Ep 51: Case Study: Retiring Before Age 60 & Before You Ever Thought You Would

Ep 51: Case Study: Retiring Before Age 60 & Before You Ever Thought You Would

Listen Now:

The Smart Take:

Like your work but hate your job? Bad boss? Terrible commute? Whatever the reason.

Hear Kevin share a story of a client who retired in her late 50s. She loved her work and taking care of her customers but hated other aspects of her job.

She worked long hours and had a long commute. This coupled with taking care of her household and aging mother plus trying to have a bit of fun left little space and time to seriously consider her retirement and life after work. Perhaps this is why she was in a state of disbelief after her retirement plan showed she could retire in her 50s. The sheer thought of retiring was new and a bit scary.

Be sure to pay attention to the end to hear how things are going for her now four years retired and how she has defined phases and varied strategies to her retirement distribution planning.

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4:47 – About The Client

8:58 – The Realization Of Being Able To Retire

14:12 – Padding The Expenses

19:44 – Healthcare When Retiring In Your 50’s

25:59 – Present-Day Planning


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The Host:

Kevin Kroskey – AboutContact

Intro:                                     Welcome to Retire Smarter with Kevin Kroskey. Find answers to your toughest questions and get educated about the financial world. It’s time to Retire Smarter.

Walter Storholt:                Glad you’re with us for another Retire Smarter. Walter Storholt here alongside Kevin Kroskey. This is the podcast that’s going to help you learn a little bit about the financial world and how you can better prepare yourself for your financial and retirement future.

Walter Storholt:                Kevin is the president and wealth advisor at True Wealth Design, serving Northeast Ohio and Southwest of Florida. You can find us online by going to truewealthdesign.com. Subscription links to your favorite podcasts apps are there, and you can listen to past episodes of the show and get lots of great information as well.

Walter Storholt:                Kevin, excited to do another show with you today. How have you been?

Kevin Kroskey:                  We’ve been great. Family’s good, kids have been going to the pool. Our near two year old now, Cameron, seems like I often mention my older daughter, Aubrey, but Cameron is just a little spitfire. So daddy likes to take the girls over the pool. Mommy is the stereotypical gender role, more the protector, and daddy is pushing the girls to take risks.

Kevin Kroskey:                  So mommy wasn’t around, and daddy was at the pool with the girls, and of course, little Cam wants to be like big sister Aubrey, and Aubrey was running and doing cannonballs into the pool. And so Cameron’s got her little floaty on and not necessarily running, more like, remember Walter, this is before your time, but I think you probably have seen this movie, but Ghostbusters in the Stay Puft Marshmallow Man. So when he’s coming through the city.

Kevin Kroskey:                  So she’s got this puddle jumper on just to keep her floating, and she’s trying to run, and it looks like a little mini version of the Stay Puft Marshmallow Man. And she’s not really jumping, but more like a timbering effect into the pool. But nonetheless, this was the first time she went completely underwater.

Kevin Kroskey:                  And so she comes up, she’s like, “Oh my gosh,” just with fear and amazement and like, “What the heck just happened?” And then there’s just absolute silence, and I’m just waiting. I’m like, “Okay, is it going to be a screaming cry, a regular cry, or something different?” And then she just says, “More.” And that’s Cameron.

Kevin Kroskey:                  Aubrey is definitely a little bit more cautious. She’s an absolute sweetheart. Cameron seems to be very comfortable with risk. She’s keeping me on my toes, and good thing mommy wasn’t there, because mommy probably would have had a conniption if she saw it.

Walter Storholt:                It’s got to be something with the second child that is just a wrecking ball like that. Because I know several two pairs of siblings, brother and sister, or brother and brother or sister and sister, that are the same way, where the first one is much more calm, proper, just sort of normal.

Walter Storholt:                And then the second one is just insane. And I mean that in the best of terms and in the best of ways, but they’re just like little wrecking balls, fearless, they run into a pole at full speed and then just smile afterward. Like, “Let’s do that again. That was fun.”

Kevin Kroskey:                  Yeah. I can’t remember the guy, the psychologist that studied the birth order theory, and maybe I shouldn’t even speak on this because I don’t if there was a lot of validity to it. There is the theory, but I think it was, but certainly, there’s that birth order theory that’s at least out there. But it’s always interesting to me to look at just the kids of, “Hey, they got the same DNA, but they’re so darn different.” And it’s pretty interesting when you see that happen.

