← HerMoney with Jean Chatzky
HerMoney with Jean Chatzky
Ep 515: Stability Over Stress: Building A Retirement Plan For Uncertain Times
00:38:01
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- [00:01]
A
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B
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A
So if someone came to us and said, hey, I'm 62, I want to retire, I want to claim benefits. I don't want to wait, but I understand there's a benefit if I can delay claiming. A financial professional could say, look, you've got some assets in your 401k. Let's buy a five or eight year fixed annuity. Very easy to price. They're very short term. We can simulate your age 62 benefits. So you'd start getting an annuity which is protected, that will then give you money every month until you turn 67 or 70. Then that annuity turns off and you claim Social Security. Then that higher monthly benefit which is then inflation protected for the rest of your life.
- [01:34]
B
Hey everybody, thanks so much for joining me today on HerMoney. I'm Jean Chat sky if you have read economic headlines recently and thought, well, that's not comforting, you are not alone. Between the market swings and overall uncertainty surrounding the economy, it's an optimistic make. Even the most confident investors start second guessing their strategies. And here's the hard truth. Wall street doesn't care if you're retiring next year. It doesn't care if you're five years away. It definitely does not care if you are lying awake at night wondering if you have done enough. But there are things that you can do to feel more confident. Today, on a special episode of the Her Money Podcast, sponsored by Limra, we are talking about how to stop riding the emotional rollercoaster of the markets and start building a retirement income plan that actually feels stable, predictable and livable. Joining me are two of the smartest voices in retirement. You better believe they are never going to let me forget. I just said that. Jason Fichner is executive director of the Limra Retirement Institute. David Blanchett is head of retirement research at Prudential, a portfolio manager at PGIM, and a Limra Retirement Income Institute fellow. Welcome, guys.
- [03:00]
A
Thanks for having us, Gene, it's good to see you. And good to see you too, David.
- [03:03]
C
Good to be here.
- [03:04]
B
So together we are going to dig into how to balance the growth that you need in retirement with the protection that you need in retirement and how tools like Social Security investments and guaranteed income can work together, especially, especially when unpredictability dominates the headlines. So as I said moments ago, many listeners who are closing in on retirement feel like they're on a bit of an emotional roller coaster. There are market swings, there are ever changing headlines. We've got Fed news that seems incessant and at the end of the day, a fear of getting the timing wrong. I wonder if you think people should be worried right now and how they should be reacting if there's something to do other than panic. And Jason, let me start with you.
- [04:01]
A
So I think it's really important we start with when to retire is a very personal decision. When to claim Social Security is a very personal decision. You don't have to make them both at the same time. They are mutually exclusive. So that's one thing to keep in mind. And then the other is people shouldn't panic. I know we're seeing a lot of market news, a lot of uncertainty. Markets go up and down, tariffs are coming in. But people should have a plan. And I always say people don't plan to fail, they fail to plan. And so while market volatility can be very nerve wracking, talk with your financial professional. And if you don't have one, it's a good idea to set up a conversation with one. Even just an initial consultation with no obligation could be a good place to start talking about what you should do. Because the goal should be to set up a spending plan for your retirement where you have a full understanding of what your monthly expenses are and therefore how much monthly income you'll need in retirement. I always say income is the outcome in retirement. We're used to getting a paycheck when we work. We need to recreate that budget experience by creating a paycheck in retirement, which includes Social Security, which by the way is an inflation protected annuity, and for many additional protected income in that form of annuity on top of Social Security, which could be funded out of retirement assets or other savings. So while the timing is important, people shouldn't Panic, but talk to somebody. Make a plan. That's what's really important.
- [05:23]
B
You sound as if you're more optimistic than pessimistic. Do you agree, David?
