The Universal Truths in Retirement

Retirement is a unique journey for each of us. The thought that there's a one-size-fits-all solution is a myth, but what if we told you there are certain universal truths that can guide every retiree?

We’ll explore the realities that all of us will face in this episode so join us as we juxtapose the individuality of retirement plans with the foundational principles that remain consistent across the board. Everyone might address each of these truths in their own way, but no one should ignore what the things we talk about today.

This list of 10 truths will be broken up into two parts so make sure you stay tuned for the next episode.

Here’s are the truths Ryan will break down:

• Everybody needs an income plan.
• Everybody needs a plan to address healthcare issues
• Nobody can consistently time the stock market successfully.
• Nobody knows how long they’re going to live.
• Money sitting in cash isn’t keeping up with inflation.

Full Transcript:

Ben: Welcome in to Candid Conversations: Retirement Talk with Ryan Cravitz. Retirement is a unique journey for each of us. The thought that there's this one size fits all solution is a myth. But what if we told you there are some certain universal truths that can guide every retiree? So today we're going to dive deep into that in this episode, and we're going to talk about how you can kind of juxtapose individuality of retirement plans with the foundational principles that remain consistent across the board.

Announcer: When it comes to financial planning. You need to cut through the jargon so that you can understand how to achieve your own retirement success. This is Candid Conversations: Retirement Talk with Ryan Cravitz of Cravitz Financial and Insurance Solutions.

Ben: Welcome in. Glad to have you on the show today. Ryan, how are you today?

Ryan: I'm doing pretty good. How about you, Ben?

Ben: Doing well. I'm looking forward to our conversation on these retirement truths because we do talk all the time about how you need to customize things, and often the answer for many questions is, it depends, truly because it depends on your situation, but there are some things out there that every retiree has to kind of follow, right?

Ryan: Absolutely. There's no doubt about it.

Ben: There's going to be a good show today. Again, if you haven't joined us before, we're glad you're here on the podcast. You can find everything online at CravitzFinancial.com. If you want to call Ryan, you can do so at 714-462-9155. So we're going to break this up into a two-part conversation because we have 10 total retirement truths that we want to talk about. We'll spend time on the first five today, plus ask Ryan a you getting to know you questions a little bit later on the show, so stay tuned for that. So our first one here, Ryan, is income planning. You can't go into retirement without an income plan, right? So that truth is, that everyone needs one.

Ryan: Absolutely 100%. And here's the thing. In your working years all throughout your twenties, thirties, forties, fifties, if you are continuing to save on a regular basis, whether that's 10%, 15%, or 20% of your income perhaps, and you still have money left over to do some fun things that you want to do and such, there's very little need in my opinion to worry about having to put together a budget and really track your monthly expenses. However, it completely changes in retirement and even just as you approach retirement and you have to formulate that game plan. Because you need to figure out, okay, what are my expenses going to be, and then how am I going to meet those expenses? And in some rare cases, someone's social security and their pension, it might be all that they need. It might give them all the money that they need to live on a monthly basis and they might be just fine.

But other times, some supplemental income is needed in addition to those income streams, and in most cases, there's no pension at all. I mean, pensions have been on the decline for years. Even the people that I see that have pensions, oftentimes it's a very small amount of money that's received on a monthly basis versus where they're getting money from, maybe social security or other income sources. So it's so important in retirement, to make sure that that income plan is put in place so that you know where you're going to get your money from and when year by year in retirement. Because by doing that, that's going to also give you that confidence and peace of mind that you're going to be okay in retirement, that you're going to be able to live and have the retirement lifestyle that you're going to want to have.

Ben: So you might have enough in place already just with what you already have, but you want to make sure you sit down, go run the numbers and make sure you don't need a more sophisticated plan. Either way, you need to make sure you have your income lined up before you get into retirement.

All right, number two here, our universal retirement truths, healthcare. We talk about healthcare a lot, the expenses there, but everyone needs to address these healthcare issues, right?

Ryan: Absolutely. It's so true. I mean everything from Medicare to possible long-term care expenses, there's a lot of decisions that need to be made, and healthcare expenses can be very expensive in retirement. And so it's important starting with Medicare when you go on that, that you understand how it works, what it covers, and what your options are. Typically, when you're 65 is when most people are going to go on Medicare. However, if you're working at an employer where you have credible coverage, meaning there's 20 or more employees, then you might stay on that company plan. But for most people, you're going on Medicare. You need to understand how part A works, how part B works, and then how does a Medicare supplement work? How does an advantage plan work? And what's the best route for you? Too often I find people get set up with a plan like that and they don't know that the other type of plan exists.

