Join Al Smith as he delves into effective retirement strategies to maximize income and explore opportunities for older adults, including board memberships and Roth conversions. Discover how thoughtful planning and strategic risk management can extend your financial security well into the golden years. This episode equips you with practical tools to cultivate a sustainable and fulfilling retirement journey.
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Welcome to Retirement Unpacked with Al Smith, owner of Golden Eagle Financial. You want a retirement plan that alleviates your fears about the future so you know your money will last. As a chartered financial consultant, Al Smith will help you find a balance between the risk and reward of the market and the safety of your retirement income. And now, here’s your host, Al Smith.
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welcome to another program of retirement unpacked i want to thank you for tuning in i’m sure there’s other things that you could be doing and before i dive into our topics i wanted to encourage you if there are some topics or things that you’ve heard on this show that you would um like to have some questions answered give my office a call you don’t have to come in for an appointment but give my office a call which is 303-744-1128 and I get a lot of people who call in that just have questions and they don’t necessarily schedule an appointment or anything like that but they do get something cleared up in their mind that they were previously cloudy about Today, we’re going to continue the discussion I had earlier about longevity. And I’m not going to reiterate everything, but I think we all understand that medical science is keeping us alive longer. We already talked about that. And we talked a little bit about those blue zones, certain areas of the globe where people live into their 90s and 100s with great regularity. But what does that mean for us if we’re going to plan to retire and our parents are still living and there’s some longevity in our DNA? What should we do to make certain that our money lasts? What can we do to make certain that we won’t run out of money? What can we do to possibly generate a little extra income in retirement? Well, these are some things that I’m going to talk about this afternoon. The first one, and it’s very basic, but it’s one of the most important components of nearly everyone’s retirement, and that is you can, if you think it’s in your best interest, talk to your advisor, talk to me. You can postpone declaring your benefits, filing for your benefits for Social Security. Now, that isn’t something I would recommend for everyone, but if you think your retirement income as you move into retirement is not going to be quite as much as you would like, this is often a good solution for everyone. And I’m not going to devote the entire show to Social Security, but I think most of us know that the full retirement age is about age 67 or possibly a few months earlier. There’s a sliding scale of when full retirement age in based on your birthday. Now, some people retire early, age 62. And if you’re not certain if you’ll have enough income in retirement, I wouldn’t suggest that unless you have some circumstances that you believe you won’t live as long as most folks in retirement because the benefits are reduced between 25% and 30%. But if you had an illness or a medical condition that you believe would make your life expectancy substantially shorter, then it would be a good idea to file for Social Security early. Now, the caveat to that is that if you are still working, after you earn, it’s about $23,000 a year, then for every $2 you earn, you lose $1 of Social Security benefits. So filing for Social Security early is not a good idea. now that’s only affected by earned income it’s not affected by investment income so that’s the way to sort of look at that full retirement age again is close to age 67 and if you’re not sure if you’re going to have enough income in retirement you can postpone all the way to age 70. And if you choose to do that, your retirement income from Social Security will grow by about 8% each year. And people ask, well, should I do it at 67 or age 70? Well, there’s a break-even point that’s about age 81. So, for example, if two people have the exact same Social Security benefits, one decided to retire at full retirement age and the other postponed to age 70. then the sum that they would have collected from Social Security would be equal by age 81. Now, that doesn’t take into consideration the time value of money, and it also doesn’t take into consideration how much longer than 81 someone might live. Obviously, if someone died younger than age 81, then filing for Social Security earlier, age 67, then it would clearly be in someone’s best interest to do that. Some other things that I talk to people about and that I learn about that helps our income go farther in retirement is possibly downsizing. Now, I’ve met people who have downsized to a condominium or a townhome. And while that relieves the homeowner of a lot of the duties of shoveling snow and mowing the lawn and things of that nature, there can be significant HOA fees that are associated with that. So if someone can downsize into… a single-family residence that is not part of a condominium or townhome complex where there is either no HOA or a very small HOA, that is a better idea than moving to a condo or townhome because what you end up saving in property tax or possibly a mortgage payment can be lost in HOA fees. And they can be as much as $500 a month, depending on what townhome or condominium complex that, you know, where you end up downsizing or moving to. Something else that I’ve met a lot of people who do, especially people who have specific skills like engineering or software engineering or some very specific business skills, is consider part-time consulting in the same field where you work. Now, what I would recommend for that, and I know some people who have done that, is that you begin doing it prior