- [05:28]
C
I guess I have both optimism and pessimism. Right. You mentioned this idea of a roller coaster, and I think that maybe Jason's point is you don't have to ride the roller coaster. Right. There's things that you can do that can significantly reduce the potential highs and lows of what may happen. And maybe I'm a realist. I'm stuck between being an optimist and a pessimist, where I'd love it if the markets would keep going up forever. I really do. It's great if they go up 15% a year forever, but it's not realistic. And so I do think it's very likely that at some point in time in the future, it could be tomorrow, it could be a year from now, it could be five years from now. We're going to have a correction. I think the question really is, if we have a correction, what does that mean for your retirement? And I think the implications of a correction are very different for people, especially those who don't have a plan. And, you know, one thing that I think is it's really important to note that I've. I've found in research with a fellow LIMR colleague, Michael Finke, that people tend to overreact or react more when they're closer to retirement. And so it does. It just feels more real right. As you're entering retirement. And so I think, to Jason's point, having a plan is just absolutely critical to understand where, if something were to happen in the market, what it means for your retirement.
- [06:38]
B
I want to talk a little bit more about that research because I experienced that sort of feeling in my own household in 2022, 2020, when the markets dropped for Covid. My. My husband is a little bit older than me, a little bit closer to retirement, and we both looked at each other with our eyes wide open and basically were like, should we get out? I mean, and we don't ask that question, right? We have a plan. I think that the feeling is a little bit of being stuck between wanting growth, wanting not to miss out on market growth, and being afraid to lose what you've built. How do you handle those feelings of. I guess I don't want to call them irrationality because they feel very real and rational, but how do you handle those feelings of wanting to just do something when the markets start to make a pretty significant move?
- [07:42]
C
Yeah, I think, you know, this is really one of the more fascinating things that I explore. I mean, all the stuff I do is fascinating, but this is more fascinating because there's different ways to think about this. One is, like, economically, you've been investing now for 30 or 40 years. Like, you are a pro. You know what happens. You would think if you just assume that humans were, like, really rational and made great choices all the time, that as you got older, approach retirement, you'd become a better investor, right? You'd be more willing to stay the course. You'd be more willing to kind of just hang on because you know that markets rally and that it's when you. When you market time, things go wrong, right? And so what this suggests, at least to me or to us, is that it's very behavioral, right? It's this idea that, you know, you only get one shot at retirement. It only is going to happen one time. And the implications of a market drop just before you retire are really significant. So I think this is where, you know, having just a plan is absolutely critical. I mean, I don't know that there's a great way to help someone understand that, you know, a down market doesn't destroy their retirement. But the key then, you know, like, so one of my rules of thumb in life for retirement is that you should have all of your essential expenses protected, right? You know, no matter what happens in the market, you're going to be okay. And I think if you, if you come at retirement from a perspective of. Of. Of protection and understanding what may happen, it maybe will, like, make it easier for you to stay invested and earn that higher return through investing in stocks over the long term.
- [09:08]
A
People hear this all the time and, you know, they say, have a plan, have a plan, have a plan. We repeat that. And it reminds me of the great American philosopher Mike Tyson, who said, everyone's got a plan till they get punched in the mouth. And I think you think about the Great Recession and Covid, and that's like a punch in the mouth of people's retirement plans. And one of the things that David and I have been doing in our focus on research with the Limeral Retirement Income Institute and the fellows, and what you're doing as well, Gene, is telling people, like, there's a lot of risk in retirement, right? You have longevity risk, inflation risk, market risk, sequence of return risk. There's all these risks. And people, like, think, well, if I'm saving, saving, saving, as David says, I'll get a pile of nest egg and. And I'll just draw down from that methodically, say a 4% drawdown rule. The problem is, as David mentioned, when you get a few years before or a few years after retirement, a drop in the market can significantly affect your ability to draw down those assets at the same level you want to do. You know, if you have a 50% reduction in the market, you can only take out then 2%, not 4. So what we're suggesting is part of that plan is to have an income and spending plan and that could be having some additional protected income on top of Social Security in the form of annuity. That way it's guaranteed. And if the markets fluctuate, you don't have to panic, you don't have to sell. In a down market, you can weather the storm. And that's what's really important.
- [10:20]
B
Both you and David just dropped two terms that I want to talk about just to make sure that people really understand them. The first is sequence of return risk. What is that?
