Listen Now:
The Smart Take:
When you’re 12 months away from retirement, everything starts to feel real. From hard deadlines like pension elections and Medicare sign-ups to emotional shifts around identity and purpose, this final year before retirement can feel like a perfect storm.
In this episode, Tyler Emrick, CFA®, CFP®, explores the unique challenges clients face in this transition — and how the financial planning process needs to evolve accordingly. You’ll hear how True Wealth Design helps clients navigate not just the dollars and cents, but also their lifestyle risk, time horizons, and the often-overlooked emotional aspects of leaving a long career behind.
Here’s some of what we discuss in this episode:
📆 Why the last 12 months before retirement matter so much.
💸 The truth about lumpy spending and how to plan around it.
💑 Pension decisions, Social Security timing, and survivor benefits.
🧠 How to navigate identity shifts and relationship changes.
📊 Why advisors should be more than number crunchers.
Learn more about the Retire Smarter Solution ™: https://www.truewealthdesign.com/ep-45-retire-smarter-solution/
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The Hosts:
Kevin Kroskey, CFP®, MBA – About – Contact
Tyler Emrick, CFA®, CFP® – About – Contact
Episode Transcript:
Tyler Emrick:
The last year before retirement can feel like the perfect storm. Deadlines are looming, emotions are high, and big questions start to surface. In today’s episode, we’re talking about what really changes during this critical 12-month window and how thoughtful planning can make all the difference.
Walter Storholt:
Hey, welcome once again to Retire Smarter. I’m Walter Storholt, alongside Tyler Emrick, CERTIFIED FINANCIAL PLANNER, as well as a chartered financial analyst with True Wealth Design. He’s a wealth advisor on the team and joins us each and every episode to help walk us through trying to understand a little bit more what’s happening in the financial world, how we can improve our financial lives in all sorts of various ways.
And we’ve got a great topic to tackle today that I’m looking forward to. Tyler just teased us about it a minute ago, that year mark from retirement. So that’s going to be fun to dive into, Tyler. But before all that, how’s life treating you? What’s going on in your world?
Tyler Emrick:
Oh, things are going well. No complaints on my end whatsoever. We just had a birthday in the house. My youngest turned four.
Walter Storholt:
Nice.
Tyler Emrick:
So that was very exciting. Yeah. Walt, have you ever been to a teahouse?
Walter Storholt:
I have been to teahouses.
Tyler Emrick:
Oh, you have?
Walter Storholt:
I like going to a teahouse. Yeah.
Tyler Emrick:
It was fun. My first experience. The China on the wall, the flowered wallpaper, the whole nine. It was quite the experience to say the least.
Walter Storholt:
Nice.
Tyler Emrick:
And my little one, my youngest, she is really into princesses, so she had her Cinderella dress on. She was just eating it up. Loving it to death. I caught myself. I actually looked back when we were getting in the place and I seen my oldest trailing behind her in her Teenage Mutant Ninja Turtle shirt on, and she had happened to grab a shark stuffy walking in through the door, and I’m like, “Oh boy, I think she’s scouring at my youngest like, I can’t believe you like princesses.” But amazing, the stark difference between the two.
Walter Storholt:
That’s a fun difference between the two.
Tyler Emrick:
Oh yeah, man.
Walter Storholt:
But was this an actual princess teahouse or a normal British afternoon tea kind of place that just catered to then a younger birthday party?
Tyler Emrick:
I’m not sure. My first experience. We made it a princess teahouse. At least my youngest did, for sure. For sure. But they definitely had the small little tea cups and all that good stuff, and I tried the tea. Tea was pretty good, and the food was really good too. I was pleasantly surprised.
Walter Storholt:
The food at teahouses that we’ve gone to, we like to do the British afternoon tea, the standard, I don’t know, royal tea or something like that. So we’ve been to a few different places before, and I think the sandwiches and the little desserts, they’re tasty. I don’t know.
Tyler Emrick:
Oh, they were great.
Walter Storholt:
I like it.
Tyler Emrick:
Let’s just say my expectations weren’t all that high.
Walter Storholt:
So it exceeded it. It was a good experience then.
Tyler Emrick:
It was.
Walter Storholt:
Nice. Did you drink with the pinky out? That’s the important part. As you sip, you got to…
Tyler Emrick:
I tried tea though. I tried tea. I had the cup, the whole nine. It was good. And my youngest, she had lemonade out of her little teacup. She thought it was the coolest thing ever. Cookies. Good experience all the way around.
Walter Storholt:
Love it. Sounds like maybe not your last teahouse visit.
