The Smart Take:
There is a lot of obsessing over creating a stress-free experience in retirement. But life doesn’t really work that way. We can still experience happiness and joy in retirement, even if there are still a few stressful moments along the way. Don’t buy into another one of those retirement rules gone awry, that a truly stress-free retirement is attainable. Kevin will show us how to root your financial plan in realistic terms.
Prefer to read? See below for the transcript of the show.
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Introduction: 00:03 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: 00:16 Are you ready to Retire Smarter? That’s what we’re going to do on today’s podcast. I’m Walter Storholt. Thanks for joining us here with Kevin Kroskey, President and Wealth Advisor at True Wealth Design serving you throughout Northeast Ohio with an office in Akron, you can find us online at any point in time at TrueWealthDesign.com Kevin, thanks for joining us today. How have you been sir?
Kevin Kroskey: 00:35 I’m great, Walter. I’m great. We got some big news in the Kroskey family. So I mentioned last time we spoke, we were in the home stretch of pregnancy for daughter number two and daughter Cameron Nicole Kroskey joined us on August 10th so we are now a family of four and two four-legged animals. Oh, that’s actually excellent.
Walter Storholt: 01:00 So, Cameron Nicole Kroskey, what went into the name?
Kevin Kroskey: 01:04 Okay, I’ll make this succinct. So Cameron is a bit of a gender bender, so we had a daughter, but Cameron is more typically used for boys. However, I wanted it to be a little bit more gender-neutral, didn’t want her to get discriminated against in the job place somewhere down the road in her future.
Kevin Kroskey: 01:21 And you can shorten it by, you could call her Cammie, you could call her Cam, she can decide later in life whether she wants to be more formal or more fun. So, I completely over-thought this one, but it checked a lot of boxes and that’s where we ended up.
Walter Storholt: 01:36 Well, there you go. I’ve known several Cam’s or Cameron’s on all sides of the equation, so I think you’re definitely very safe from that perspective. Did Nicole have a particular meaning there is the middle name?
Kevin Kroskey: 01:46 It did. It’s a family name. It’s my wife’s middle name and my first daughter Aubrey. Eileen was the middle name of my wife’s grandmother. So went with the family name says common tradition for the middle name.
Walter Storholt: 01:36 Very cool. I love the names, Aubrey and Eileen.
Walter Storholt: 02:01 Yeah, Eileen. Yeah. Maybe have some roots there potentially. That’s pretty cool. Well, congratulations on kid number two. Sounds like a full house now Kevin, how are you adjusting?
Kevin Kroskey: 02:18 You know, the testosterone levels in aggregate just got a lot lower in the household.
Walter Storholt: 02:23 What about the pets? Are they both females? Are you completely surrounded?
Kevin Kroskey: 02:27 They’re not. They’re actually two males, so, and the dogs are, everybody always asks, how are the dogs taking it? The dogs just went a little bit of dad’s attention. As long as they get dad’s attention, they’re happy and they get plenty.
Walter Storholt: 02:39 You guys will just bond even more now. You still have your guys that you can hang out with. Sounds like. Well, that’s very cool. Congratulations. Very happy to hear about that. And best of luck to you guys getting sleep over the next couple of months.
Kevin Kroskey: 02:52 Yeah. Yes, absolutely. It’s been so far so good.
Walter Storholt: 02:55 Well they say, you know, having a kid is one of the most stressful things you can go through in
Walter Storholt: 03:00 Life. And I think with the lack of sleep that comes along with that, that’s probably an appropriate guess with all of the other complications that come through with having children. Very rewarding but also a very stressful time. Surprisingly also high on the list for a lot of people is that retirement is very stressful, so much to plan for dealing with being unemployed essentially for you know, 10, 20, 30 maybe longer than that years of your life and just that huge life adjustment that occurs when you get into retirement, but that’s not how it’s supposed to be. Right? I thought retirement was sitting on the dock of the bay relaxing and it’s supposed to eliminate a lot of your stress from your life. Kevin, I know this is something that you’ve given a lot of thought to. What do you think about that whole debate about retirement being stress-free but often the process to get there being a complicated and kind of winding road?