Walter Storholt:                Yeah, it really is. It’s definitely very true, as both of my parents are from four sibling families, and then I’m an only child. So it’s been interesting to compare what their childhoods and lives have been like compared to now mine as an only child and seeing how… It’s just interesting how they grew up with that and how different it was for me not having a brother or sister growing up with, and all the differences between everybody. Always an interesting thing.

Raquel’s Story

Walter Storholt:                You can find anecdotes to support or dispute those claims just like with anything, but fun to share those stories, for sure. Well, I think today’s show is going to be really fun. We do this every once in a while, Kevin, we basically just have what we call a case study show or a story show if we want to just make it really simple, where we really get taken inside the planning process with a real-life example of somebody that you’ve worked within the past, or maybe even just recently.

Walter Storholt:                And I understand that today’s story is about someone who wanted to be featured on the show. It was sort of a goal. So it’s a lifelong dream coming true here on the show.

Kevin Kroskey:                  I don’t know about a lifelong dream, but yes, she did mention that one, she would like to be profiled in a way, and she’s provided perspective that, “Hey, just make sure that the stories are relatable.” Certainly, we have some clients with bigger bank accounts than others, and maybe sometimes people feel like if we talk about somebody and it’s not what they perceive to be a similar scale, that maybe it’s not as relatable.

Kevin Kroskey:                  With that being said, there’s still a lot of commonalities, whether you’re planning with somebody that has a half a million dollars or $5 million. Certainly, there’s a zero added to the end of one of those. But her story is, one, she’s just an absolutely fantastic person. And two, she also bribed me with a plate of cookies, so I couldn’t say no to that.

Kevin Kroskey:                  Her cookies are darn good. I think I have to make a very important point upfront. She did say that “When you tell my story, just make sure you tell everybody that I’m six foot and blonde.” So she’s six feet tall and blonde.

Walter Storholt:                We have a good mental image now. Okay, got it.

Kevin Kroskey:                  Yes. And let’s see, I don’t know what we’ll call her. We’ll call her Raquel. So we’ll snazz it up a little bit, I suppose.

Walter Storholt:                Is she a rocket in this former life?

Kevin Kroskey:                  No, she’s a very hardworking lady, just a personality bigger than life, and just a fantastic human being all the way around. I think we started working together in 2014, and she had a financial person before we started working together.

Kevin Kroskey:                  But as we started working together, it was really just somebody had sold some investments and certainly the person may have been nice and well-intentioned, but she really wasn’t getting any sort of planning, and she was 55 at the time. I would say that she liked her work, but she hated her job. So she liked her work. She liked the people that she worked with. She liked the customers that she worked with.

Kevin Kroskey:                  She hated her job. The company wasn’t, I guess, well run was what maybe she would say. Her boss was… Well, she has a very colorful mouth. So I don’t know if I can say some of the things that she may say, but she wasn’t exactly happy there. And I remember I moved from Pennsylvania to Northeast Ohio in ’98, and I had a job where I drove from Akron to the Beachwood area, which is also the drive that she made.

Kevin Kroskey:                  And I had a, I don’t know, it was probably ’99 or 2000 that I was making that commute. And so 20 years ago, and there was this Interstate 271 that I remember sitting in traffic, and it was under construction, 20 years ago when I was making that drive, and that damn road is still under construction today. It’s like the perpetual employment for the Ohio Department of Transportation or something.

Kevin Kroskey:                  I’m not sure what’s going on, but literally, I mean the commute is ridiculous, and the traffic is ridiculous. And though she liked her work, she just hated her job. And didn’t like the management and the way that the company was going, what have you. So she had some investments. She had always lived below her means, done really well in terms of saving, and her 401(k) had money going into Roth IRA.

Kevin Kroskey:                  Was maxing those out and even had some money in an individual account in her own name. And so Raquel, six-foot, tall, blonde Raquel, was doing quite well in a lot of ways. And you get in that grind, and you’re making that commute, and she’s a hard worker, and you just get on a treadmill in a way, and it’s just habit.

Kevin Kroskey:                  And I don’t think she had really taken the time to seriously consider retiring. It was more like a far off dream. I just didn’t really think it was possible. She’s only 55, her mom’s still around and getting up there in age. And so obviously you got to make your money last longer, and at least as long as you do. And I can’t remember back to what caused her to reach out to us, but she was referred to us by another friend.