Tyler Emrick:
Maybe not, maybe not. My oldest will turn six at the end of this month too. So we got the infamous two birthdays in one month deal. So we’ll see what that one ends up shaking out to be, but I’m not sure the oldest will want to go back. But she’ll come back for our youngest birthday maybe next year.
Walter Storholt:
Yeah. Excellent.
Tyler Emrick:
That was good. It was good. How about you? Anything on the horizon?
Walter Storholt:
Things are good. Just getting ready for summer here and hopefully squeezing in a few trips. So looking forward to those things, as always, when you hit summertime. But yeah, just gearing up for… Oh, we’re going to a concert Memorial Day weekend, so I think that’ll be fun. An artist my wife likes a lot. It’s an outdoor venue, so that should be pretty fun up in the mountains.
Tyler Emrick:
Yeah, outdoor venues are always great. Is that Red Rock that’s [inaudible 00:03:54]
Walter Storholt:
This one won’t be Red Rocks. We have done Red Rocks. This one will be in Vail. So they have a smaller amphitheater outdoors in Vail, so it is a little…
Tyler Emrick:
Okay, that’s fine.
Walter Storholt:
It was her Christmas present that just now is coming to fruition.
Tyler Emrick:
Hey, better late than never. That’s good.
Walter Storholt:
Exactly.
Tyler Emrick:
Come on now. We have Blossom here at Northeast Ohio, which is a great outdoor venue. Been there quite a few times, so yeah, enjoy, man. That’ll be good for sure.
Walter Storholt:
Awesome.
Tyler Emrick:
You ready to talk about anything but the markets?
Walter Storholt:
Yes, right.
Tyler Emrick:
It’s been busy last month.
Walter Storholt:
We’ve had a lot of market talk, but it seems like we’re going to take a little break from that on today’s show and talk about some important things, although I’m sure maybe a little bit of that will still ebb its way into this.
Tyler Emrick:
Oh, it always trickles in. Actually, the topic today kind of stemmed from that a little bit because as financial advisors, we’re always trying to think through really just how are we doing things? Are we on the cutting edge? We need to rethink our processes and we just really always trying to make sure that we’re putting our best foot forward and looking out after our clients.
So as you can imagine, we take in quite a bit of content geared towards just the financial planning profession in general. Part of my weekend reading this past weekend, there was an article that was one of these financial publications going into the fact of, hey, should us as advisors rethink the 12-month period leading up into retirement and change our process and the things that we do from a planning standpoint to gear up for this unique time?
So the focus of the article was very much for an advisor and reading through and thinking through that process. But I think the points were really valid. Your individuals heading into retirement maybe about a year away, they’re going to really face some wide range of complex financial decisions, certainly some emotional considerations as you think about that, whether it be just the logistical issues of the decisions that need to get made or just the challenges of redefining life after work, whatever it might be.
There’s a lot on family’s plates as you’re heading up to there. So today I wanted to maybe just explore that timeframe a little bit. The way they phrased it, I thought was great. They described it as this perfect storm of challenges within that year, and I thought that was a great way to put it. They specifically said that that 12-month period, they described it as a leap year.
I was like, “Okay, a leap year. Well, okay.” Partly ’cause it’s rare. February 29th only comes around every handful of years, what, about four years? And then of course partly symbolizing the significant leap into the next chapter of your life. So I was like, “Ah, that’s nice, eloquent.” I liked it and wouldn’t pick up on it [inaudible 00:06:44]
Walter Storholt:
It’s a bit of twist on what a leap year actually is. But yeah, I’ll buy into that leap year. I’m down with that.
Tyler Emrick:
No, I like it. Really, it’s this whole aspect of just thinking through, well, we’re not just facing the usual financial projections. Suddenly we’re racing against real deadlines. Hey, maybe you’ve got to make a decision on your pension plan, got to sign up for healthcare, Medicare, whatever it might be.
Maybe there’s some consideration on moving money and where it’s going to come from. So you’re really just hit with a lot of these decisions. And the premise of that article was really taking a step back, saying, “Hey, should we approach those differently? And how should we take a look at it?”
So it got me thinking, with all the market talk and all the volatility, I think that’s a really impactful time to have an advisor and to be able to lean on them for their advice and just making sure you’re making good investment decisions. Hey, let’s make the connection to this. Hey, one year leading up into retirement, how should you be talking to your advisor?
The article went through a few just questions that generally come up that I’m going to use as just a script here as we go through the podcast ’cause I think at the bare minimum, the listeners will be able to gather at least some good questions as you’re heading into that retirement that you should be talking through with your advisor.
And we’ll spend a little more time on some than others, but I think it’ll give us a good framework for today. And like I said before, at least the bare minimum listeners today can come out with some really good questions and some thoughts on what decisions are going to be coming up as they rapidly approach retirement. So it should be fun.
