John good to see you today, we are talking through one of the toughest transitions in retirement: becoming a spender instead of a saver. Only one-third of retirees are actually comfortable spending their retirement money, most would rather live off Social Security pensions or income from part-time work. Now John you and I have spent hours talking through retirees’ biggest fear of outliving their money, but what about the other side of that coin— don't hoard your money and compromise your quality of life? How do you help people transition from being Savers to Spenders?

Well, that is a great question, and first and foremost, we help them understand that this is a psychological game, right? Most people claim Social Security to their detriment— why is that? Because they want that paycheck that they're used to, that's the psychology behind us. You've been so used to it for the last three or four decades, receiving a paycheck, and unless you have a pension or Social Security, you're not getting that paycheck anymore. So for a lot of people they want to hurry up and claim Social Security. So what we tell people is, “Listen, you have to develop your own type of personal pension because people with pensions in that predictable and sustainable income stream statistically have been shown that they are the happiest people in retirement”.

And in retirement you have three phases of life: the go go, the slow go, and the no-go. We want you to enjoy that Go-Go type time of years this you've worked so hard to get to this point in your life, we want you to enjoy it, we want you to have that peace of mind, we want you to have that retirement happiness. Absolutely you've earned it. A study by BlackRock found that a vast majority of retirees still had 80 percent of their pre-retirement savings to decades into retirement and one-third even grew their assets. Do those numbers surprise you? No not really, and for a couple reasons. Number one, I think for a lot of the older retirees now, you know, two decades in they still had a pension and people with pensions that aren't touching their assets. So of course they're going to grow over time if they stay invested.

Number two, you had people that claim that Social Security first took it to their retriment may not have mathematically been the right decision but their assets grew. And you know depending on the markets, you know when they retired, if you retired at the right time, and you know part of the most basic success of investing is timing and luck. If you retired at the right time then yes, your assets may have grown increasingly so you do have an action plan to help people feel more comfortable spending their hard-earned money. And the first part of that plan is to create a spending plan. And again, this same study John, found that one quarter of people do not have a spending plan. Yeah and unfortunately you know I see this all too often, people are coming in to my office they don't have an income plan and they don't have a spending plan— they're just kind of winging it. And you have to understand how much you're going to spend because if you don't have a pension, and even if you do but you're exceeding that pension in your spending, you have to understand the withdrawal rates and how long that money will mathematically last.

Number two, and I always go back to it because taxes matter, if you don't have a pension and you're taking withdrawals your spending is what dictates how much money you're taking out and your subsequent tax bill. The Second Step assess your predictable or sustainable income sources, what does that mean exactly? Yeah you have to understand how much of your money you know, no matter what the market does it will be there at the end of every month and a lot of people I think make a big mistake. That is a lot of people look at qualified dividends and interest as guaranteed income streams. I'm not knocking them as income streams, I have some clients that we've developed income streams based on it, but it's not guaranteed and it's not absolutely predictable. So you have to understand you know if you're going to have to make adjustments and what's predictable/sustainable and what is not guaranteed. And then when you've completed step one and two then the discrepancy between those two that's known as the retirement Gap.

How do you help people bridge that Gap? Yeah well you know for a long time advisors have always used Monte Carlo simulations and they've been great, but they they they confuse clients. They tell clients, “hey you have an 89 chance of success”, I don't really think that leaves clients feeling too good. No. So we use a dynamic withdrawal strategy we state-of-the-art software that we say “Hey, listen, this is how much money you can take out in good and bad times, the less predictable income stream you have if the markets are doing bad, and your Investments are doing bad you're going to have to be willing to take out uh some uh uh income adjustments”. On the downside however, we're able to tell our clients “listen if we follow this income plan and we're taking in distributions of the most tax efficient way possible we are confident we can get you to the end without having to stress about running out of money and then it all comes down to peace of mind”. Then you feel comfortable spending your money.

It's so important John. If somebody wants to talk to you about creating their own unique financial plan, what's the best way to reach you? Well, we always tell people to give us a visit and on our website www.gosecurus.com. We have a ton of resources and while you're on the website you can actually go to the Contact Us page and there you can schedule a 15-minute phone call. We'll answer any questions in our complimentary Clarity and Vision consultation or you can call us at the office: 858-935-6210 and we can get you scheduled from there.