to retirement. So you have the contacts lined up and you have the potential future business lined up. But if people are still, you know, basically retired, healthy but desire to continue working and have a little bit of a concern about having your money last as long as you do, I would highly recommend part-time consulting. But I would also recommend beginning that before retirement. I think that makes the most sense. Now, some of the people who I meet that come into my office and we have a conversation. One of the things we often talk about is lowering taxes in retirement. And there are certain things that we can do because as far as making your money last in retirement, if less of your income is taxed, that’s going to make your money go farther. And one of the things I often recommend is converting traditional IRA to Roth. And depending on people’s age and circumstances, I think the best time to consider that is very late in the year because the cutoff time-wise for doing that is December 31st of that tax year. Now, most people by November or late November or something have a pretty good idea how much income they have earned that year. And we can sit down and consider, well, how much of a traditional IRA do we want to convert to Roth? because traditional IRAs, by the time you are 73 or if you’re considerably younger, age 75, there will be required minimum distributions, which, of course, are taxable. On the other hand, if a large part of someone’s 401k slash IRA is converted to Roth, then by the time they reach age 73, their RMDs may be substantially smaller. And their entire tax circumstance may be different because if someone’s income is largely from a Roth IRA and Social Security, they’ll be paying very little, possibly even zero, in federal income tax. So those are some of the things that we can do to make our money last longer in retirement. Now, one of the things I often talk to people about is what we call a bucket strategy, where we can have our resources in three different buckets for three different purposes. The first one is likely the most important because that would be the bucket that would be providing guaranteed income. If you’re fortunate enough to work somewhere where they offer a pension, that would be included in guaranteed income. And that… of its own requires a certain discussion because there are usually several pension options depending on what you would want for a surviving spouse. So that is always requiring further discussion. Social security, of course, is a component of that guaranteed income. And if a pension and Social Security together don’t provide adequate income, there are annuities that will provide what’s called a guaranteed monthly income benefit that will continue as long as you are living, even if the account balance goes down to zero. Now, that’s one bucket. And if that bucket provides you adequate income in retirement, one of the components of that, the Social Security component, has a cost of living feature, which, of course, is very useful because some people in retirement may live 20, 25 years, and cost of living can be considerably greater as we go into the future. The second bucket, of course, would be money that’s at risk, money that’s in the market. And what kind of risk you want to assume is going to be, of course, different than someone else. Some people are not at all uncomfortable if their account value drops because they’re confident that it’s going to bounce back again. Other people are very uncomfortable with that. So the selection of investments for that component in the bucket that includes risk is going to be different for most people. And the last bucket, which is also extremely important, is an emergency fund, which they recommend to have six months income. And that can be, of course, if your transmission goes out, if your furnace goes out, if one of your children’s emergencies all of a sudden becomes your emergency, it’s important to have cash in that. And that’s money that’s readily accessible usually in the Bank, money market, it can even be in an investment account if it’s in a money market segment of that investment account. So having these three buckets is a mechanism to help your resources last throughout your retirement. And we talked earlier about part-time consulting. and there are some ways that people can do that there is another big opportunity for people as they move into retirement depending on what they might enjoy doing in retirement for both activity as well as additional income and that is serving on a board A lot of people who are up in years are also serving on the board of directors. And that is a topic in itself that we will dive into right after the break.
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Golden Eagle Financial will help ensure that your nest egg will last. Advances in medical science have helped Americans live longer, which is wonderful. But where retirement advisors used to plan for about 15 years of income, today retirees live much longer. That means you’re going to need more money for more years of living an amazing retirement. Sure, there are programs to bridge that gap, like Medicare and Social Security, but that’s not the fulfilling retirement that you’ve always dreamed of. Al Smith and Golden Eagle Financial use financial strategies with guaranteed lifetime income to stretch your principal to last longer so you can do more of the things you want to do in retirement. like vacations with your kids, helping others, or giving to your favorite charities. People like you who are well-prepared will have a more fulfilling, stress-free retirement. It’s easy to get started. Just go to klzradio.com and click on the advertiser’s link to schedule a free consultation. Investment advisory services offered through Brookstone Capital Investment LLC, a registered investment advisor. BCM and Golden Eagle Financial Limited are independent of each other. Insurance products and services are not offered through BCM, but are offered and sold through individually licensed and appointed agents.
