Roger: Okay, so let's go back down to the 60,000.
We worked our way around and so travel, let's go on travel now in the wants category. In your mind, do you budget about $12,000 a year?
Rosie: 12 to 15, yeah. Would love it to be 24.
Roger: Okay, well let's go with 24. $24,000 a year, I'm assuming starting next year, because you're both retired, right?
Rosie: Right, and the first few years is when we would want the most, the first five years.
Roger: Okay. So then, let's assume that 24,000 goes for the next five years, from 23 to 28. Okay. And then after 2028, are you done traveling or did you want to just moderate it?
Rosie: No, then it could probably just cut back to maybe like, 15, 18.
Roger: Okay. And then how long would that go for?
Rosie: Maybe another five, and then I think we can cut back.
Roger: Okay. So that would get us to 2034.
Rosie: Yep. Right in that range. I'd say in
Roger: That's 11 years sense. So that would put you at 74-75?
Rosie: Mm-hmm.
Roger: Okay. And then any travel after that? Do we want to make assumptions?
Rosie: Oh, you know, hopefully, hopefully there'd still be some, but I mean, I would keep that travel budget high until I'm 78 if I could.
Roger: Okay. So, we'll call that for another eight years. Okay, so we have the travel. We have 24,000 for five years, and then about 15 to 18,000 for eight years, and then beyond that, it's sort of over the horizon. Who knows?
Rosie: Yeah. Right, right.
Roger: What else in the wants category, which is literally of the discretionary things. This is like the spice of life, right? What else would be in that?
Rosie: Well, we have like for example, a small amount designated for dining out and our budget's kind of granular because that's the nature of the beast here, the beast being myself. Also, money that we spend on our kids and grandkids, you know, just taking them places, doing things. So, I would definitely be beefing those up in any more wants rather than needs.
Roger: We could break it down by each individual category, kids dining out more. We could just call it "go-go extra".
Rosie: "Go-go extra" is probably good.
Roger: Okay, so let's define what "go-go extra" is. That's, I'm assuming, starting now. How much "go-go extra" would you want in the ideal world on top of that base great life?
Rosie: So, we're back to the 60,000?
Roger: On top of that. Yes.
Rosie: On top of that quite a bit!
So, my ideal budget, if we're going with that, is closer to, I would say 10.
Roger: $10,000 a year.
Rosie: A month.
Roger: Okay so these end up being like layers of a cake.
So, we have a base great life of 60,000 a year.
On top of that, we have healthcare, right? So let's just build that. The healthcare, let me get my little calculator here. I hate doing live math.
So, with healthcare, we're at about 73,200. Plus 24,000 for travel. Which gives us to about 92,700, so "go-go extra" is going to be the next layer on top of that, the kids, the eating out and everything else.
So how much more than the 97,200?
Rosie: Probably another 20 to 25.
Roger: Okay. We're going to do, we'll just call it 20, just to keep the math simple. That gets us to about $117,200 per year after taxes. How long do you think the "go-go extra" would continue?
Rosie: Yeah, I think at that level, you know, five years for sure. Then bump it down a little bit for the next eight. Kind of the same schedule, I would think.
Roger: Bump it down by half, by a third?
Rosie: So, we added 20. Yeah, after five years, bump it down by a half.
Roger: Okay and then do that for another eight years?
Rosie: Yeah.
Roger: We're going through this relatively quickly.
We're not worried about the decimal points, because we're just swaging these things, but we're swaging them off of a good basis. It sounds like you have a budget that's fairly detailed and you're a detailed person, the monster you said.
But even if they weren't super detailed, it's nice to have a basis for it, and the reason I want to say this is we want to go through this first iteration very quickly because it's very easy to get bogged down into things that you actually can't figure out, right?
Rosie: Mm-hmm.
Roger: We're just doing all of this to do a feasibility study of going and say, well, Rosie, yeah, this is totally feasible. Then we can figure out how to make it resilient.
Or Rosie, this is not feasible, and then that will help you and hopefully I can help you with that is negotiate to get to feasible right? It's not important to get specific on this too quickly because then you just get bogged down and you lose momentum.
