Retirement Answer Man

Do you think your own behavior affects your retirement investment management? If you said no, you may want to think again. The most significant risk to your finances is not market volatility or inflation, it’s your own behavior. Over the past several episodes we have explored how our own cognitive biases affect our financial choices and this episode continues that journey. On this episode, you will learn what you can do to make better decisions to ultimately protect your money from its own worst enemy: yourself. What is heuristic? A heuristic is a psychological term for a mental shortcut that allows an individual to make a decision, pass judgment, or solve a problem quickly with minimal mental effort. Our brain constantly uses so much energy that it always looks for shortcuts. Renowned behavioral finance expert, Dr. Dan Crosby, calls this bumper sticker thinking. The 4% rule is a good example of a heuristic used in retirement planning. We need to learn to work around our mental shortcuts and truly think things through. Behavioral risk is the most significant risk to your finances In finance, there are many kinds of risks. We often worry about volatile markets or inflation. We use diversification to help us lessen the market risk but we often ignore the greatest risk to our finances. The biggest risk to your financial security in retirement is your own behavior. If you can’t control your investment behavior especially during challenging times then your retirement portfolio will suffer. Listen in to learn how to manage your cognitive biases and set yourself up for financial success in retirement. Tips for managing investment behavior Investing is a crapshoot. That’s why we diversify, in essence, diversification is an act of humility. When you diversify you are admitting that you don’t know what will happen. Put a premium on optionality. As life unfolds you need to have the ability to make changes to your plans. Don’t white-knuckle it. If you can’t sleep during volatile times then you are taking too much risk. Listen to differing points of view. Cultivate a knowledge base with diverse opinions. Redirect your energy. Once you identify your cognitive biases, set up systems to redirect your natural tendencies. Consistently receive feedback from others with different points of view. Be careful to cultivate diverse opinions. Force yourself to consider the opposite case of any decision you make. Learn to see an issue more fully from both sides. Use personal benchmarking to compare your finances to a set standard. This will allow you to look inward at what matters to you personally How I manage behavioral risk with clients When I work with my clients I have to help them manage their own behavioral risks. I do this by considering process, strategy, and tactics. Consider what you want your life to look like. What is important to you? Before making any decision, slow down and ask yourself some questions. If you slow down and center yourself you can think through any decision. Think about the decision from all sides. What does success look like? What does failure look like? What are some alternatives that you can consider? Listen to this episode of Retirement Answer Man to hear how you can manage your own behavioral risks. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN? [1:20] What is heuristic?PRACTICAL PLANNING SEGMENT [3:45] Managing behavior is the most significant risk you have to your finances[7:04] Be nimble as life unfolds[12:36] Create personal benchmarks[14:23] How I manage behavioral risk with clients as well as with myselfCOACH’S CORNER WITH B.W. [21:41] What is the Rock Retirement Club?[22:35] Do we make rational decisions?TODAY’S SMART SPRINT SEGMENT [34:02] Practice your decision-making frameworkResources Mentioned In This Episode  My article on Kitces.comRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

We all have cognitive biases that we have to account for when retirement planning. Although we can never shed ourselves of these biases we can manage them. In this episode of Retirement Answer Man, we continue to explore behavioral finance and how it affects retirement planning. Our minds like to play tricks on us and prevent us from making rational decisions. Listen to this episode to learn how to be aware of those tricks and overcome them so that you can rock retirement. What does bias mean?  Before we further explore the subject of the cognitive bias we need to have a clear understanding of the term. Bias means that we prefer one side over the other. We all have our preferences for certain things, sometimes we aren’t even aware of them. Cognitive bias is a systematic error in thinking when people are processing or interpreting information. Cognitive bias can affect our judgment. It is especially important in finance to be aware of these errors in thinking. The biggest obstacle to rocking retirement is a cognitive bias. These 7 types of cognitive bias can impact your retirement planning There are several different types of cognitive biases that can affect our decision making and impede our judgment. Confirmation bias is when we look for information to support our conclusions