- [10:35]
A
So I'll do that one first and David could correct me if he wants to add to it. But think about markets that go up and markets that go down. So you could have a 10% return one year, 12, the next down 5% negative. That's a sequence. The question is, when does that sequence happen based on your retirement? So if you were to retire this year, in 2026, and you had 20 years of 10% returns and the last year the market drops 50%, well, you've had now 20 years or 10 years of growth, it doesn't matter. You're near the end of your retirement, you can weather that storm. Whereas if you retire today and you get a 50% drop today, all of a sudden your resources are in half. And that typically impacts your ability to spend in retirement that sequence of return risk.
- [11:16]
B
Okay, I get it. The second term is protected. So we talk a lot about the three legged retirement stool, right? You've got Social Security, you've got your money from your 401k or however you've built your nest egg, whatever sort of account it lives in, you've got a pension, some of you. But pensions have become really rare. So David, when we talk about this three legged retirement stool in the context of you wanting to have your fixed spending protected, however you want to say it, how are you? How are you doing that?
- [11:55]
C
Sure. So again, virtually every American retiree has some form of income that is protected or guaranteed for life, right? Social Security. My parents were both public school teachers, so they've got a pension that way. And that's kind of the base.
- [12:08]
A
Right.
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C
And I think a really important, often overlooked benefit of that system is that it's an easy button for retirement. Right. You don't have to worry about how long you're going to live in the markets and all these different things. And people really like that. But as you mentioned, Gene, there's kind of shifts going on in the marketplace today. They have been for decades about how people prepare for retirement. And the role of personal savings is becoming increasingly important. So you're going to save in your workforce 401 or 403 plan, for example. You're going to build this big pot of money that you're going to use to fund your retirement. Well, the problem problem is that it's great to have money, but that pot of money probably is just your pot of money. It's not protected for how long you live. And so I think that one of the things that Jason and I talk about is kind of the potential benefits of moving back to defined benefit plans where you had this benefit that's defined for life. Now, I don't think that we're going to see employers start doing that, but you can create a defined benefit plan with your savings by things like delay claiming of Social Security or buying a lifetime income annuity. If you want protection, there are ways that you can get it. Even as our system has evolved in terms of how you save for retirement.
- [13:18]
B
A lot of people listening are very likely thinking, you say Social Security is safe, but is it really safe? Is it going to be Safe if I'm 50 years old? If I'm 60 years old, is it going to be Safe till I'm 80 or 90 years old? And is the government actually going to step in and do what it has to do in order to shore it up? I mean, Jason, you are a former deputy Social Security administrator. Let me let you take that one.
- [13:47]
A
So I think it's important to separate the myth and the fact and people's concerns about Social Security because they hear all the time that Social Security's trust funds are depleted. They hear it might be going bankrupt. So let's just start with the first thing is Social Security is not going to bankrupt. It has significant revenues coming in from payroll taxes that Americans pay today. But it is a pay as you go system. And the trust funds, which consist of treasury bills, are scheduled to be depleted around 2032. So what does that mean? It means a quote, unquote, worst case scenario is Social Security could not pay out full benefits based on the revenues coming in from payroll taxes around 2032 and there could be a 20% reduction in benefits across the board if Congress does nothing. But that's not bankruptcy. It still means you'd get 80%. So if you're planning for a worst case scenario, plan for 80% and plan around that. Now this also means that Congress would do nothing. And a lot of us have a hard time thinking that Congress would do nothing. They're very good at waiting to the last minute. Trust me, we've seen that before. But imagine having Congress up on Capitol Hill refusing to do anything and resulting in a 20% benefit cut for seniors. We don't think it's likely there's going to be some sort of increases in revenues, whether it's an increase in payroll taxes, increase in the taxable maximum for Social Security, some benefit reductions for higher income people, maybe some intergovernmental borrowing that pushes out the trust fund insolvency to further, there will likely be something. But I think our job is to say, look, we need to have a plan. And part of that plan should be you plan for the worst, you hope for the best. But let's talk about what that means in between. But it does not mean Social Security is going away. Social Security will be there for you. The question is in what form.
- [15:19]
B
This is the first time I've heard the year 2032. I, I was hearing 2034 until about a year ago and then I started hearing 2033. But is this one of those instances, instances where the clock is speeding up?