Kevin Kroskey:                  And once we did start working together, putting a plan together, we took a look at it, and I said, “Look, you’re 55 now.” It’s mid-2014, late 2014. I said, “You’re probably going to be able to retire in 2016 or so. You’re pretty close.” And it was really; I would say disbelief at first, Here she is 55, probably just feeling the grind on a daily and weekly basis.

Kevin Kroskey:                  And she wasn’t expecting that, for sure. And maybe it wasn’t so noticeable, but after the fact, I think it was probably a year or two later, she just shared with me. She was like, “Not that I didn’t believe you, but I didn’t believe you.” It’s probably how she put it, and maybe with a little bit of an expletive to go along with it.

Kevin Kroskey:                  And she gave me some cookies, which made it all better. But it took a while, and that’s very common. I can think of several different circumstances over the years where we looked at somebody’s plan initially after starting to work with them, and we’re able to clearly show and feel confident in saying that, “Hey, you can go ahead and retire.” And it’s like they hadn’t really thought that was possible, and it just takes a while to process that.

Kevin Kroskey:                  And while initially, it can be a really good thing, like “Hey, I’m financially independent. I’m working because I want to, not because I have to.” Then it can become, “Holy crap. What am I going to do? And what is this really going to look like? Not only if my finances are okay, that’s great, but what am I going to do day to day?” At first, it’s maybe the grass is always greener on the other side, but if you really start thinking about it, which we always try to press people to do, what are you going to be doing when you wake up on a Monday morning, and you look at your day planner, and it’s completely blank for the week, and in fact, it’s blank for all the weeks of the year?

Kevin Kroskey:                  How are you going to fill your time and make sure that you feel productive and are happy with the life that you’re leading, and make sure that you’re just not watching TV all day or something of the sort. So there’s certainly that softer side to it, and I think in Raquel’s case, six-foot tall, blonde Raquel, I think that was certainly true.

Kevin Kroskey:                  You’re making this long commute, you got a tough job, you’re a hard worker, and you really care about the people, your clients that you’re working with, but it’s a grind. And it’s a grind every day, and then you come home on the weekend, and you’re just trying to keep the house up, do your grocery shopping, pay your bills. And then before you know it, Mondays back around. So when do you really have time to really pause and think about the future?

Kevin Kroskey:                  So, I get it, and I think that’s very common for many people. So that was 2014 when we started working together, and ongoing after that, and she let her former financial person now that she was going in a different direction, and we started doing her planning every year. We were helping her with her 401(k) and managing her assets that were in her Roth and individual account, doing her taxes each year. It took a while, I think, for it to really set in.

Kevin Kroskey:                  We had moved past the disbelief, I would say, get it to know that, “Hey, I mean, not only is it possible, but here are some of the things that I really do like doing. I really like going out with my friends and doing these different activities, and I’ll be able to do more of that.”

Kevin Kroskey:                  And for her, her mom’s still around, and her mom’s getting older, and she wanted to make sure that she was there with mom and to help mom, and just be there for her family. And she wanted to just do some things on her own time, do some gardening, do some more baking, which we’ve been the happy benefactors of. And so it just really became a reality about what this could be.

Kevin Kroskey:                  And then just, I guess, trusting the process, and us building our relationship and trust together. I mean, yes, she had been referred to us, but trust is built over time. And even though we had a strong referral from somebody that she knew and respected and trusted, our relationship was newer. And so we were building that relationship and building and earning that trust and just really showing her why we were saying what we were saying about her being able to retire, and it was a process.

Kevin Kroskey:                  And as most relationships are there, they grow over time, and this one was no different. But Raquel ended up retiring, not in 2016, she pushed it back just to play it on the safe side, but she retired in 2017. So she was only in her late fifties by the time that she retired, and in today’s day and age when pensions aren’t anymore, or maybe a fraction of what they were, and she didn’t have a pension that she could rely on, it was really social security and the assets that she had accumulated over time.

Kevin Kroskey:                  To be able to retire in your fifties and have the confidence to do it is quite an astounding feat, and I think most people would say the same. And again, she lived below her means, she did some fun things, but she wasn’t a spendthrift by any means. She’s very prudent with how she spent and tracked her dollar spent. And she did track her dollars, and for us, it was helpful in our planning process to have those figures.