Walter Storholt:
And just to clarify, I know we’re zooming into this last 12 months of your working life and that pre-retirement phase there, but you would still prefer that people interact with, develop a plan, come to see you guys well before this mark. Even though a lot of important stuff happens in that last year, we still want some planning to be happening before then, right?
Tyler Emrick:
Hey, we’re planners at heart, Walt, so the earlier, the better.
Walter Storholt:
Never too early.
Tyler Emrick:
The earlier, the better. Yes, no, absolutely. So no, very, very good point. Always a good time to be working with an advisor, feel like that value’s there. I’m just zeroing in on that 12-month period. You’re exactly right.
Walter Storholt:
Yes. Yes.
Tyler Emrick:
All right, there’s many questions that I’m sure we can dive into, Walt. the first one we got there on our notes here, how much can I spend in retirement? So the infamous, we’re not going to be talking about budgeting, I promise, but really thinking through, well, what does your spending look like in retirement?
And you look back through, at least as I look back through the financial planning industry, I think a lot of times the industry is set up to really focus on how you accumulate wealth, save, save, save. How can you do that efficiently and effectively? And then all of a sudden you head into retirement and it’s like, oh wow, we got to start maybe using some of those savings. And that’s a very different conversation.
I even think back to early in my career and how I used to approach the conversation around individuals getting ready to retire and talking about spending. Well, I’m almost embarrassed to bring and mention this, but my question about spending used to be like, well, hey, how much do you need to live off of on a month in, month out basis? And that was it.
There wasn’t much else on the agenda from that. We took that information, we started building these complex financial plans around it. And looking back, I really didn’t give it the justice that it deserved, really not even a conversation. Let’s move on from the fact that I didn’t fact check that number and really get down into helping families understand, was that really what we’re spending? But aside from that-
Walter Storholt:
But that’s the key part, right? If that number was accurate then they’re okay. But you’re seeing it’s not accurate hardly ever, right?
Tyler Emrick:
Well, I think it’s harder to maybe wrap your arms around than what it maybe originally seems. I think a lot of families have a general feel, but not every family, I think, has a budget where they’re going into an Excel and we’ve got a nice, beautiful line by line list of spending out there. It’s a little bit more complex than that.
So yeah, I definitely think it’s worth that conversation,. And maybe even more so trying to wrap your arms around and understand, well, how is this really going to change over retirement? We’ve done, I don’t know, countless podcasts on retiree spendings and getting down into some of the nitty-gritty research on, well, what normally happens for retirees and spending.
But you just use the same number that you’re spending a year out from retirement, a lot of times I could argue that, well, you get down into the weeds on some of that, some of that spending is going to fall off. Maybe you’re going to add some in retirement. And it’s just not this flat projection of a spending continues to stay the same. It’s much more lumpy, I guess.
Walter Storholt:
Lumpy is a great word for it ’cause I could even see it’s not just this nice drawdown either, ’cause there may be different life events that pop up that you are going to have those lumpy years and that bounce. Yet your income, if you set it and forget it, won’t follow that same lumpy approach.
Tyler Emrick:
True. So you can see the-
Walter Storholt:
[inaudible 00:11:57] the problems that get created. Yeah.
Tyler Emrick:
Well, absolutely. And you can start to see some of the issues with just assuming that, hey, spending stays exactly the same over the next 30 years. 30 years is a long time. Hopefully we’re all going to live happy, healthy retirements and we can get down into the argument of life expectancy and all that good stuff.
But sure, these projections are a long time and you start making some of these baseline assumptions on spending and just taking it at face value and not giving it maybe some of the conversation it deserves, we might be making decisions off of bad information. Of course, we always want to get back into the research and the study on this.
So the article that I’m referencing, it talked about this study published by the Journal of Financial Planning, great resource for a lot of advisors out here, but the study is called Spending in Retirement: Determining the Consumption Gap.
And really, the gist of why they brought that up was speaking to the fact that those retirees in the top quintile, which top 20%. Fact check me on that, right, Walt?
Walter Storholt:
Okay.
Tyler Emrick:
Top 20%. So top 20% of retirees-
Walter Storholt:
Quintile, right? Yeah. So that would be break it into five, 20%. It’s okay.
Tyler Emrick:
Okay, it’s all right. I’m not sore eyed today.
Walter Storholt:
You’re trying to get a little egghead alert there. I don’t know. Quintile.
Tyler Emrick:
I know. Yeah, I can do some of the basic stuff. So the top 20% of wealthiest retirees, which I’m going to take a step back here for a second, so if you’re a listener going, “Hey, that’s not me.” Well, to put numbers on that, that’s someone with maybe a million and a half net worth.
Walter Storholt:
Okay. Net worth?
