Retire With Style

Episode 135: RISA® in Action with James Matthews

In this conversation, Wade Pfau, Alex Murguia, and James Matthews discuss retirement income and the Retirement Income Style Awareness (RISA) framework. James shares his background in the retirement income space and his realization that traditional retirement planning advice was lacking. The conversation touches on the limited investment options in 401(k) plans and the need for a holistic view of retirement income. They also discuss the importance of risk management and the gaps in the current financial planning curriculum. Overall, the conversation highlights the need for a more comprehensive approach to retirement income planning. The conversation explores the need for a strategic approach to retirement income planning and the limitations of traditional retirement income paradigms. It emphasizes the importance of maximizing living standards in retirement and the need for open-mindedness in exploring different methodologies. The conversation also discusses the role of the Retirement Income Certified Professional (RICP) designation in addressing the gap in retirement income planning education. It highlights the shift towards a more client-focused and personalized approach to retirement planning and the potential applications of the RISA framework in other retirement decisions. The conversation concludes with a discussion on the importance of finding an advisor who embraces an open-minded and client-centric approach.
 
Takeaways
Traditional retirement planning advice often lacks a comprehensive approach to retirement income planning.
401(k) plans typically offer limited investment options and lack clear mechanisms for converting assets into retirement income.
The Retirement Income Style Awareness (RISA) framework provides a more holistic view of retirement income planning.
Risk management is an important aspect of retirement income planning that is often overlooked.
There is a need for improvements in the financial planning curriculum to better address retirement income planning. Retirement income planning requires a strategic approach beyond traditional paradigms.
Maximizing living standards in retirement should be the primary goal.
The RICP designation addresses the gap in retirement income planning education.
A client-focused and personalized approach is crucial in retirement planning.
The RISA framework can be applied to other retirement decisions.
Finding an advisor who embraces an open-minded and client-centric approach is essential.
Chapters
00:00 Introduction and Background09:59 The Retirement Income Style Awareness (RISA) Framework23:21 The Importance of Retirement Income in ERISA30:40 Applying the RISA Framework to Other Retirement Decisions37:05 The Importance of Finding an Advisor with an Open-Minded Approach
 
Links
Join the Retirement Researcher team for "Travel in Retirement: New Options and Opportunities," with Dan Veto, CSA, to learn how travelling in retirement is different from the vacations you took while you were working - and how you can make the most of these differences. Register to attend LIVE on 7/23/24 at 1:00 PM ET by visiting risaprofile.com/podcast.
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 

Episode 134 YouTube Live Q&A (not really): Answering Your Questions about Portfolio Allocation in Retirement

In this episode, Wade and Alex answer listener questions about portfolio allocation in retirement. They discuss the impact of low yields on TIPS and how it affects a retiree's portfolio. They also explore the optimal allocation of assets in taxable, tax-deferred, and tax-avoided accounts. Additionally, they address the role of annuities in retirement income and how they can replace the bond portion of a portfolio. They emphasize the importance of tax diversification and asset location. Finally, they provide insights on investing in stocks and the different factors to consider, such as value, small-cap, and REITs.
 
Takeaways
Low yields on TIPS impact a retiree's portfolio and may require a reassessment of risk and allocation.
Tax diversification is important, but the exact percentages in each type of account are not as crucial as asset allocation and asset location.
Annuities can play a significant role in retirement income by providing protected lifetime income and reducing reliance on other investments.
When investing in stocks, it is important to capture market risk and consider factors such as value, small-cap, and REITs.
Growth indices may not necessarily provide a premium over value stocks in the long term.
Chapters
00:00 Introduction and Small Talk02:45 Navigating Low Yields and Portfolio Allocation in Retirement09:15 Optimal Allocation of Assets in Taxable, Tax-Deferred, and Tax-Avoided Accounts25:58 The Importance of Tax Diversification and Asset Location26:41 Investing in Stocks: Capturing Market Risk and Considering Factors
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 133: YouTube Live Q&A (not really): Answering Your Retirement Planning Questions with Rob Cordeau

In this episode, Alex, Wade and Rob answer listener questions about retirement planning. They discuss topics such as asset allocation, selling RSUs, managing sequencing risk, and when to claim Social Security. They provide insights on diversification, tax implications, and the importance of considering both sequence risk and concentration risk. They also suggest strategies like creating a bond ladder and using IRA distributions to bridge the income gap. The episode ends with a plan to continue answering more listener questions in the next episode. Listen now to learn more!
 