Rosie: Gotcha.
Roger: Okay. What else in the want category?
Rosie: I think if we're adding those layers on, we're kind of there. I mean, you can never have too much travel budget for me. But I mean I guess another ideal thing, which isn't really built into anything we've got here is possibly a second home, like in Florida or somewhere warm.
Roger: Okay, so why don't we move that to the wish category, second home in Florida. If you had to swag that, what would be the year you'd want to do that and the estimated budget in today's dollars.
Rosie: So, I just to be totally honest, upfront about it, I think we wouldn't do that till we sold this home. So, I'd say, you know, 10 to 12 years from now.
Roger: 12 years, and in your mind, would you swap equity? We haven't gotten to your finances yet. Would you swap the equity from your sale, or would you add money to that?
Rosie: Probably swapped.
Roger: Okay. So, we'll just call that a swap. Okay. So, they almost even out, right?
Anything else in the want or the aspirational or a wish category?
Rosie: No, our numbers are pretty modest on cars and stuff like that, but I don't think even in the wish category, it'd be a whole lot different. You know, it might get in a little nicer car or something, but that's kind of granular.
Roger: Okay. Is there anything that you wanted to say that you decided not to say?
Rosie: Uh, no, I don't think so. This wish category is a lot harder than you think it would be, because sometimes when you're thinking of like, for example, a travel budget, you think, well that's kind of greedy if I'm, if I want 30,000 or whatever it is, you know?
Sometimes, well, it might be a wish in some ways it feels like. Yeah, but is that really a rational thought?
Roger: Yeah, and I would think when you're thinking of these goals, because it's easy just to think of it as money and that does sound greedy and a little crass necessarily. But ideally, these things are how you're going to express your values that we established last week, right? So, you can live in congruence with those values from a travel standpoint, 20 or 30, we can bat around these numbers, but I don't even know how you normally travel. What's the big last big trip you took?
Rosie: Probably just before Covid we went to Italy and Switzerland.
Roger: Okay. So, did you fly first class?
Rosie: No. Oh, no.
Roger: Flew coach?
Rosie: Yeah.
Roger: What kind of place did you stay at?
Rosie: We went through this company that organized all of it, so we had like a private driver. We were with friends. The places were nice, I wouldn't say they were, I mean, they weren't like crazy high end, but they weren't not nice.
We had gone through a travel company that arranged all the excursions and everything, you know, so typically we don't do that. We do our own thing, but we did that time.
Roger: How much did that cost for the two of you?
Rosie: I'd say when it was all said and done between 12 and 15 probably.
Roger: Okay. How many would you ideally do of those a year?
Rosie: Well, ideally out of the gate we would go over there for four to six weeks and just stay, so that'd be a little more frugal, because we'd probably do like, you know, Airbnb’s and stuff like that. But then honestly, if I could get to Europe for a decent amount of time, three times, it'd probably be enough.
That's, that's the big money, you know? I mean, it's just more expensive than lots of the other travel we want to do.
Roger: It's interesting to think of these, because we think of these as, I want to do this, but once you start doing these things, I don't want to say they get old necessarily, but I've sort of done it, right?
Rosie: Yes, yes. To your point there, you know, we might go to Europe twice and say, okay, that's enough, and decide to switch to like South America or African Safari or something like that. You know, there's just so many awesome things that you could do that you kind of have to pick and choose.
Roger: You've mentioned there's never too much travel, does Dwayne have that same spirit?
Rosie: I think he enjoys it. Yeah. He's not as driven or it's not a need for me, obviously, but it's a definite big wish, something I've always wanted to do. When he retired, where for him he's in, but I mean, he's just as happy with like the Caribbean, you know, whether it's a cruise or a resort or some other kind of trip somewhere warm and beautiful. So, Hawaii, whatever.
Roger: Now, Dwayne is not in on this conversation. Is there anything that he would put on this list that you didn't?
Rosie: Hmm. He's more into sports and likes college football and stuff like that. So, he'd probably say maybe at some big sporting event that tickets are expensive too.
He'd probably want to do something like that, I would guess.
