Should I Ever Retire? Expert Advisor Weighs In on Retirement Age and More

 

 

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Introduction

 

Christina, Host
Hello and welcome! My name is Christina, and this is Anthony. We are here to talk about the question - should you ever retire? I’m excited to be featuring Copper State Wealth Management’s Anthony Rocha, and he's been working in the financial industry for about 25 years, with our credit union for about 12. 



Largest Transfer of Wealth Ever + Who's Saying They'll Never Retire

 

 

Christina, Host
Now – question: How many Americans do you think turn 65 every day in the US?
8,000 people every day are turning 65 in the United States!
So Anthony, why is it that so many people are entering this stage of life, it seems like all at once?


Anthony, Financial Advisor:
Well, it just goes back to basically one group of people and everybody knows who they are. It's just the baby boomers. - It's a very large group and it spans over a very significant amount of time. And it's going to be the largest transfer of wealth we've ever seen, which is why it's so important for them to have their estate planning and beneficiaries in order. It's really significant.

Christina, Host
Wow, yes - and it's interesting because I found that the trend is actually increasing for folks who say they're never truly 100% ready to retire. Which, is surprising because for a lot of us it feels like retirement's that end goal, where you've put in your time in your career and you get to that point and then you're ready to just relax. But 20% of people earning over a million dollars per year, say that they'll never retire.

Anthony, Financial Advisor:
Maybe, they just don't want to give up that income or lifestyle. And even more generally, I would wonder if the people that are not retiring - how many of those are not retiring because they need to continue to work OR really enjoy the work?


Christina, Host
I’m sure it can go either way! It depends on the person, the career and many other factors. I bet that some people retire from what they did all their life, and that's their opportunity to explore a different kind of side hobby or alternate career, volunteerism, etc.

 

Contact Copper State Wealth Management

 

Retirement Age Relating To Retirement Accounts

 

 

Christina, Host
So you mentioned that retirement age is the key here and that there are several different ages to be aware of. Talk to us about that.

Anthony, Financial Advisor:
Yes. What I was referring to when I said that was in regards to your retirement accounts, because there are specific ages that are really very important and it determines how you're going to be able to access or when you need to access your retirement. And so the first important age that's relevant to retirees is age 59.5. And 59 and a half is relevant to retirees because that's the first time you can really access your own money in your retirement accounts without penalty.

If it's in a traditional IRA or 401k, if you wanted to access that prior to the 59 and a half, the majority of the time you're going to pay a 10% early withdrawal penalty on top of the tax you have to pay. And so that's really important to, to most people because that extra 10% makes a big difference.

It's an IRS rule and they've designed it for accounts specifically for retirement, so they don't want people to take that money out prior to their retirement.

Christina, Host
What other ages are relevant?

Anthony, Financial Advisor:
I think the next relevant age, as it relates to your retirement accounts, is age 72. And age 72 is the first time you have to start taking money out. Now, this changed during the pandemic, there was some law changes. It used to be 70 and a half, and now it's 72 and that's related to what's called an RMD. It's a Required Minimum Distribution.

They want to be able to tax you on that money, so they run a calculation that determines how much you have to start taking out at age 72, and then that number normally goes up over the rest of your lifetime. And it's designed to really get all that money out before you pass.

 

Retirement Age Relating to Social Security

 

Christina, Host
Let’s start talking about retirement age with a different lens – social security. Tell me what ages we need to be aware of when it comes to social security.

Anthony, Financial Advisor:
I think that the first time that people need to be aware of age as it relates to social security benefits is age 62. And 62 is the first time you’re eligible for social security money.65 is the age many people have in mind because that's the first time you have access to the Medicare system. There’s no access to Medicare before 65.


Christina, Host
What is considered ‘full retirement age’?

Anthony, Financial Advisor:
Well, it’s not the same number for everyone. You’re categorized by the date you were born. So depending on when you were born, depends on what your full retirement age is. And I always tell people, go look at your social security statement and you go on the website and find this out. But most people nowadays their full retirement is somewhere on the range of 66-67.

 

 

 

Advantages of Delaying Retirement

 

Christina, Host
What are some advantages of delaying and just putting off retirement for a few years?


Anthony, Financial Advisor:
The most obvious advantage is that if you want to delay your retirement, you're still going to have an income coming in. You can continue to live the current lifestyle you have. You also can continue to save. And that also means that you're going to be able to delay taking social security, which you could delay that up to 70. And so the longer you delay, usually the larger your income payment is on social security administration.


Christina, Host
It’s so crazy that over half of people who are currently retired say that their income is less than 70% of what they were making before they retired. So if, you do the math on your own salary or whatever your household income is, and you bring that down to 70%, you think about that, that's the reality for over half of retired folks. Some make much less than 70% of final income.