Takeaways
Consider the risks and benefits of holding concentrated positions, such as RSUs, in your portfolio
Evaluate the tax implications of selling RSUs and consider the potential benefits of diversification
Use Social Security claiming software to determine the optimal claiming strategy for both spouses
Explore strategies like bond ladders and IRA distributions to bridge income gaps in retirement
Balance the preservation of principal with the need for growth and income in your retirement portfolio
Chapters
00:00 Introduction and Q&A Format05:42 Managing Concentrated Positions and Sequencing Risk27:43 Creating a Bond Ladder to Bridge Income Gaps29:54 Using IRA Distributions to Manage Tax Liability35:23 Balancing Preservation of Principal with Growth and Income
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 132: YouTube Live Q&A (Part 3)

In this conversation, Alex Murguia and Wade Pfau discuss various topics related to retirement planning, including glide paths, asset allocation, index funds, and tax planning. They address questions about implementing a rising equity glide path, asset allocation across different types of accounts, the performance of index funds, and the availability of withdrawal strategy software for retirees. They also touch on the topic of Medicare and HSA contributions. Overall, the conversation provides valuable insights into retirement planning strategies and considerations.
 
Takeaways
Implementing a glide path for retirement asset allocation depends on individual circumstances and goals, and there is no one-size-fits-all approach.
When considering asset allocation across different types of accounts, it is generally recommended to place tax-efficient assets in taxable accounts and tax-inefficient assets in tax-deferred accounts.
Index funds generally reflect the performance of the stocks in the index they follow, and their daily performance is based on the weighted average of the proportion of each stock in the index.
Withdrawal strategy software packages for retirees are primarily available to investment advisors and may not be easily accessible to individual consumers.
Individuals who work for employers with more than 20 employees can delay applying for Medicare after age 65 to continue contributing to their HSA accounts, but it is important to consult with HR and understand the implications of signing up for Medicare.
Chapters
00:00 Episode 131 Starts01:29 Asset Allocation and Glide Paths in Retirement04:07 Understanding Index Fund Performance07:10 The Drawbacks of Equal-Weighted Indices10:47 Tax-Efficient Asset Location21:46 Limitations of Withdrawal Strategy Software28:00 Managing Medicare and HSA Contributions32:33 The Value of Professional Advice in Retirement Planning
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 131: The Impact of the Election on the Stock Market and Retirement Planning

In this conversation, Alex and Bob discuss the impact of the election on the stock market and retirement planning. They emphasize the importance of looking at historical data and not getting caught up in the rhetoric and uncertainty of the election cycle. They also highlight the recency effect and how campaigns are information machines that can influence market movements. They discuss the complexity of interpreting campaign statements and the countervailing effects they can have. They also mention the upcoming webinar where they will dive deeper into the numbers and provide more insights. The conversation explores the relationship between presidential elections and the stock market. The hosts discuss whether there is a correlation between the political party in power and stock market performance. They also touch on other factors such as the height and handedness of presidents and their impact on the stock market. The hosts emphasize the importance of taking a long-term view when it comes to investing and retirement planning, rather than trying to time the market based on election cycles.
 
Takeaways
Look at historical data and avoid getting caught up in the rhetoric and uncertainty of the election cycle.
Campaigns are information machines that can influence market movements.
Interpreting campaign statements and their impact on the market is complex and uncertain.
Consider the countervailing effects of policy proposals and how they may impact the economy and stock market.
Join the upcoming webinar for a deeper dive into the numbers and insights. There is no clear correlation between the political party in power and stock market performance.
Other factors such as height and handedness of presidents also do not have a significant impact on the stock market.
Taking a long-term view and focusing on retirement planning is more important than trying to time the market based on election cycles.
Understanding historical context and having a framework for interpreting market events can help investors make informed decisions.
 
Chapters
00:00 Introduction and Setting the Stage00:29 Discussion on the Election and Stock Market05:08 The Recency Effect and Campaign Season07:20 Interpreting Market Movements After an Election08:46 The Challenge of Timing the Market Based on Current Expectations09:15 The Difficulty of Predicting Market Reactions to Campaign Statements13:14 The Volatility of Campaign Season and Uncertainty15:12 Considering the Impact of Policy Proposals22:38 Upcoming Webinar and Deeper Dive into the Numbers25:30 The Impact of Presidential Elections on the Stock Market33:51 The Relationship Between Election Years and Market Volatility37:25 Long-Term Investing and Retirement Planning41:16 Understanding Historical Context and Interpreting Market Events
Links
Register now to attend the next webinar with Retirement Researcher, “The Election and The Stock Market: Understanding the Effects on Your Investments” on 6/25/24 at 1PM ET hosted by Bob French. Visit risaprofile.com/podcast to reserve your spot!
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 130: YouTube Live Q&A (Part 2)

