Phasing Into Retirement – Is This The Right Decision For You?

Transcript

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John Stillman: Welcome once again to Wright Money Tips with Isaac Wright, chartered financial consultant and president of Financial Dynamics and Associates, serving you in the greater Richmond area. Isaac is also the author of Navigate Your Way to a Secure Retirement. You can find him online at wrightmoneytips.com if that's not where you're already listening.

John Stillman: Isaac, how are you, what's happening?

Isaac Wright: Doing good, John. Another good podcast lined up here. How are you doing?

John Stillman: I'm doing fantastic. I was about to ask you the same thing because we haven't talked about babies in the Wright household in the last couple of episodes, so I am curious to know what things are like around the house for you?

Isaac Wright: Yeah, John. No, it's good, it's good. We have a 13-year-old son and an approaching 5-month-old daughter, and you would think that that gap in a way can create some synergy in terms of having a son that wants to help babysit, and he does a great job of staying out of trouble and doing all the right things, but not quite ready to do the babysitting yet. So, you know, we've been good. We've been good. Sleep schedule's been better, and we kind of, knock on wood, made it through the hump, so we'll see how it continues to go.

John Stillman: Well, I'm glad you're awake enough to guide us through this retirement planning conversation that we're going to have today, and ...

Isaac Wright: Absolutely.

John Stillman: By the way, if you'd like to reach out to the team at Financial Dynamics at any point, the number is real easy. Locally in Richmond. Area code 804, and then it's just a very simple 777-9999 is the number to call.

John Stillman: Isaac, a lot of people I think are overwhelmed at the idea of retiring, and it's not just because of the financial aspect of it. I know a lot of people who are in fine shape, financially, they could have retired when George Bush, the first one, was president. They've been so financially sound for so long they could have retired years ago.

Isaac Wright: Years ago, yeah.

John Stillman: But they just won't do it, and it's not even a financial confidence issue, it's more of a lifestyle question. What am I going to do with myself? They can't fathom going cold turkey from working 40, 50 hours a week at a high performing job where they're in demand and they're making good money and people are relying on them and they're managing a staff to just ... nothing. You wake up in the ...

John Stillman: In fact, well, you were at this event. Several years ago, in Washington D.C. at a conference for financial advisors, George W. Bush was a guest speaker and they were doing a little Q&A with him, and I remember him talking about how weird it is that first day when he wakes up no longer as president.

Isaac Wright: As president. Yeah, I remember that.

John Stillman: He said it was this huge weight that was off his shoulders because he doesn't have his morning briefing that he's had every day for the last eight years. He doesn't have the national security briefing, but at the same time, there was this huge void.

Isaac Wright: Yes.

John Stillman: So, it was this two-edged sword of relief but also almost an emptiness, like, "What do I do with my life now?" And I think a lot of people are worried about that same dynamic. Maybe they're not even conscious of it, but that's what keeps them working because they really don't know what they do. So, how do we solve this problem of the fear of going just cold turkey into retirement?

Isaac Wright: Yeah. That's when ... I think it's a great way to lead in, John, because many of you, even though you may be in a high productive situation or maybe you're ready to retire, one of the two. There's always these feelings, you always have to balance your emotions out of figuring out what really you want. Let me say this. I mean many, many retirees today, the definition of retirement is not sitting down watching soap operas every day. That's days past. Today people want to stay dynamic. People want to be able to have the ability to continue to be meaningful with their work.

Isaac Wright: And here's the problem. What we're seeing here, we're finding people getting early retirement packages, severance packages, or just being outright let go and if you don't plan for this, your employer may plan it for you. And so you have a scenario then that you haven't put anything in place, whether you have enough money or not, and it can even create that additional stress.

Isaac Wright: So what I want to say today is this. Many employers today simply don't allow what's called a phased retirement. So, phase down, sometimes you can be able to retire, maybe go back into that same role as a consultant, but that's going away. We're finding many employers, because of HR and other issues, they don't want to deal with that.

Isaac Wright: So, in today's topic, I want to just talk about three simple things that can help you prepare for the fact that you may have a lifestyle change, whether it's on your accord or your employer's accord, related to retirement. But redefining the word retirement is phasing in some areas that you don't feel like you're going cold turkey. That makes sense, John?

John Stillman: Sure. So, give us some examples. What are the things we need to think about and what might this lifestyle look like that you're describing?

Isaac Wright: Absolutely. So, number one, do you need to make any income? Simply yes or no. Or maybe, if you don't know, you need to come in and get a financial plan. But if you have a financial plan or you would like to be able to have a second opinion on that, and you determine mutually that you don't need any "additional resources" for maintaining lifestyle, like your income is already set, you're good, your investments are enough to maintain what you think you're going to need, well, then it comes down to how driven are you by money at that point.

Isaac Wright: So, your decision related to that next step of being meaningful, if you feel like you have to be in a position of bringing in some income, and we meet with plenty of people that still need to bring in some level of income even if they want to retire from their job, they may want to make fifteen hundred, three thousand ... you know, it really can be any number, but maybe they do that in a fashion where they're in a different industry or they're consulting, potentially, within their own industry, but typically it's not with their same employer any more.

