transcript

Speech-to-text transcription can look a little quirky. Please excuse any grammar or spelling errors.

Episode #571 - Close Out the Year with Intention

Roger: The show is a proud member of the retirement podcast network. 

Confucius says: “By three methods we may learn wisdom. First by reflection, which is the noblest. Second, by imitation, which is the easiest, and third by experience, which is the bitterest.”

Welcome to the show dedicated to helping you not just survive retirement, but to have the confidence because you're doing the work to really lean in and rock it. it is Christmas Day, 2024. Hopefully you are with family or with people you love or in a place that brings you peace on this day. It is a good time of year to reflect on 2024. It's very easy not to do this exercise and I'll admit I am deficient in this exercise as a practice or a protocol in life. But reflecting on what has been a noble way of gleaning wisdom and identifying the seasons of your life. Looking backwards or just experience can be the bitterest, as Confucius says. So, it's a good time to do this. 

Tanya Nichols from Align Financial held a meetup in the Rock Retirement Club with members where she worked through her yearend reflection protocol which we're going to share as a PDF in our 6-Shot Saturday email. If you like the show, you will love our weekly email where we share links to resources like her reflection worksheet as well as outside sources and keep you up to date on what's going on in rocking retirement. So, you can sign up for that at 6shotsaturday.com or rogerwhitney.com. I'm just going to walk through her worksheet. I wasn't able to coordinate with her being with me. She would be the best person to do this, but I decided to adopt this protocol and do this this year and hopefully continue that on. We're going to go through that and I'm going to challenge you to do the same. In addition to that, we're going to answer some of your questions now. January is but a week away, 2025, it's going to be a great year. The first episode in January, Tanya Nichols is actually going to be on the show. We're going to talk about retiring single and set the table for the Retirement Plan Live case studies, plural, that we're going to be doing next month with a man and a woman that are both single, never married, no children, and how, they're both facing retirement. So that's going to be the case study with two people. This is going to be interesting. See if we can pull this off.

But for now, let's get started and work through Tanya's 2024 worksheet. I feel really bad that Tanya is not on the show to go through this. I'm going through it for the first time myself, so maybe that's a good thing. 

PRACTICAL PLANNING SEGMENT

As we're sitting here between now and end of the year, that's a good quiet time between Christmas and new. In fact, Shauna is leaving tomorrow to go see her niece. Grandniece. Second niece, I guess. Our goddaughter Kelsey had her first baby, Shaylee. So, Shauna's going to fly up, I'll be by myself for a week. This will be a good time to do this type of exercise.

First category, what are the successes for this year? What things as you chronicle the year, are you proud that you achieved in some way? 

Looking back on your calendar is a good tool to do this because I forget all the stuff that was done. So, if I think personally, what are some successes personally this year? Deciding to move forward and purchase the town home in Colorado and plant that flag is probably one of the biggest successes. I was able to spend three months of the year, a third of the year already, or is that a third or quarter? I don't even remember when we bought it. Now it's like February and March. So that's a big success for us. Our son and his relationship and our daughter and her relationship getting engaged, that's a big success. The fact that they're involved in our lives and want to be involved in our lives, we're proud of that. What other big successes? Personally? Shauna and I have been able to be outside more because of Colorado and golf, and we're being very intentional about that. I love that. We have been nurturing friendships a little bit more intentionally. 

You see, I haven't done this in depth yet, so you can see how hard this is. It's been a whole 12 months of stuff that you forget about until you reflect on the business side. Success. We've been blessed to work with amazing people, not just the team. Oh, wow. The team. I'm so just giddy when I think about the people I get to work with. Big successes. The universe or God brought Erin to us who works on the advisory side, but she is just amazing. She was on the show here, a month or so ago Troy and Kim and Nicole and Tracy and Scott and so many others I can't mention. So that's a big success. Financially. We've been able to share that and save for ourselves, which is a big success. A lot of big successes, business wise, that we forget about. 