In this episode, the conversation covers various aspects of long-term care, including qualifying for long-term care insurance, alternative options for funding long-term care, and the role of Medicaid. Alex and Wade also discuss the importance of planning for long-term care and the potential challenges faced by individuals who cannot afford to pay for care. The conversation concludes with a discussion on how to invest funds set aside for long-term care. The conversation covers various topics related to financial planning and investment management. They discuss fee-only planners, annuities, engaging a fee-only planner, strategies to lower risk during retirement, buying whole life insurance for teenage children, and investing to keep up with inflation. They also touch on the reinvestment of dividends and capital gains for a 74-year-old to offset RMDs. The conversation ends with a lighthearted discussion about push-ups. Listen now to learn more!
 
Takeaways
Traditional long-term care insurance is difficult to qualify for if you have chronic conditions.
Alternative options for funding long-term care include hybrid life insurance with long-term care, annuity with long-term care, and deferred income annuities.
Medicaid can be an option for long-term care if you have depleted your other resources.
Investing funds set aside for long-term care depends on your liquidity mindset and the timeline for needing the funds.
Transparency and client preferences should guide the choice of compensation models for financial planners. Fee-only planners charge a fee for investment management and financial planning, while commission-based planners earn a commission on annuity sales.
Engaging a fee-only planner may be worth it if you have enough assets, typically around $500,000 or more.
Whole life insurance for teenage children can be used to protect their insurability in case of future health issues.
Lowering risk during retirement can be achieved through strategies like adjusting asset allocation, creating bond ladders, and building an income floor.
Investing in TIPS (Treasury Inflation Protected Securities) can help preserve the inflation-adjusted value of your principal.
Dividends can be taken out to offset RMDs (Required Minimum Distributions) for IRA accounts.
Both Wade and Alex need to get back on track with their push-up routines.
Chapters
00:00 Episode 130 starts00:17 Exploring Alternative Options for Long-Term Care Funding07:23 Considering Medicaid as a Long-Term Care Option14:35 Investing Long-Term Care Reserve Assets19:59 Transparency and Client's Best Interests23:34 Lowering Risk During Retirement Transition31:13 Reinvesting Dividends and Capital Gains for RMDs39:32 The Importance of Regular Exercise
 
Links
Register now to attend the next webinar with Retirement Researcher, "The Election and The Stock Market: Understanding the Effects on Your Investments" on 6/25/24 at 1PM ET hosted by Bob French. Visit risaprofile.com/podcast to reserve your spot!
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/retirement-income-planning-llm/ to download McLean’s free eBook, “Retirement Income Planning”

Episode 129: YouTube Live Q&A (Part 1)

In this conversation, Wade Pfau and Alex Murguia discuss retirement planning and how to determine how much can be spent from a portfolio without running out of money. They touch on the use of Monte Carlo simulations and the funded ratio approach. They also highlight the limitations of Monte Carlo simulations and the importance of considering the magnitude of failure and the potential for underspending in retirement. The conversation emphasizes the need for individualized planning and the importance of working with a financial advisor. The conversation in this part focuses on the funded ratio and its implications for retirement planning. The funded ratio is a tool that measures the ratio of assets to liabilities in retirement. It is used to determine if a retiree has enough assets to cover their retirement expenses. The conversation also touches on the relationship between withdrawal rates and failure rates, the role of long-term care costs in the funded ratio, and the impact of political and environmental uncertainties on retirement planning.
Takeaways
Monte Carlo simulations are a common method used in retirement planning to determine the probability of success, but they have limitations and can be sensitive to assumptions.
The funded ratio approach, which focuses on a fixed rate of return, can provide a different perspective on retirement planning and allows for more control over assumptions.
It is important to consider the magnitude of failure and the potential for underspending in retirement when using Monte Carlo simulations or the funded ratio approach.
Individualized planning and working with a financial advisor are crucial for determining how much can be spent from a portfolio without running out of money. The funded ratio is a useful tool for assessing retirement readiness and determining if a retiree has enough assets to cover their retirement expenses.
Higher withdrawal rates are associated with higher failure rates, so it's important to find a balance between spending and ensuring a successful retirement.
Long-term care costs should be factored into the funded ratio as a contingency expense, as they are a high probability, high-cost event.
Political and environmental uncertainties can be addressed through scenario analysis and contingency planning, but it's important not to let short-term events dictate long-term investment strategies.
The Retirement Income Challenge offered by Retirement Researcher provides an opportunity to learn more about retirement planning and create a comprehensive retirement plan.
Chapters
00:00 Introduction01:59 Retirement Planning and the Use of Monte Carlo Simulations08:24 The Pros and Cons of Monte Carlo Simulations25:19 Addressing Questions about the Funded Ratio33:08 Incorporating Long-Term Care Costs in the Funded Ratio
 