Anthony, Financial Advisor:
Number one takeaway here - social security was never meant to be your end goal/primary source of income as it relates to retirement.

It's supposed to be dependent on your additional savings to make up the gap, or in many cases – your individual savings should be your primary source, because Social Security may not be around.
It's very important to have a retirement income plan, because that means you’re running projections and knowing how much you will need versus how much you currently are saving and what that’s projected to be come retirement time.
Peace of mind in having a plan is really important.


Christina, Host
Other advantages of delaying retirement?


Anthony, Financial Advisor:
Well, life expectancy increases for those who retire at 70 versus age 60.

You have a purpose. And that's what I always tell my clients that are getting ready to retire. Have a purpose of retirement. Whether, it be volunteering or having a different hobby, that's important. So I guess you want to live longer, they say work longer.
The sense of enjoyment people have from their careers plays a role in happiness as well. That's a big thing that a lot of the challenge is that this sense of just enjoyment or satisfaction they get from going to work and accomplishing things.
Another advantage - delay your social security past your full retirement age and you're going to have a much larger social security benefit. That's why I always encourage people to go onto the social security website. Back in the day, years ago, they used to send out a social security statement to you every year, showing your earnings, showing the amount your social security payments going to be. And they don't do that anymore, so you have to be proactive, actually go log in on the website and pull that. And you can just see what those numbers are projecting based on your current income.


Christina, Host
What about catch-up contributions? Tell me how that is connected to delaying retirement.


Anthony, Financial Advisor:
Catch-up contributions start helping once you turn 50. Normally, you can put as much as $19,500 into your 401k every year, as long as you have at least that much income. With the catch-up provision, you can contribute an additional $6,500 a year into your 401k. Many people are contributing much less than this on a yearly basis, but still.

So let's just say that you knew you were going to retire at age 65 and you had the capability to do the max plus your catch-up from age 50 to 65. That's going to make a significant difference to the amount that you have in retirement and what you can pull from.

Christina, Host
The last one we have here as a benefit is healthcare. I was honestly really shocked to see this statistic, but a couple in the year 2020 was estimated that they would need as much as $325,000 out of pocket, just for health care expenses from the day they retire until the day they pass. That, is a staggering number.


Anthony, Financial Advisor:
It is. And you see inflation on healthcare more than just about anything. The two things I see more inflation on is education and healthcare. So it's one of the biggest challenges I see for my clients that are planning on retiring prior to age 65, when they can access Medicare. And the reason being is that now they have to come out of pocket for their healthcare, if they want to be insured. And most people that I see nowadays, even on the low end, it's four or $500 a month to get your own personal policy. And on average, I see people spending upwards of seven, eight, $900 a month to cover that expense.

 

Two Takeaways for a Successful Retirement Age

 

 

Christina, Host
So Anthony - you're sharing information for free with our members and community, which is awesome that you're willing to do that because this is your area of expertise, this is what you spend your time helping people figure out, come up with a plan for it. So what advice can you give us?


Anthony, Financial Advisor:
When it comes to when you should retire and should you ever retire - is a very personal choice and it has many factors that people need to consider. I always want my clients to have an option. I want them to keep working because they enjoy working, not because they have to continue working. And so that's one thing that I always focus on. But I think when it comes to having a successful retirement and increasing your probability, the two things that are most important,
1. Retire with little or no debt. This will significantly impact how much you can stretch that income.
2. Maximize your retirement savings. We talked about the $19,500 and the catch-up provision. I encourage people to really save more for retirement, because the more you save, the more you're going to have a nest egg to pull from. Social security is not enough.


Christina, Host
Thanks Anthony, that’s really helpful. Everyone – please make sure you visit our survey page and take the survey to download your free Retirement Budget Worksheet as a benefit to you attending our free webinar today. Anthony – where can we reach you if members want to chat more about their specific situation?


Anthony, Financial Advisor:
My main office is what we call the Arrowhead location at 59th Avenue & Union Hills. I also cover our Payson location, I'm up there every other week. But being here at Copper State for 12 years, I have members and clients that are spread out all over the valley.


Christina, Host
Great! Thanks everyone for joining - and stay tuned because we are here doing webinars pretty often, and just wanting to share financial information with our community to help you achieve that financial prosperity and whatever that means to you

 

Copper State Wealth Management

Financial Advisor Contact Information

 

Contact Copper State Wealth Management

 

Find out more about Copper State Wealth Management  at www.copperstatewm.com

Ryan Graham - ryan.graham@copperstatewm.com 

Anthony Rocha - anthony.rocha@copperstatewm.com

Tony D'Astice - anthony.dastice@copperstatewm.com

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This article is intended to be a general resource only and is not intended to be nor does it constitute legal advice. Any recommendations are based on opinion only. Rates, terms and conditions are subject to change and may vary based on creditworthiness, qualifications, and collateral conditions. All loans subject to approval.