Coming Clean on Spending

Kevin Kroskey:                  One of the things that’s interesting about Raquel is each year that we are always updating the planning, and we’ll project this is how much we’re projecting to spend this year on these different goals. Here’s the core expense that’s in your needs bucket. Here’s how much you’re going to about spend on travel. You don’t need another car purchase for a few years, so on and so forth, here’s healthcare.”

Kevin Kroskey:                  But I kept consistently finding that she wasn’t spending as much as was in the plan. And it was probably maybe four years after we started working together. She’s like, “Well, Kevin, I’ve got to tell you something.” And I said, “What is it, Raquel?” And she said, “I bullshitted you.” And I said, “Well, what do you mean?” She’s like, “I just padded my expenses when I gave them to you. So each year, when you keep asking me, ‘Hey, how come you didn’t spend as much money?’ I just inflated the expenses upfront, because I just wanted to have a little bit more of my own safety margin in there.”

Walter Storholt:                That’s awesome. And then followed it up with, “Here, have a cookie.” She gives bad news or curses people out, then gives them a cookie after. I love that visual and that strategy. “I can’t believe you, go to you know where. Here, have a cookie.”

Kevin Kroskey:                  It’s a very effective strategy when the cookies are as good as what hers are. So I don’t recommend doing that. At least if you have confidence in your advisor. Maybe she didn’t have confidence in me at first. Again, that relationship was built over time. I’m not sure, but we actually have-

Walter Storholt:                Some people would just like lots of buffer.

Kevin Kroskey:                  Well, buffer is good.

Walter Storholt:                No, I’m just saying sometimes that’s just a personality trait, right? And so that’s part of the defense mechanism maybe, in a way?

Kevin Kroskey:                  Yes, but I guess here’s the other thing. So we’re certainly not going to lead with the chin in terms of telling somebody to retire when they really can’t financially, with a high degree of confidence that they’re going to be okay, and again, we’ll make that very clear to them. But by design, if we’re going to be somewhat… I think you always have to lean on the conservative side in general, once you’re doing this.

Kevin Kroskey:                  I mean, when you look at, “Well, what’s the risk if we’re too aggressive with maybe our return assumption or something?” “Well, you run out of money.” “Well, okay, that’s not good. Let’s not do that.” So you certainly want to be on the more conservative side to begin with, but if we’re taking that approach by nature in the planning work that we do, and then the client’s doing it as well, one, we’re at least informed about our buffer and our approach and know what we’re doing there.

Kevin Kroskey:                  The client, who’s not a financial advisor, doesn’t know what ramifications their buffer may or may not have. So I think a better way to do it would just be like, “Hey, let’s walk it through, but this is your plan. If you feel more comfortable having more of a buffer in the plan, let’s have an open conversation about that and then factor that in so we’re both on the same page.”

Kevin Kroskey:                  And everything is fine with Raquel, everything is working out really well, but frankly, if you’re conservative by nature from an advisory standpoint, and then the client’s buffering in some conservative spending, or maybe not fully disclosing some assets or something like that, now you have, frankly, a completely different retirement plan. They’re going to probably have to spend even less than what they could or work later.

Kevin Kroskey:                  So it’s just better to be transparent, I think, in any relationship for that matter, and just be on the same page. And then you can say, “Okay, well, here’s my concern,” we can talk about that concern, and then we can describe why or why not it may be valid. And even if, in our opinion, it’s not valid, it’s their plan. So then let’s just go ahead and build in that buffer. But at least now that we’re cognizant of it, it’ll impact some other advice that we have.

Kevin Kroskey:                  So I think that’s an important thing to be mindful about. Tangentially we have a couple of clients, I can think of two, where their cash that they have on hand, they just don’t want us to pick it up in the plan. I’m like, “Well, we at least have to know for cashflow planning each year,” but one client, I think just slipped up, and he actually disclosed what his current cash amount is when we meet with them in about two weeks.

Kevin Kroskey:                  And when I talk with him, we’re going to… We’ve been working together for 12 years now. It’s just something that he’s always done. He just really hasn’t told us how much he has in cash. And he really hasn’t needed cash in his portfolio, even though he’s in his seventies, but I’m going to joke with him. I’m like, “You’re getting older here. He must be slipping up. You’re telling us how much cash you have now. You sure you want to be doing that?”

