Hello, and welcome to the Retire Once show the show designed to help you get to retirement, but most importantly, stay retired. I'm your host, Johnathan Rankin. I'm the founder and CEO of Theorem wealth management. And I'm joined as always by my lovely co-host. Hi, I'm Melissa Rankin. Thank you for joining us today.

We have a great episode in store for you. We're gonna be talking about the five top things that you need to do to make sure you are ready to retire. That's right. And before we jump into those five things, Do us a favor, hit that subscribe button, join us on this retirement paradise that we're building.

We come up with a new episode every single week. So make sure you hit that subscribe button. You never wanna miss it, never wanna miss it. And you know, maybe share it with your friend, your neighbor, share it with everybody. You come in contact with. There we go. Tell everybody, tell everybody. So let's jump into those five things, Mel.

So what we found is that it really does come down to the five things and we think. Kind of starts with your money. Yeah. Or the number one thing income needs. Yeah. You gotta figure out how much money do you actually need to retire. Now, a lot of people think let's just take my pre-retirement budget and let's just push that into retirement and we're good.

And the reality is people need to just take a second, take a few minutes and actually sit down and think about what does retirement really look like for them? What are they envisioning they want to do well? And I mean, more than that, even it comes down to what does your day to day look like? I mean, are you gonna be eating at home?

Are you gonna be going out more? Are you gonna be entertaining more? Yeah. A lot of people talk about they wanna travel more during retirement. What does that really look like? And starting to come up with the activities? You're gonna do during retirement because that's a separate line item that you're probably not spending today.

If you're still working. So coming up with what retirement looks like for you will help you determine that income need, because you've got that additional activity budget. We'll say you've got your living expenses. You've got a factor in healthcare at some point, you know? Absolutely. If you're younger than 65 years old, well, you gotta figure out how are you gonna bridge to.

If you're over 65, you know, try to plan for Medicare costs and any supplemental insurance that you might have. So once you figure out your day to day living expenses, so what does it take to keep the lights on and keep food on the table? What is your activity expense level going to be so travel, you know, social stuff, day to day, additional living expenses, and then your healthcare expenses.

You all that combined. There you go. Now you've got your income. But then what do we gotta do? Well, I mean, once you get the income out of the way or not out of the way, I mean, it'd be nice if it was just gone and outta sight, but once you have an idea of exactly what you're gonna need next, you have to think about how you're going to fund those needs your income streams.

Yep. So that brings us to step number two, figuring out your income streams now. A lot of people want to talk about social security. Now we've done episodes on social security before you could check those out. Uh, but you do have to figure out what your social security strategy is going to be. Depending on the age you're retiring.

If you are retiring before, before full retirement age, do you take it early? Do you delay it? Do you wait till 70? You know, factoring in if you're married, you know, the spousal consideration there. So there's a lot of things to factor in with social security. We're not gonna dive into all of those today, but that all goes into figuring out your income streams.

So creating that social security plan is important. If you don't know where to start, you'll feel free to schedule some time with us. We'd be happy to help walk you through that. There's a link in the description below, but creating that social security strategy, that's part of figuring out your income streams.

What are the other parts? You've got your pension. A lot of people that are retiring today, they still likely have a pension. Now, I don't know anybody outrage that has pensions , but they there's a lot of people who, but a lot of people still do. They do, and figuring out a pension strategy to maximize that, you know, you've got a couple different options.

You can, a lot of companies allow you to take a lump sum. So should you do that? Or should you take the lifetime payment? If you're taking a lifetime payment, if you're married, you. With joint and survivor. Do you take it just single life? You know, which do you take to maximize that pension for your retirement?

So you've got social security strategy, pension strategy, then you've gotta figure out if you have any other streams of income know, do you have, uh, rental property or nowadays it's popular to have Airbnbs, you know? So do you have any other income streams? You want to add all those up and that will help you figure out.

How much is leftover that you need your portfolio to fund that retirement. So figuring out those income streams is that really that second step and that five step process to make sure that you are retirement. Because, like we said, first, you've gotta figure out what you're gonna need money wise, then you've gotta figure out how you're gonna get it.

I mean yep. That leads us important. That leads us to step number three, figuring out if your portfolio is, you know, sustainable for the rest of your life. You know, so you've got the income streams that you've put together, and now there's a difference that has to be made up with your portfolio. So how do you know whether or.