Links
Join the waitlist for the next Retirement Income Challenge by visiting www.retirementresearcher.com/challenge 
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 128: Long-Term Care Planning (Part 12): The Different Features of Long-Term Care Planning

In this episode, Wade and Alex discuss the different features of long-term care insurance. They cover topics such as waiting periods, benefit periods, benefit amounts, inflation adjustments, and methods of payment. They also touch on the administrative aspects of managing long-term care insurance and qualifying expenses. In this conversation, Alex and Wade discuss various aspects of long-term care insurance. They cover topics such as the definition of activities of daily living, the differences between policies, the option for couples to pool their benefits, the concept of hybrid policies, underwriting requirements, coverage for living abroad, liquidity and death benefit options, ways to lower premiums, and the importance of sharing your long-term care plan with family members. The conversation concludes with a discussion on implementation and monitoring of the plan, including the importance of staying healthy and reviewing the plan regularly.
 
Takeaways
Long-term care insurance policies have different features that need to be considered, such as waiting periods, benefit periods, and benefit amounts.
Waiting periods determine how long you have to wait before the benefits kick in.
Benefit periods determine how long the benefits will last.
Benefit amounts can be paid per day or per month, and the total benefit pool depends on the policy.
Inflation adjustments are important to consider to protect the value of the benefits over time.
Methods of payment include reimbursement, indemnity, and cash methods.
Managing long-term care insurance can be administratively burdensome, and it may be helpful to have a trusted person or professional assist with the process.
Qualifying expenses for long-term care insurance coverage depend on the policy and may include in-home care, assisted living, nursing home care, and more. Understand the definition of activities of daily living and how they are defined in different policies.
Consider the option for couples to pool their benefits in a joint policy.
Explore hybrid policies that combine long-term care insurance with other benefits.
Be aware of the underwriting requirements and shop around for the best health classification.
Check if the policy covers living abroad if that is a consideration.
Consider the liquidity and death benefit options in hybrid policies.
Explore ways to lower premiums, such as choosing a lower level of inflation protection or a shorter benefit period.
Share your long-term care plan with relevant family members and make sure they are aware of the policy and any care coordinators.
Implement and monitor your plan regularly, reviewing it annually and making adjustments as needed.
Stay healthy and take care of your health to reduce the need for long-term care.
 
Chapters
00:00 Understanding the Different Features of Long-Term Care Insurance06:10 Navigating Waiting Periods and Benefit Periods08:13 Determining Benefit Amounts and Inflation Adjustments15:21 Exploring Methods of Payment for Long-Term Care Insurance24:28 Qualifying Expenses for Long-Term Care Insurance Coverage24:56 Understanding Activities of Daily Living and Policy Differences27:17 Pooling Benefits for Couples in Joint Policies28:37 Exploring Hybrid Policies29:00 Navigating Underwriting and Health Classification30:36 Considering Coverage for Living Abroad31:38 Understanding Liquidity and Death Benefit Options33:05 Lowering Premiums through Various Strategies35:23 Sharing Your Long-Term Care Plan with Family Members37:57 Implementing and Monitoring Your Plan39:16 Staying Healthy to Reduce the Need for Long-Term Care
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/roth/ to download McLean’s free eBook, “Is a Roth Conversion Right For You?”

Episode 127: Long-Term Care Planning (Part 11): Traditional Long-Term Care Insurance Policies

In this conversation, Alex and Wade discuss traditional long-term care insurance policies. They address the declining popularity of these policies and the shift towards hybrid policies. They also cover topics such as premium payments, care coordinators, and the importance of starting early with long-term care planning. Wade emphasizes the need to read the specific details of the policy and the potential for premium hikes. They also mention the option of Medicaid for those with limited assets. Overall, the conversation highlights the considerations and factors involved in choosing a long-term care insurance policy. In this conversation, Wade Pfau and Alex Murguia discuss the different types of long-term care insurance policies, focusing on traditional policies and hybrid policies. They cover the key features and considerations of each type, including coverage options, premium hikes, and the use-it-or-lose-it aspect. They also highlight the advantages of hybrid policies, such as level premiums, relaxed underwriting, and the ability to tap into the death benefit for long-term care expenses. The conversation concludes with a discussion on the perceived disadvantages of traditional policies and how hybrid policies aim to address them.
 