Financial Transitions & Strategies

Kevin Kroskey:                  But back to Raquel. So she retired in 2017, in her late fifties. I personally noticed just the change in her demeanor. I mean, whenever you’re going through that hamster wheel and working and in a stressful position with a stressful commute, and you’re just playing catch up on the weekend to make sure that things are in order at home and in life, and hopefully have some fun in between too.

Kevin Kroskey:                  I mean, I get it. But then when she left and retired, you can just see it. I mean, you can just see it in her disposition. I think she’s just happier. And I can think of several other clients where the same has been true. And I mean it would be great if we all had jobs, not only that we loved and work that we were passionate about, but frankly for some people, maybe they had that, but maybe there was a shift, and now it’s just more of a means to an end.

Kevin Kroskey:                  But regardless, in Raquel’s case, I mean she’s been retired now for nearly four years. Initially, she retired in her fifties. Some of the interesting aspects were that when you retire in your fifties, and you don’t have retiree medical coverage, there are several years that you have until you’re eligible for Medicare at 65.

Kevin Kroskey:                  And so that was a big concern for her coming into this, and it should be for anybody, quite frankly, “What’s it going to cost? I’ve been accustomed to this employer-provided health insurance for all these years, now what am I going to do?” And so we helped her navigate that. We don’t sell health insurance, but we have a couple of people that we work with. And in her case, because she had pots of money in her 401(k) in the yet to be tax bucket, she had money in a Roth IRA, which was tax-free.

Kevin Kroskey:                  And then she had money in both the taxable account with cash at the bank, as well as in taxable investments, we had a few different pockets to pull from and do so quite tax efficiently. So I just looked at her tax return that we did for 2019, we were able to manage her distribution plan in a tax-efficient way so that she got about a $7,600 tax credit for her health insurance.

Kevin Kroskey:                  And we’re on the conservative side in the plan. We think this tax credit has been around for the last few years, but who knows if legislation changes or something, or if it goes away, we have it in the worst case in our financial plan, which she felt comfortable with. There’s that being more conservative as well, as I mentioned before, but in actuality, her cost is just a fraction, probably 10% of what it could be in the plan.

Kevin Kroskey:                  So she’s had some out of pocket costs, but when you get $7,600 in a tax credit to go ahead and help defray the cost of health insurance before you get onto Medicare, that’s quite a bit of money. And if we just do that, say for five years or so, now we’re talking getting close to about $40,000 cumulative in terms of tax credits, just by, “Hey, here’s how much she’s going to spend.”

Kevin Kroskey:                  It’s not like we’re underspending or not meeting her goals. We’re just doing it in a very tax-efficient way. We’re taking some money out of her 401(k). In fact, in her case, because she retired before age 59 and a half, we intentionally left some money in her 401(k), set up a monthly distribution to do that, and then rolled an excess amount over to her IRA just to have more flexibility.

Kevin Kroskey:                  And then we could, in theory, better advise on it for her and manage it for her. But when you separate from service after the age of 55, and you have money in a 401(k) plan, there’s an exception where the 10% penalty, if you take it out before age 59 and a half, does not apply. In this case, Raquel was in her late fifties, not yet 59 and a half.

Kevin Kroskey:                  We left enough money intentionally in the 401(k) plan, chose very conservative investments, and then just set up a small monthly distribution to yield the total taxable amount of dollars that we were targeting to maximize her healthcare tax credit. And then what we did to go ahead and meet her additional spending goals, well, it’s really a combination of taking money from her Roth, which was pretty sizable, and from her individual account.

Kevin Kroskey:                  And so each year we have our tentative game plan that we’re going into this new year with, and then in the fourth quarter each year, we go and make sure that everything is coming in as we like with these tax credits. If you go over certain thresholds, you’re losing the tax credit, and it declines pretty quickly. So this is an area where precision matters a great deal.

Kevin Kroskey:                  So we’ve been doing this, but when she gets down the road… And I should also mention that in her case, we’re factoring in social security a little bit later. In fact, her plan is really starting at age 70 tentatively, and most likely going to stay there. But once she hits 65 and is able to go on Medicare, then really the strategy is going to be different, and it’s going to flip to, “Well, hey, let’s make sure that we’re taking more out of the IRA.” Her 401(k) will be exhausted by this point, but taking more out of that yet to be taxed IRA, filling up those lower tax brackets.