rather than looking at all the arguments in an objective way. Our minds are often overloaded with information and use confirmation bias to make decisions easier. Confirmation bias provides the mind with a quick shortcut to come to an answer that you already ‘know’ to be true.Loss aversion explains people’s tendency to avoid loss rather than seek a gain. Psychologically the pain we feel when we lose outweighs the joy we feel when we gain. Oversimplification tendency helps us to find simple explanations for complex matters. Retirement planning is one of those complex problems. It takes a lot of energy to think out complex solutions to complicated issues. We love those rules of thumb to help us simplify matters, but the truth is we need to seek to understand the complexity. Only then can we discover the elegant simplicity of our own unique retirement plan. Memory bias impairs us from understanding past lessons. Instead of looking back in the long-term, we look to more recent decisions to guide our plans. Recency bias is similar to memory bias. Recency bias is the reason most people buy high and sell low even though they ‘know better’. When the markets are up we become more optimistic about life. Information bias brings out our tendency to continually seek out information even when it doesn’t affect the action. It becomes a way of procrastinating to delay making decisions.Parkinson’s law of triviality means that we spend more time focusing on trivial details rather than the important issues at hand. Good investments plus good behavioral habits will help you rock retirement The worst part about these biases is we don’t even realize that we have them. The first step in overcoming a problem is to realize that the problem exists. None of us have this retirement thing all figured out. But if you can create good behavioral habits and pair those with good investments you will rock retirement. Be sure to tune in next week to learn how to create a framework to manage your cognitive biases and become a better critical thinker. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT [1:52] Check out the Grandpad to stay in touch with elderly family membersWHAT DOES THAT MEAN SEGMENT [4:35] What does bias mean?PRACTICAL PLANNING SEGMENT [6:40] You have so much information coming to you[13:43] The goal of retirement planning is to find the elegant simplicity[16:48] We become optimistic when the markets is doing well[21:21] Good investments plus good behavioral habits can help you rock retirementQ&A SEGMENT [23:44] What can you expect to pay as an individual for Medicare?[26:55] The number of publicly traded companies has declined over the past few years[34:10] Be cautious of booking travel due to the potential of travel company bankruptciesTODAY’S SMART SPRINT SEGMENT [35:40] Examine a past investment decision you have made to look for one of these biases Resources Mentioned In This Episode GrandpadRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

Life planning is one of the hardest things about retirement. Deciding when to retire can be challenging and is a decision based on more than just money. There are various types of mind tricks that we play on ourselves to talk ourselves out of making life big changes. In this episode of Retirement Answer Man, we continue the behavioral finance series by taking an in-depth look at rational decision making. Come join me to learn how you can make more rational decisions so that you can rock retirement. Our biases often get in the way of our life planning There’s a difference between being rational and rationalizing. We, humans, tend to choose the latter. Our minds often play tricks on us. Instead of making simple choices, we tend to complicate things by letting our biases get in the way. We use different types of biases like status quo bias, anchoring bias, information bias, and sunk cost fallacy to guide our decisions. Many times you know that change is coming, you can see it a mile away, but you still have a hard time navigating that change. Retirement is one of those changes. You have been preparing for it all of your life, but leaving the safety of what is known and what is easy can be hard to do. Don’t let yourself get lulled into the status quo. Has anchoring bias got you stuck in the same place? Anchoring bias is another common bias seen in retirement. People often don’t know how to live a life without constraints so they simply choose to stay in place. They choose not to see the myriad possibilities that are out there. Embrace the total freedom of retirement by exploring all of your options. Listen in to hear an interesting parable to help you understand all the opportunities you have waiting for you on the other side of retirement Are you waiting for more information? Other people are always seeking information to guide their choices. While making informed decisions is important, some keep delaying their decision to retire due to their lack of information. They think that once they have all the information they will finally be able to pull the trigger and retire. But the reality is, we will never have all the information. There is always a gap between the known and the unknown. Do