That difference is going to make you run outta money, or is it going to be sustainable for the rest of your life? So there's a few different ways that you can figure out if your withdrawal rate is sustainable. Now, I think the most important one, I mean, aside from just taking the steps in the first place, because that's a big deal, kudos on doing that.

If you already have. Yeah. If not, again, we're here to help you with that, but the Monte Carlo simulation, I mean, that's huge. Yeah, we get a lot of people who ask, you know, can I just use the 4% rule? You know, we've heard of that. And we've done episodes on that where, you know, whether or not it's the 4% rule or the four and a half, or, you know, it kind of keeps changing.

But Monte Carlo simulation is something that has been pretty popular over the past. I would say 20 years, maybe a little bit more than that in terms of determining whether or not someone is going to have a successful retire. And so I think we want to look at, okay, well, what is Monte Carlos there?

Simulation. I was just gonna say, I mean, for anybody who doesn't know, let's take it back a step and explain exactly what that is. Yeah. So Montecarlo simulation, it's a model that is used to predict the likelihood of success of certain outcomes. So what'll happen is it's your Vegas odds. If you will.

Hopefully they're a lot better than Vegas thoughts. So what happens is you take your allocation and your ass allocation is the mix of different asset classes you have. So you might have stocks, you might have bonds, you might have other assets within your portfolio. And each one of those assets has a different characteristics.

They have different historical returns, different risk profiles. So you take that and you couple your withdrawal rate with that, and you run it through thousands of scenarios of market cycle. And that will give you a probability of success to say you are called 80%. You know, likely to not rent outta money, which sounds pretty good.

That sounds pretty good. Now most people shoot for a 70 to 80% likely to success. Obviously we'd all like to see a hundred percent, um, or at least 90. I mean, somewhere in that a range. Yeah. So somewhere up there, I guess if we're using school grades, even though we're talking to people who haven't been in school in what 40 years.

You're assuming that I'm assuming that that's true. I apologize about the assumption there, but, uh, there is new research that, you know, is from kitsis.com and we're gonna link to that in the show notes here. It was a really interesting research piece where they actually discuss why a 50% probability success actually isn't too bad.

Okay. 50, 50 shot, which I mean, doesn't sound great. And could you imagine if you told someone, okay, you have a one in 2% chance that your, uh, that your retirement's gonna fail.  which actually, I think aren't those, the marriage and divorce statistics also. Isn't that a, I don't, isn't a thing. Why is she thinking about this folks?

Well, no. I mean, because if you think about it's.  people with 50% knowing that that's true. People still get married. That's a good point. I didn't know where she was going with that one. So yeah, that, uh, we're trying to be a little more positive. Yeah. A lot more positive in our last episode where she was talking about your deteriorating health, but, uh, I'm a realist.

So again, that's why I feel like we have to bring it back to, I don't know something that people can relate it. Just don't be discouraged by a 50% rating. That's true because in Monte Carlo simulation failure is actually defined by depleting someone's assets without funding all their goals. But the reality is that doesn't necessarily mean that retirement is a failure.

So, you know, they point out there's a scenario that they run and it's a very detailed article. And I'll just kind of give you an example from that. Imagine you are retiring and you need a hundred thousand dollars to live. And with your social securities and your pensions, you're able to make $85,000 of that a hundred thousand.

So you need to make up $15,000 every single year and, you know, add inflation there. But what if your portfolio runs outta money? Is it really a failure for retirement to live off of 85,000 versus that a hundred that you needed? Is that really a failure? Because a lot of people can make an adjustment.

They change your budget. Yeah. And that's what they talk about is that it's not a, it's not a probability success. It's a probability that you need to make adjustments at some point, you know, which makes sense. I mean, it kind of goes back to being realistic about your budget in the first place. Yeah. We've talked to people before who said, Hey, I'm working with an advisor and they told me that I only have a 35% likelihood of success in retirement.

Is that true? Can you, well, that's not great. I mean, yeah. Can you, can you validate that?  running through that. You might hear someone say, okay, you're 50% probability of success, which means you can either delay retirement or reduce your budget now. But instead the conversation should really be okay.

There's a 50% probability that you're going to have to make adjustments at some point in retirement in the future. Not that you're going to fail just that you need to kind. Account for that failure, so to speak. Yeah. Yeah. At some point you're going to have to make spending cuts. If the, depending on market returns, at some point you're gonna have to make less spending cuts.

