Amy: Tonight, do you think you're ready? Are you ready? We've got the signs that you are, in fact, ready for retirement. You're listening to "Simply Money." I'm Amy Wagner, along with Andy Shafer, who's in for Steve Sprovach this week. You know, Andy, you can do all the legwork in the world, right? Have your financial plan in place, and then all of a sudden, it's on the horizon, retirement. And the question is, am I really ready? And I think for so many people, it's a money question, it's a financial question, but there's also a lot more to it.

Andy: There's a number of things that you wanna keep in mind, you know, when you're nearing retirement. I think the first thing is, and, you know, this is pretty common and pretty inherent, that you must have adequate savings and investments. That goes without saying, you know, most people have a number in mind. When you're a pre-retiree to say, "I might need $500,000, $1 million, $2 million," whatever it is to meet your lifestyle when you retire, most people have a number in mind, and when they hit that number, maybe it's time for you to hang it up and retire.

Amy: Yeah. And I think there's a number of things that go along with that. Yes, you have money, but then I would also say that money is in different buckets, right? It's not all tied up in 401(k)s. We like taxable investments as well, taxable accounts as well. We also though think having an emergency fund is incredibly important. And I think it becomes even more critical for those of you who are either in retirement or getting close to retirement. Here's why. Ed Finke, right? One of the founders of our company...

Andy: Love him.

Amy: ...came back on the show last week and we were talking about the fact that for those who are in that boat, right, getting close to retirement or retiring right now, like, what a time this is. Your investments are down, inflation is high, you're paying more for everything. What do you do?

And Ed has always been really open about this. He went into retirement with an emergency fund, and, you know, we always say like six to nine months. His emergency fund was like two to three years, cash reserves that he is just going to live off of during market downturns. He's not gonna cash out when markets are down. You know, he is not going to worry about his spending. If you can get to that place, right, where you have not only ample savings and ample investments, but also ample money and cash liquid on the sidelines, you can go into a downturn like now and still sleep really well at night because you're okay.

Andy: Well, you know, when I was a young advisor, I thought cash reserves was for suckers. I thought, you know? But then...

Amy: Who needs that? And then reality hits you in the face, Andy.

Andy: Well, and then, you know, as I matured and got more experience, emergency cash comes in handy, particularly 2020 and what we're going through now. And if you're retired and you have an income distribution stream, it comes in handy. Because if you're taking out, let's say, $5,000 a month from your investment accounts to supplement your income, and all of a sudden the market goes down 20%, 30%, 40%, you can turn that distribution income stream off, turn that spigot off, use your cash reserves in the meantime so that you're not selling when the market's down.

And then when the market comes back, turn that spigot back on and then replenish your cash reserves. And so that came in super handy for me and my clients, you know, particularly in 2020, but also lately, you know, during this downturn that we're having in this bear market. So, you know, I've seen the utility of it, I understand the importance of it, and it has come in handy for not only myself but my clients as well.

Amy: Yeah. I would say another key factor that maybe you're ready for retirement is no consumer debt, right? You don't have a credit card balance. You're not carrying a credit card balance, especially right now when you've got the Federal Reserve raising interest rates, you know, so much this year. You know, you look at the fact that it's gonna cost that much more to pay off that debt. If you can go into retirement, and we always say this, money not going out is the same as money coming in. It's great at any point in your life to pay off debt, but when you get to retirement and you're living on a fixed income, you're essentially giving yourself a raise. So I think the same can be said for paying off the mortgage, right? That can make a lot of sense.

Andy: I think credit card debt is a killer. You know, anytime somebody comes to me and I look at their portfolio and, you know, I ask about their debts and they have credit card debt, that's one of the first things that we identify. Because it has high-interest rates and there's very high cost to borrowing on credit cards. As far as your home is concerned, you know, that is a big goal to have that paid off, you know, by the time you retire. And think about the stress that that relieves, if you have that big amount of your total budget and not even have to worry about it. For most of us, that's going to be the biggest purchase that we make in our lifetimes, and that's also gonna be your biggest monthly expense.

Now, on the other hand, you know, sometimes you have to figure out, well, you know, if I still have, let's say, $50,000 on my house as far as the remaining amount on the mortgage and you're only paying 2% or 3% and you have money that's in an investment account maybe making 8% or 9%, maybe it is in your best interest to continue paying that mortgage.