Kevin Kroskey: 03:50 Well, any transition in life is going to evoke some stress, you know, we have good stress. Eustress is the technical term or distress.
Kevin Kroskey: 03:58 And when you go from work to non-work, I mean it’s a huge, huge transition. So it’s not just what you see in the commercials of redefining retirement and getting on a Harley or sitting on the beach or playing golf or whatever it may be. You know, there’s a lot that goes into it. So whenever we start thinking about envisioning retirement, I just always like to ask a question. And over the years I’ve done a lot of educational classes and this is usually how I start off these classes. And it’s something that I say, you know, you really have to know what you’re planning for. If you can’t envision what you’re planning for, how are you supposed to make good decisions in your financial and your retirement and your investment planning? And so what I do when I teach these classes, I just ask everybody to go ahead and get out a pen and I have some paper and write down what age they think they’re going to retire.
Kevin Kroskey: 04:54 I’ll give them, you know, 30 seconds or so. Some people don’t participate. I got to walk over and stand very close to them and get them to write. That was one of my former teacher tricks. Then I just get an answer and say, Hey, well, you know, what do you think? And usually, people say, you know, 65 or 66. And when you look at what the average age of retirement is here in the US usually it’s right around 61 or 62. So you can call it about, you know, three, four, maybe five years difference from when people think that they’re going to retire compared to when they actually do. And one of the reasons why people always think that they’re going to work longer than they do. Well, there are several, actually, some of them are good, maybe some of them not so good. So some of the things that may become in your mind, maybe somebody on the good hand just did a good job and saved and accumulated and they don’t have to work anymore.
Kevin Kroskey: 05:48 So they’re financially independent. They can go ahead and ride off into the sunset. But on the other hand, a lot of times people will have some health issues, you know, maybe their own, maybe a spouse more likely, maybe a parent that they want to go ahead and help and care for. But for whatever reason, there may be usually people work not as much as what they’re thinking that they’re going to. And so that’s number one. And I think that’s really, really important to remember because one of the biggest things that go along with those last few years of retirement you’re making the most money, maybe the mortgage is paid off, kids are out and you’re also saving the most over those last few years. So if those last few years get cut short, it could be very detrimental to your retirement plan.
Walter Storholt: 06:32 I know that’s a big concern for a lot of people is picking that retirement date, but a lot of people will also stress over how long they’re going to live in retirement. Kevin, I mean that’s a big unknown that if we did know the answer to that question, we avoid make the whole retirement planning situation a lot easier to plan for. No offense to you, it probably would kind of mean your job would not be that necessary anymore. Right, Kevin? If we all knew the day we were going to leave the earth, we’d be able to kind of just, you know, do some simple math and figure out a way to get us to that final date. But unfortunately, it’s not that easy as it.
Kevin Kroskey: 07:03 No, it’s not. It would definitely make my job a lot easier. I don’t know if it would eliminate it, but it would definitely make it a lot easier. So a basic principle of retirement planning is you need your money to last at least a little bit longer than you do in. As we know, that’s a moving target.
Kevin Kroskey: 07:19 So we have our starting date of, on average, people are going to retire around 61 or 62 again. For some people it’s good, you know, they’re financially independent. They can choose to do that earlier than what they thought that they were going to do when they were in their 50s. On the other hand, some people are getting their working years cut short, so they’re 61, 62 say we’re talking about a married couple in this example and the only other condition I’ll put on it is that they are non-smokers. So we’ve got a 62-year-old couple husband and wife married, non-smokers. And so what I would ask in that class is go ahead and write down at what age the second death is going to occur. And some people would look at me puzzled for a minute or two, but obviously the money has to last both of your lifetimes.