you want to create memories or regrets? The sunk cost fallacy is another way people tend to rationalize themselves out of making good decisions. At your age, you have a lot of sunk costs. Don’t let those get in the way of living your life to its fullest. In the Rock Retirement Club, one of the first things that we discuss with new members is the 5 most common regrets from people on their death beds. Those regrets are:I wish I had the courage to live a life true to myself.I wish I hadn’t worked so hard.I wish I had the courage to express my feelings.I wish I had stayed in touch with my friends.I wish I had allowed myself to be happier.You don’t want to die thinking about all of those things you wish you had done. Using rational thinking and consciously stepping away from your biases can help you live your life to its fullest so that you can look back at a life full of memories rather than regrets.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [1:58] The more difficult the decision the more likely you are to choose the status quo[9:02] Sunk cost fallacy can also influence our decisionsQ&A SEGMENT [13:24] The transition from an employer-sponsored account to your money can be scary[17:20] Do you still need an emergency fund in retirement?[22:00] The difference between Medicare and Medicare Advantage[25:05] Concerns about municipal bonds TODAY’S SMART SPRINT SEGMENT [31:37] Read Who Moved My Cheese? by Spencer JohnsonResources Mentioned In This Episode PODCAST - Retirement Starts Today with Benjamin BrandtBOOK - Who Moved My Cheese? by Spencer JohnsonRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

This month on the Retirement Answer Man show we are diving deep into behavioral finance. Do you consider yourself a rational person? Most of us think we are rational people, but according to Frederick Nitzsche rationality is impossible. However, without rationality, we are bound to make poor financial decisions. That’s why today we’re going to explore our humanness and focus on how we can make better decisions. Listen in to learn how to make better financial decisions so that you can rock retirement. What is behavioral finance?  Behavioral finance is an area of finance that attempts to understand and explain observed investor and market behaviors. One question behavioral finance seeks to answer is why do investors sell during bear markets and buy during market peaks? Behavioral finance tries to explain how our humanness affects the markets. When we study behavioral finance we have a better understanding of those things about investing that don’t make sense. How do traditional finance and behavioral finance differ?  On the flip side, traditional finance assumes that investors are rational, optimizing market players. Modern portfolio theory is based on the premise that every investor is going to try to maximize returns and minimize losses in their portfolio. The sweet spot that every investor seeks is called the efficient frontier. So, according to traditional finance thinking, an investor would never deviate from the efficient frontier. Traditional finance assumes that an investor can filter information and assess the tradeoffs in order to maximize utility. But the reality is, self-deception and social influence have a huge impact on our decision making. What does Maslow’s Hierarchy of Needs have to do with finance? Maslow’s Hierarchy of Needs plays a role in our decision making as well. Many of us have learned how quickly we can move down the pyramid from self-actualization to base needs during the recent turn of events in the world. Our own pessimism and optimism have so much to do with where we lie on this psychological chart. We use self-deception, irrationality, and bias to block our ability to make rational decisions. This month my goal is to help you learn to make reasoned decisions even with all of your cognitive biases. Should market volatility affect plans to rebalance? A listener asks if she should continue her plans to rebalance her portfolio amid the recent market volatility. There are two different ways to approach rebalancing. Some choose to rebalance according to a date on the calendar. Others choose the threshold approach which means they rebalance when their portfolios begin to tip too far in one direction or the other. David Stein recommends choosing one approach and sticking with it. Listen to this episode to see what he has to say about rebalancing, taxes, and other listener questions. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN? [1:11] What is behavioral finance?PRACTICAL PLANNING SEGMENT [2:05] Why is behavioral finance important to understand?[8:12] Maslow’s Hierarchy of NeedsQ&A SEGMENT WITH DAVID STEIN [16:25] David Stein thinks that loss aversion is the most prevalent bias that people have[18:54] Should Wendy take a lump sum or payments?[23:40] A rebalancing question[27:22] What could John do to lower his capital gains tax?TODAY’S SMART SPRINT SEGMENT [32:30] Read The Behavioral InvestorResources Mentioned In This Episode BOOK: The Behavioral Investor by Dr. Daniel CrosbyBOOK: The Laws of Wealth by Dr. Daniel CrosbyMoney for the Rest of Us podcast with David SteinBOOK: Fix This Next by Mike MicalowiczRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