In other words, some people get put into a Medicare Advantage plan and they didn't even know that the Medicare supplement option exists or vice versa, I see. So it's important to understand both options and really what's best for your particular situation, your needs, and what's right for you might be different for your spouse as well. So make sure that you understand those and the differences between the two.

And then also, it's important to understand that Medicare doesn't cover everything as far as healthcare expenses. So you may very well need to pay for long-term care expenses. Now that doesn't necessarily mean that you need to have long-term care insurance. It is an option and there's some different types. Some I think are a little bit better than others, but it's going to depend on you and your particular situation. If buying long-term care insurance is not an option, maybe due to health reasons or you just decided it's not the route that you want to go, that's absolutely okay as long as you figured out where you're going to get the money to pay for those expenses.

On the other hand, having long-term care insurance might be something that you do want to make sure that you get. And there's different types there. There's the pay as you go type, which is picture it kind of like car insurance. If you have an accident, it's going to pay, but if you never have an accident, you're just glad that you had the insurance.

So that's one type of coverage that's there. One of the concerns with that is that when they first came out with those products is that they really mispriced it because they really didn't realize how many people would need long-term care and how long they would need it. And so there were a lot of rate increases on those types of policies. And so there's other types of products that are available too. As an example, one of them that's very popular in this arena is a life insurance policy that has a long-term care rider that you can have attached to it, which allows you to, in essence, buy a pool of money that could be utilized for either long-term care expenses while you're alive, or if you never need the money, you can have that money passed on as a death benefit to your beneficiaries.

So simply explained, if you have a $500,000 death benefit from the life insurance and you have the long-term care rider, if you need money to cover long-term care expenses, every policy is going to vary, but you're allowed to take money from the death benefit while you're live to pay for those expenses, and then any remaining money that may be there will go on to your beneficiary. So there's different ways to kind of approach that. The key thing though, again, Ben, is just making sure that you have that plan.

Ben: It sounds like there are a number of different options there potentially. So to figure out which one is best for you, again, cravitzfinancial.com, but definitely something you need to be thinking about there, healthcare.

All right. One thing we've learned even more, and it's really driven home, the point the last few years with the stock market is that no one can consistently time it successfully, right? We know that. We know that you can't try to time the market, but we really figured that out over the last few years. But that is one universal truth.

Ryan: Look, here's the thing my crystal ball broke a long time ago. The fact is, is that nobody knows what's going to happen in the stock market from one day to the next. You might hear from someone that brags about how they got out of the stock market just before the 2008 crash, and they might even claim that they know when the next big downturn is going to come, but it's unlikely that that person who guessed right in 2008 is going to nail it this time around. I live here in Southern California and so we're not too far from Las Vegas, right? You can get there in about four or five hours and if you drive and if you're hopping on a plane, it's an hour. And I can't tell you how many people have come back from Las Vegas telling me about their huge winnings that they had on the craps table, or blackjack, or even the slots or whatever else. And you hear these great stories of these great winnings, but you never hear about the losses.

Those big buildings in Las Vegas were not built on people winning lots of money, that's not how that happens. But what's more important, when it comes to investing is making sure that you have set up for yourself or with an advisor, that your portfolio is designed specifically and customized for you based upon your specific goals. When are you going to retire? Or if you're retired, how much income are you needing to pull from that and when? Or if you have other types of savings goals, what is the plan behind that? And then having the right mix of appropriate types of investments within there, whether that's stocks, or whether that's bonds, or whether that's structured notes or something else. You need to make sure that it's specific for you and your situation.

Ben: I were talking through some universal retirement truths two-part series here. We're going through the first five today. So number four, nobody knows how long we're going to live, right? You mentioned your crystal ball is broken. If we knew how long we would live, planning would be pretty easy, wouldn't it?

Ryan: Yeah, it would definitely make retirement income planning a lot easier. I mean, it's one of the biggest unknowns. If you're, let's say you're 65 and you're retiring, we don't know, are you going to live to 75 or are you going to live to be 105, right? So it definitely does make it a lot more complex. Some people like to assume how long to live based upon the longevity in their family. But with modern medicine continuing to progress and get better and better, the longevity of your ancestors becomes less and less relevant unless you have a terminal illness, you really need to plan for a long life just to be sure that you don't outlive your money. You don't want to be put in a position where you're now, let's say in you're 80, 85 years old and you're feeling like you may very well run out of money and you'll just be left with social security.

