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The Wrong Retirement Number
48 Plays5 days ago
Phillip Ramsey of Uncommon Wealth Partners challenges the conventional approach to retirement planning, emphasizing the importance of cash flow over a fixed "retirement number." Exploring the pitfalls of solely relying on a nest egg, Phillip illustrates with examples the significance of understanding monthly income needs and leveraging guaranteed income sources like Social Security and pensions. This episode of the Uncommon Wealth Podcast offers insights into building a customized retirement strategy, encouraging a shift from traditional metrics to more personalized financial planning methods. Learn how to gain control and confidence in your retirement vision.
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Transcript
Introduction to Unique Wealth Building
00:00:00
Speaker
Everyone dreams of living an uncommon life. And the best asset you have to achieve your dreams is you. Welcome to the Uncommon Wealth Podcast.
00:00:13
Speaker
We're going to introduce you to people who are living uncommonly. We're also going to give you some tools and strategies for building wealth and for pursuing an uncommon path that is uniquely right for you.
Retirement Perception vs. Reality
00:00:26
Speaker
A recent study just came out of the American population of retirees and they believe they need $1.46 million dollars in order for them to retire.
00:00:37
Speaker
I'm telling you right now, if that's you to try to figure out what goal is by the size of your nest egg, this video is for you. Hi, my name is Phillip Ramsey. I'm the president of Commonwealth Partners. And every day I get to work with people like this and they have a very different goal in mind versus a number in their nest egg or their four one k So if this resonates with you, please keep listening. We're goingnna go through all the reasons why I think this is a bad idea and what you can do in order to change your paradigm and have an uncommon perspective about
Rethinking Retirement Numbers
00:01:10
Speaker
retirement.
00:01:10
Speaker
So where do we start? First, I saw this commercial. It was a long time ago. I can't tell you exactly when, let's say 15 years. It was from a financial institution called, I think, Voya.
00:01:22
Speaker
And their whole tagline for this commercial was, what's your number? And the whole commercial was all these people walking around Wall Street or New York, and they had this big, bright orange number over their head.
00:01:35
Speaker
And I was like, this is fascinating. and when the survey came out, i was like, I gotta talk about this. Because this is not the way that people should be thinking and viewing retirement. Why is that? Main reason is because we can't control exactly what our 401k will grow to or, heaven forbid, be subtracted from, and that's the way we're building our plans. That shouldn't be the way we do things. We can do things way differently and way more strategically with putting you in control, and that's why having a financial plan is so important.
Case Study: Diverse Retirement Strategies
00:02:08
Speaker
This goes down to just the basics of retirement. But let's just take, for example, two different personalities, two different perspectives. One, you have retiree A who has $1.5 the exact number, almost the exact number that they used in this retirement plan study.
00:02:26
Speaker
And then the other one had $700,000. So from immediate onset, the people who think they need $1.46 million dollars would be like, let's do the retiree A. That seems way better.
00:02:36
Speaker
And in theory, it might be. But really, when you look down at categories, cash flow that both retirees need, retiree B is way more conservative and in a better spot. So let's peel back the onion a little bit.
00:02:50
Speaker
So in retiree A, who has $1.5 million dollars of of money that he has in his nest egg or her, they need $12,000 month to live comfortably.
00:03:01
Speaker
That's $144,000 per year. And when you do the math, that withdrawal rate is very high. It's almost 10%. And we would say in the industry, like that's too high that they are, and we are in real big concern of running out of money before they pass away or graduate, as we like to say.
00:03:19
Speaker
And so that, because of the money that they need to live off of, and they have such a nest small nest egg for that withdrawal rate, they're in, they're again, they're in danger of running out of money very quickly.
00:03:32
Speaker
So let's go to retiree B. he has $700,000 in their account or she has $700,000 in their account and she only needs $7,000 to live. But she's factoring in social security and maybe a pension that she has and really the only thing after you add all those up, she had $4,000 of guaranteed income and then she has $3,000 that she needs to supplement her income with her retirement balance of $700,000.
00:03:57
Speaker
That's a way better withdrawal rate of $63,000 per year than the other side of the 10%. And so it all boils down to basically three things in retirement.
Key Retirement Planning Factors
00:04:08
Speaker
You ready for this?