Tyler Emrick:
So half a million a house paid off, a million dollars in a retirement plan, hey, you’re in the top quintile. So we’re talking about you.
Walter Storholt:
Easier to end up there than you think maybe for those who are doing a good job.
Tyler Emrick:
Absolutely, ’cause we’re thinking about your entire net worth here when we’re looking at some of those numbers. But the study came out and said, “Well, those retirees often end up wealthier in their eighties than they were in their sixties,” which is astounding to me.
Walter Storholt:
Wow. Yeah.
Tyler Emrick:
So your wealth grows over the course of retirement.
Walter Storholt:
I got to say that again. Wealthier in their eighties than in their sixties.
Tyler Emrick:
Correct. Yep.
Walter Storholt:
interesting.
Tyler Emrick:
So you retire in your early sixties so that your net worth increases over that 20-year time period.
Walter Storholt:
As you’re not working, which is impressive.
Tyler Emrick:
It is, right? So rather than depleting your funds, using them, these retirees are really facing the opposite challenge. They worked all their lives and they stressed about saving and being able to hit this crescendo of retirement, and now they’ve changed that stress to inadvertently trading it to the stress of spending and having the confidence to use that wealth that they’ve built.
Now, hey, don’t get me wrong, if your wealth goes up over 20 years in retirement, okay, that’s great, that’s wonderful. But having the conversation and understanding that is that really what you want? Are you using your funds to the best of their ability and the use case and living your life to the fullest?
Walter Storholt:
Some people want to use those funds.
Tyler Emrick:
And they want to do it in a very secure and reasonable way. And it’s not always apparent and easy to wrap your arms around, hey, I can spend now and not give up my eighties and nineties and still be okay and accomplish all those long-term goals. Because again, we’re talking a 20, 30 year retirement here. I think a lot of what we do as a financial advisors are really trying to help families quantify that decision and make that decision, and you’ll feel comfortable about doing it.
Walter Storholt:
That’s permission, right? That’s hey, I can take two more trips a year to go see the grandkids or to go on that European vacation or Asian vacation or whatever it may be each year. I could have been doing that the whole time. You don’t want to get to your eighties and realize you could have done all those things you hoped to have done, but held back on. So do you find a lot of your clients are just looking for that permission sometimes to take those steps?
Tyler Emrick:
Yeah, I think sometimes. And it’s just being comfortable with the decision. And of course, there are a number of families where, hey, we’re perfectly fine with our spending and the lifestyle that we live, and they’re very comfortable with how they’re using their money, and that’s perfectly fine.
The question is, which are you and which camp do you fall in? And empowering yourself to be able to make those decisions and feel comfortable doing it. You look at all the old planning tools that individuals have used over the years to try to help answer this question and wrap their arms around that spending.
We’ve talked about the 4% rule, which of course, I think you look back over the data, two-thirds of cases, those individuals that use that as a rule, double their wealth over the course of their retirement. You also can look at the opposite and look at that sequence of return risk.
And hey, if you’re pulling out 4% and you run into a 2008 market crisis, is that going to be sustainable and still going to fit? So you can pick and choose it from both ends of the spectrum there, but you’d grow from-
Walter Storholt:
Just shows me there’s a wide range of outcomes, which is what we don’t really want. We want to know with a little bit more surety what’s going to happen.
Tyler Emrick:
Correct. Well, and too, you want to be tracking, not necessarily tracking it, but having a conversation around, well, is the boat going in the right direction on a year in, year out basis? It’s almost not a set it and forget about it thing.
Sometimes those spending goals and aspirations might change relative to what account balances are doing in the market or what life circumstances that are coming up and doing. So things can change on a fly. And having an open forum where you can have those types of conversations, I think are a lot more impactful as opposed to just saying, “Yep, I’m going to pull 4% out this year, put in my checking account. And if I use it, I use it. If I don’t, I don’t.”
Walter Storholt:
The 4% rule is not lumpy.
Tyler Emrick:
Yes, not lumpy at all. Exactly right. And too, when you even look at some of the more complex planning tools that we use to try to talk about this conversation, Monte Carlo simulation comes up all the time. We use Monte Carlo simulation.
Walter Storholt:
That just sounds fancy. That sounds like something you discuss over tea with the pinky out. Have you run your Monte Carlo simulation recently?
Tyler Emrick:
That’d be a good conversation with her, talking about Monte Carlo simulation. But no, you think about how we present those results when we run those types of tests. And all we’re doing in its most basic form of Monte Carlo simulation is taking your assets, taking your spending, changing the rate of return you get, and seeing if we can run you out of money by your mid-nineties. And if we don’t, that’s a successful trial. And then we’ll go back in, change the rate of return and see if we can run you out.