Kevin Kroskey: 08:02 So one spouse typically is going to pass away first and then another one is going to survive for a period of, you know, some years. So at what age on average will the second death occur? Now, I had been teaching this class for about 10 years, going back to 2008 and the answer changes over time. The reason why it changes is life expectancy increases. On average, you know, every year goes by about a month, two months we’re adding to our life expectancy. So whether that’s through, you know, eating better food, having better health care, whatever it may be, we keep living longer now certain segments of the population, maybe not. What a lot of people don’t know is there’s a big disparity in life expectancy between, just call it the house in the have nots. So you know, people that have higher income, their higher-income correlates to having better food, having better health care, making smarter decisions in general that correlates to a longer life expectancy.
Kevin Kroskey: 09:02 I saw a few years ago, there’s a study and there was about a 10 year age gap, life expectancy gap, between how long the most well off people will live versus the least well off. 10 years. I mean, to me that was astounding an entire decade. You know, a wealthier person is going to live compared to somebody without those means that they have.
Walter Storholt: 09:25 Wow. That’s a pretty shocking and hugely disproportionate number to compare those two things. And now we’ve been talking kind of framing this all around that stress conversation. I think people who are stressed out aren’t experiencing a lot of joy, aren’t experiencing a lot of happiness. I’m sure there are exceptions to that rule, but certainly, I think an argument can be made there. So where do these two things meet? How can we make retirement less stressful? We have all of these unknowns that we’re trying to prepare for it. You’re asking people questions, you know, when’s your spouse going to die and then when are you going to die? None of this sounds fun, Kevin. So how can, how can we get to the fun of retirement from your experience and how you’ve helped people get there.
Kevin Kroskey: 10:02 So you have to dot the I’s, cross the T’s and do the planning, the technical part of it, and just make sure that basic needs are met. And so if you’re not envisioning really what I would say is more inappropriate time period that we’re planning for, you know, if the couple is retiring at age 62 and the current statistics would say on average the second spouse is going to live at least 30 years to age 92 and again, that’s increasing each and every year. So we’re talking about a 30 year period in retirement. Whenever I would do a survey of these classes, I would teach, I would always ask people to write down, you know, what they thought the life expectancy or when that second death would occur.
Kevin Kroskey: 10:40 And most of the answers aggregated around the mid-eighties maybe 85, 86, 87 very few people raised their hands and had an answer in the nineties and so if you’re thinking a 20-year retirement that you’re going to work to 65 and die at age 85 not as dramatically different than a 30-year retirement of retiring a few years earlier and living to be at least a few years older than what you’re envisioning. So the spending decisions, the investment decisions that you would make over a 20 year versus 30 year period could be completely different. So I think one of the things about reducing the stress is really envisioning retirement for what it is. And I think the first step in that process is really, you know, on average when you’re going to retire and on average, how long are you going to live? Now, these are averages. Who knows if you’re going to be average or if you’re going to be above or below average by rest assured.
Kevin Kroskey: 11:36 Anybody that ever comes into my office wants to make sure that their money lasts at least as long as they do. And a default reaction maybe, well, I’m not going to live that long. Well, you know, of course, we don’t know. You know, maybe that seems like a big number. Maybe somebody in your family hasn’t lived that long before, but frankly, even if you’re looking at your family, your parents or your grandparents, you’re looking at it the wrong way. It’s like you’re driving down the road and looking in the rearview mirror because life expectancy keeps increasing as we move forward in our society. If you’re looking at the older generation, you’re really looking backward and looking the wrong way.
Walter Storholt: 12:10 I think it’s interesting how you can approach this retirement planning process from a lot of different angles to Kevin. I’m something from your blog that talked a lot about this stress-free mentality and retirement and how you can get there versus where you do have those stressful elements that come into the equation are how people approach the retirement planning process and you said to design the financial component of your plan to support your wants and needs and that most people actually do it the other way around. They start with the money and that does seem logical. Start with the money and then make that fit the big picture. Do you like taking the other approach?
Kevin Kroskey: 12:47 Yeah, we all have a lifestyle that we’ve become accustomed to. So I think you first have to understand, you know, what it is that you do with your time, what costs money, how that’s going to change as you age. A lot of people completely miss that part. Something that we’ll talk about in a future episode, but you know, it’s really about who you are as a person, what’s important to you, you know, from a values perspective, what you like to do with your time, you know, what goals do you have for this next phase of retirement. And you know, when you’re talking about a 30 year period in retirement, you’re going to have a lot of time on your hands.