Now, it'd be nice to have that house paid off, but at what cost? So not in every instance does it make sense to pay it off if you're gonna be pulling it from another type of investment account that might be earning more than the cost of borrowing can be.

Amy: Yeah. I mean, to your point, I don't think there's a one-size-fits-all approach to doing this. It's just thinking through, "Hey, what makes the most sense for me?" You're listening to "Simply Money" tonight here on 55 KRC as we ask, are you ready? Will you be ready? Doesn't matter whether you're retiring next year or 20 years from now, these are the things you have to think through, and one of those is proper health insurance, right?

I mean, social security, you can start drawing at 62. For whatever reason, Medicare is not until 65, yet the average age of retirement right now is 62. So you have to figure out, okay, in those gap years, what is gonna make the most sense for me? Or even in retirement, if you are 65 or older, Medicare doesn't pay for everything.

Andy: Well, and the other thing is, is who knows how long it's gonna be 65, you know?

Amy: Yeah, that's true.

Andy: With life expectancies and with, you know, the government, maybe they increase that age down the road. You know, Amy, you and I, we're in our mid-40s. I'm not prepared to expect that Medicare is gonna be 65 for me, you know? And so in the meantime, you know, if you retire at 62, you can look at proper healthcare to be double the cost of Medicare. It might be $20,000 for you and your spouse, between the time of 62 and 65. And when you're on Medicare, you know, if you factor in Medigap programs or any supplemental type of healthcare, you're looking at probably half of that, maybe $10,000 between the two of you for the year. So you have to plan for that gap because it's gonna be expensive.

Amy: Yeah. It's so expensive. I think the latest numbers I saw out from Fidelity are $380,000 at the average couple retiring today can expect to pay out of your pocket over the course of the rest of your life in healthcare expenses alone. It can be extremely complicated. When you're working, often you're on a family plan for health insurance. When you get to the Medicare age, you're on separate plans with separate costs. And also different things might make sense to each of you in different years.

Say one of you is diagnosed with something, and all of a sudden, a specialist that you were seeing is no longer covered by that policy or some kind of medication that you were on. Well, the next year during open enrollment, it makes a lot of sense for you to get out there, shop. Again, I've seen people who can save hundreds, thousands of dollars a year by just making sure that during open enrollment, they're checking back in to make sure that their current health insurance plan is the best one for them.

Andy: Well, and you also think about the fact that, you know, healthcare costs increase every year at a greater pace than your general cost.

Amy: Oh, way outpaces inflation and you think about inflation now.

Andy: Right. I mean, the cost of milk and eggs continues to increase, but the cost of healthcare increases dramatically more than that. So if you're younger, if you're our age, you know, you have to expect, that $380,000 figure that Fidelity ran, that can be significantly more.

Amy: Way higher.

Andy: That can be significantly more in 10 to 15 years. So you wanna make sure that you plan ahead because healthcare costs are gonna be one of your biggest expenses after you retire.

Amy: Yeah. And then speaking of complicated, how about social security? Yeah. I mean, any kind of stuff...

Andy: And it used to be more complicated.

Amy: Yes. Any kind of government program, like, clear as mud, we say, I think all the time there's 81 different claiming strategies that a couple can make, 81. And then you add into that when you claim, at what age, and then does it make sense for your spouse to take half of your benefit or to claim off of their social security? It can be incredibly complicated, but getting to that point of retirement and then being like, what the heck am I gonna do, you don't wanna wait to that point.

Andy: Well, and you wanna max out your social security as much as possible. And when I say max out social security, I don't mean necessarily wait until you're 70 to take social security. What I mean is, is that you have to understand how social security works. You should work at least 35 years to collect your full amount because a social security administration calculates your benefit using your top 35 earning years as part of the calculation. So let's say you only worked 30 years, you know, those extra five years that you haven't worked are gonna be putting up goose eggs. Those are zeros.

Amy: Right. I think about when my kids were little, like, for several years I worked part-time. I didn't make much. And so I will definitely, as I get closer to retirement, start looking at those calculations. And then once you understand how the program works, to your point, Andy, you can say, "Okay, maybe I'm gonna work two extra years, or three extra years."

