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Transcript
Mike:
I always get the question. Hey Mike, how much money do I need to accumulate? How much money do I have to have in my 401k or my 403B or my IRA? How much money do I need in order to be able to retire? What’s that magic number? That is the wrong question. That is the wrong question. And it’s not, not a very intelligent question.
Zach:
Welcome to Retirement Today. I’m your cohost Zach Holcomb, and alongside me we have Michael Reese. He’s a certified financial planner, retirement planning expert, and founder and president of Centennial Advisors headquartered right here in beautiful Austin, Texas. Mike, how are you this evening? Happy to be back.
Mike:
Hey, I’m doing great. You know, again, it’s Austin in the summertime, so we’re having a little bit of a nice warm day every day. Right?
Zach:
I actually just got back from a vacation in Vegas. It was 115 when I got there. 115.
Mike:
Yeah. I remember going to Las Vegas one time in the summertime and it, same thing. It’s like you walk outside when it’s that hot and, and it, it just hits you like you’re walking into an oven or something. It’s crazy. Stay inside? That’s the goal. Stay inside
Zach:
A hundred percent. Well, they want you to stay inside there anyways, too.
Mike:
Right. So anyway, today I’m excited about today’s show though, Zach. We’re going to be talking about the, the three things that you must get, right? If you want to make work optional. Right? Right. So imagine that here you are, maybe you’re driving home as you’re listening to this, or, you know, maybe your work, maybe you’re at home wherever you are. You know, maybe you’re sitting there thinking, man, I want to make work optional. Within the next couple of years, I would love to retire or at least have the ability to retire. That’s what I choose to do. Well, what do you have to get? Right? What do you have to do? Like, what’s your checklist? What are the three things you have to do? That’s were great. That’s what we’re going to talk about tonight
Zach:
Well, I’m excited to hear about that. And this phrase, work optional. I feel like this is something that people are starting to say more and more and not just retirement.
Mike:
Yeah. That’s very true. I think retirement traditionally, they’re, they’re still let’s Hey, let’s not get past this. A lot of people out there, maybe you’re one of them. And a lot of people traditional retirement is their goal. They are their goal. Financially speaking is to build up their assets to a point where they can walk away from work and then just kind of sit back and enjoy life for the rest of, you know, for whatever time they have left on this earth and nothing wrong with that. In fact you know, there’s a lot of people, that’s the right thing to do. Yeah. There are a lot of other people. However, they say, you know, I’m not really built to retire. Look, my wife, Becky, her brother, Chris, he retired at the age of, I think he’s 60 or 61. Zach. He was retired for, I think almost three months.
Zach:
Didn’t last long at all.
Mike:
And he’s already back to work again. Sure. Does he need the money? Does he have to work for the money? The answer’s no, he’s got plenty of money. He’s fine. He has the financial ability to be retired. However, he doesn’t have the emotional mindset of being retired. He’s not there yet. And I, in fact, I talked to him, he said, you know, I just he’s like he says, I just, I was home for a while. His going crazy. Now he likes to, he’s an outdoors guy. He likes to go outside. He likes to hike around and he lives out in Phoenix. He loves to hike in the mountains and you drive up to Colorado and go hiking up there. He loves that stuff. And he did that stuff. And his comment to me was he goes, yeah, it turns out I’m not ready to do that full time.
Mike:
I feel like I’ve got more to contribute in the, in the business world. And, and you know, it just, it’s not just that it’s also, he wants, he has the freedom though, that he could do. What’s interesting. So he can, he doesn’t have to work in a job anymore where he goes to work. It’s like, ah, I don’t really want to be here right now. As he told me, he goes, where I go now it’s because I’m working on projects that are interesting to me. And yeah, they’re paying me, which is great, but I’m also really enjoying working on these projects. So trying to get to the point of, we would call it being work optional is all about how do you structure your finances in such a way that you’re like my brother-in-law Chris, where you’re working. Not because you have to, you’re working because you want to, it’s a choice. And it’s, it’s a choice that is you know, it increases your sense of self worth or your satisfaction or what have you, either way you’re working because you want to, not because you have to
Zach:
Right. Sounds like a great mindset. I’m sure a lot of our listeners would, would love to be in the same position.