All right, so that's the first thing, go over your calendar or your journal or just reflect. It's good to put your year into quadrants so you remember what happened in January or February. Oh, another big success, which is personal and professional. I traveled a lot less for business purposes, which has been a big intention, so that's a big success.

All right, now let's flip the switch or to the other side of the coin. What are some failures this year? 

I've not dialed in my health as best that I could. That's a failure, I would think. I haven't successfully renegotiated my relationship with alcohol as much as I wanted to. That's a failure. I've relied a little bit too much on my team because they're so awesome, which can actually make me a little lazier. That's a little bit of a failure. I want to make sure I respect that. What things that are you not so proud of that you can observe? 

All right, next category in Tanya's sheet is things I wish I had done. Maybe you had intentions to do certain things that you didn't do. 

I wish I had made more progress on the educational content for the Rock Retirement Club. I wish I had done that. I wish I had been better at saying no to certain things that probably would have given me more time. Difficult to do that. On the personal side, I feel pretty good that we did a lot of things that we're proud of. I don't think I missed too many things there.

All right, next category. Something I thought was important but is actually meaningless now. This really reflects back to Dan Crosby's conversation of those focusing questions of what to pay attention to. What are things that you thought were really critical in the last year that you probably have forgotten about? 

his is going to be a hard one to answer, maybe because you've probably forgotten about them. It could have been the election. It could have been the economy, could have been interest rates. It could have been a relationship. What is something that you thought was important then, which ended up not being? I'm going to have to do some work on that one.

All right, next category for 2024 reflection is what made me truly happy in 2024. What really felt like you were in the spot that you needed to be in? 

For me, professionally, doing the show, showing up for the club and teaching and coaching, growing the team and seeing the collaboration that, the collaboration of the team and working with cool people is a big one. Professionally and able to serve clients and listeners and club members that are all extremely nice people. I can tell you I interact with, I don't know, hundreds, if not thousands of listeners and club members and clients. Virtually everybody has a beautiful spirit and a wonderful attitude about them. That makes me truly happy personally. Being outside with Shauna, having game nights and doing stuff with the kids. All those things make me happy.

Okay, next. Now we're flipping the coin again. Tanya's flipping the coin. What made me deeply sad. Ooh, that's a heavy one, isn't it? What made you deeply sad this last year? 

Usually, I'm really good at answering questions really quickly. Maybe you have for this one, but a lot of these questions, I'm actually struggling a little bit, which means there's a little bit more pondering. Usually, I'm really quick at answering questions. 

What made me sad? I think I’m realizing the change of seasons. You know, Sherlock's getting older and he's slower. Elderly parents, the fact that the kids are more living their own lives and, you know, as much as we do, we don't talk nearly as much as we used to because they're so busy. I mean, that's a change of seasons and it's a good thing. But you can still mourn that change of season.

Next category. Something new I discovered about myself. 

Well, this year I reached a physical limit when I was in Costa Rica that had never happened before, where I barely got out of the jungle and had to get three IVs and B12. I had never had that happen to me before. I have never been unable to complete a difficult physical challenge. So that was something I discovered. Still processing that. I like to test the boundaries and well, I found the other side there. That's something I discovered. One thing I’m still in the process of discovering is my own boundaries and when to use the word no, or that doesn't work for me. Not trying to solve everybody's problems. That's one thing I'm working on about 2024. 

The next category is what I loved. My soul is at peace in Colorado, the mountains. I love that. I love being outdoors. What did you love in 2024? The last two on, Tanya's worksheet, I think, are really important ones.

What goodbyes did you have or you noticed in 2024, what seasons are ending for you? That could be work related, it could be relationship related, it could be a way of thinking. There's no wrong answer here. But when you reflect on 2024, what things have you had to say goodbye to? Or are you in the process of saying goodbye to. For me, I’m in the process of saying goodbye to Texas. I'm in the process of changing roles a little bit in the business and having to be a leader. So, I'm saying goodbye to a little bit of the scrappiness and closeness that you get with a tiny team. Although we're not trying to get really big. Saying goodbye to some of that, we have had to be a little bit more formal about things. That's important, but a little sad. 