Andy: Right, because you might be in some of the highest earning years of your career.

Amy: Knocking those lower earning years out of the equation, which can make a huge impact on how much money that you're actually pulling out of social security. These are the kinds of things that it is just so key to understand. I'm gonna throw something else in here. A plan for long-term care, right?

Andy: Huge.

Amy: You can have every other box checked, and all of a sudden, if you or your spouse has to go into skilled care nursing care facility, we're talking about $100,000 plus a year. You can go through everything that you have saved for decades in just a couple of years.

Andy: Yeah. And the thing about it is, is that long-term care insurance is super expensive. So if you have the forethought and the planning to try to generate enough wealth where you can self-insure.

Amy: Self-insure.

Andy: Meaning that you have enough money if you do need long-term care, that you can afford it yourself, that's ideal. Because long-term care insurance, you know, 10, 15 years ago was fairly affordable, but now it's really not. And to pay that type of premium for a benefit you may or may not need, to me, doesn't make a lot of sense. So if you, again, got out in front of it and tried to generate as much wealth as you can in the instance that you might need long-term care, hopefully you can pay for it yourself.

Amy: Yeah. And I'm gonna go somewhere else here that has nothing to do with money when it comes to retirement, and that is what is your plan for your time?

Andy: Huge.

Amy: And don't just say like, "I don't care. Not working is enough for me," because it's really not. And so many people that go at it from that direction end up a couple of weeks in being like, "I don't even know." I think one of the best questions to ask yourself as you get close to retirement is how much of your identity, and I mean, this is a look yourself in the mirror kind of very truthful question, how much of your identity is wrapped up in what you've always done? Right? If you're at a dinner party, you're meeting someone at a game for the very first time, and the first thing you're talking about is what you do.

Andy: I'm a financial advisor.

Amy: Right. Exactly. Well, good luck to you because when you're no longer a financial advisor, like, then what are you? And for a lot of people, that becomes such a difficult transition. So it's not just about what am I even gonna do with my time? It's who am I now? And these are all things you have to think through. I always suggest kind of a trial run-through of retirement for several weeks. But all of these things have to be a component of this.

Andy: Well, and you wanna make sure... You know, what type of hobbies do you have? What types of interests do you have? Would you like to learn about a different area? Would you like to pick up a hobby? Maybe you would like to volunteer or maybe you would like to pick up a side job after you retire. You know, my goal in life is to work on a golf course someday. You know, so think about the things that you enjoy. Maybe you can incorporate that into your life after you do retire.

Amy: Here's a "Simply Money" point. If you can check off all the boxes that we just talked about, there's a really good chance that maybe you are ready to retire, or you certainly will be when your time comes. Coming up next, help for a man with too many investment accounts and what to do when your portfolio has too much stock in just one company. You're listening to "Simply Money" here on 55 KRC, the Talk Station.

You're listening to "Simply Money." I'm Amy Wagner along with Andy Shafer. If you can't listen to "Simply Money" every night, well, subscribe to our weekly podcast. It's the best of our show, the best of "Simply Money." It's on the iHeart app or wherever you get your podcasts. Straight ahead at 6:43, why changing the way that you think about money might really help you later in life. We will explain.

You know, Andy, sometimes you just hear something that someone says about money and you're like, "Man, that is true today, tomorrow, yesterday. It doesn't matter." So there's some interesting quotes that we came across just recently that, man, still hold water today. One of them about inflation. So definitely worth mentioning. This is from the late writer and humorist, Sam Ewing. He wrote, "Inflation's when you pay $15 for that $10 haircut you used to get for $5 when you actually had hair."

Andy: Well, I can relate to that since I'm generally bald. So that was a good one. There's another one that I saw from Mark Twain, and I really like this one. And he said, "There are two times in a man's life where he shouldn't speculate, when he can't afford it and when he can." And I think that one really hit home for me, because, you know, in the industry that we're in as far as investing is concerned, it just tells you that, you know, get-rich-quick schemes usually end in a disaster. Long-term investing is the way to go. Try to hit singles and doubles and try not to speculate, or at least leave the speculation for money that you can afford to lose.