It's much better, instead, if you think realistically that your longevity that you're going to live, let's say is till 85 or 90, it's much more prudent to plan to make sure that that you're going to have the income that you need until perhaps 95 or 100. And then if you're wrong, at least you know that you have the income that you needed, that you were okay financially. And of course, along the road, if you continue to do better and better and your plan is really working out well, perhaps your investments are doing well and you want to take money and spend additional money along the way, that's all part of reviewing, and updating your plan, and giving you that option to do that. But from the get-go, a lot of people are surprised about how long they actually end up living. So make sure that you're planning ahead for that.

Ben: A lot of planning items, you want to be prepared, and if you're wrong, you know what? You're much better off than you thought you were. So this is kind of one of those cases as well. All right, one last one here, Ryan, to discuss today on this part one, you need to have money set aside for emergencies, right? It's important to have some amount of cash, but you have to always keep in mind though, that money that's sitting in cash is not going to keep up with inflation.

Ryan: Yeah, for sure. I mean, you have to have money sitting aside, of course, in checking just to pay the normal bills. Then you have to have some money in savings that's going to be there in case the roof leaks or the car breaks down. You need money in a moment's notice, it's there. You can take it and you can pay for those types of things. But you also have to think the big picture that if, again, let's say you're going to retire and you're 65 years old, just as our example, you may very well live for let's say 30 years in retirement. So some of the money that you have right now, you're going to be spending now, you're going to be spending this year. Some of that money is money that you likely won't spend for another 10, 20, or 30 years. So the way that money needs to be invested is going to be very different depending upon when you're planning to spend that money.

Ben: All right, very good. So that's the first five. We'll go through five more universal retirement truths on our next podcast, so make sure you subscribe. But if you want to follow up and go through these items we've talked about today, if you haven't accounted for these in retirement, today is the time to take the step and do so. cravitzfinancial.com, or you can call 714-462-9155.

All right, a little getting to know you, Ryan. We ask you a couple questions here on the podcast away from financial planning. I got two for you, I'll start with this one. We all like to spend time on our phone. Right? What's the app on your phone that you use the most?

Ryan: Oh, the app on my phone I use the most. I would say it's going to be YouTube.

Ben: Okay

Ryan: Would be the one, I just hopping on there, whether it's because I want to learn something or because I just want to laugh. I want to watch some funny videos. So that's probably the one that I will spend the most time on. Probably the second most would be Netflix. And it's funny these days I don't watch a full movie too often, so it might be a TV show or I'll catch part of a movie and something else. And really that has to do with, we have a five-year-old, so-

Ben: Yeah, I know it.

Ryan: Anybody with young kids knows how that works.

Ben: Yep. Absolutely. We're getting ready to go on a flight tomorrow, actually, and I've been in Netflix just downloading a bunch of shows, so I feel you completely there. All right, one more for you then, Ryan. Speaking of TV, what's the last TV show you binged?

Ryan: Well, also, again, I've got a five-year-old, so it's been over five years since I've done that. But I would say that the last one, my wife and I used to binge-watch a lot of shows. I would say the last one was probably Breaking Bad.

Ben: That was a good one. Yeah.

Ryan: Yeah. And that was a great show. I did watch Better Call Saul since then when that came out also on Netflix, but I definitely did not binge-watch that the same way.

Ben: Yeah, well, at least you didn't answer a show like Cocomelon or something so, with the young kids, I've binge-watched a lot-

Ryan: Yeah, I watched my fair share of that one too, Ben, come on.

Ben: I've watched, Gabby's Dollhouse is what I'm binge-watching with my daughter right now, quite a bit. So not the answer I wanted to give you, but the truth.

Ryan: I'll only get worried about you if you're watching it when your daughter's not there. Are you getting into these shows now, Ben? What's going on?

Ben: I haven't gotten into that quite that deep yet, but who knows? Who knows? All right, we'll wrap it up on that note. Ryan, thanks again for sharing as always, and thanks for taking through these retirement truths. I know these are so important and we emphasize the importance of retirement planning, but these are just some individual things you need to be thinking about. And again, the answer to these things and your solution, your strategies might be different than somebody else's, but you have to address for these truths. We'll do part two on our next episode, so hit subscribed is stay tuned. Ryan, thanks for your time today. Have a good week.

Ryan: You too.