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Welcome back to Retirement Unpacked, and we’re continuing what we talked about last week, which was longevity, about things you can do to make certain you will have plenty of income during your retirement. We’ve already talked about some situations where people relocate. We’ve talked about postponing drawing Social Security. We talked about the advantages and disadvantages of downsizing, talked about part-time consulting in the same field where you worked. And one thing that some people do is they serve on a board of directors for a company. And that is something done by a lot of people in retirement. But there’s a lot of rules, and it’s not an easy position to get. But it kind of depends on your background and what you might enjoy doing in retirement if you find you have extra time and would like a little extra income. There are six million small companies, some of them private, all of whom need board of directors on their board. And they can be public companies, private companies. They could be LLC. They could be… S corporations, they could be full C corporations, different kinds of companies, but many have boards of directors that need participants, need people on their boards. Now, before we dive too much into the details of this, you may feel really close to a particular nonprofit, but Only 2% of nonprofits pay an income to their board members, with the exception of maybe travel expenses. So if you end up serving on a board of a nonprofit, there’s a 98% chance that you won’t be compensated. But that $6 million figure that I gave you, those are for private companies, and they do pay for people to be on their board. And if this is something that interests you, I researched it a little bit. There are many different companies that can assist you in finding a position on a board. And one of the things they have pointed out is that like a resume, if you’re looking for a job, there is sort of a separate type of resume or portfolio that small companies would like to review to see if you would be a suitable board member. And there are companies that will help you create the best type of portfolio to make it more likely that you’ll find a position like that. And if you’re leaning toward a particular type of business, then it’s wise to learn more about that. business to make it more likely that you can end up finding a seat on that board. And it is a little bit like anything else. If you’re looking for a board membership, then you need to create a pathway. Find out what certain companies are looking for in board members. And there are also a considerable number of companies who can help prepare you and even guide you toward finding a board membership. One of those companies is called Board SI. And there is some cost involved, but the cost is relatively modest if you end up finding a position. And they work hard at finding you a position because they’re compensated once they find people to fill those positions. But for smaller companies, the compensation is quite good. It’s a ballpark investment. is between $20,000 and $40,000 per year. And that may involve between 10 and 20 hours of work per quarter. So we’re talking about a reasonable level of compensation without spending an enormous amount of time. And some people find when they find a position on one board, they’re able to find a position on a second board and sometimes there’s travel and sometimes they’re they’re not it just totally totally depends but this is something i know when i researched board si They have scores and scores of people who have found positions on boards that have done a testimonial. So if you’d like to learn a little bit more about how you could find a position on a board, it’s Board SI. I don’t get any kickbacks from them or anything like that. I have just learned that they are a company who… communicates with and has relationships with more other companies who seek board members than supposedly any other business that’s doing that. But there’s plenty of other information on the internet about finding a position on a board. now although they’re very highly compensated i wouldn’t recommend trying to get on a fortune 500 companies board i read somewhere where someone was serving on two boards and he or she was making about one million dollars a year but these are fortune 500 companies and being able to find a seat on a board like that i think is highly unlikely But there are many, many companies that have anywhere from 50 to a few hundred employees, small businesses who have boards of directors that help guide the direction that their company takes. And if this is something you’d like to do in retirement, I encourage you to research it and be thinking about what kind of board you’d like to serve on. If you have a lot of interest in, let’s say if you’ve retired from Lockheed Martin, you may find that there are boards in aviation companies or technology companies that are looking for people with your experience. If you’ve retired from the public sector in a certain area, that background may be very, very useful for a company that has products or services that are quite similar to what you were doing while you’re working. So a lot of things to think about. But if you’ve ever… looked at boards of directors for various companies and so forth you’ll find that many of them are older and they they are experienced and it’s something where age is almost a benefit rather than something that is someone is looking for work for example and they’re in their 60s or 70s Very, very difficult to find a regular job. However, finding a position on a board for someone in that age, if they fit the criteria, is much, much more likely. And you can, for example, easily research some big companies and find out who their board members are. And you can also go online and many of the big financial firms like Forbes and Kiplinger and so forth, they have all kinds of information and assistance that makes it easier for you if you do have interest in becoming a board member, but I think of all the things someone can do in retirement, if he or she has a particular interest in a particular area where they may have worked for many years, this is not like just getting a part-time job at Home Depot or something, but it’s clearly something that would be very rewarding there would be travel and a lot of interaction with other people who have worked in similar fields. Well, we’ve been talking about what we can do to make certain that our money will last. And this program is not totally about taxes, but I think taxes are an important component of that because how long your money will last is going to depend partly on on is that gross income or net income. If you have a reasonably long window before you retire, let’s say 10 years or something like that, I talked about it earlier, but a strategy of converting traditional IRA to Roth really makes sense. And the reason for that, if you’re like in your 50s or 60s, you’ll have to pay tax upfront when you convert to Roth. But then, The growth of that Roth account is tax-free, and the income from that account will be tax-free. And if you’ve ever looked at compound interest, if you convert maybe $200,000 of a traditional IRA to Roth when you’re about 60, by the time you’re in your 80s, That could easily be six or eight hundred thousand dollars that represents a tax free nest egg. And you can take income from that on your schedule, not on the IRS’s RMD schedule. Thank you for tuning in. God bless you. If you would like a copy of the 2025 tax update, it’s about a two page item. I can email it to you. Contact my office at 303-744-1128. Or if you’re driving, just get in touch with KLZ. Again, thank you for tuning in. God bless you. And let’s keep going. the places on the globe where there’s fighting, let’s pray that those end and that there’s greater peace going forward. Bye now.
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Thank you for listening to Retirement Unpacked with your host, Al Smith of Golden Eagle Financial.