Amy: Right. Hello, crypto. Right? Hello, meme stocks? There's so many things, especially... I don't know what it's been since this pandemic, but people had more money, right? You couldn't spend it on things. You likely had stimulus money coming in, and that's when all these weird investment options that were just so crazy. You know, I'm gonna give Shaq my money in the SPAC because Shaq is obviously this genius investor, and whatever he wants to do with my money and decides to invest it, and I'm cool with that.

Well, does that really make sense? I think Mark Twain hit the nail on the head right there. Another one, Nobel-winning economist, Eugene Fama, "I'd compare stock pickers to astrologers." But I don't wanna bad-mouth astrologers like, "Ouch." But he's kind of right.

Andy: Well, here's the thing. I like astrology, but I particularly like astronomy, so I can understand why the stock pickers are compared to astrologers because, you know, when you get into that realm, you're kind of basing it on hearsay and just...

Amy: When you were born. Yeah.

Andy: Yeah. You know, like the thing about when you get a fortune and a fortune cookie, well, that can apply to anybody, right?

Amy: Exactly.

Andy: And that's why I feel like Friday to the 13th is kind of weird because if you're looking for trouble and trying to spot everything bad that happens to you in a day, you're gonna find it. And so now, you know, for any astrologers that might be listening, I'm not saying that it's a bad thing and it is a lot of fun, but stock picking is usually gonna end in disaster.

Amy: Yeah, without a doubt. And another one worth mentioning here, George Carlin, super funny comedian, "Trying to be happy by accumulating possessions is like trying to satisfy hunger by taping sandwiches all over your body." I love that one. And it's interesting too because that's a realization that I have come to myself over the past few years, right?

As there is maybe a little more income, you know, not living paycheck to paycheck, like when the kids were little and everything was so crazy, I'm still going to prioritize where that money goes because obviously, I wanna be able to retire and I wanna be able to make sure we can help the kids with their educations a little bit.

And I've realized like, you know what, the stuff doesn't make me happy. It's making memories and the trips and the vacationing and the, you know... Last night, you know, just a few days before my kids go back to school, we could have just sat around here and I said, "No, we're going to the driving range."

Andy: Nice.

Amy: You know, just to do something together that makes memories, that we spent money that we probably wouldn't have spent otherwise. But I think it was money well spent.

Andy: Yeah. You know, the new purse or the new fishing rod isn't always going to make you happy or it might for an instance, but I think generally speaking, if you're not happy inside, you're not gonna be happy buying shiny new objects.

Amy: Yep. So, switching gears, what are your money questions? Because everyone's got them. Tonight, it's time to ask the advisor. You've got a question, send it to us, asksimplymoney@allworthfinancial.com. Again, asksimplymoney@allworthfinancial.com. First question tonight comes from Pete who lives in Cheviot. As I've saved over the years, I've periodically opened new investment accounts to put that money in. Now I've got eight different accounts, having trouble keeping up with what's in what account. Should I simply combine these accounts?

Andy: Maybe, it depends. If the registrations are the same, you can combine them. So let's say, for instance, you have an individual account with Fidelity and you have an individual account with PIMCO, you can certainly combine those. If you have an IRA, you know, with Charles Schwab and an IRA with TD Ameritrade, you can combine those as long as the registrations are together. And I would advise you to consider that.

You know, I see a lot of people that have money all over the place and they can't figure out what's what. And particularly from an estate planning point of view, you wanna make sure you get all that tightened up so that you can make sure that your beneficiaries don't have to sift through all of that and try to figure out what's what.

Amy: Yeah, Pete, what you cannot do is combine accounts, say you have money in a Roth and you have...in a Roth IRA, and then you have a regular IRA. Okay? If you wanna move that Roth money into that traditional IRA, you can, but you're going to...it's gonna trigger a taxable accounts, right? That's a Roth conversion. It may or may not make sense, it might bump you up into a higher tax bracket and that kind of thing.

So yes, if you have eight different traditional IRAs, absolutely, you're gonna drive yourself crazy. Combine, combine, combine. Just make sure you understand what the tax treatments, right? And if there are different tax treatments on different accounts, then those accounts will have to remain separate. Next question comes from Bob and Kenwood. My company recently granted me stock. Now that stock though makes up more than 10% of my portfolio, so what can I do to bring that percentage back down?