Kevin Kroskey:                  We don’t have to worry about keeping our income really low to maximize the healthcare tax credit, but now we’re just going to want to make sure that we get more money out of the IRA. Because when she gets to that other inflection point of age 70 and social security starts, the way that social security taxation works currently and has worked since like 1982 or ’82, is the lower your income is, the less taxable social security is going to be, in very general language.

Kevin Kroskey:                  But if you think about it, it’s almost like three distinct time periods here. So she retires in her late fifties. So that point in time through 65, we want to have some taxable income, but we want to keep it pretty low till we go ahead and make sure that we can get that $7,000, $8,000 healthcare tax credit per year. She gets to be 65, and now Medicare is coming in. Now she’s on a Medicare advantage plan.

Kevin Kroskey:                  Now we’re realizing more taxable income because we can’t get that healthcare tax credit any longer, but we’re filling up the lower bracket. So this year, it would basically be filling up a 12% tax bracket. And really all of her spending needs would be met with that, by and large. So her Roth account keeps growing, her individual account keeps growing, her social security keeps being deferred, and then we reach that another inflection point at age 70.

Kevin Kroskey:                  Now she probably isn’t really going to have to take much out of her IRA. We certainly are going to want to have some taxable income, but her social security is going to be quite sizeable. She worked for many years, had a pretty good health benefit, and by the way, she deferred it. So she got those delayed retirement credits of increasing it each year up to a maximum of age 70. And that much higher social security benefit is really going to provide and meet all of the goals that she’s going to have in the needs bucket.

Kevin Kroskey:                  And I think whenever you have a dedicated income stream, like social security, like a pension, and it’s going to meet the primary goals that you have in your plan, one, that’s a very strong financial plan, a very solid foundation. You don’t really have to worry about investments and investment markets and any sort of uncertainty there in terms of meeting those needs. And at worst, it’s like, “Well, hey, if the investment assumptions aren’t realized or something like that, maybe it’s just the more discretionary goals that are impacted anyway.”

Kevin Kroskey:                  And so this has been Raquel’s plan. This is how we laid it out back in 2014. Here we are, six, seven years later, she’s come clean and fully disclosed that, yes, she did in fact pad expenses. I am going to be meeting with her tomorrow, but each year now, true to form, we’re projecting that she’s going to have a certain amount of money by the end of the year, and here we are mid-year, and she is way, way behind in terms of spending that amount of money that we have budgeted.

Kevin Kroskey:                  So some of that’s explained by the coronavirus, some of it is also explained because she’s probably still doing some padding. So I’m going to try to push her on that and just come clean here. But the good thing is we’re encouraging her to-

Walter Storholt:                She must be making some more cookies, getting them ready for you.

Kevin Kroskey:                  Probably, yes. Yes, absolutely. And maybe even some zucchini bread to boot. But we’re going to encourage her to, “Hey, it’s okay to go ahead and do more and spend more.” And she’s only in her early sixties at this point. So whenever things do get back to some sense of normalcy and people are traveling again, and she started with a point of probably disbelief, and we’re just building our relationship to where we are today.

Kevin Kroskey:                  I mean, it’s grown in so many ways, but she’s been retired for a few years. She’s seen that it’s worked out okay. Now we’ve made it through this whole coronavirus situation, at least. I don’t want to say we made it completely through. I mean, it’s obviously still with us, but we had a pretty conservative portfolio for her going into retirement because stock prices were arguably high.

Kevin Kroskey:                  And her portfolio had to do all the work because we’re planning on taking social security later at age 70. So for all these years, more than ten years, she had to live on her portfolio. So if we were overly aggressive coming into 2020 and coronavirus happened, rest assured she would not have been feeling well in March.

Kevin Kroskey:                  But the fact that we took the prudent processes and did the planning that we did, we reached out to Raquel and said, “Hey, we’ve played it a little bit closer to the vest. We’ve made it through a few of these years. We’ve got clear that you, in fact, add to plan spending a little bit. So now that we’re aware of that, and when we re-look at the numbers, we really think that you could go ahead and take a little bit more risk and do it in a prudent fashion, but stock prices went down a lot. Let’s go ahead and increase the risk a little bit. You’re not putting any risk to your lifestyle. And you could probably end up doing a little bit more and having a little bit more safety margin to your plan. Do you want to go ahead and do that?” And she said, “Yes.”

Cookies & Conclusions

Kevin Kroskey:                  And so Raquel, she’s just a fantastic human being, and a six-foot tall, blonde woman, in case I didn’t say that before, but she’s just a fantastic person. And I’m very happy to be able to share her story and to work with her and help her move on to this new phase of her life over the last few years, and just see how happy she’s become.