Roger: Okay. Then I'm assuming we can conclude that in the 24,000 a year budget that we're using for our ideal world.
Rosie: Yeah.
Roger: Okay. I think you had some home improvement things on what you had sent me. Are those ideas or, yeah, we're going to have to do these things.
Rosie: I know there was another segment of pool remodel on there, which we've done a lot already, but that's the final phase, which we would like to do, but we don't have to do it. It functions okay as it is. Going back to my roadmap here, because I'm trying to remember what they were.
Roger: Yeah, you had pool 2024, 25,000.
Rosie: Okay.
Roger: So, I think we include that in the want category, because that's something that is the last phase. You want to do it, but you don't necessarily have to do it. That's sort of what the want category is, right? So, I want to make sure we capture that.
Rosie: Yeah. The other things are smaller and they're more home maintenance, but you just have to allocate for it.
Roger: Right. Okay, let me recap best I can.
We have $60,000 a year plus healthcare for a base great life, so about 72 grand, and then we have 24,000 in travel for five years and then moving down to 15,000 in travel for eight years, and then we added a go-go extra of 20,000 a year for five years going down to 10,000 for eight years. We added a home swap sometime in the future, a potential pool renovation in 2024 for 25,000.
All of these add on top of each other, and they all have different sequences. And we'll be able to see that when you and I are live together with everybody on February 2nd, and this captures living the values that you and Dwayne have.
Rosie: Yeah, I think where I'm a little bit confused maybe with our numbers is the base life that we're talking about that is more of our needs level, not like, not what we're living today.
Roger: Yeah. The base, great life is meant to represent, because we don't know what the future holds, just like you did when you retired and the bear market came, right?
The base, great life is like the Maginot Line that France had. This is the line that we can't cross. We have got to be able to make this secure because otherwise you might be on the street or really be stressed financially.
So, the base, great life is meant to represent, man, I want all these other things because this is all the zest of life, but I have to make sure this is secure, this is resilient. Then, God willing, we just have normalcy, normalcy, and then normalcy.
Then we can have some, you know, some of the wants and the wishes. Maybe not at the ideal level, but somewhere in between. So, what we'll do is when we do the feasibility study at the end of this, look at the feasibility of the needs category only, the needs and the wants, and then the wants and the wishes.
If we have to negotiate because it's clear that all three are not feasible, given the resources that you have, then we'll just have to negotiate. Well, you'll have to negotiate, and I'll be your facilitator to help you understand the trade-offs with the goal of focusing on getting as much of what you care about most.
In my experience, if you don't have it all out there it's hard to negotiate with yourself because it's just these things in your head, but when you see everything on paper mm-hmm. It's easier to make those trade-offs or think through those trade-offs.
Rosie: Okay. Yeah. All right. Yeah.
Roger: So, the goal will be to get to a feasible plan that's focused on what you care about most, and anything that we negotiated away doesn't mean they're gone forever because we're looking at all this right after you've gone through a bear market. If we have a year or two that are better, some of those things can come back in because you're going to do it in an agile way, and that's the constant kind of renegotiation that you'll end up going through forever, right?
So, when we do this, if it fails miserably, we don't have to shed a tear. That just gives us a lot more information to figure out, to get to feasible.
All right. I'm always amazed, regardless of how organized the structures are, it's just messy as you go through it.
Rosie: It is messy. Too many unknowns.
Roger: Yeah, and that's why the process is so important. So, what we're going to do next conversation now that we've dreamed of ideal, we got to figure out how the heck you're going to pay for all of this. So, we're going to talk through the resources you have to marshal to actually do this, and that will give us most of the information to do that feasibility study.
So that'll be great. Sound good?
Rosie: Makes sense. Yeah!
Roger: Anything I should have asked or that you wanted to make sure you shared?
Rosie: No, I think I need to just let this play out a little bit more because I'm wanting to make sure that I didn't misrepresent the needs bucket.
Roger: This is all in pencil.
It'll be changed a million times, so don't worry about that. All right. So we will chat next week and go start going through your resources.
Rosie: That sounds great. Thanks!