Amy: Well, Bob, I think it kind of depends whether that 10% is in a 401(k) that requires 10%. You know, I think specifically for General Electric, I think they require at least 10% of their security within that portfolio. However, if it exceeds 10%, anything above that, you can certainly diversify. If it's in an IRA or an individual account for you at this point, you can certainly try to sell some of those securities, you know, over time, dollar cost to average and get out of that position.

Because generally speaking, anything over 10% in an individual security is a red flag for me and for most advisors because you have a concentrated position, and that can significantly hurt your overall retirement if something happens to that particular company.

Amy: Here's how it happens, right? Apple, right? You feel like Apple can do no wrong, and so you start buying the shares of Apple or Facebook or locally, what we see much more likely is Procter & Gamble, right? You work for Procter & Gamble, your paycheck's coming from Procter & Gamble, you've got it in your 401(k), you've got stock options, and you look at your combined portfolio, everything that you've saved, and it's more than that. So you just need to make sure that we keep it at about 10%.

Coming up, finding a long-term care facility, one of those important decisions you can make. We're gonna look at some of the key factors to look for next. You're listening to "Simply Money" here on 55 KRC, the Talk Station.

You're listening to "Simply Money." I'm Amy Wagner, along with Steve Sprovach. I remember when my kids were little, trying to pick the perfect preschool for them, the perfect schools. And as you get a little older and maybe your parents get older, on the other end of the spectrum, it might be finding the right retirement community for your parents or someone you love.

Joining us tonight with just some great perspective on that, as always, is our estate planning expert from the law firm of Wood + Lamping, Mark Reckman. Mark, I really think about how much care and time and love I put into choosing those schools for my children. And, you know, I'm not at a point yet where my parents need to look into these things, but I think, gosh, it must feel very, very similar.

Mark: Well, and it's coming for all of us, Amy, we all are gonna have to face this personally, or we're gonna probably face it on our parents' behalf before that.

Amy: So what do we need to think through? Where do we even begin? Because I think often, this is a pretty emotional time, right, Mark? I mean, a lot of time, parents aren't ready to leave their houses. It's a sad time to think that maybe they need that sort of extra help, yet here you are.

Mark: Well, and the whole thing for most people, it just seems like a big black box. They don't really understand the basics. So what I thought we...what we do today is to just talk about a few of the basics.

Amy: Sure.

Mark: In the retirement community business and the nursing home business, there really are three levels of care. And these categories are very vaguely defined. In other words, there's a lot of blurring between these lines, but there are three categories. First is independent living, which is like living in an apartment with your own kitchen and your own space, but you're in a community of other people of similar age and in the community that provides a lot of support.

The second category is assisted living, which looks and feels a little like dormitory living. In other words, you usually live in some kind of a community hallway, a common hallway. The facility provides meals, the facility provides all the housekeeping, medication administration, and that's called assisted living. And then last but not least is nursing care, which is also called skilled care. And Amy, that looks and feels a lot like being in a hospital.

Amy: You know, Mark, I think back to my grandparents, years ago, my grandpa was diagnosed with Parkinson's when he was 86. He needed to go straight into skilled care. He needed to go straight into a nursing home. And my grandma wanted to be close to him, but she didn't need that kind of assistance. So we found a place that was attached, that had assisted living near skilled care.

And if I hadn't been through that experience, I probably wouldn't think about it this way, but I think I would probably want something that offered all three so that maybe independent living makes sense now, but as maybe health deteriorates, you're not having to move them around a lot.

Mark: Well, that's exactly right, Amy. As you can imagine, the market has all kinds of choices. There's all kinds of different options. Some facilities just operate on independent living, senior apartment living, that's it. Some are just assisted care. And in fact, in the last 20 years, there's been a real boom in places that offer assisted care. And then last but not least, there are places that are strictly nursing homes. But to your point, there are facilities that offer all three levels of care, and we have a name for that. We call that a continuous care retirement community.

Amy: Yes. So that would be one of those things that just...you can transition and transition. You know, I think, Mark, for a lot of people though, they just want to stay home. And how do you help figure out whether, gosh, like maybe I'm worried about my parents being in the home by themselves. Are they still safe? Is there a way to find some assistance in the home? Or do we need to make this transition to kind of somewhere else living?