It’s easy to say don’t live your life based on assumptions. But how can we do that in retirement when assumptions are our way of managing uncertainties? Assumptions are basically just guesses at things we don’t know. And we need to make some assumptions to create a retirement plan. So today we’ll finish off the setting your retirement assumptions series by exploring 5 rules for setting and managing retirement assumptions. Join me to learn how you can make good assumptions so that you can rock retirement. 5 Rules for making and managing assumptions Recognize the assumptions you need to make. Even if you don’t like to make assumptions, you still have to make some to effectively plan your retirement. It’s important to recognize the assumptions that are important to retirement planning. There are obvious ones like inflation, rate of return, and longevity. But some may not be as obvious. Spending rhythms are difficult to understand in retirement and challenging to predict. You also may not understand how to live a life without the boundaries that have constrained you for your whole life. Investigate the data surrounding your assumptions. Don’t just assume blindly. Do your research. It’s good to start with historical data, but you can also think about more personal factors. One example is with longevity. You should consider your personal health and family history when estimating your own longevity.Beware of making extreme assumptions. This one can be challenging in the times of COVID-19. We tend to start believing in extremes when faced with extreme situations.Determine which assumptions have the biggest impact on your life. Next identify which ones you can control. Where those two meet is precisely where you want to focus your time and energy.Don’t trust your assumptions. Although we need our assumptions to help plan for retirement, we can’t trust them fully. This is where being agile comes into play. When you are agile you can find the blips on your dashboard and then readjust your model accordingly. Agile retirement planning can help you keep your model up to date and relevant as life changes.Why is identity such a big issue for retirees? When you retire you lose your work identity and your identity as a wage earner. It can be easy to become lost. But instead of lamenting the loss of what was you can instead take this opportunity to create a new identity that you choose. You can create this identity based on who you really are. So give it some thought, who do you want to be in retirement? OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN PRACTICAL PLANNING SEGMENT [3:00] 5 Rules for making and managing assumptionsCOACHES CORNER [16:10] Why is identity such a big issue for retirees?TODAY’S SMART SPRINT SEGMENT [28:00] Go through these rules think about how you will manage your retirement assumptionsResources Mentioned In This Episode Rock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

Once again we are tackling your retirement assumptions on Retirement Answer Man. This week we’ll discuss market assumptions. You are modeling 30 years out, so the market assumptions that you make can easily overestimate or underestimate the amount of money you will need. What kind of market assumptions have you been making with your models? What are capital market assumptions? Capital market assumptions are the assumptions that investment managers or asset allocation software use to design your pie chart. It will include what the expected returns are for the asset class. The factors include what the return assumption is, what the standard deviation is, and how each ingredient reacts with each other. We can refer to these factors as return - volatility - correlation. We try to manipulate these assumptions and put our own views on top of them. It is important to note that these are the components of your pie chart asset allocation forecast. It’s different this time… We always think that this time is different. Each major crisis has been unique. The Great Recession of 2008 hit us all hard and changed paradigms. During The New Economy of the 90s, many threw caution to the wind because they just knew that returns were always going to be 20%. But this time is different, right? This pandemic, it’s personal. The safety of our families is at stake. You can’t leave your house. But this time just like all the rest one thing stays the same. It is difficult just to try and be reasonable. What kind of historical market assumptions do you use to plan your retirement? Many people like to use the 10% number to plan their retirement model. But why do they choose 10%? Is it a nice round number? The last 5 years’ stock market returns were 7.7%. During the past 10 years, they were 15%. Over 50 years that number drops to 8.4%. And over 94 years it averages 10%. We often use these historical numbers in our models, but these numbers don’t factor in the lumpiness. These numbers vary wildly from year to year which is why linear models fall apart over time. Find the answers to your retirement questions In our Q&A segment, you’ll hear the answers to questions like, should you consolidate all of your assets in one place? How should you rollover your pretax and post-tax dollars? How hard is it to get a mortgage in retirement (even if you have a pension)? Should you use withdrawal strategies in retirement? Listen in to the end to hear all of these questions answered on this episode of Retirement Answer Man.  OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN?  [1:02] Capital market assumptionsPRACTICAL PLANNING SEGMENT [2:50] It’s different this time…[7:05] What are your assumptions that the stock market will do going forward?[10:32] It is easy to overestimate the viability of your planQ&A SEGMENT [19:15] Should you consolidate all of your assets in one place?[23:30] Is qualifying for a mortgage in retirement challenging with a pension?[29:16] Should you use withdrawal strategies in retirement?TODAY’S SMART SPRINT SEGMENT [31:20] Reexamine your market and inflation assumptionsResources Mentioned In This Episode Rock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

One of the biggest assumptions you can make in retirement is in your spending. Spending is one of the greatest financial pieces of retirement planning. On this episode, we’re talking about spending. How do you track your spending? How do you know how much you will spend in retirement? Will your spending change after you retire? Listen in to hear how to break free from your retirement assumptions so that you can not just survive retirement but rock retirement. Americans want to keep working remotely American views are changing amid this Corona disruption. According to a recent study done by IBM, 54% of Americans would like to continue working from home and 70% would like to retain the option to work at home. Major events like the one we are experiencing accelerate social trends. We are all learning a new rhythm of life and many of us like it. If you are enjoying working from home it’s time to consider, what does this make possible? Would working from home give you access to more time freedom? Would it cut down on your wardrobe and commuting costs? Listen in to brainstorm with me how you can use this new trend to perhaps extend your working life. You can’t rely on averages to plan your own spending There is a rule of thumb in retirement spending. People who make close to $50,000 per year spend about 70-80% of that in retirement. But conversely, as your wages go up your retirement spending goes down. Those making over $100,000 per year spend only about 55% of that in retirement.Another generalization about spending in retirement is household spending by age group. People under 55 spend about $57,000 per year. Ages 55-64 spend approximately $59,000 each year. But then the numbers begin to go down once people reach ages 65-74. This demographic spends $47,000 and finally those in their golden years who are 75 and older only spend $35-37,000 per year. We can look at averages and facts and figures all day long but they don’t mean anything. These averages aren’t yours. The data is a good place holder to use as you plan far into the future but in the short-term, the only figures you should be concerned with are your own. We all have different categories of spending Everyone has different ideas about what essential spending entails. I like to customize retirement spending into 3 categories: needs, wants, and wishes. Obviously the needs category includes food, clothing, shelter, and healthcare. But it is important to include a bit more than the basic rice and bean budget. Your needs category is your firewall. You want to make sure that you can really live your life on this level. The wants category may include more travel and discretionary spending. The wishes category is where you get to dream big. I encourage you to create different retirement budgets based on these 3 categories. Two ways to estimate your budget There are two approaches to create a retirement budget. If you are still a way out from retirement, one easy way to project your spending is to do a top-down budget. A top-down budget is where you estimate all of your income sources and then subtract the money you save. This will give you a ballpark figure for your current budget. As you get closer to retirement you’ll want to create a more accurate model. You can do this by forming a bottom-up budget. This is where you will get a real handle on each category of your spending. This type of budget takes a lot of work, but it’s important to be as accurate as you can as you approach retirement. One way you can really dial in your budget is to live on your projections for a year and see how that works for you. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT [1:21] Americans want to keep working remotelyPRACTICAL PLANNING SEGMENT [10:45] Spending assumptions[15:56] You can’t rely on averages to plan your own spending[17:20] Health care costs vary per age as well[23:45] We have different seasons of life[35:36] Healthcare assumptions[39:35] Two ways to estimate your budgetQ&A SEGMENT [43:49] An asset dedication question[47:41] An IRMAA correction[49:02] RMD’s for 2020TODAY’S SMART SPRINT SEGMENT [52:33] Revisit your retirement cost assumptionsResources Mentioned In This Episode  Jasnon Aten’s article in Ink magazineRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center  