Takeaways
Traditional long-term care insurance policies are becoming less popular, with less than 6% of Americans age 50 and older having these policies.
The direction is shifting towards hybrid policies, which combine life insurance with long-term care benefits.
Premium payments for traditional long-term care insurance can increase over time, and it's important to budget for potential premium hikes.
Care coordinators can be valuable in helping individuals find the right care options.
For those with limited assets, Medicaid may be a viable option for long-term care coverage.
Starting early with long-term care planning is recommended, as waiting too long can lead to health issues that may disqualify individuals from coverage.
Traditional long-term care insurance policies have coverage options for nursing home care, assisted living, at-home care, and other services, but they may not cover in-home care or respite care.
Hybrid long-term care insurance policies, which combine life insurance or annuities with long-term care benefits, have become more popular due to their level premiums, relaxed underwriting, and the ability to tap into the death benefit for long-term care expenses.
Hybrid policies offer more flexibility and liquidity compared to traditional policies, and they eliminate the risk of accidental lapses or premium hikes.
While traditional policies may have lifetime benefits, hybrid policies typically have finite benefit periods, but they may offer continuation of care riders that provide additional long-term care benefits beyond the death benefit.
Reviewing the language and features of your existing life insurance policy may reveal that you already have a long-term care benefit through an acceleration of death benefit rider.
Hybrid policies can be a better use of assets, as they reduce the need for a large cash reserve and provide the potential for higher returns on invested assets.
Hybrid policies have different names in the insurance industry, such as asset-based long-term care insurance or life insurance with a long-term care overlay.
Chapters
00:00 Introduction and Overview03:03 The Decline of Traditional Long-Term Care Insurance04:23 The Rise of Hybrid Policies06:20 Understanding Premium Payments08:00 The Role of Care Coordinators09:30 Considering Medicaid for Limited Assets10:22 The Importance of Starting Early26:45 Understanding Level Premiums28:37 Hybrid Policies: The Darling of Long-Term Care Insurance37:05 Different Approaches to Hybrid Policies41:02 Advantages of Hybrid Policies44:05 Flexibility and Liquidity of Hybrid Policies45:08 Eliminating Disadvantages of Traditional Policies
Links
 
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by Retirement Researcher https://retirementresearcher.com/. Download their free eBook, 8 Tips to Becoming A Retirement Income Investor at retirementresearcher.com/8tips

Episode 126: Long- Term Care Planning (Part 10): Medicaid as A Funding Source

In this episode, Wade and Alex discuss Medicaid as a funding source for long-term care. They touch on the importance of Medicaid planning and the different rules and qualifications that vary from state to state. They also highlight the need for specialized elder law attorneys to navigate the complexities of Medicaid. Wade shares his personal experience with his parents' Medicaid coverage and the benefits it provides. The episode concludes with a reminder to consider Medicaid as an option for parents who may not have sufficient savings for long-term care. Listen now to learn more!
 
Takeaways
Medicaid is a state-based funding source for long-term care that is generally considered a last resort option.
Medicaid planning involves shifting assets from countable to non-countable categories to qualify for Medicaid benefits.
Every state has different rules and qualifications for Medicaid, so it's important to consult with a specialized elder law attorney.
Medicaid reimbursements may be less than the actual cost of care, so it's beneficial to enter long-term care facilities before needing Medicaid.
Consider Medicaid as an option for parents who may not have sufficient savings for long-term care.
Chapters
00:00 Introduction and Personal Updates10:56 Discussing Films and Personal Interests13:33 Transition to Discussing Medicaid19:14 Qualifications and Asset Limits for Medicaid23:01 Medicaid Planning and Non-Countable Assets26:55 Personal Experiences with Medicaid Coverage28:25 Importance of Medicaid Transition and Considerations29:22 Conclusion and Preview of Future Episodes
 
Links
The Retirement Planning Guidebook: 2nd Edition has just been updated for 2024! Visit your preferred book retailer or simply click here to order your copy today: https://www.wadepfau.com/books/ 
This episode is sponsored by McLean Asset Management. Visit https://www.mcleanam.com/roth/ to download McLean’s free eBook, “Is a Roth Conversion Right For You?”