LISTENER QUESTIONS
Roger: Now it's time to answer some of your questions about the retirement issues that you are grappling with. If you have a question for the show, you can go to rogerwhitney.com/askroger and ask your question, either type it in or leave it as an audio question. We'll try our best to answer it on the show.
QUESTION ONE
Our first question comes from Tim, who is trying to determine whether his wife can retire or not, and Tim wrote this question a while ago. Sorry for the late response here, Tim, but he said he was in Salida with his family. I hope you had a chance to eat at Moonlight Pizza, which is our favorite.
So, Tim says he retired from the corporate world.
After 38 years and then started an LLC as a consultant in the industry that he was in, and that's taken about a year to get going, but he's been earning about $50,000 a year. He says they have everything paid off, but they're very cash poor in after tax assets with about $20,000. They have about 1.1 million in IRA and 401K assets, and then.
About 20 or 30,000 in a Roth and they have a paid four house of $350,000. So he lays the groundwork and he says, my question is I want my wife to be able to quit daycare while I still focus on my consulting business, but we will make around $50,000 a year if she quits.
Although we have a simple lifestyle going to national parks, et cetera. Our estimated retirement budget is $85,000 a year. I will be 59 in April, and my wife will be 57 in April.
The question is, in your estimation, can we retire and live our dreams based on our net worth and our investments?
That is the central question around a lot of this stuff, Tim, and it's easy without a framework to just keep working, because we don't know.
You have set the table well with the facts, but let's think through this and hopefully I can give you some guidance on this very central question. Can she leave her job?
The correct answer as it is always both. We don't know whether you'll be okay and yes, she can leave her job if you're willing to make whatever adjustments are required to support that decision.
I was thinking about that framework, because that sounds contradictory, doesn't it? If you decide that she needs to leave her job and she is burnt out and she wants to leave her job. The answer is yes, you can do that if you're willing to do what it takes to support that journey.
The key decision is, I am leaving my job. The next question is, well, what do we have to do to make that work? That's the key decision. That's an interesting distinction that we can go into another time, but let's walk through some of the issues of her retiring at age 57 and you continuing your consulting business.
Within the Agile framework, you're going to want to walk through this step by step in a very similar way to Rosie. We want to know what specifically the goals are, not just how much you need this year, but mapping out what you think you're going to need in the years to come. If we assume that's a 30-year timeline, these goals are going to have different sequences.
You may have more travel while you're younger, you may have. Other expenses come up later in life. You go from whatever healthcare you're on right now to Medicare when you qualify for Medicare. So, the first step is to follow and build a framework, much like you're going to see with Rosie today, and that we will present in the live event, because that's going to show your spending timeline and then you're going to want to match that to your income timeline.
As an example, if she leaves her daycare job, you're going to have $50,000 a year in income. Then at some point she'll have social security. At some point you'll have social security. So, you want to map these out over a very long period of time so you can get an understanding of how much your assets can really support, these financial assets that you shared with us, and that's going to get you a feasible plan.
Based on the numbers you told me, it looks like bird's eye view, hey, this looks feasible. Initially, you're going to have what, an $85,000 annual expense, which 50,000 of your consulting business is going to offset, so you'll have a deficit of roughly $35,000 a year.
Well, if you divide that by the 1.15 million that you have in savings assets, that's about a 3% withdrawal rate. So, from a rule of thumb standpoint, it looks like it could totally support that.
Now because the withdrawal rate percentage is only a rule of thumb and not what you want to use for retirement planning, then you can start to dial that in a little bit more because we have, well, social security will come in, so your actual withdrawal rate given the expenses that you're showing will actually go down as you start to get this supplemental income coming into play.
On the flip side, you're earning $50,000 as a consultant. We don't know if that's going to continue. So, there's some risk to that, just like there is with any job. But you want to get to what is a feasible framework and rule of thumb, I think it sounds feasible once you have it feasible, Tim, to make it resilient is the next step. That's going to be mapping out exactly how you're going to pay for that deficit over the near to midterm. I would suggest starting with five years, how you're going to pay for that deficit over the next five years and have that money de-risked from an investment standpoint and build out your allocation structure from there.