 What retirement assumptions do you have? In retirement planning, we rely on assumptions for just about everything. This may seem like a small thing, but this topic is so big that we are taking the whole month of May to talk about it. Today we tackle the life assumptions: how much you plan to spend, how long you plan to work, how long you think you’ll live. Join me as we consider the different assumptions we all make when planning for retirement. What is an assumption?  Your assumptions are your windows on the world. An assumption means assuming something is true, taking it for granted. In retirement planning, we must make assumptions. Assumptions must be made to plug into the models. We assume for inflation, spending, costs, markets, longevity, and health. As you plug these numbers in, the range of potential outcomes gets wider and wider the farther out you project. And often in retirement planning, we plan as far as 40 years out. You can never get the assumptions just right but you can try to get as close as possible. We often have incorrect assumptions about how we will spend money We need to make assumptions about how we will live in retirement to be able to plan accordingly. One of the biggest inputs into the retirement plan is spending rhythm. Many people assume that they will continue to spend in retirement as they do now. But retirement spending is lumpy. It doesn’t have an even flow. In the go-go years at the beginning of retirement, we often spend a lot, then that spending slows down as life slows down. It’s hard to imagine yourself at age 70 or 80. But try to think about how you’ll be living your life at that age. We assume that retirement is like turning off a light switch One day we’re working and then the next day we stop. Right? Wrong. Retirement doesn’t have to be that way. Most people actually work for a period of time in retirement. You can take that light switch and make it a dimmer switch. If you are willing to rethink work and rethink income then you can still work and have the time freedom that you seek. You can choose pretirement and slowly But oftentimes it’s not that way. And it doesn’t have to be that way. How will longevity affect your plans? Be careful with statistics, they can fool you. We often look to statistics to plan our longevity outlook. But your health is not average and it’s not based on statistics. You need a more personalized plan. Consider where you really fall on the longevity timeline based on health, fitness, and family history. We also often assume that our mental capacity will remain the same. You may want to factor in some kinds of systems to help keep your finances running smoothly if your mental function begins to diminish. These aren’t things we have fun thinking about but they are important. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT’S THAT MEAN SEGMENT [2:54] What is an assumption?PRACTICAL PLANNING SEGMENT [6:00] We often have incorrect assumptions about how we will spend money[10:02] We assume that retirement is like turning off a light switch[14:32] Is your plan dependent upon you working in retirement? [17:07] Will helping your kids impair your retirement plans?[18:38] How will longevity affect your plans?[23:44] You also need to consider your mental capacity[26:02] Consider your assetsQ&A SEGMENT [29:20] A super backdoor Roth questionResources Mentioned In This Episode  John Hancock longevity calculator Nova Article by Kate BeckerRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center  

Beachwalker, the rockin’ retirement coach is in the house today. He joins us once a month on the show to give some helpful tips on how to create an awesome retirement. Today we’re talking about attitude. Attitude makes a huge impact on your retirement, your health, and even your longevity. Listen in to hear how a positive attitude can affect your life and stick around for the Q & A segment to hear the answers to questions you didn’t even know you had. Attitude isn’t everything, but... It’s a huge component of rocking retirement. Attitude is an important determinant of the quality of your life now and it will be so even more in retirement. The definition of attitude is a settled feeling about someone or something that is reflected in behavior. So what comes first the chicken or the egg - a great retirement or a positive attitude? What do you think? Attitude has an even bigger factor on longevity than your health People are living so much longer than they used to. 80 is the new 60. With this newfound longevity, it’s important to create a positive mindset. You can’t let every ache and pain get you down, find a way to deal with that so you can move on and make the best of your life. Studies have shown that a positive attitude impacts your balance, your mental health, and even your longevity. Aging is inevitable, being old is a choice. Robo advisors and target-date funds in retirement If you are young and accumulating your savings, target-date funds are totally fine (even though I like allocation funds better). And robo advisors are able to put your portfolio