- [15:32]
A
So this is an interesting thing because if you look back at the last 20 years of the trustees reports, which come out annually around April, and I've signed five of them when I was at Social Security. The trust fund date has been scheduled or estimated to be depleted within a very short timeframe, anywhere between basically 2028 and 2045. And now it's been closer you get, the more you can fine tune that prediction and estimate. So last year was 2035. You also bought the combined trust funds, which is Social Security, and there's a disability TR trust fund. Technically they are legally separate, but Congress could draw from one. And so basically the disability insurance trust fund, which is currently solvent for a 75 year period, could buy you one year of additional retirement benefits, which is why you sometimes hear 2034 as the combined date. 2033 or 2032 has been one. Because Congress recently passed a provision to get rid of what's called the Wepon gpo, the windfall lunation provision and government pension offset. And that hasted the trust fund depletion by at least six months, if not a year, which is why we're talking maybe 2032 now.
- [16:36]
B
When people think about the challenges that the Social Security administration is facing, the response is often, well, I'm just going to get mine. I'm not going to wait. I'm going to claim when I can. Because of all of these uncertainties down the road. David, when we talk about this decision. Decision, I mean, I. I think it's arguably the most important financial decision many people make in their lifetime is when to claim Social Security. How do you think about the calculation for people?
- [17:14]
C
Sure. So I think first it's important to acknowledge that most Americans don't have a choice about when they claim benefits. Right. So for better or worse, most people have much money to save for retirement. They're going to retire around age 62. They're going to claim as soon as they retire. I think that, you know, when we talk about who should maybe claim at a different age, it's people and individuals that have some money saved for retirement, they can actively choose when to claim and also that they're in reasonable health.
- [17:38]
A
Right.
- [17:39]
C
And so when you start from there, you know, almost every paper that's been done on this, the vast majority demonstrate that there's a significant benefit to delayed claiming, just given the underlying math associated with Social Security. Now, I do think we're going to see more of that, of that I want it now perspective, given some of the information that's being flowed in the news media. I think people do honestly believe they don't understand the fact that, you know, it's still a pay as a go system. It's going to be 80% benefits. And so they're going to start saying, hey, I'm going to claim a claim as soon as I possibly can. And it is technically possible where claiming earlier could result in a larger benefit based upon how they implement a future possible cut. But I think, to be honest, for anyone that is willing to actively consider the decision, they've got money safe for retirement, they're in reasonable health. Waiting as long as you possibly can is likely to result in the highest available income. And there's different reasons for that. You know, one is that the benefits are linked to inflation explicitly. The only thing like that in the market today, it's tax advantage. There's these things called spousal Forbes. So I would just say that before you claim to your point, it's a very big deal. Take a deep breath, you know, use some online tools get some advice and guidance. What you. What you're typically going to hear is that, you know, at least wait until full retirement age. Wait as long as you possibly can, because there's just nothing else there like Social Security in terms of creating protected lifetime income.
- [18:59]
A
So let me add to that Gene, because David made a good point, but I'm gonna put some math behind it for people. So you can claim Social Security as early as age 62 or as late as age 70, but there's a penalty for every year you claim before the age of 70. So, for example, if a person's Social Security benefit was scheduled to be $1,000 a month at age 67, which is today's, quote, unquote, full retirement age, that person would get $700 if they claimed at age 62. Right. That's a monthly benefit that is now 30% less. If they delayed until age 70, they'd get a monthly benefit of $1,240 or a 24% increase from that age 67 benefit. But that age 70 monthly benefit amount is 77% higher than the age 62amount. That's huge. Now, granted, you think about the idea. Well, Social Security have a 20% haircut, but that 30% penalty from 67 to 62 is greater than the 20% benefit. So even if you got a reduction of 20%, you still have a higher base amount. So it's important to keep that in mind. And as David said, some people can't work until age 70 or 67 or maybe even past 62. So my general rule of thumb, which Dave and I have talked about, is you should claim Social Security when you need the money. But if you can afford to delay even a few months or a few years, you should. Because that inflation protected, higher monthly benefit will go a long way toward helping people have a financially secure retirement. So think about how you could structure maybe like a bridge annuities to simulate an age 62 Social Security benefit for five or eight years. And as David said, some people have 401 assets. They built up that assets. So now we got to think about how to create your own personal pension off that assets to couple on top.
