Well, you’re retired. Now what? Some people subscribe to the “first year rule” which says that the majority of your best retirement months will all take place in the first year of retirement. So how can you be strategic during that first year and set the tone in the right way, both emotionally and financially? Helpful Information: PFG Website: https://www.pfgprivatewealth.com/ Contact: 813-286-7776 Email: info@pfgprivatewealth.com Disclaimer: PFG Private Wealth Management, LLC is an SEC Registered Investment Advisor. Information presented is for educational purposes only and does not intend to make an offer or solicitation for the sale or purchase of any specific securities, investments, or investment strategies. The topics and information discussed during this podcast are not intended to provide tax or legal advice. Investments involve risk, and unless otherwise stated, are not guaranteed. Be sure to first consult with a qualified financial advisor and/or tax professional before implementing any strategy discussed on this podcast. Past performance is not indicative of future performance. Insurance products and services are offered and sold through individually licensed and appointed insurance agents. Marc Killian: Well, you're retired. Now what? Some people subscribe to the first year rule, which says that the majority of your best retirement months will take place in that first year. So how can we be strategic during the first year and set the tone the right way, both emotionally and financially? Let's talk about it this week here on Retirement Planning Redefined. Hey everybody, welcome in once again to another edition of the podcast with John and Nick from PFG Private Wealth, as we talk about the five must do categories in year one, or things at least to be thinking about when we get to that first year of retirement. John and Nick have helped many families get to and through retirement, so it's a good conversation for us to have and get some insight from the fellows this week. If you need some help, go to pfgprivatewealth.com. That's pfgprivatewealth.com. Nick, what's going on, buddy? How are you? Nick: Good, good. Just staying busy. Can't believe it's already almost October, so time flies. Marc Killian: Yeah. By the time we drop this, it might be closer to November, so time definitely flies for sure. John, my friend, how are you doing? Are you hanging in there with the family? John: Yeah, doing well, doing well. Family's good, the girls are getting back into gymnastics, I'm trying to get them into basketball, so having some fun. Marc Killian: Okay, nice. John: Got some solar panels put up on the house before the tax credit goes away, and I'm excited to try those out, I'll keep you posted. Marc Killian: Nice. Yeah, look at that, being efficient. So share some of that information with the listeners out there in case they want to, because that's a great point, the tax credit may be going away, I think pretty soon, so maybe something worthwhile. John: Yes, end of the year. Marc Killian: Yeah. Well, let's get into this first year conversation, guys. We'll start with some financial, then we'll transition to the more touchy-feely side of things, although it's not that touchy-feely, it's just important stuff to think about. But I guess you've got to learn how to adapt, that's going to be probably the overarching theme, that first year is a heck of a gear change from the working life to the retired life, so learn how to adjust financially, I suppose. John, you want to start? John: Yeah. So the first few years, I'd have to say, are typically the most difficult for retirees to adjust. I just had a meeting actually yesterday, and the person did a great job saving, actually had a pension, good retirement accounts, and there was this fear of how much should I be spending, what should I be doing? So it was that one month, two month shock of, all right, how do I get a paycheck and what should I be doing with my time? So it's important to take a look at what was on your bucket list, what do you want to accomplish, and like we say with anything, and I know Nick's going to jump into this a little bit more, what's your strategy for income moving forward? Nick: Yeah. Especially the first year, clients tend to break into A or B as far as the structure of how they like income. So for example, we'll go through the exercise, get the expenses on paper, go through the plan so we've got a pretty good idea of what the expenses are going to look like, and then create their distribution schedule for the first year. And some people like to look at the numbers and say, let's just say that their number works out to them needing income from their investments at 8,000 a month, so some of them, and it's interesting because you kind of see the mindset, some of them will start to say, "All right, well, hey, we built in a bunch of buffers in there, I want to make sure we're not spending too much money, so let's start at 6,000 a month and let's see how that plays out over the first year." And so, one of the first questions that John and I will ask them is, "Will that prevent you from having any fun or doing any of the things that you want to do?" And if it will, then we'll oftentimes suggest that they do the 8,000, and then let's review it at the end of the year and see, hey, did savings go up, did savings go down over that period of time? Marc Killian: Yeah, that makes sense, because people will often say, "Hey, let me retire on less just so I can make the numbers work," and then it's like, well, maybe you should try that for a few months too, maybe even while you're still working. Nick: Yeah. We really look at that first year as the test period, and even to the extent a suggestion that we'll make is, especially if they've got maybe multiple credit cards they've used for different things, "Hey, consolidate the house down to one card, you can have the same account for both of you, put all your expenses on there so it's easy for us to track. We'll do a data dump at the end of the year, seeing where the money's actually going." And then, all we've got to do is we look at, all right, the total withdrawals that we took, did the savings go up or did it go down? And we look at the report on that credit card, and then we can mirror the expenses moving forward on that, and we use that as a test drive. Others would say, "Hey, no, I feel very comfortable, I'll still do the things that you want to do. As long as you're okay with me sending you an email and saying, 'Hey, we need 10,000 for a trip,' I'd rather manage the day-to-day expenses coming from that lower amount. And then, if we need bigger chunks to come out for different specific reasons, then we'll just message you and have you send the money." Marc Killian: Yeah, that's a great point. So that first two pieces, really, these five things we're talking about is you've got to learn how to adapt, learn how to adjust financially to that gear change, and then establish that income plan with that withdrawal strategy so that you're giving yourself the salary really is what I'm hearing, Nick. So some people... Because I was talking with somebody not too long ago about this and they were like, "My wife is super frugal, and so she's scared in that first year to spend anything." And I talked to them a little later on, and it was like, "Yeah, after seeing the salary come in from the nest egg every two weeks or once a month or whatever it was, after a couple of months, she got comfortable." "Okay, well, now we can roll, now I feel better about spending." So that's a great point on how to just watch that over that first year. All right. So then, John, then I guess the next piece would be to maybe start to shift a little bit and start thinking about the purpose. Again, we talk about this being a gear shift in that first year, you're working, you've got your job, you've got your career, many people are all about who they are at work, so what are you retiring to? What is your purpose in retirement? That's a struggle for folks. John: It is, it is, because you're trying to figure out, where do I fit now? Marc Killian: Who am I now, kind of thing? John: Yeah. I can tell you where my parents fit, they fit watching my kids, which they tend to enjoy, so that's where some grandparents are. Marc Killian: That's where many are, sure, yeah. John: [inaudible 00:06:27] conversations that Nick and I have, it's like, "Hey, I'm going to spend some time with the grandkids and take them on vacations and watch them," so that's perfectly fine and that's where some people do find where they want to start going. We have others where they look at the first 10 years of retirement as these are the years we're going to go travel and do the things we really want to do while we're healthy enough to do it, whether it's go sightseeing, go to national parks, you're going to have more energy, you can go hiking, you can do things like that, so that could be the purpose is just enjoying the next five to 10 years of really doing some physical activity vacations. Then we have some others that will join some charities that they had an affinity towards, but now they have more time to volunteer and dedicate some time to or build something or just some hobbies. I think Nick, in our classes, does a great job of talking about some different activities people can get into and some resources of now what, what do you do now when it's not time to go to work anymore? Marc Killian: Right, yep. John: I'd say the most important thing is just building a routine, so you have a purpose, you have things to do, so you're not just sitting around watching the news all day, driving yourself crazy, because I'll tell you, I think I spent... One time, I wasn't feeling too well, so I had to ta