What hellos are you saying? So, if you have seasons that are ending, reflect on, okay, well, what new seasons are coming? These could be people in your life, these could be roles in work, roles in your family, new hobbies that you have. Some years ago, I was reflecting on fitness, and we've had chats with Bobby on this of my goal in fitness was always competitive when I was younger. But now I'm saying hello to structuring my health regimens for being healthy and not injured. It's less about a comparative thing and more about a wellness thing. Those are some hellos. Some other hellos that are on the horizon I can't really mention here. 

These are good reflections. You're welcome to go deep into pages, you're welcome just to fill the worksheet out briefly. But the intent of this exercise is to take a moment and categorize where you're at now, and also the journey that you've been on for the last 12 months so that you can glean some wisdom on what your intention is for 2025. Now, we're not talking about New Year's resolutions. I'm out on those. New Year's is way overrated as a holiday, in my opinion. I'll give you an example.

 In reflecting on the last year or so. I choose a word for each year. And in 2025, I actually have two words, one personal and one professional. So, as I'm thinking about seasons and where my life is, my word for personal for 2025 is outdoors. I want to be outdoors, specifically in Colorado. That is my theme for 2025 and that is very helpful when opportunities are presented. I had two opportunities presented to me recently. One to go to Machu Picchu with some amazing people and one to go to Switzerland with some amazing people. I used my outdoors, specifically Colorado, as a filter of saying no to these amazing opportunities that I really wanted to do. Having a word based off of some reflection of where I'm at is very helpful in your boundaries. Then on the professional side, if you're still working, my word and our team word for 2025 is hone, which is honing our craft, our systems, delivering on our promises. We're going to intentionally slow down any kind of growth in order to work and hone what we do to be sharper, so we can hopefully have more impact on you with the podcast and in the club and with our clients. More impact in helping them and you have confidence in retirement. So, you see how these all flow together. If you don't, if you're just moving like a shark, sometimes these things can get lost. We're going to share this worksheet in 6-Shot Saturday. I challenge you to complete it.

With that, let's go answer some listener questions.

BOB ASKS ABOUT ROTH CONTRIBUTION LIMITS AS A LOW EARNED INCOME HOUSEHOLD

All right. our first question is from Bob, who has a dual contribution question. Good time of year for that. 

Bob says. 

“I have a question about Roth contribution limits as a low earned income household for 2024. I'm 59 years old. My wife is 53. I don't have an earned income, but my wife works a W2 job and will have roughly $22,000 in income in her box. Number one, this is the total of our household income. We don't really need the income from my wife's job for our living expenses. She mostly works for the access to medical insurance. 

If she contributes $12,000 of her earned income to her Roth 403b through her job, which doesn't reduce the $22,000 W2 box and we contribute $8,000 to our Roth IRAs, will the IRS come back someday and penalize us for a total Roth contribution of $28,000 which exceeds our earned income?”

The central question here is, can individuals contribute to a 403 and 401k or 401k and IRA based on their earned income? 

Bob, you're correct as long as your reported earned income is large enough to support each of your contribution types separately. The IRS doesn't disallow contributing to both a 401k or 403 and an IRA. You can check out IRS Publication 590A, the K. Bailey Hutchinson Spousal IRA Limit, where it's described verifying that you do indeed need to have enough earned income separately for each spouse's IRA contribution. But there's no additional 401 or 403 check described. 

One thing you do want to be aware of, given that she's looking at contributing such a large amount of her income to the 403, you may want to check if the employer plan has a cap on how much of her income that she can contribute. You are fine with the contributions that you described. I would just check on the maximum amount you can do into the company plan.

BRIAN HAS FOUND A CLEVER WAY TO KEEP HIS BRAIN ACTIVE

Next, we have a listener, Brian, who has found a way to keep his brain active and I think it's a great idea for anyone. 