Kevin Kroskey: 13:21 So you really need a plan, not only for the money part but for the nonfinancial part of retirement. When you wake up and you have a day planner that’s completely blank, you know, from Monday through Sunday, what are you going to do with all that time? You know, one of the things that really spoke to me is I started working with people a lot of times it’s not about the money for these people. I sat down in a conference room probably, you know, 9, 10 years ago now with a gentleman that was on the doorstep of retirement and he’s very positive. He’s an incredibly positive person, very optimistic, just great to be around. And I asked him, you know, how’s it going? And that’s all I said, how’s it going? And things were quiet, things were really quiet. And then he started crying and you know, these are two guys sitting in a conference room and he was single and it was very, I don’t want to say uncomfortable, certainly, it was at first.
Kevin Kroskey: 14:18 I think I’m a lot more mature in 10 years later. But that was the point in time when I realized it’s more than the money. What he shared with me was that he had been working since he was nine years old and how he really likes to work and be helpful and to help people and be around people. And the fact that he had recently retired and was only a couple of months into it. He wasn’t really feeling fulfilled by not doing anything, by not being involved and engaged and around people and helping them. Something that he had been doing for 50 years at that point. And they can teach you this stuff in school, but it just doesn’t come close to actually experiencing it. But that’s the point in time when I look back on my own experience and realize it’s more than the money. It’s a heck of a lot more than the money.
Kevin Kroskey: 15:03 It’s about all these other things that we do that are important to us. You know, Abraham Maslow is somebody that a lot of people may be familiar with back in the fifties or sixties came up with his hierarchy of needs and if you can envision a pyramid at the base of the pyramid, he had his physiological needs, things that, you know, everybody needs for essential existence. But as he moved up the pyramid, the safety needs, you know, having things like a home, having things like food and shelter. Those are some of the basics. But as you move up and get into safety and then you get into more kinds of social things like belonging needs and esteem needs, you know, these are a lot of things that we get from work and form relationships with people at work. You know, having a good project, a tough project to work on, working in a team environment.
Kevin Kroskey: 15:48 These are all things that Maslow would say are on his hierarchy of needs and a lot of them are met by work or things that we get from work. So when you take work out of the equation, it’s not like these needs go away. We’re still people. We’re still emotional creatures that use reason to justify how we feel. But just because we go ahead and take work out of the equation, those needs don’t go away. The difference is we have to find a way to go ahead and meet those needs without work in this next phase of our life.
Walter Storholt: 16:19 Well, I know that this may be a little self-serving, Kevin, but I know that one way to eliminate some stress from the retirement planning process is to have somebody on your side to help you make the decisions. I know when I recently went through, you know, the home buying phase of life bought our second home, my wife and I and my goodness, we went from very rational human beings to stressed-out freaks during that situation and it was so essential to have a realtor in this case, to help kind of reel us in, eliminate some of that stress, take care of some of the issues that popped up in the negotiations and get us a little bit more level headed and helped guide us through a successful conclusion to get the home that we really wanted. Same thing in retirement planning. I think a lot of people overlook this, the value of an advisor, not just somebody to look at the numbers with you, but as you said, to expand the conversation even wider, talking about what you want in retirement, what your needs are, all of those kinds of things should be a part of that conversation. Is that something you do for everybody who walks through the door? Is that an additional service that has to get added on or are you planning the same way for everybody that comes through the door where you’re looking at that entire picture and all of those different moving parts?
Kevin Kroskey: 17:29 I’d answer that a few ways. You know, firstly you need to understand the person, but everybody’s coming in with some level of resources. So you know, in a prior episode we talked about having realistic expectations and ultimately we can go ahead and measure how much of what they’ve accumulated, what that’ll correlate to for, what kind of lifestyle that they can have.