Walter Storholt:
So you’re trying to fail in a Monte Carlo simulation?
Tyler Emrick:
Yeah, we’re seeing what it looks like. And the way we present those results is we tell you what percentage of those tests or trials were successful. As with anything, we’re all overachievers. We all want to get the best A we can. Everybody wants 99%.
And you look at a plan like that and you shut the book, hey, my plan’s at 99%, I’m good. Well, okay. Well, that just tells you that you’re going to have a multitude of money left at the end of the plan. Is that your goal? Is that what you want? You want to maximize your estate?
Or are you going to use that information to say, “Hey, am I adequately living the lifestyle and spending the way that I want to now?” And empowering some of those decisions in the now and taking it maybe one step further and really trying to communicate well, what do those results mean for me and my family? And how can-
Walter Storholt:
Buffer is good, but we don’t want too much buffer. It can have the opposite problem.
Tyler Emrick:
It can. Well, and too, this is where we get back to understanding the families that we work with. Well, what are their goals? Are your goals to have an abundance of buffer and have a huge estate and write a big check to family members when you pass and have it be there?
That might be a different conversation. And we would interpret those results a little different as opposed to talking to a family who maybe has no kids and they have a good amount of savings, and they’re still starting into retirement and thinking through how they want to use that money.
Those might be two different scenarios. Not saying that kids are the only individuals that can inherit estate. Maybe there’s charitable goals or whatever the case may be. But understanding that, I think, can really be empowering as you start to think about, well, what does retirement look like for yourself?
Walter Storholt:
Yeah, great point.
Tyler Emrick:
Spending. How much can I spend in retirement?
Walter Storholt:
Great question.
Tyler Emrick:
We touched on that one a little bit. That one was my favorite one. So the other ones here, we might be a little more light on, so take it easy on me if I don’t give as much commentary here. So the next one, healthcare. Well, it’s a big one. It’s a big decision. The article came back and said, “Well, hey, what if I get sick?”
And in my mind, that does go to healthcare for me. I start to think about, well, how old are you? Are you going to be eligible for Medicare? If you are, how does that look? What’s the cost going to be? What type of plan are you going to look for?
If you’re one of those individuals that are trying to retire before Medicare age, so before 65, there’s a number or a host of options that are going to be available to you as you start to think about, well, what are you going to use for healthcare? Heck, your answer might be your employer plan. You can go on COBRA for 18 months.
But really starting to think about, well, what healthcare plan are you going to go on? How is it similar or dissimilar from what you’re on now through your employer? And how do you want to use these things? We’ve again, done a number of podcasts on, I think healthcare and income spending, talking about the infamous Irma or ACA tax subsidies.
These are all huge planning opportunities that as you start thinking about, well, what if I get sick? We start high level. But when you start getting down into the granularity of that decision, a lot of things financially are going to go into that, well, which healthcare plan are you going to potentially pick?
But healthcare is on the mind for a lot of retirees as it should be. There’s going to be some pretty important and sometimes timely decisions that need to get made there for sure.
Walter Storholt:
I think about my parents in their first couple of years of retirement right now, and they’re really looking forward to 2026 because they’re getting a pay raise because dad, who’s a couple of years younger than mom, will finally be able to go on Medicare, and so it’s going to be a lot less expensive than his current coverage.
And so they’re like, “We’re going to have extra funds each month.” And so they went into it knowing that, hey, we’re going to be tighter in those first few years, but we’re going to get this automatic pay raise essentially. It all points back to the spending, right?
Tyler Emrick:
Lumpy, right?
Walter Storholt:
Lumpy.
Tyler Emrick:
It’s lumpy for sure. No, it’s a great way to put it. But real life. And piggybacking off, that’s a good little segue into the next question that the article popped into, but it’s, well, what if my spouse dies first? What happens? How does our plan work? There are changes with that, whether maybe social security goes away or not. Maybe your pension plans are affected by that decision. Obviously spending.
Walter Storholt:
It’s not as simple as everything’s just cut in half.
Tyler Emrick:
No, yeah. And it can be that simple and maybe in some cases, maybe not. I think about a couple I had just met with literally just last week, and they were in a very envious situation to where they actually both had two pension plans. Well, we don’t come across that too often anymore.
Walter Storholt:
That’s pretty nice.
Tyler Emrick:
Most of the time, it’s 401(k)s. You’re exactly right. We were having conversations, and it was one of the first things they brought up, like, “Hey, we’re getting ready to retire. We’re about a year out.” That’s why a lot of families come to us during that time where they start getting serious about retirement planning.
Walter Storholt:
Again, try to come sooner if you can.