Walter Storholt:                I’m definitely going to adopt her strategy though, of bringing cookies to every confrontation from now on. So if I’m ever planning on getting in an argument or having to be hard on somebody or pushback, I’m just going to offer a cookie right afterward. “it’s all right though, have a cookie.” And then it’s a nice reset to the conversation.

Walter Storholt:                I think that’s awesome, great visual there. And it’s interesting to see someone retiring early, how it then does, despite all of the buffers that she built into the plan there, that always does create some additional challenges for folks. And a great example of how healthcare issues and concerns also create different challenges for people, and great way to underscore that we’re all different in the way that we get to retirement and approach it, and it always requires unique and customized solutions to figure out the problems.

Walter Storholt:                So I always love stories that highlight that fact and help us realize that there is no cookie-cutter plan that works for everybody. You have to get that customization to make it work. So I love the story.

Kevin Kroskey:                  The processes should be similar, but everybody’s different. Everybody has different stuff; everybody has different goals; everybody has different feelings. So, you really have to understand the person, what’s important to them, and then you really need to align all the things that they have and have accumulated to go ahead and help support who they are and the life that they want to have.

Kevin Kroskey:                  But the process is similar, but is completely customizable. Having some sort of calculator online or something like that, or with your 401(k) about how much money can have for retirement, is one thing. But that’s probably maybe five or 10% of the way there to go ahead and do an actual retirement plan, in my view. It’s a good starting point. It at least starts helping you, maybe give you some feedback on how much you should be saving, or how close you are to really being where maybe you need to be.

Kevin Kroskey:                  But her story illustrates, I mean I remember her saying, she’s like, “It’s not like I have some big seven-figure amount here. I mean, is my situation really that complex?” And I said, “Well, in this case, I wouldn’t say complex,” but I said, “Here’s really…” And I walked through the three different time periods that I explained in some of the strategy and how that’s going to need to be different, as well as describing some of the benefits, like from the taxes and also how the investments had to be managed in order to go ahead and avail ourselves of those benefits.

Kevin Kroskey:                  And she quickly saw that it was becoming, in her mind, quite complex. Now we do it every day of the week, maybe taking off Sundays, but most every day, this is the stuff that we do. So you unconsciously become really competent at it over time, but it’s new to her. And maybe that’s why there’s some disbelief up front too, but everybody’s different. I mean, it’s our job to go ahead and understand them and help them make the most of what they have and align their resources, but also help them make it clear and help them see, “Hey, does it make sense to work with us or not? What am I going to be paying? What can I expect in terms of benefits?”

Kevin Kroskey:                  Some of them are very concrete, like tax savings. Others, just like the peace of mind, frankly, that she probably has and her ability to retire way sooner than what she probably believed. I mean, that’s highly subjective and qualitative, and only she can put a value on that. But what we’ve been told over the years and working with people, those qualitative benefits are often the ones that are most valuable.

Kevin Kroskey:                  And certainly, being a numbers guy, I like the concrete ones, and I’d love to help people get tax savings and make sure that they have a good, efficient portfolio and all that good stuff. But it’s really the softer side of things that I think most people would say that matter the most to them.

Walter Storholt:                Very true. And if you want to find out a little bit more about what it looks like to get a financial plan in place that truly is customized to your individual goals, needs, and wants, encourage you as always to schedule a 15-minute call with an experienced advisor on the True Wealth team by calling (855) TWD-plan, that’s (855) 893-7526, or go online to truewealthdesign.com and click on the, “Are we right for you?” button to schedule your call.

Walter Storholt:                Go to truewealthdesign.com and again, click on the, “Are we right for you?” button. It’s a great way to start the process and an easy way to do it as well. And we’ll put links and information that you need to get in touch with Kevin and the team in the description of today’s show to help you out. Well, Kevin, thank you for sharing that great story of a Raquel. I really enjoyed getting to learn some of those details and how you went about the planning process. And I know you’ll have a great episode on tap for us next time around.

Kevin Kroskey:                  I’ll do my best. Thanks, Walter.

Walter Storholt:                Thanks, Kevin. That’s Kevin Kroskey. I’m Walter Storholt. Thanks for listening. We’ll talk to you next time, right back here on Retire Smarter.

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