“Hey, I've been listening to your podcast and reading your newsletters for about a year. I love the information approach that you encourage for retirement planning. I retired about 14 months ago and love retirement after a long and successful career in financial services. 

This week's episode featured some non-financial pillars hit close to home. The second pillar, which is mindset, focuses on having a growth mindset in retirement so you are not stagnant. I love the description of a growth mindset. One thing I have found and started to do is attend college courses. I live in New Jersey. The state has a Senior Citizens Learning program which allows residents over age 65 to attend any state college and take up to 6 credits semester on an audit or non-matriculated basis. I am now enrolled in a Communications Political Science class that meets on campus at Montclair State University, my alma mater, once a week in person. After overcoming the awkwardness of being in a classroom with young college age students, I love it. 

This is a great experience taking classes in subjects that interest me without the pressure of grades and doing all the work. This is my first semester taking advantage of the program.” 

This is a great example, Brian. Thank you so much for sharing this of looking for these types of resources in a lot of states. It sounds like in New Jersey, you can go to college and take classes and not have to worry about the tests and assignments just because you enjoy the subject. This year one of my Black Friday purchases which were there were very few, was Master Classes, the masterclass framework. I am going to work through some of the master classes that I have an interest in, just for improving my mindset, Brian. But the one thing that masterclass lacks that you found is that you are in a classroom with people, in this case young people, which is as good or better than just people in general, which is a whole different dynamic to learning. Whereas I'm going to be sitting on my computer in my master class, writing my notes by myself, watching it. In addition to these types of programs, there are extended education schools or departments in almost every university where you can take classes on all sorts of things. 

Bravo for you, Brian. Hanging out with the young-young people. Putting back on your old sweatshirt from your alma mater. Hopefully you still fit in it. Let me know how it goes.

JIM HAS A QUESTION ABOUT PAYING DOWN HIS MORTGAGE

Our next question comes from Jim related to paying down a mortgage. 

“Hey Rog, great pod. I listen faithfully and really appreciate your style and energy. I'm going to try to have energy here. 

We own a home and intend to sell it in three to four years. There's a $92,000 mortgage at 4%. We currently pay $800 a month, an extra 1200 in principal, having savings in our 457 of 850,000 and have assets in other places. We're trying to decide if paying this down is correct option for us. At this time, we intend to build a home for approximately $400,000 once our existing home is sold, approximately $180,000 and retire at that time as well. Upon retirement I will receive a lump sum of approximately $200,000 as well as a pension, proceeds from the home, 15k in sick leave, et cetera. 

I guess it's basically the old age question. Pay off the mortgage or invest with a twist of possibly saving towards down payment. I know you'll walk us through this and I can't wait to hear your thoughts.”

Oh, the pressure Jim. Okay, now that you have shared your thoughts, let me summarize this. 

We have a $92,000 mortgage at 4% with an $800 a month payment. You're currently paying $1,200 extra in principal. You have a 403 with $850,000. So that's tax deferred. You have a brokerage account with $60,000, Roth with $50,000, HSA with $20,000. So, you have about $60,000 in after tax liquid assets. The goal is that once you retire, you're going to sell this house, realize about $180,000 and use that plus the lump sum that you're going to receive of $200,000 to essentially pay for the new house, I don't know on the proceeds from the home, if you're factoring in that you're paying off the mortgage or not. But the central question is, do I continue to pay the extra $1,200 a month or even throw more to it in order to have the mortgage paid off? 

Given that your time frame is three or four years, Jim, I think you have a couple of options. The nice thing about paying extra to the mortgage is obviously you're saving on interest, but you're also creating forced savings in the form of principal reduction. You know, you're paying $1,200 a month, that's $14,400 a year extra principal reduction, which you'll recapture once you sell the house. Over four years that's forced savings of $57,600. You could argue you're getting about a 4% interest rate on that because you're not having to pay interest on the principal that you're paying off, although there's some deductibility in that principal. Alternatively, you could not pay extra on the house and save that $1,200 a month. Knowing that you have a three to four year timeline and invest that is likely for return of your principal, not return on your principal, meaning that you can invest that money in safe vehicles, understanding the time horizon and just trying to earn interest. Currently in treasury bills, I didn't look it up today, but they're in the 4% or 5% interest range. You're netting about the same, maybe a little bit more actually if you get a deduction on your mortgage interest. I personally like that approach better in this situation, Jim, for a couple reasons. 