Then when you're making this resilient, you'll also want to test, well, what happens if your income goes down? You're not able to consult at the same level. What happens to the long-term feasibility of the plan, so you have some color on that perspective. Also, what happens if you experience a major bear market or you have a major healthcare shock?
You'll want to stress test this feasible plan against some of those things to see where there are opportunities and risks to make it more resilient. Much like we're going to be doing with Rosie throughout this week and at the end of the live event. This is all figure outable, figure outable, is that a word?
This is all able to be figured out. Where we fall down is having a pathway to do this, and I think that's what we try to provide, well, I know that's what we try to provide here. But once you have it resilient, that's going to give you one pathway of how you're covering this deficit, but also give you more confidence that you have some control and flexibility for all the unknowns that are around it.
So, Tim, this doesn't look unachievable based on what you've told me. I think you want to follow a logical way of testing whether it's feasible and then making it resilient in the ways that we talk about on the show. So, I wish you the best of luck and I hope to maybe see you in Salida sometime.
I guess we're starting the building on our house in like mid-year, so who knows? Some point, maybe we'll see you out there.
QUESTION TWO
Our next question comes from Perma related to social security benefit and where they live, and Perma says, I'm Canadian. I'm turning 60 in June next year. I've been working in the US since 2006, and my social security statement shows that I'll get a $2,500 a month benefit at my full retirement age of 67.
I don't have a green card, and I'll be moving back to Canada or some other country to get away from the cold. Will I get my social security as a Canadian?
My Canadian pension will not be much as I worked in Canada only for seven years and I have IRAs, et cetera, in the U.S. So the central question is how does claiming social security work for Canadians?
Well, Perma, great question, and it's a pretty complicated question, and it's not an area of my expertise. There are some financial planners that tend to do cross-border planning. I know it's very difficult to do that with Canada, it's something about the regulatory structures back and forth that I'm not a hundred percent familiar with, so I don't work with Canadian clients.
What I would suggest though, is that there are two social security webpages that you can refer to. One is ssa.gov/international/agreement_pamphlets/canada. So if you go to the ssa.gov and look at international agreements with Canada, they should be able to guide you in navigating this benefit. So those pamphlets should be able to give you a lot of information.
Secondly, and I don't know where you live, you could contact the local branch of the Social Security Administration and depending on where you live, that can be really easy or really hard in more rural areas I know examples, especially in the northern U.S. Where they're very accessible. But if you live in a major metropolitan area, it could be a little bit of a headache.
So those are two pamphlets that we can share with you. We'll put them in 6-Shot Saturday, FYI Nichole, who's listening to this, and hopefully that will help you on your way.
By the way, we've gotten a lot of replies regarding expat living. Some people were willing to offer their expertise, others that had suggestions or questions.
We're going to do this as a theme. I'm not sure if it's going to be in the first quarter of this year.
So, if you've offered your expertise, I may be reaching out to you, and we can look forward to a month-long series on Expat Living to help guide your way. So, thanks for the question, Perma.
QUESTION THREE
Our next question is from Renee regarding tithing in retirement.
So, let's take a listen to Renee's question.
Renee: Hey, Roger. This is Renee in New Mexico. I love your podcast. Thank you so much for everything I have learned by listening to you for a couple of years now.
I haven't heard you address specifically the topic of tithing in retirement. I know you've talked about giving and strategies for that, but how does someone who is used to giving a certain percentage of their gross income, for instance, how do you translate that to trying to maintain giving a certain percentage in retirement when your income may be coming from various sources like social security or withdrawals from your brokerage accounts, that kind of thing.
So, if you could just discuss maybe some ways to think through, as you'd like to say, in an organized manner, how to go about tithing in retirement.
I would appreciate it. Thank you very much.
Roger: Hey, Renee. Great question. I haven't encountered this one before. So tithing, giving. To the church when you are retired and there are a lot of issues around tithing, even while you're working, is it on gross, is it on net? Put all of that aside and let's just think of what income sources you should tithe from, if any, when you're retired.