Isaac Wright: Those are things that I would say have to be ... Number one, you have to know how driven do you have to be about the income before you, what I would call, get to the next step. Okay? So, number one, everybody, how much income do you truly need to bring in? And if you don't have a financial plan to be able to get to that answer, we can help you with that. But I think that's the number one thing.

John Stillman: So, figuring out, "Am I okay to live off what I've saved or do I need to supplement that a little bit from some part-time work," like you said, some consulting maybe, not for your company but in the same industry, working with some of the contacts that you already know, just under a different umbrella than you have.

Isaac Wright: And, hey, by the way, if you do have it with the same employer, I'm not saying it's never available, but this is becoming less and less for other, let's call it, rules of the game of what HR and all these employers have to follow. So, that's number one.

Isaac Wright: And number two is this. Let's call it, you don't need little to any income. What are you passionate about? Okay. Sometimes it's a tough question. You know, the hardest thing to do is sometimes think about what you want because you've been in a routine where you really maybe haven't had to do that because you've already been in front of a situation where you're working eight, nine hours a day in a job, and you had a weekend routine. Well now, all of a sudden, you can completely turn that into a positive if you have the right mindset with this, not a negative mindset. It's a very positive mindset.

Isaac Wright: What are you passionate about? If you're passionate about playing golf and you can go to the golf course and put away carts for three days a week and play free golf, then take it, if it pays you $100 a week. But enjoy what you do. If you want to get involved with your church, whether or not that pays any income, because you've already answered the question of the income need first, now it's about really executing and thinking about where your life wants to go.

Isaac Wright: One of the most powerful things that we do here at our office is help people envision. If you go to our website, you'll see, our first meeting is an envision meeting. And it continues on to be able to, let's call it, have tweaks at that envision because you're going to have different needs, wants and goals depending on family, or depending on your own personal agenda.

Isaac Wright: So, what are you passionate about? Number two.

John Stillman: So, to summarize that point, basically, you're asking a lot of pre-retirees, "What do you want to be when you grow up?"

Isaac Wright: Yeah. It's basically a whole reset on that and sometimes people get scared about that question. And I'm telling you right now, there's no reason to be scared at all. In fact, that is a powerful position to be in. And maybe you have to come to grips about maybe some things that you should have done earlier in life, that you don't do now. That's what I kind of find, it's more of a guilt feeling.

Isaac Wright: But you know what? Man, don't cry over spilled milk. Figure out what you want to do now. You've got a life to lead. And however impactful that you want to be between who you have in your life and where you want to be, now's the time to get that done. You want to talk about a fantastic relationship. I mean that's why we serve great families, is because, you know what, when you get past the money and you start getting to those issues and you have somebody that knows who are, that's why people call, come see us and all the above. Because, that's a question, sometimes, from a communication standpoint, doesn't get addressed when you're talking about "investments".

Isaac Wright: But number two, you're right, John, is what are you passionate about?

John Stillman: So, question number one is, how much are you reliant on income, if at all?

John Stillman: Number two is, what do you want to do, what are you passionate about?

John Stillman: What's our third question answer?

Isaac Wright: Well, again, and for those of you that are workaholics, for those of you here that feel like you have to be on the productive side of anything you ever do, which is great, I think it's a good thing. I can tell you, I'm going to be that way into any aspect of my life. I feel like we're put on this earth to be productive and try to help others and all the above. So, I think the last thing I want to say is maybe not necessarily rule number three, but again, a summarization of everything is, it's time to redefine the word "work".

Isaac Wright: Just keep in mind, in the past, your definition of work, whether you were fully invested in what you did or you were ready to retire, let's figure out a time to redefine what work means. If work means four hours in the yard a week, helping with three church activities, working two days at the golf course, and maybe even working at the grocery store. I mean, there's just no limit to what you can do and what I call define your productivity around.

Isaac Wright: So, I want people to know many people today. Almost everybody we serve here today has a phased retirement. We just helped a family where the gentleman was a bus driver and just fully retired at 75, but for 10 years that's what he did. So phasing in your retirement plan and having a relationship with somebody that can see you through the general transition of normally less work as you get older due to health and other circumstances, but still leading a meaningful life.

Isaac Wright: So, if you have any questions, feel free to call at 777-9999. Of course, you can also send us a message, you can text that same number if you want to just simply text the word "tips", we'll make sure we respond back to you shortly, and just want to be as helpful as I can to make sure that you're making some good decisions towards what we discovered today.

John Stillman: 804-777-9999 if you're trying to figure out how to phase yourself into retirement. If you don't want to do it cold turkey or maybe you do want to do it cold turkey, you're just trying to figure out how to make all these moving pieces come together, reach out to the team at Financial Dynamics for some guidance. 777-9999.

John Stillman: This has been Wright Money Tips with Isaac Wright. Thanks for tuning in. We'll talk with you again soon.

Announcer: Information is for illustrative purposes only and does not constitute tax, investment or legal advice. Always consult with a qualified investment, legal or tax professional before taking any action. Advisory services offered through J.W. Cole Advisors, Inc. (“JWCA”). Financial Dynamics and Associates, Inc. and JWCA are unaffiliated entities.

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