And if you're okay knowing that today, then yeah, go ahead and retire. But if you say, okay, I don't wanna make spending cuts well, Then yeah, delay retirement. So that, I mean, that's really the only other option. You just have to be realistic about it. Yeah. And not only that, not only about being realistic, but it goes back to what we always talk about consistently updating your retirement plan, because if you're just doing it today and you're retiring, even with a 70% probability success, Well, if we go through some sort of bear market, maybe that changes that if you're not updating that you don't really know if you need to make those adjustments or not.

So that's really step one in that CR determining whether or not your withdrawal rate is successful or not necessarily successful, but sustainable. The step number two is you gotta build a portfolio that actually supports that withdrawal rate. So if it is four or 5%, you know, building out a proper portfolio to support that is I.

I think that's really important right now is we're going through a market that has sold off. At least it's recovered a little bit, but it's still in, you know, somewhere near bear market territory. And the reality is a lot of people get nervous and they say, okay, I just, let me just sit in cash. Let me just hold off or let me sell everything.

It's a out completely. Yeah. Long term, that's not going to support anybody's withdrawal rate for the most part, unless you only need a one or 2% withdrawal rate for the rest of your. Which is probably not the case for most. Yeah. So building out that portfolio that fits your risk tolerance and making sure that supports your withdrawal rate really that's all goes into step number three, which is making sure that your portfolio can sustain your entire retirement.

Which leads us to step member four estate planning. This is something that we actually feel very strongly about. I mean, we kind of went in order of the way we think it should go. Mm-hmm  with the steps, but this one, if we could put a ding, ding, ding around it, or a star or something, this is actually a really important one estate planning.

It is. And it's something that. Almost everybody I talked to just wants to put off. Nobody wants to have the conversation about estate planning. Nobody wants to plan their death. No, you don't. And, and the reality is when we did ours, they said, okay, here's this sheet plan your funeral. And yeah, it was a, it was a very grim day.

If you will. Now I would like this on record. And so everybody could witness because if something happens to Melissa, she has it in there where she wants playing at her at her funeral. What. Another one bites the dust, another one bites, the dust, this is not made up. This is exactly the song that she would like playing at her funeral.

So, uh, now that that's on the record, it's as dark as that is. It's something that, I mean, it's important for your spouse or whoever's going to be helping out along the way to know that kind of stuff it is. And so it's a good practice to just get that outta the way before you go into retirement, because nobody really thinks about that stuff.

When they're in retirement, you probably have other plan. Probably immediate travel plans or spending time with family. You have fun. You want to, yeah, you just retired. You wanna go live the good life. And not only that, but a lot of companies nowadays, especially large corporations, they offer, you know, legal benefits in their benefits plan.

So now that open enrollments coming around the corner, you know, that might be something you might wanna look at because last I checked, it was, you know, eight or $12 a month or something like that. And that benefit usually will. Setting up a basic estate plan, you know? And so putting that together, getting that out the way to figure out if something happens to you, what happens to your money and well, and not, I mean, not just your money.

I that's true if you've got, I dunno, grandkids think, I mean, there's, it's, there's a little more to it. It's a little more involved than just, this is where your money will go. I mean, it's, you know, that's true. There are other pieces. It's your, your belongings. Well, I was trying to simplify you, but yes, it's your belongings and it's all your stuff.

He brings it back to money every time, but you know, it, it, it's a little more in depth. We'll say you're right. It is a little more in depth, but that is, that is step number four. And it's important to just get that out of the way, especially while you're working. So try to do that before you retire, because look at all of this as like a checklist, you know, you've got 1, 2, 3, 4, that was the fourth.

And now we're on number five. So that leads us into, it's actually kind of a, a great segue to it because number five is your social strategy. And we don't mean like, how often are you on Facebook or, you know, something like that, Instagram, we mean, what is your social. Kind of isolation look like. I mean, there are some crazy statistics out there about what happens once somebody retires.

Yeah. And we've all heard this kind of anecdotal evidence of so and so retired and then just, didn't just immediately passed away a couple months or years right after retirement. And so there have been studies to look at why does this happen? Well, a lot of it has to do with social isolation and I saw statistically said that social, I.

Has it as high of health risk as was it smoking 15 cigarettes a day and obesity. So, oh my goodness. That is, uh, that's not good. So there's actually, I love how he says it. Like a news anchor. That's not good.  and now see that's where we're supposed to bring in the next topic, you know, the next positive topic, but there was actually a study done, you know, how much I love my surveys and studies mm-hmm  on, uh, on shell oil retirees.