- [20:40]
B
Of Social Security another term you just threw out. So I'm going to ask for a definition. Bridge annuity. What is that?
- [20:47]
A
So when people think about annuities, most often they think about a lifetime annuity. You get a payment starting on day one that lasts as long as you live. There are so many types of annuities out there and products David knows a Lot more about this than I do. He's written about several. You can get fixed income annuities, deferred annuities, you can get QLACs, there's SPIAs DIAs. You know, there are so many out there. You need to talk to a financial professional. But one of the things people are concerned about putting over a pot of money for life, they may not need to do that. They may need to do something that facilitates their ability to delay claiming Social Security. So if someone came to us and said, hey, I'm 62, I want to retire, I want to claim benefits, I don't want to wait, but I understand there's a benefit if I can delay claiming. A financial professional could say, look, you've got some assets in your 401k. Let's buy a five or eight year fixed annuity. Very easy to price, they're very short term. We can simulate your age 62 benefit. So you'd start getting an annuity which is protected, that would then give you money every month until you turn 67 or 70. Then that annuity turns off and you claim Social Security. Then that higher monthly benefit which is then inflation protected for the rest of your life. So when you think about annuities, it's not one size fits all. There's so many products, which is why it's important to talk financial, professional and think about what might be right for you.
- [22:01]
B
I want to turn and talk a little bit about spending in retirement, which is another one of those things, David, that I know that you've studied a great deal, but before we do that, we're going to take a very quick break. When I first started Hermoney, it felt like I had to figure it all out alone. Scripts, tech, design, promotion. The list was never ending. Every day brought new tasks that I just hadn't planned for. I would have loved having Shopify in my corner. Shopify is like having a built in business partner. It helps you run your online store from top to bottom. Inventory, payments, marketing, analytics, all in one place. They even offer you hundreds of beautiful templates so that your store looks just like you. And if you're stuck, They've got award winning 24, seven support and tools that simplify your work. From AI written product descriptions to social and email campaigns. Campaigns that actually convert so that you can spend more time growing your dream and less time chasing tabs. Start your business today with the industry's best business partner, Shopify and start hearing. Sign up for your $1 per month trial today at shopify.comhermoney go to shopify.comhermoney that's shopify.comhermoney this time of year, everyone's talking about new goals. Saving more, spending less, paying off debt. But at her money, we like to get some specific Take Haley, our producer. She and her husband just realized they've got a full year of weddings. One in Miami, one in Poland, another in nyc, plus engagement parties in between. And as joyful as weddings are, they are not cheap. That's why Haley turned to Monarch, a personal finance tool that helps you plan ahead, not just look back. Monarch pulls everything into one beautiful dashboard. Your budget, your accounts, your investments, and lets you project forward. Haley knows exactly what she needs to save now so she can say yes to all the fun without falling behind. Set yourself up for financial success in 2026 with Monarch, the all in one tool that makes proactive money management simple all year long. Use code hermoney@monarch.com for half off your first year. That's 50% off your first year at monarch.com with code hermoney you know that feeling when you're wearing something that just works? Lately, for me, it starts before I even get dressed because Skims has totally transformed my basics drawer. The cotton jersey full brief. That's my go to. They stay in place, they don't bunch, and after dozens of washes they are still in perfect shape. And the fits everybody triangle bralette. I think a bralette could support and flatter, but skims nailed it. Feels like a second skin, but one that makes you feel really confident. Skims just makes me feel pulled together even on the busiest mornings. And that's something I'll always recommend to a friend. Shop my favorite bras and underwear@skims.com after you place your order, be sure to let them know that we sent you select podcast in the survey and be sure to select our show in the dropdown menu that follows. And we are back. I'm talking with Jason Fichtner and David Blanchett, both from LIMRA's Retirement Income Institute, among other places. David, you've studied a lot about how people actually spend in retirement. What have you learned about their patterns, their habits and where they sort of end up feeling comfortable?