00:04:09
Speaker
First thing, you going graduate? or when are you gonna pass away? Not a lot of people know that, but you can think about your parents and longevity of your parents and relatives.
00:04:20
Speaker
That plays a factor, but really no one knows when they're gonna pass away or graduate, like we like to say. ah The second thing is cash flow. How much money do you need per month in order for you to live comfortably?
00:04:31
Speaker
That is the biggest question that you get to solve, you get to understand, and you get to manage and own in retirement. And you can do this well before retirement. And that's the biggest thing and I think the biggest concern for a lot of people.
00:04:44
Speaker
How much do you actually need to live comfortably? The third thing is probably not as important, but how much money do you want to pass to your heirs and the people around you or if you want to give money at the end of the rainbow?
00:04:56
Speaker
ah So once we have those three numbers, we can really start kind of building a portfolio or a plan that really is customized to you. So, what does that mean for you?
00:05:09
Speaker
How do you do it?
Guaranteed Income's Role in Retirement
00:05:10
Speaker
So, I would say the guaranteed income of Social Security, and you can have a lot of different theories on if it's going to be there or not. We always plan for it's going to be there, and then if something doesn't happen, we would plan accordingly.
00:05:22
Speaker
But I always tell people, if you think about the highest voters in this country, if somebody tried to get rid of their Social Security, they're probably not going to vote for them. So, chances are you go we're going to have some kind of benefit there.
00:05:34
Speaker
So start with that. We call that your kind of base pay or your ground level of guaranteed income. You take yours, you take your spouse's. And again, a lot of factors come come into this play. So if you ever have any questions, please go to uncommonwealth.com and click on...
00:05:53
Speaker
set a meeting or whatever it is on the top. Let's talk, i think it is. And then we'll set a 15 minute consultation, we'll talk through all of this stuff. But once you have your guaranteed income of you and your spouse and your social security, and you know what the number is, let's say it's $7,000,
00:06:08
Speaker
and you have a guaranteed income Social Security at $3,500, and then your wife has a pension from an old job she has, um that's $500. So together, all of that is $4,000 that's coming in.
00:06:22
Speaker
And then you need $3,000 in order to supplement for your retirement. That's what your nest egg now needs to compensate.
Focusing on Monthly Income Gaps
00:06:29
Speaker
And then we have to factor in inflation and RMDs and IRMA and health insurance and all these different things. It gets pretty complicated, but back of the napkin just says, what is the gap that you need to cover or have your money that you've saved so hard? How much does that need to cover?
00:06:45
Speaker
That's a way more interesting number than just $1.46 million dollars in my retirement account. Why is that a number? And what do you need monthly in order to live?
00:06:57
Speaker
So if you're listening to this now, you need to figure out what is your gap and and what is it that my gap and what is my nest egg need to cover every month? And is it going to handle those things of like, let's say you retire and the market goes down.
00:07:11
Speaker
Super scary. And that is probably the biggest risk for a lot of retirees is that they haven't factored that in. So there's ways around that.
00:07:22
Speaker
There's different strategies that we can implement. But the last thing we want you to do is go be a Walmart greeter, front door greeter. you know like We don't want you to go back to that. So um that's kind of a way, but I do side with you of like there's a lot of noise in the market today.
00:07:38
Speaker
And a lot of people are nervous about making the right decisions as retirement.
The Role of Financial Advisors
00:07:43
Speaker
That's why it's so important to have a financial planner or I'd say advisor that you know, like, and trust that you can work through all these things together and that you feel a confident in your financial plan moving forward.
00:07:54
Speaker
If you don't have that, we would love to walk you through those decisions and all the different... questions and variables that we can factor in ah for you and your customized plan. so So now when you see a commercial like that, what's your number? You don't need to know your number. You need to know what you need to know, what you need to live off of every month.
00:08:14
Speaker
That's the number you need to do. The rest is up to us to help you understand and get you educated on all the different variables. Thank you for
Episode Conclusion and Call to Action
00:08:22
Speaker
tuning in. You've been listening to Philip Ramsey. Until next time, have a great one.
00:08:27
Speaker
That's all for this episode brought to you by Uncommon Wealth Partners. Be sure to visit UncommonWealth.com to learn more about our services. Don't miss an episode as we introduce you to inspiring people who are actively pursuing an uncommon life.