Tyler Emrick:
Yes. Right. Come sooner if you can, but that’s one of the big prompts, of course. And we were talking about their pensions and they had made the comment, “Yeah, we’re going to choose a particular payment option and, hey, does that sound right?” And didn’t necessarily give them a yes or no answer. Talked a little bit about the pension, and then we continued the conversation.
And over the course of that conversation, we actually started talking about what insurance policies they had, how they were in a unique spot where both of them had a pension plan. So if they choose maybe the joint and survivor option, that’s almost like buying life insurance. The question is, do you need that? You both have pension plans.
And by the end of it, one of the spouses actually came in and was like, “Well, I know one thing. We’re going to talk to you before we choose what we’re going to do with the pension plan. ‘Cause hey, do we take a PLOP? Do we take the joint and survivor option?” In their mind it was-
Walter Storholt:
Did you say PLOP?
Tyler Emrick:
Yeah, PLOP. So that’s the technical term for some of the individuals that… If there’s any teachers listening, you’ll be very familiar with our STRS program here. They call it a PLOP, which is essentially a lump sum where could say, “Hey, either you can have a pot of money or we’ll pay you X amount for the rest of your life.” Or whatever the case is.
So they have a couple of decisions there, where in their mind they’re like, “Nope, that’s…” Well, PLOP is real thing. I promise.
Walter Storholt:
Okay, I got you.
Tyler Emrick:
You’re trying to catch me there, I think.
Walter Storholt:
I was like, “Oh, I’m going to have to make a new sounder for PLOP, I think.”
Tyler Emrick:
We definitely don’t need a PLOP sound. But by the end of it, something, a decision that they thought was almost made in their mind, very much ingrained and thinking just by a 45-minute conversation, just trying to understand a little bit more about their situation and how that could trickle down into that pension decision, I think that’s a really good way to take a step back and look at it.
And you start thinking about, well, what happens if my spouse passes? Well, that’s perfectly in line with it. And if you look back on the studies too, some of the life expectancy stuff that’s put out there, the article that we’re talking about here today talked about how, I think it was somewhere in the range of just under age 60 is the median age for a married woman who becomes widowed.
I think just under 60 is the median age for a widow, is what they referenced there. And then they referenced that-
Walter Storholt:
Wow, that’s eye-opening.
Tyler Emrick:
Right. It seems very young, right?
Walter Storholt:
Yes.
Tyler Emrick:
And then they referenced the fact that there wasn’t much data that they said was on from the other end of the spectrum for males. But they did find it interesting and threw out some stats that said, “Well, 80% of men die married, 80% of women die single.”
Walter Storholt:
Wow.
Tyler Emrick:
Which you get down into some of these nitty-gritty numbers and I think it can be a little bit, I don’t want to say shocking, but-
Walter Storholt:
I believe that tail-end one, but that median age of becoming a widow is really shocking.
Tyler Emrick:
Yeah. Median age of widow, yep. I think it’s 59.4, as we’re being exact in here, is what was [inaudible 00:26:17]
Walter Storholt:
Yes. Well, you guys like to be exact. That’s a good thing.
Tyler Emrick:
Yeah, we try to. We try to. So the final question, as we’re wrapping up here, was-
Walter Storholt:
And I got a good story for you on this one, but introduce it first.
Tyler Emrick:
We’ll fit it in. We can fit it in. All right, so what do I want to do? And essentially they were referring to, well, what do you want to do in retirement? And I think it can really be almost as important as getting down into the nitty-gritty stuff and some of the numbers.
Walter Storholt:
Looks like that goal setting, right? Same kind of idea?
Tyler Emrick:
Sure. And I would say more so in the last couple of years, I’ve had more families come to me saying, “Hey, do you have any research? Do you have any things we can read, podcasts, whatever, just talking about the transition of what I’m going to do in retirement?” A lot of our identity can come from our careers and our professions.
Walter Storholt:
Huge.
Tyler Emrick:
And I think that the data is getting out there. Again, in the article, always talking about research, they referenced the 2023 Pew Research Center survey and really just alluded to that fact. I think they said a little over 70% of Americans view their careers as at least somewhat important and almost just under 50% categorize it as central to their overall identity. They shape our routines, our lives, everything that we do, our schedules-
Walter Storholt:
Expands what we do.
Tyler Emrick:
… they’re all shaped through our career. And really filling that gap, filling that void is not only necessarily a question of, well, what am I going to do with my time? But it can certainly become very quickly an identity of, what is my new identity?
They had a wonderful part of the article that talked about saying, hey, while you’re working, when someone asks you what you do, I’m a teacher, I work in tech. It’s a very easy answer to come out and say. Well, some individuals, when you ask, “Well, what do you do?” And you say, “I’m retired,” that might not seem as impactful or as in-depth or you get the same emotional good feelings and vibe from saying something like that.