- [26:06]
C
Sure. So a few things. I mean first, everyone's retiring spend is a bit different, right? So when we do this, we're observing like thousands or tens of thousands of people and kind of pulling out overall averages.
- [26:15]
B
And I'm looking at real spending data.
- [26:17]
C
I just want real spending data. Yes. Yeah, yes. The best data sources that you can get without a doubt. So. But again, it's interesting to kind of when you do it just because everyone is so different. Right? But I think, I think it's important to define trends, right? What are the things that we see in the data that could help retirees make better informed decisions?
- [26:33]
B
Right.
- [26:33]
C
And in terms of like, like two really important takeaways, you know, one is that retirees do not tend to increase their spending every year by inflation. Okay. It's very common in financial plans to assume that, you know, if inflation was 3.1% last year, that you spend 3.1% more the following year. That doesn't track reality. What you tend to see is that as people get older, they spend a little bit less versus inflation over time. So if inflation's 3%, they might spend 1% more. Where this is really important is that it might allow you to spend more earlier in retirement. Right. If you model out, you know, you're spending increasing by inflation minus 2% a year, whatever else it is, it frees up more money earlier in retirement. So that's kind of like spending phenomenon one. Okay. Spending phenomenon two has to do with how people actually use their resources to fund retirement spending. And this one is perhaps more interesting because there's been research on the benefits of lifetime income for 50 plus years. And it's all pretty consistent where people can create more income for life when you allocate to lifetime income. So, delayed claim of Social Security, all these things. And the idea is just that when you do that, or you buy an annuity, for example, you benefit from poor fueling the, the longevity risk. Okay, but here's the thing that we don't often think about in research. Well, how will people actually feel about spending down a portfolio versus spending down lifetime income? And you know, to kind of summarize it as briefly as possible, people hate to spend anything other than lifetime income. Whether it's a qualified account, a non qualified account, wage income, capital income. People are not very good at spending down or even spending those types of wealth. People love to spend lifetime income. And this is some research with Michael Finke. The catchphrase is license to spend. But to me, like, the key takeaway point is that I think it's already come up once today in the call this idea of the 4% rule. Right? So research that's 30 years old would suggest that when you first retire, you can spend 4% of your portfolio.
- [28:36]
A
Okay.
- [28:36]
C
I think that 5% is like a better number. That's just me. Okay. But if you look at people's like spending in retirement. And you try to. This is a complicated regression analysis. Whatever. They're only spending about 2% at age 65, right? At no age are people spending near even half of what they reasonably could or should from their portfolio. So I think that there's this additional benefit from having more lifetime income. It's not just that it gives you the capacity to spend more. You actually are more willing to spend that income than you are from a portfolio.
- [29:07]
A
I want to double down this real quick because one of the things that we talk about is having a paycheck in retirement. And again, for all the economists out there, when you had Econ 101, you were taught money's fungible. It doesn't matter where a dollar comes from. A dollar is a dollar. And so a dollar coming from a paycheck or a dollar coming from your retirement account should be the exact same. But that's not how people behave. People are basically behavioral. They do mental accounting. They bucket. And to David's point, they see retirement assets differently than they do, like income coming from a paycheck or. Which is why we kind of want to structure retirement as a paycheck and retirement, make a personal pension plan. Because if people start drawing 4% or 5%, they're going to start seeing potentially some of their principal decline and they're going to be concerned. They're going to run out of money before they die. Where if they get some protected income along with Social Security, they know they're getting that every month. It becomes a budget constraint like a paycheck. When they're working, they know they can spend it and they spend it. And at David's point, they're more comfortable about it. They're more confident about it. They sleep better at night because they have that income.
