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Will You Avoid These Retirement Catastrophes?
Created: January 1, 2020
Modified: June 6, 2023

Will You Avoid These Retirement Catastrophes?

What You’ll Learn:
Have you ever wondered why your advisor spends so much time on all the scenarios you never expect to happen? It’s to avoid a catastrophe in retirement that ruins everything you’ve worked for or even causes you to return to work. Let’s discuss four scenarios that we’ve seen first-hand and talk about how you can avoid the same outcome.

When you think about that day retirement becomes a reality, can you picture the life you plan to live? We all have different visions for our future, but no one ever expects to hit adversity.

Unfortunately, that’s what happens if you don’t have a plan in place that sets you up for the retirement you want to live. On this episode of Money Wisdom, we will share four different scenarios that show what might happen if you don’t have a comprehensive retirement plan in place. Joel will also react to an eye-opening survey on student loan debt.

Let’s get started.

Student Loan Debt Increasing

The student loan issues are no secret in our country as the debt continues to pile up. There was a recent study that found student loans have tripled in the last 14 years up to $1.6 trillion. That number is hard to fathom but now it’s impossible to ignore. We discussed the study and what this debt is doing to the economy. Plus, Joel’s children each have different experiences with paying for college and he shares their stories.

[0:43] – A recent study finds outstanding student loans have tripled since 2006. There’s now $1.6 trillion in student loans out there. When will this become a major problem?

[1:58] – Here’s how Joel’s kids have dealt with paying for college.

[3:13] – Anytime there’s easy money to borrow, bubbles happen. And that’s what we have in this student loan situation. This is a real problem.

Retirement Catastrophes

As soon as you think you have things figure out, life throws you a curve ball. But sometimes it’s our own error along the way that led to the adversity we have to face in the present. Unfortunately, it happens enough for individuals in retirement that we wanted to talk about it on the podcast. When someone fails to put a proper plan in place, it makes them vulnerable to mistakes in retirement that lead to catastrophe.

Today we’re talking about four scenarios we’ve seen first-hand from people that have come into the office. You hate to see these things happen because we all work so hard to get to retirement. To watch that all go away because of an avoidable mistake is difficult to accept, but it’s a reality that faces each of us.

Let’s discuss these four scenarios, share stories of people that have dealt with these catastrophic events, and what you can do to avoid facing the same fate.

[4:12] – Let’s talk about some retirement catastrophes.

[4:39] – 1st scenario: Tell us a story about somebody later on in retirement that struggled to pay the bills because they didn’t do a good job accounting for inflation through the years.

[6:00] – 2nd scenario: What about somebody where bad tax planning really bit them?

[7:44] – Another example of this where a person bit on one of these schemes that caused a big tax burden down the road.

[9:19] – A lot of people don’t see taxes as part of the retirement planning process. 

[10:20] – 3RD scenario: Someone retires without having a realistic idea of how much they would spend in retirement.

[12:27] – Think about retirement as 35 years of unemployment. This needs to be a part of your thinking when building a plan.

[14:06] – 4th scenario: Have you seen someone that got wiped out by a market crash? Maybe they took on too much risk in retirement.

Taking Your Financial Questions

We finish off this episode by opening up the mailbag and taking a couple listener questions. The first comes from someone who has enjoyed this long-running bull market and seen big gains in their 401(k). The concern now is do you capitalize on this growth and go conservative or do you keep riding this wave. That’s what Joel will try to answer.

The second question is one that we hear from clients a lot. When the time comes to step away from work and a paycheck and begin enjoying the fruits of your labor, it can be a very difficult transition. Moving from a mentality of saving to one of spending can create anxiety and worry. First off, it’s a common feeling so don’t feel like you’re alone. And then remember that you’ve worked for years on a plan that prepared you for retirement so embrace it with excitement.

[16:48] – Mailbag Question #1: I’ve been loving the growth in my 401(k) for several years but I just don’t know how long this ride is going to last. When should I walk away from this roulette wheel?

[18:31] – Mailbag Question #2: I’ve spent 40 years saving and investing and now that I’m about to retire, I can’t comprehend the notion of taking money out now. Why does it terrify me so much?

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