Kevin Kroskey: 17:49 So I think that’s good because after you can really show somebody, Hey, your lifestyle needs are met, you know, this is what it really costs to live your lifestyle, your spending is approximately going to change like this over time we’ll go ahead and reflect that in the planning assumptions and then you can start making this whole ambiguous thing of retirement much, much more concrete than in my experience it’s allowed people to think more about kind of the softer side of retirement cause before they know some of that before they know, Hey, am I going to be okay and you can take that worry out of the equation. It just seems very difficult for them to go ahead and start envisioning maybe what retirement could be because maybe they’ve been in a box, which the box they may be in may be fine and maybe one that they’ve become accustomed to and maybe comfortable.
Kevin Kroskey: 18:37 They may be completely happy there, but at the same time maybe they haven’t permitted themselves to get outside of that box and think about really if I could do more if I could be more, what would I want to do? What would I want to be? And that may sound a little bit fuzzy a little bit, you know, West Coast if you will. But you know, certainly doing the technical part is fine and maybe some people stop there. I can tell you personally, I get the most satisfaction when I can help people move the needle and help them get a little bit more out of life than maybe what they would have allowed them to themselves. So, you know, the technical part of financial planning is table stakes. It’s critically important, but it’s table stakes, you know, taking that and then doing that and then really being able to connect with somebody and understand them and understand who they are and maybe even nudged them from time to time.
Kevin Kroskey: 19:23 Share stories about other people that have made those changes that may feel uncomfortable to them. Maybe it’s spending money on themselves, or maybe it is actually spending some more money in general, but helping out their kids or their grandkids earlier in life than maybe what they thought. These are all things that are regular conversations and occurrences in our practice. And those are the things that you just get such a big smile out of those people that you’re helping and out of their families. And we’ve gotten so many letters over the years just helping them do that. And literally, when I think about what I get most out of what we do, it’s not solving a complex financial problem, which is something that I love to do, but it’s about helping people get more out of their life. And so, you know, it really is important just to have that relationship coupled with the details of financial planning and maybe a tough loving, empathetic financial advisor that’s on your side to go ahead and help, you know, do those things for you.
Kevin Kroskey: 20:18 Both the technical part as well as you know, just being on your side and helping you be a guide to you to help make sure that you’re moving your life in the direction that you want to take it.
Walter Storholt: 20:27 It’s all a part of being able to Retire Smarter. The name of the podcast and if you would like to get in touch with Kevin Kroskey and the team at True Wealth Design, we make it easy to do so. You can dial them up at (855) TWD PLAN. TWD is True Wealth Design. (855) TWD PLAN or the number version simply as (855) 893-7526
Walter Storholt: 20:51 If you’re on your mobile device or at your computer, which if you’re listening to this, it’s probably one of those two things. TrueWealthDesign.com is the place to go online where you can also schedule a time to meet and have a 15-minute call with Kevin and the team to talk with an experienced financial advisor and talk about your situation and see if it would be worthwhile to come in for more of a conversation about your financial plan and see if the team is right for you. Call and have that 15-minute conversation. You can set that up again at TrueWealthDesign.com Kevin, thanks again for taking us through the program today, giving us this great information and most importantly, congratulations again on Cameron Nicole Kroskey baby number two in the Kroskey household and well wishes to you and the family.
Kevin Kroskey: 21:33 I appreciate it, Walter, and I guess one final note now that we had baby number two, it looks like I’ll be working at least another five years, so looking forward to doing this for quite some time.
Walter Storholt: 21:42 There you go. Absolutely. We’re only a couple of podcasts in and we’ve got many, many more ahead of us, that’s for sure. for Kevin Kroskey, I’m Walter Storeholt. Thanks for joining us and we’ll talk to you next time on Retire Smarter.
Disclaimer: 22:00 Information provided is for informational purposes only and does not constitute investment, tax or legal advice. Information is obtained from sources that are deemed to be reliable, but their accurateness and completeness cannot be guaranteed. All performance reference is historical and not an indication of future results. Benchmark indices are hypothetical and do not include any investment fees.