- [30:03]
B
Well, two things. First of all, I saw this in real life with my mother, right? My mother had 3ish sources of income in retirement. She had Social Security. She had my father's pension because he was a teacher for a decent part of his career. And she had a retirement account mix of IRAs, mostly rollover IRAs. She did not want to spend that principal in that account. She took such pleasure in the fact that the balance was the same over 20 years from the time that my dad died until the time that she died. She actually ended up with a little bit more. I mean, it was. And she held so tight to that. I have had conversations with. With your collaborator, Michael Finka, David, about the fact that, you know, my brothers and I We said to her, mom, we don't need your money. Money, we don't need it. You want to, you want to buy something, you want to go somewhere, like, you should do that. And it didn't sink in. And as a result, I worry about maybe she didn't have as much joy as she potentially could have had in retirement. I think she had a pretty great retirement in general. But, you know, it's a thing, it's a worry that people aren't spending 2% when they could spend 4 or 5%. That's particularly in retirement when we're in those healthy years. That's a lot of sacrifice.
- [31:36]
C
What is. I think a really important point is that I don't personally enjoy saving money. I haven't met too many people out there that really enjoy talking.
- [31:42]
A
I do.
- [31:44]
C
Okay. I mean, you. But you enjoy it because you think you're going to use it eventually, right? Like, you know, like, what's the point of. I mean, I mean, I get it that that money can buy security and money can buy safety. And so I think that's where at least have your essential expenses covered. Because I think what we've seen too is that when you have more of your expenses cover lifetime income, you actually spend more from your portfolio. And the idea there is the more you have this sense of protection, the more that you're not as concerned about bad things happening, the more you're going to be willing to spend down that, that portfolio. And that's obviously different for everyone. But I just don't think that, you know, a bunch of people saving a bunch of money. Because the thing is, too, we train people to save money, right? You don't want to see your balance go down for 30 or 40 years. And then all of a sudden we have this mindset. You're supposed to just turn on withdrawals from that portfolio. That's just not realistic. And so I think that's where having a plan where you allocate this out is so important.
- [32:36]
A
I think also the one thing Gene is sort of like Stephen's mentioning this, we talk about we're saving, saving, saving. When we go into retirement, a lot of Fed professionals say, well, just do something like a 60, 40 allocation retirement of 60% equities, 40% bond. What you do is rethink the allocation, start talking about protection as an asset class. So maybe you do basically 60% equities or 50% equities, you do 20 or 30% bonds, and the rest you do protection, which could be life insurance or an annuity. But it's important to start thinking about that whole portfolio and a slice of that now being protection.
- [33:10]
B
I want to talk briefly about Gen X. One recent study showed that when it comes To Xers, about 80% say they are terrified of not having a paycheck in retirement. Many of them do not have pensions. They're the ones who are up in arms about Social Security. They're concerned about health care costs. Any different information for them? And David, are you seeing any particular strategies pop up for Xers?
- [33:38]
C
I think one thing we've seen that's interesting emerge is fears around inflation. Historically, the primary concerns of retirees were living too long. What a fascinating risk. Like I don't want to live forever, right, or healthcare risks. I think that inflation has become a top of mind risk for almost all Americans, all consumers across the board. And I think that just speaks to the idea that if you retire and you experience high early inflation, that has pronounced implications for what things cost long term. And there's ways you can address that. But again, it just gets back to having a holistic plan because there's just so many things that can go wrong in retirement. Right. And that shouldn't be, it shouldn't be the focus. But I think that's what it is because we all only have one retirement. And if you don't understand how your plan is built to address that, it just creates concern for people who are.
- [34:24]
B
10 years, 20 years ahead of those Xers. Somebody who's already retired, who's feeling uneasy with the market volatility. Jason, how would you suggest they stress test their plan?
- [34:35]
A
I think the first thing is one, again, don't panic. Talk with a financial professional. Go over your monthly expenses and match it up with your retirement income. Can you still cover your expenses? Can you still cover your expense if inflation goes up 10%? Run those types of scenarios and see how you fare. But again, don't panic if you feel like you're not. So for financial success in retirement, go talk to a financial professional and see how you can make some changes. And again, I think that's the big point. Don't panic. Talk to somebody.
- [35:01]
B
All right, last question for. Actually second to last question for both of you. You've said get a plan, get a plan, get a plan. If somebody doesn't have a planner. One of the questions I get asked all the time is how do I find the right person for me? I know you must get asked that question as well. How do you answer it?