Mark: Well, certainly, you can hire help to help keep people in their homes. And Amy, what you find out is that this sneaks up on us gradually. You know, at first, it's just finding somebody to cut the grass, but then all of a sudden, it becomes somebody to help clean the house and maybe somebody to come in and do the laundry. Oh, you know, can I help mom with her grocery shopping? These are small tasks, but as they grow, as they increase gradually over time, you need to hire somebody to come in and do these things for you.

And there's nothing wrong with doing these things in your home, but it is different. It's a different experience. Number one, it's expensive. Facilities, if you hire from an agency, you're gonna pay $22 to $25 an hour, and you're gonna have a minimum of four hours a day. If you hire privately, you're gonna pay certainly in the $18 to $20 range, but you're also gonna have a lot of legal paperwork that you gotta pay. The social security, the FICA, the FUDA, withholding taxes, workers' comp, unemployment, insurance. It's a fair amount of paperwork.

Amy: Okay. And also, you know, a good thing to think about here too is, and we have a family member who needs in-home care, it's great when they're super reliable, but finding that kind of reliability to your point can be tough where if you're in a nursing home, someone calls in sick, there's other people that can pick up the slack.

Mark: Well, that's exactly right. It's really hard to find stable help. And it's hard to find a backup system. Even if you hire from a nursing service and bring a service into your home, they're having the same challenges. You won't get the same worker every day. And by the way, Amy, this has become particularly a problem in the course of the last five years. Unemployment is down, the healthcare industry has been in turmoil as a result of the pandemic. It's hard to find good people. It's hard to find mediocre people.

Amy: Yeah, exactly. So where do you begin? Like where do you say that you begin? If you have determined that maybe being at home is not the right decision for your loved ones, where do you even start?

Mark: I think the best place to start is deciding what level of care you need. And the idea of having a retirement community that offers a full range of care is a big plus for many people. And that's, as we said, a continuous care retirement community. I think the second most important factor is location. You want a location that's convenient for your family, because what I have learned over time is that the people who get the best care in any setting, whether it's a hospital setting or a retirement community setting, the people who get the best care are the people who have a support system and an advocate, the people who have family members checking in on them regularly. And if you make that easy, it's more likely to happen.

Amy: I think another consideration too, Mark, and I've heard many people who've been in this situation, your parents have resources and assets when they move in, but these facilities are incredibly expensive and they can blow through a lot of money quickly. All of a sudden, there's no more resources maybe left to pay for these facilities and they're ready to transition to Medicaid. The question is, does that facility take Medicaid or do you have to move them again?

Mark: Well, that's exactly right. So once you've decided, you know the level of care you need, and once you pick the neighborhood you wanna be in, then the next question is, do you want a private pay facility or a facility that offers Medicaid as you just described? And for many, and I would say most folks, the Medicaid option's an important one. There aren't that many of us who can afford to pay privately at $100,000 to $120,000 a year that can afford that for a few years or even a couple of years. It's expensive. Especially if there's a spouse living in the community that needs some of that family money just to live in the home.

Amy: You know, and Mark, I think for a lot of people too, when you're starting this, and again, it's a very emotional time. Having other people who have walked this path before you to make recommendations, hey, we checked out this place and here's what we've thought about it. This was a good fit for my mom, or this is why we didn't like this for my dad. But talking to other people can be a great place to start as well.

Mark: Ask around, ask your friends, ask your neighbors, coworkers. But in that process, I warn people to be careful about the advice you get. Be sure that the advice you get comes from people who have personal knowledge, that they have the experience themselves because there are so many rumors and so much gossip in this world. You have to be careful about people who repeat information that they're not sure about, or that they don't understand accurately.

So when you ask your friends and neighbors, and they are great resources, listen carefully to be sure that they are talking about their own personal experience and that they're being both objective and realistic about what they experienced. There are services on the internet, by the way, placement services. Now, you gotta be careful about those because they are commission-driven, which means that if you sign up for one of these free services on the internet, they will find a retirement community for you, but their list of options will only be those facilities that are willing to pay them a commission, the internet service, a commission.