What they found is that for those who retired before 62, they actually had a higher mortality rate than people who retired at 65. And so there was other studies done. Social security actually found the same thing that men who retired at 62 have a 20% higher likelihood of death than the general population.

So why, why is that the case? There's a research study on that one too. Um, I mean, I think it kind of goes to sh not that you're retired or we're retired, but it makes sense kind of to me, because it's like on a weekend where, I mean, no offense, but this is where you might hang out and watch football or something.

Whereas I used the weekend to get all of my, like, to-dos done, but he's like, oh, good. I'll relax now. So it kind of makes sense that you would men. Are more likely to become sedentary. That is true. And just so you know, uh, it is very true in the study. This only applies to men. It doesn't apply to women in the study for some reason.

So guys, if you're watching the reason this is right there, it that's part of it, I guess, but there was actual research done. Uh, Maria Fitzpatrick of Cornell with the national bureau of economic research actually found that it's because people's lifestyle choices change and they actually get unhealthy, especially for.

Retirees that are male. Typically become more sedentary, often watch more TV. They actually smoke more out or, and drink more. So doing less smoking, more drinking, more. Probably not a recipe for, uh, for longevity there for a fulfilled retirement long life. Yeah. So you wanna figure out, okay, what are you actually going to do socially?

And how do you surround yourself with things that are going to fulfill you? You know, a lot of people worked for companies throughout their career to get themselves ready to retire that was surrounded by other people that had that engagement. And when you go to retire you after the first few months, you kind of.

It's no one here. It's kinda like the episode that we did with, uh, Matt Moline, who wrote that book on, uh, on empty nest. Yeah. Empty nesters. Mm-hmm  so, which, I mean, it, it kind of makes sense, especially if you're retiring before, say your spouse mm-hmm  because then you're going from being surrounded by people are having constant communication and interaction to really just.

Maybe waiting for the other one to get home every day, hanging out on the porch. I mean, yeah. So you want to figure out, are you actually, are you busy during retirement or are you actually fulfilled and figuring out things that you can do? And those are two different things. It really are. And you know, there are things that you can do.

You can find places to volunteer. You can do part-time work. I know we're talking about retirement and not going back to work, but for some part-time work is actually fulfilling and fun. Uh, get more active things like yoga or exercise. I would prefer exercise over yoga any day of the week, but even just going for a walk.

I mean little things. It doesn't have to be some grand thing. I mean, you, you are in retirement, but. Stay active. It's important. Stay active and stay social with friends and family, you know, and, and scheduling those things out. Making sure you have things on the calendar where you're surrounding yourself with other people.

And going back to what Melissa said, social media is a good place to start. If you don't really know where to start to get socially involved, but try to get out in the world and, and figure out how to get social, because this might not sound like it's part of retirement, but this is a very big part of retirement.

And there's a lot of studies done. The drop off of fulfillment and happiness in retirement because of that. So it's a huge adjustment. I mean, you go from every day, you know, you're gonna see 10, 15 people who, whatever, and you probably have close friends that you work with. I mean, it, it kind of all plays a role in retirement.

I have a close friend that I work with too. Uh, she, she is my cohost and we are happy that you are here. So, uh, those are the five things. And that last one I think is really important that often is forgotten. Uh, but make. That you go through those five steps before you're even ready to hit that retirement button, go use it like a checklist.

Did you knock out all these things? We also do have the retirement toolkit that you could download. I wanna link to that in the show notes as well. Make sure you check that out so you can be fully prepared and ready to retire. Uh, and that way. You have nothing that you've overlooked, nothing that you forgot and that you've crossed every T and dotted every eye.

That's the saying, right? Yep. Okay. I just wanna make sure I got that right. And before we get outta here, what do we want everybody to do? We want you to subscribe. We want you to tell everybody, you know, that's true. That's part of the being social that is. Be social and tell all of your friends that you watch this, and this is the only thing you need to be, you know, really sedentary in watching it and you can watch it on your phone or you can listen to us while you're on a walk through some sort of podcast enjoying nature.

There you go. So those are the things we want you to do. Hit that subscribe button, download that retirement tool kit. And if you have any questions, we'd be happy to have a conversation. There's gonna be a link to schedule some time with us with that. I'm Jonathan Rankin. I'm Melissa Rankin. Thank you so much for joining us.

Thank you.

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