- [35:20]
C
I mean there isn't one answer, right? I think that One, there's an increasing array of online tools that you can use to get free or almost free advice and guidance. You can always start there. The second is seek out a planner that provides an hourly service in terms of an asset center management or retainer fee. And then don't just go all in on one. Meet as many as you can to find one that you're comfortable working with.
- [35:43]
B
Jason, anything to add?
- [35:45]
A
I think that's great advice and keep in mind also to David's point, you can meet with many people and it's like buying a car. Test drive them first before you buy. But realize that a lot of financial professionals will meet with you. Either give you a free consultation or you can do like a one hour for a short fee, small fee. That's a good place to start.
- [36:01]
B
Yeah. And if you're looking for help, we've got to find a planner button that'll help you find a vetted planner on hermoney.com so that's a place to look as well. We like to end these conversations by asking guests for their top tips to just start. If you're at the point where you are thinking about these issues and you're not sure exactly what to do first. Jason, I'll start with you.
- [36:25]
A
Well, my top three would be the same for someone whether they're 25 or going in close to retirement. The first thing of course is plan. We've been mentioning plan the whole episode plan. Talk to a financial professional. Create a spending and income plan for retirement. Again, income is now the outcome in retirement. Same with the 401. Maximize your matching, do other right things, but have a plan. The second one is delay claiming Social Security. Even if you're not near Social Security age, think about the idea that you should be planning to delay claiming Social Security for as long as you possibly can up to age 70. Again, that maximum monthly benefit, it's inflation protected and it'll go a long way towards your financial security. The third is create your own personal pension using Social Security as the base that we used to call the three legged stool. Provide some additional protected income via annuity by converting some of your 401 assets in your employer plan into protect distributed income which will add to Social Security and give you that paycheck in retirement. Then use some of the remainder to save on the side for emergencies. That's the top three I would pick.
- [37:27]
B
And David, Sure.
- [37:28]
C
So mine are going to be very similar to Jason's. So I'll pivot a little bit and I'll pick three different ones. The first one I'll say is like save early and save often. You know, I don't love the word retirement. I like the term financial independence. You know, a lot of people say to themselves, I don't want to retire. Well, you want to have a choice at some point to do what you want to do. And I think, you know, the more that you save, the more you give yourself an opportunity to change your mind at some point in the future. So even if you don't see you're going to retire, give yourself the chance to kind of follow that passion in 20 or 30 years that you might really enjoy. The second is retirement isn't just a portfolio problem. If you meet with someone and they're all talking about it, sort of build an efficient portfolio, they're not focused on lifetime income. That isn't how to solve retirement. You need a holistic plan that deals with lifetime income protection, all these different things. And if someone's talking about only efficient frontiers and the stuff that I really enjoy, only then that's not what you need as a financial planner. And then finally you got to do what makes you feel good, right? I think one of the most fascinating aspects of planning for retirement is there's lots of right answers and we're going to find a plan that allows you to be comfortable doing what you want to do. And so maybe that is a lifetime income annuity, maybe it's a portfolio. But understanding kind of how it creates the income in a way that you're comfortable with, that's how you kind of truly define retirement success.
- [38:46]
B
Thank you so much for a fantastic and wide ranging conversation.
- [38:50]
C
Thank you.
- [38:51]
B
Thanks for being here. If you are looking for more resources to help plan for retirement, be sure to visit Limra's website@limra.com that's L I M R A dot com. You'll also want to check the show notes for a link to a free market stress test from our friends at Limra that will help you gauge how vulnerable your portfolio is to volatility. If you love today's episode, please take a moment to leave us a five star review on Apple Podcast. Your feedback means the world to me. Looking to grow your investing skills and make smarter decisions with Your Money in 2026? Join HerMoney's investing fix, the twice monthly women's only investment club where expert stock pickers pitch ideas and you help build the portfolio. Since launching four years of ago, our member driven picks have outperformed the S and P. Thanks to smart collaborative choices. We've got a strong track record and a community that's learning and winning together. Tap the link in the show notes and check out Investing Fix today. Her money is produced by Haley Pascalides and our music is provided by Video Helper. Thanks so much for listening and we'll talk soon.