I'm going to think through this in an open-minded way with no real opinion on what you specifically could do. I am definitely not a biblical scholar, and so this is just this organized thinking that you requested Renee. So, let's think of the capital or the income sources that you're going to have in retirement.
Let's start with social capital. Social capital is going to be income primarily that you're going to receive from social security. As well as potentially a pension, which are socialized sources of income. So, let's just stick with those two. How much, if any, should you tie from those income sources?
Well, if we think about social security, it is a benefit that you've been paying into in the form of payroll taxes your entire life, and then your employer has been paying into that as well. So, some of that would be reflected, those contributions would be reflected in your gross income over the years, which you perhaps have tithed on before.
Whereas the employer portion that has gone to it has not been reflected in the previous tithing that you could do. So, you could go maybe one route of just tithing off of your social security. Another route is tithing on half of it, because technically you've tithed on one half of it already because you've been contributing via payroll taxes, and that's caught in your gross income.
I think one of those two make sense to me, probably just tithe on the whole thing. From a pension standpoint, if you have a pension likely you've never tithed on that money, the company has that benefit. So that would make sense to tie on that entire amount. You know, it's funny when you think about that cause you sort of get nick picky about it and I don't know if that's really the way to go about it, but I'm just trying to think through it logically.
Human capital, if you're going to consult or do something like that, you continue to tithe on your income.
What about your financial capital? These are monies that you have saved over the years. From your income, either via deductions from 401k or IRA contributions, or after-tax contributions to investments.
My guess is over the years, if you just tied your tithing to your income, then you're not really going to have income from these investments to tie the off, off of because you probably haven't, you know, if you haven't tithed on your dividends and capital gains distributions over the years. Should you start doing that just because now you don't have work income?
I don't know.
Or maybe you have been tithing off of those things because in retirement, these are monies that are after tax that you've invested, that are after your tithe from your income. It's going to be up to each of us, I think, to determine do I tithe on the dividends that I'm receiving or the capital gains that I'm receiving, or the amount that I spend every year.
Yeah. I don't know.
I think the key thing here is you need to, you know, in this instance, pray on this and just come to a decision that you feel honors God and your church on this particular topic. Some people do that, and they say, I'm already doing net, you know, my net income, not my gross income. But I think on the financial capital, that's where it becomes a little bit messy, because most people probably don't tithe it off of their dividends and their interest and they may start doing it in retirement.
I don't know. But I think definitely the social capital and the human capital makes sense. The key is just having a framework that you feel comfortable with that honors your faith, and then go from there. With that, let's move on to set a smart sprint.
TODAY’S SMART SPRINT SEGMENT
On your marks, get set.
and we're off to take a little baby step we can take in the next seven days to not just rock retirement, but rock life!
In the next seven days, I want you to either define or revisit your long-term retirement goals, your base needs, your wants and your wishes, and we'll have a little worksheet that we will share in 6-Shot Saturday to help you do that.
This is a good annual exercise to revisit some things that you've said were important to you in the past and that you likely have structured your plan around, this is a good time to revisit that because we don't want those goals that you've set to become traps. Because there's a ripple effect because all of the planning decisions you made downstream are, are focused on achieving what you said was important.
If that had changed, that is totally fine. It's okay to give up a goal, to just say, this isn't important to me anymore. This is the time to revisit that. If you haven't revisited it. Then you can set those because that will help you start to build your cash flow timeline to get to a feasible plan of record.
All right, it'll be fun. Get to work.
CONCLUSION
We're working on integrating a new segment called Rock Life For Now. How to create a great life outside of the financial realm, and I have some contributors that are coming. We're working on the format, so you're going to see it in an episode or two, and then hopefully here in the next month or so, we'll get into a rhythm.
We're going to focus on, like I've told you before, I think mindset and energy and passion, which is work and relationships, the things that you need to be intentional about in order to create a great life as we do that would love your feedback, and I hope your year is starting off well.
The opinions voiced in this podcast are for general information only and not intended to provide specific advice or recommendations for any individual. All performance references are historical and do not guarantee future results. All indices are unmanaged and cannot be invested in directly. Make sure you consult your legal, tax or financial advisor before making any decisions.