No matter how well you plan, situations arise that can wreak havoc on your finances and create income gaps that you’re left trying to fill. With everything though, planning for these potential scenarios can lessen the burden in retirement. We’ll discuss that plus the three worlds for investing your money on today’s show.
Want to save time? Click the timestamps below to jump ahead to specific spots in the episode.
What You’ll Learn:
The fear we all face in retirement is running out of money. No one wants to worry constantly about their income, and that’s why we put a strong plan in place. But there are scenarios that create gaps in that income and can cause some problems if you aren’t prepared.
On this episode of Money Wisdom, Joel Johnson will explain the most common ways that income gaps occur in retirement. There are those that we can’t predict like a forced retirement, the death of a spouse, and the need for longterm care. If you want to read more about early retirement, check out his book Forced to Retire. Then there are two that we do know when they’re coming and that’s inflation and the loss of a paycheck after retiring.
Each of these create income gaps that put a strain on your finances unless you have steps in place to replace that income. That’s what a financial advisor can assist you with and Joel will share thoughts on each of these on the show.
Then we spend some time on the three worlds in which we invest our money: banking, insurance, and Wall Street. Each can be an effective avenue for building a portfolio, but you have to understand the pros and cons of each. Knowing things like banking is safer but the returns are smaller while Wall Street has bigger growth potential but also puts you at risk of losing everything gives you an advantage over those that don’t and it puts you in a better position to be successful.
This show will also take three listener questions about whether Roth conversions are a good idea for someone with high income, if interest rates going up are good or bad, and a couple that has differing opinions on spending a lot of money on travel early in retirement.
That’s all on this episode of the Money Wisdom podcast plus a little more so let’s get started. Here’s the list of main topics we cover (Just click on the timestamp to jump to the specific clip):
[0:40] – We’re talking about the 3 worlds of money and income gaps today.
[1:01] – First, let’s address your 401(k) and market volatility.
[1:52] – Mailbag question: Is it a bad idea to do a Roth conversion if I have a high income?
[4:50] – Mailbag question: Is it good or bad when interest rates start going up again?
[6:33] – Mailbag question: My husband wants to travel a lot as soon as we retire next year but I’m worried about outliving our money if we spend too much early on. Who’s right?
[10:46] – There are three ways to invest your money: banking, insurance, Wall Street.
[11:06] – Pros and cons of the banking world.
[11:48] – Pros and cons of the insurance world.
[13:04] – Pros and cons of the Wall Street world.
[13:54] – Let’s talk about income gaps now.
[14:08] – A forced retirement can create an income gap.
[15:23] – An income gap is created in retirement when you no longer have a paycheck coming in.
[17:09] –.Let’s assume we do everything right but none of our income streams keep up with inflation. Then we have an income gap.
[18:33] – As we get further down the road we might need more money for longterm care and we immediate have an income gap.
[20:02] – The final one we have to discuss is the death of a spouse.
“There’s good and bad for every three of these worlds and understanding those three worlds and what allocation you should have in each of these worlds is a big win.– Joel Johnson, Money Wisdom Podcast
3 Related Items & Resources:
- Simple Financial Strategies That We Often Fail to Follow
- Are These Decision-Making Impediments Impacting Your Finances?
- Why You Should Consider Rolling That Old 401(k) Over Into an IRA
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