Walter Storholt:
Sure. Well, ’cause there’s purpose attached to those other answers. But I’m retired doesn’t really have a purpose automatically attached to it. It needs more explanation.
Tyler Emrick:
You got it. You got it. So I love the trend of more of the families asking for those resources and starting to think about it and having a real conversation around, what does retirement look like? And it go back to spending. My favorite topic, spending. How are you using your money? Best case use for it and enriching your life.
Same thing for in retirement and thinking through how you’re going to be spending your time. I didn’t steal your thunder from there. I thought there was something you said you could pop into that question.
Walter Storholt:
Yeah, you did not. In fact, I think it fits into what I see as your last point here in our outline, is about relationships shifting a little bit. So I’m throwing mom and dad under the bus here. Sorry. But we were just together recently for a family graduation. My cousin was graduating college. Congratulations, Paige. Shout out on the show for you.
And it was just funny because we were all chit-chatting and hanging out. It was just a fun weekend with everybody at the same house staying together. And we got into this funny conversation, where and this was all pretty much in jest, but there was a little truth to this where mom was kind of like, “Yeah, ever since retirement, dad’s been bossing me around everywhere, and he’s treating me one of his employees.”
And the funny joke was back when they were working, it was mom. She was in HR, and we always had the joke that she would go into HR mode and treat us employees. She’s flipped in retirement and she’s just so chill and laid back. Meanwhile, dad, who managed people for the many years at the tail end of his career, he’s not anybody’s boss anymore. And so she made the connection, it was like, I think he’s bossing me around now.
And she’s having to stand up to him and be like, “Oh, you can’t boss me around.” And he was a good boss. It’s not like he yelled at people, but still, he was able to say, “You’re going to go do this.” And now he doesn’t have that in retirement. So he’s navigating that now. So, sorry, dad. Sorry, mom.
Tyler Emrick:
That’s great. I love that story, and certainly on topic. I think it hits the nail on the head of really what we’re trying to just talk about and just make individuals and families aware of that dynamic, so that way you can talk about it or think through it a little bit and just maybe not be blindsided three months in, six months into retirement and having to maybe adjust some of those thoughts on what it would look like for you.
So never too early to start thinking through that for sure. So want to finish up with maybe how an advisor should fit into maybe some of these conversations. Does that seem fair?
Walter Storholt:
Yes. As we hit into that one-year mark, what does this then all mean, and what’s the difference between me just kind of figuring this out on my own?
Tyler Emrick:
No, I think confidence in retirement is often centered around financial security, and for good reason. However, effectively managing time and figuring out how to spend it I think are just as equally as important. And you think about that advisor relationship and to help you explore that and lead that type of conversation. The article, I’ll reference back to it as I’ve done multiple times here throughout the podcast, obviously I thought it was a pretty good article.
It talked about and referenced the American Psychological Association, the APA, and really tried to draw this link between how in their world and therapy, the strength of the professional relationship is really crucial for positive outcomes. Being able to open up to your therapist or whoever you’re talking to in their profession was really, really important.
Certainly, I don’t think your financial advisor necessarily maybe needs to be a therapist, but having that confidence to be able to talk to your financial advisor in a way that really gets down to what drives you and how you want to use your money and how you want to spend your time, I think really does help drive better outcomes for sure.
And you think about the type of questions, they change over a relationship with the families that I’ve worked with now for a number of years, and I’ll go back to that couple that I referenced earlier where I was meeting with them for the first time and they were talking about their pension and thought they had their pension figured out. And by the end, they backtracked a little bit and said, “Maybe we need to take another look at that.”
But their questions at the beginning, as with many families I meet with for the first time and are trying to fill us out, are very almost direct one word answers on my end. They’re looking for a yes or no, or maybe even looking for affirmation that they’ll describe what they want to do and say, “Hey, that sounds reasonable, right?” And then are looking for that yeah, that’s great. You nailed it. You got it on the head there. You know what I mean?
And rightfully so too. The whole podcast here today was talking about the decisions that are coming at you a year out from retirement. You need to get answers to these important questions, and certainly it’s important to be direct. But as you work with your financial advisor, what I think you’ll find is over time, the questions will become less very pointed and very yes/no to more questions on, hey, can we afford to take the family to Italy?
What would it look like if we got a second home down in Florida? Hey, my kid’s struggling, I’d really like to gift them. Is that possible? How’s that work? You know what I mean? And those questions are much more, hey, big ideas. And they’re looking for us as an advisor to break down that decision, explain the important parts, explain clearly how it affects them so that way they can make the best decision for them and their family and provide those good outcomes.