And that may or may not include the full range that you want. It may not be in the neighborhood you want. So you gotta be a little bit careful about these free services because they have their own compensation strategy, and that ends up being an agenda for them that may not be your agenda.

Amy: And also, I would say beyond any research that you do, right, you can go to medicare.gov, you can even hire an independent case manager. Make sure you're going to these places, checking them out. Does this feel like a place that's a good fit for your loved ones? You know, is it clean? How are other residents acting? How do they seem like they're treated? All of those things are worth considering during this time. Great insights as always from Mark Reckman, our estate planning expert from the law firm of Wood + Lamping. You're listening to "Simply Money" here on 55 KRC, the Talk Station.

You're listening to "Simply Money," I'm Amy Wagner along with Andy Shafer. Straight ahead, the danger associated with those free trials you sign up for. So when you think of retirement, I think, Andy, so many people are like, "Just give me a number. Is it a million? Is there a formula where I can just plug in some numbers, and voila, I have it?" And gosh, it would be really easy if that were the case, if it was a number or a formula that you could use.

But I think you have to start by asking yourself a question regardless of what age you are, if you're 60 or 26, what does retirement look like for me? And it'll change through the years, but just generally right now, am I gonna wanna travel a lot? Am I going to wanna stay close to my kids? Am I gonna wanna spend a lot of time with the grandkids? And then when you kind of figure out what that looks like, you can come to maybe a number that supports your own vision of retirement.

Andy: Yeah. I have clients that...you know, some clients spend $24,000 a year. Some clients spend $240,000 a year. But equally as happy, right? It's just a matter of your lifestyle. And I think, you know, there really is no specific number, but you do have to give some thought to what retirement looks like. You know, what do you like to do? What's the expense? You know, how much does it cost? If you like to travel, budget that and find out what that looks like.

A lot of times when I meet with a client that's about to retire, you know, we try to reverse engineer and say, "Okay, well, what do you spend right now while you have an income coming in, first of all? And let's make sure that we can at least meet that lifestyle now. And then if you've planned and saved well, maybe you can do more." And that's usually the exciting part for me, is to tell people, "Hey, maybe you can spend a little bit more." So whatever it is you like to do, do more of it.

Amy: Yeah. Well, and I think for so many people too, part of the equation too, is estate planning, right? Do you want to bounce that last check or do you want to save money for the kids, you know, and pass it on to them? That also becomes part of that equation and how you're gonna live in retirement. But it starts with that vision and then figuring out, okay, what does it take to get from where I am right now, however old you are with however much you have saved, to that point, and how do I do it well?

And there are pitfalls along that path, and I think one great one to point out is kids or family that are asking, like, "Hey, can you help with college? Can you help with this? You know, this thing just came up." Far too many people, and of course, you wanna help your family, you wanna help your children, but don't put on your own financial oxygen mask first, and then you're left in a world of hurt.

Andy: Yeah, I see that all the time. Most people tend to...you know, whatever's left is left for their beneficiaries. That's generally the approach. And if they can leave something to their kids, you know, so be it. However, I come from a family that's very disciplined German Catholics, right? And my folks are my clients, and I try to get them to spend their money all the time. And they are in these habits where they just can't do it. They've done it their whole lives, still cutting coupons, still packing lunch, doing all those types of things.

And so it's very difficult sometimes to get out of those habits. But at the end of the day, you know, I tell people, I say, "If you don't fly first class, your kids are going to, so consider spending your money as long as you have a plan in place and allow for you to utilize that money to do whatever it is that you like to do."

Amy: Yeah. And one of my favorite stories about one of our clients at Allworth has to do with that, right? Hey, yes, you can fly first class, right? And then it's like, wow, this whole new awakening of, "Wait, I actually have worked all these years and I've saved this money and I can spend it in this way." And then a couple of years later, same client calls back and, "Hey, I think I'm going to charter a plane for my family to go on this vacation." It's like, "Whoa."

Andy: Whoa, whoa, whoa, whoa.

Amy: Okay. We said first class, not charter an airplane for your family, right? And that's our job. That's our job to say, "Hey, you can do this, but hey, maybe not that."