on autopilot by automatically rebalancing whenever you need it. But these tools are not set up for managing your assets in or nearing retirement. In retirement, they can lead you astray since they are not geared for distribution. How do you determine whether to take a lump sum or an annuity? Choosing between taking a pension or a lump sum is a tough call. There are many factors to consider. One factor you should think about is what other assets do you have? A pension offers flexibility if you have other assets in place. But if you are underfunded for retirement taking a lump sum would create investment risk at a time when you need to have guaranteed income sources. When planning for retirement, I like to first create a process, then a strategy, and lastly, I choose the tactics to use. You can create your own model at home using your own process, strategy, and tactics. Try modeling both choices and see where you end up. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN WHAT DOES THAT MEAN SEGMENT [3:00] Attitude isn’t everythingCOACHES CORNER SEGMENT [5:22] People who have a more positive perception of aging live longerQ&A SEGMENT [10:30] Robo advisors and target-date funds in retirement[12:43] Why isn’t catastrophic long-term care a thing?[14:30] Lump sum or annuity?TODAY’S SMART SPRINT SEGMENT [19:27] Ask yourself, what does this make possible?Resources Mentioned In This Episode BOOK - Younger Next Year by Dr. Henry LodgeRock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center

Retirement planning will never be the same. Actually there are many aspects of our lives that will never be the same. The Coronavirus disruption has been exactly that, a disruption of our everyday lives. It has affected everything from education, to work life, to retirement planning. Find out how staying intentional and agile will help you rock retirement on this episode of Retirement Answer Man. Disruption causes trends to accelerate Normally we see new trends happening but they take time to really take root. But once some kind of disruption takes hold those trends begin to accelerate. Remote working and online learning were two trends that were coming along in the world but they never really took hold until the Coronavirus disruption. These two trends have been fueled by this disruption and education and the workspace will never be the same. How do you define retirement? If you look retirement up in the dictionary it can mean several things. But none of those ring true for most people in the various stages of retirement planning. We all have our own definitions, our own versions of how we want to spend our golden years. Many of us feel that the most important thing to consider in retirement is time freedom. We want to have control over our own schedules. Plenty of people want to continue to work, but for a different purpose. The compensation may not be the same. Instead, they choose to work to give or to make an impact in the world. So what does retirement mean to you? 5 ways retirement planning is changing School and work aren’t the only aspects of life that are changing. Retirement planning is changing as well. This field has its own trends that will be accelerated by the Coronavirus disruption as well. Here are 5 trends that I see changing retirement planning.I think we were all starting to value experiences over things and that will continue to accelerate when all this is said and done. Retirement planning generally starts out as a mathematical formula and we often forget life outcomes. I think retirement planning will become less investment-focused, and more focused on creating the outcomes that are right for you. Matching our assets with our liabilities will increase in importance in retirement. This is what retirement planning actually is.People will become more focused on short-term volatility risk and may forget about long-term inflation risk and decreased buying power. Since inflation has been so low for so long we frequently ignore its risk. Pretirement will boom. Pretirement is an excellent bridge between full-time work and retirement. It doesn’t just give you cash flow in retirement it also gives you:Time freedomA purpose or something that interests youA way to help mentally ease into retirementA transition in your social networkAgency and a sense of power What trends do you think might accelerate from all of this? Let me know by responding to the 6 Shot Saturday email. OUTLINE OF THIS EPISODE OF THE RETIREMENT ANSWER MAN HOT TOPIC SEGMENT [0:40] Disruption causes trends to accelerateWHAT DOES THAT MEAN? [3:20] What does retirement mean?PRACTICAL PLANNING SEGMENT [5:35] 5 trends in retirement planningQ&A SEGMENT [20:28] How should Mitchell roll his pension so that he doesn’t get taxed for the lump sum?[22:00] What kind of stress tests can we do to prepare for retirement?[25:38] How to prioritize what’s important in stressful times[30:28] How to pursue a second actTODAY’S SMART SPRINT SEGMENT [33:24] What can you do to treat yourself?Resources Mentioned In This Episode Rock Retirement ClubRoger’s YouTube Channel - Roger ThatBOOK - Rock Retirement  by Roger WhitneyWork with RogerRoger’s Retirement Learning Center