So much, much less transactional, I guess, and much more philosophical and trying to understand how decisions are impacting their wealth over time. Because those are tough questions. They’re not just a simple hey, here you go a lot of times and go from there. So thinking through.
And maybe if you’re working with another advisor and you’re evaluating how you’re working with them, I think a good test is to say, “Well, how does your conversations go with that advisor?” You go in, you talk about investments, you say yes or no, or have a maybe pointed question.
Is that what you want to get out of the relationship or not? And is that really truly providing you with advice that’s what you feel like is going to put you in a better situation a year from now, 10 years from now, 20 years from now?
Walter Storholt:
It all makes sense to me. And I think you are therapists in a way, financial therapists, because you are talking about more than just the numbers. You’re problem solving, but you’re often helping the client come to their own conclusions. You’re not just giving them yes or nos. You’re helping them arrive there too and say, “Ultimately you’re the one that has to say yes or no.” And you’ve got got to help bring them to that point.
Tyler Emrick:
Yeah.
Walter Storholt:
It’s behavioral in a way.
Tyler Emrick:
And it’s not my job to force like, hey, this is the decision. This is the maximizing financial decision. That isn’t always the right decision for some families. Sometimes we make decisions that aren’t maximizing wealth or taxes or whatever the case is.
But the important part is that the individual or family that we’re talking to understands the give and the take and can adequately put themselves into empower themselves to make that decision and get them to that point is my job. This whole idea about decision making and uncertainty, this is my final point here, and then we’ll let everybody get out of here, but the article wrapped up with…
I hadn’t heard it before. Maybe you’ve ran across it on your podcast, Walt, but it was a study from the University College London, and really, what came out of this particular study is that they found that knowing there’s a small chance of receiving a painful shock can be more stressful than the certainty of one.
Walter Storholt:
Interesting.
Tyler Emrick:
So oddly enough, the most stressful scenario in this study was an individual that had a 50/50 chance of either getting shocked or not getting shocked. The participants who either knew they weren’t getting shocked or 100% knew that they were, it came out to be a less stressful decision. And I don’t know anything about shock therapy, but what I do know is what I gathered from it, which I thought is extremely important, is that our brains are wired to hate uncertainty, right?
Walter Storholt:
Yes.
Tyler Emrick:
We don’t like uncertainty, even maybe more so than the actual pain of a bad situation.
Walter Storholt:
Yes.
Tyler Emrick:
So your advisor should be giving you those insights. That’s really crucial from a financial advice standpoint to educate families and get them into a situation where they can get rid of uncertainty and certainly not add more uncertainty to their situation and really help them get through that decision path and you get on to living their lives and living a happy retirement and all that good stuff that comes from it.
Walter Storholt:
I think that’s a great visual to end things on. There are some things that are certain, there are some things that are uncertain. We can’t go to the far end of either spectrum, but it is a spectrum. And so if somebody comes in to meet with you, that goal is getting them to that more certain side of the spectrum, eliminating some of the variables, some of the unknowns.
And the further we can get up that spectrum, the more comfortable people feel, the more the planning is paying off. And that all resonates and makes tons of sense in my head. I had not heard that study before.
Tyler Emrick:
I’ll take that as a win, Walt.
Walter Storholt:
It resonates 100%, so-
Tyler Emrick:
Awesome.
Walter Storholt:
I think that’s great.
Tyler Emrick:
Yeah. But all from a simple article. Like I said, I thought it was a good one. Like I said, we’ve been on some pretty heavy topics over the last month, so we wanted to bring it back. And not that this is any less important, not that this is any less important. And yes, Walt, start your planning early, but if you find yourself one year out, you haven’t talked to anybody, hey, now’s the perfect time. Right?
Walter Storholt:
Exactly. Exactly. Well, here’s the way to do it if you do want to reach out, whether you’re within that year or approaching that one year mark from retirement, or even if it’s still four or five or even more years away, but you want to jump on the planning now and be proactive, couple of ways that you can get in touch.
The first one, of course, is to go to truewealthdesign.com. We’ve got a link for that in the description of today’s show for you. When you go to the site, you’re going to just click Let’s Talk, and you’ll be able to schedule a 20-minute discovery call with an experienced advisor on the True Wealth Team. So that’s the first step to do; truewealthdesign.com. Click on that. Let’s talk.
Or of course, you can give a call to the team, 855-TWDplan, 855-893-7526, all the contact info is in that description of today’s show, so go check it out there. Well, Tyler, go get you some tea, kick back, relax, and we’ll talk to you on the next episode, my friend.
Tyler Emrick:
Sounds good. We’ll catch you on the next one.
Walter Storholt:
Enjoy your next birthday party and we’ll see everybody next time, right back here on Retire Smarter. 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.