Andy: Well, I think you have to understand that money is a tool, and the work is never-ending. So even when you retire, you still have to utilize that money and put it to work. Make sure you continue to invest it properly so that it continues to outpace inflation so that you can meet your needs. Ideally, if you are able to have enough wealth where the interest or gains from those investment accounts satisfy whatever your income needs are, that's ideal. That's the sweet spot where, you know, your balance remains the same, but you're generating enough income and interest to meet all of your needs. But, you know, most of the time, the most worry-free retirements are enjoyed by people who saved enough money. So make sure you have a plan and make sure you stick to it.

Amy: Here's a "Simply Money" point. Your money exists to work for you, right? It's a tool to free up your life and your energy so that you can devote yourself to whatever your purpose is when you get to that point in retirement. Coming up next, what to do when those free trials aren't so free. You're listening to "Simply Money" here on 55 KRC, the Talk Station.

You're listening to Simply Money. I'm Amy Wagner, along with Andy Shafer. I'm gonna ask if this has happened to you, but I feel like it's happened to just about everyone at this point. Someone tells you about, I don't know, this great app, this streaming service, some kind of a subscription, or you run across it online, you wanna try it, right? There's a free offer. So you put in your credit card information just to get the free offer, and then all of a sudden, you're charged and you're charged, and you're charged again. And good luck figuring out how to cancel that subscription

Andy: Well, I'm kind of going through that right now. During the NBA season, I'm a New York Knicks fan, and I did one of those where you get two months that, you know, for a couple bucks or whatever it is, and then it automatically rolls into a regular subscription. Well, the Knicks stink and so I stopped watching that.

Amy: You gave up. Yeah.

Andy: But all of a sudden, you know, the major charges started coming after the two months trial, and it was a pain in the rear to try to figure out how to get that unwound. So yeah, I've certainly gone through it. Another one is "The Wall Street Journal." I remember doing a two-month subscription for them, and it was, you know, nine bucks or whatever it was, and then all of a sudden, you know, I get...

Amy: It's not cheap.

Andy: It's not cheap, but, you know, I look at it as part of my job. I need to have that subscription. But it was a surprise for me when it came through in my bank account. It said, you know, $45 or whatever it is.

Amy: So often, you sign up for these free... So I just did this. I was talking to a friend not long ago, and she tried this weight loss program. She was like, "Oh, it's so great. My husband and I did it. We lost 30 pounds each." I was like, "Oh, I've gained a few pounds lately. I'm gonna try this free trial thing." Well, I get in my email yesterday $120. And I was like, "Wait a second. I haven't even logged onto this website yet to even see what the plan looks like. Like, no, thank you." We all learn these lessons, unfortunately, the hard way.

In fact, there's a recent bank rate survey that found that more than half of us who were surveyed have said, "This has happened to me," unwanted charges because you tried one of these free trials. So we are not alone. I think this is brilliant. If you are going to try these plans, get a prepaid gift card. These prepaid Visas, those prepaid MasterCards, put that information in, and make sure there's like $20 on it or whatever, just enough to...

Andy: Enough to cover the free trial?

Amy: Yeah. Yeah. So the trial is covered but then any additional trial, there's no funds there and they have that credit card number, not your credit card number where you're gonna spend now the next 10 days of your life trying to find the one small page on that website where you can actually cancel that sucker.

Andy: Yeah. Let them come after you, as opposed to the opposite, right?

Amy: Absolutely.

Andy: I think, you know, this is a little bit easier said than done, but I think it's also important to review what your subscriptions are on a regular basis too. You know, I go through my phone probably once a quarter and I look at what my subscriptions are and I think, "Man, I haven't used that particular app in so long. I need to get rid of that and unwind that." And so I would advise to try to take some time to go through what your subscriptions are and sit down and figure it out. I know that's a difficult task and I'm not very good at it either, but it will help you in your long-term savings.

Amy: Study after study has shown that the average American thinks you pay about, I don't know, 80 bucks a month in subscriptions. And then when you actually get down to it, it can be like $200, $230, $240 a month. So to your point, absolutely. This can be something that can kill your budget. Make sure you're checking in. Ask yourself, am I actually using these things? Cancel what you're not using. You're listening to "Simply Money" here on 55 KRC, the Talk Station.