One is the interest is roughly a wash. 

Two, you're going to be selling this thing in the near term. 

Three, this may be the most important thing is that you're building more after tax liquidity. So, you're almost going to double the amount in your brokerage account in the next four years by taking that $1,200 a month, putting it into the brokerage or high interest yielding money market or treasuries earning 4ish percent if you lock in those rates, whether it's laddering CDs or whatever. That gives you a lot more optionality. If you change your plan in the next four years it doubles your after tax liquidity. Then when you do sell your house, you'll pay off the remaining debt. You'll have the proceeds from that house plus the 200,000 that you have coming in when you separate service, plus the money that is invested in CDs and treasuries. Then that can go to the house. But what that gets you that you don't get as easily if you pay more on the mortgage, is flexibility. What if you need more liquidity sooner because life changes or you have an opportunity or something you know that requires a lot of capital comes up? By moving that $1,200 a month to your after tax investment account rather than the mortgage, you have optionality, whereas you don't have as easily if you pay it towards the mortgage. 

That would be my thoughts on that. That's probably where I would lean on this given the facts that you've shared. Thanks so much for hanging out, Jim. Hopefully that gives you some wisdom to make a good decision.

NANCY HOPES YOU HAVE A MERRY CHRISTMAS AND A WONDERFUL 2025

To end the questions for 2024, I'm just going to share some gratitude that was shared from Nancy.

“Hey Roger, Nancy here. 

I have been listening to your podcast since the pandemic started. I guess I like it. Long time self-employed, now semi, mostly retired at age 67. Not rich, not poor, doing my best. I really value the knowledge I have gained over time from you. 

Thank you and cheers.” 

Nancy, thank you and cheers to you. I hope you have a Merry Christmas and a wonderful 2025.

Let's get to a smart sprint. 

TODAY’S SMART SPRINT SEGMENT

On your marks, get set, and we're off to take a baby step that you can take in the next seven days to end the year and not just rock retirement, but rock life.

Grab the intention worksheet that we're going to share on 6-Shot Saturday. If you're not signed up for that, just go to rogerwhitney.com you can put in your name and email. You'll get one email a week, with resources from the show and take a little bit of time and reflect. If you have a partner, perhaps you give them the worksheet, you both fill it out separately and you share. That might create some interesting conversations.

BONUS STORY

All right, now it's time for the next mission log from Zigmund Chanceller who flew B-17s in World War II. We've been putting these on the record over the last weeks and we'll continue until it is done. 

Before I do that though, one thing that I love and I reflect on related to the podcast is being able to hang out with you here and think about this topic and try to figure out what to do to actually create a great retirement. All the emails that you send are wonderful, constructive, kind, and we're all figuring this out together. I like the fact that we're able to do this without any motivation to get you to be a client or anything like that. Obviously, we have the club and we talk about the club, but if you never join the club, I'm cool with that. I'm here to serve you and I thank you so much for all that you've done in my life because you all have poured into mine a lot. 

All right, mission number nine. 

“July 13, 1944. Ship number 183, sortie six target a railroad bridge near Heirosco, Italy. Could not see the target due to heavy overcast. Flew around North Italy looking for a target. Could not find one, but did run into moderate but accurate flak due to dumb tactics of the leader. Landed with bombs. Carried 12500 pound bombs. Mission 5 1/2 hours long altitude 19,000ft. Just flying around looking for targets.” 

So that was mission number nine. Hope you have a wonderful Christmas. I'll talk to you next year. 

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 reference is historical and does 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.