Mike:
Oh, of course. So, so we’re good. Talk today about three things you have to do, right. So let’s go ahead and let’s maybe lay these three things out first and then later in the show, we’ll kind of dive in each one of them individually. Okay. Right. and by the way I guess we could say that I personally am somebody like Chris. Yeah.
Zach:
A hundred percent. You were retired for a little bit.
Mike:
I was retired for four months. Yeah. And my wife kicked me out of the house and said, all right, you driving me crazy. You know, Mike you’re, you’re driving me crazy. You got to get back to work, man. You’re killing me. And which, by the way, the timing was good. Cause I was driving myself crazy too.
Zach:
Too much golf.
Mike:
Well, is it possible to golf too much?
Zach:
Maybe when you were retired for four months, it could have,
Mike:
I was golfing every day and you’re right. I got sick of it pretty fast. So in any event, what are the three financial decisions that you have to make? So that work can be optional. Okay. So here’s what we’re going to talk about on tonight’s decision number one, or really maybe strategy. Number one is you need to make sure or that your portfolio is generating enough income to replace your paycheck.
Mike:
Okay. So this is the first thing and what’s kind of interesting as people, I always get the question, Hey Mike, how much money do I need to accumulate? How much money do I have to have in my 401k or my 403B or my IRA? How much money do I need in order to be able to retire? What’s that magic number? What’s my number. In fact, I remember several years ago, there was a commercial from ING, which is today called Voya. And they had people walking around, you know, in the city and like little numbers were above their heads,
Zach:
Their magic number.
Mike:
And it was like, what’s your number? And they’re talking about how much money do you need to retire? That is the wrong question. That is the wrong question. And it’s not, it’s not a very intelligent question. The right way question is, and we’re going to talk a little bit more about this a little bit later, but the right question is not how much money do you need to retire?
Mike:
It’s how much income do you need your portfolio to generate, to retire or to make work optional as, as we’re talking about this evening. So that’s decision number one or strategy. Number one, if you want to call it that, but how much money are, question number one, even how much money or how much income rather do you need does your portfolio need to generate so you can make work optional. Okay, there you go. That’s number one. What’s number two. Number two is what are you going to do about the taxes? It’s a big one. We should probably call this the three questions. Yep. All right. Question number two. What are you gonna do about the taxes that you’re going to be facing in retirement? Now, if you’re like a lot of people, you probably have a lot of your retirement savings in your 401k, your 403 B and IRA, something like that.
Mike:
Those are all tax deferred, the accounts, which means you’ve never paid tax on that money. And when you look at your statement, you know, I had someone I was talking to the other day, they were showing me, Hey, look at this, we’ve got roughly $1.3 million in, in their, in their 401k. Right. And we have the conversation about how well I know the statement says 1.4 million or no, I’m sorry. 1.3 million, whatever it is close to that I know your statement says that, and it’s your name on the statement, but we have to recognize that you have a, there’s another name on that statement. That’s not listed the IRS. It’s called the IRS. Right? And, and it’s, and so we’re gonna talk about that. You’ll how do you, what are you going to do, do about those taxes? How are you going to manage those taxes so that the smallest amount goes to the IRS?
Mike:
And the biggest amount goes to you. And on top of that, the thing we need to remember there is this kind of like a debt that you don’t control, right? We’re gonna talk more about that a little bit later in the show. And then the third question you need to answer, and that is what are you gonna do about all the healthcare costs out there? What are you going to do about the potential catastrophic healthcare costs? And they’re pricey. It’s only getting worse. It’s going to be a bigger and bigger issue. What’s your plan to handle that. If you want work to be optional, you got to cover those three areas. You got to make sure that you’ve got enough income to replace your paycheck. You’ve got to make sure that you’ve got a tax plan, you know, keep more money in your pocket, less money to the IRS.
Mike:
Number three, you’ve got to have a plan for healthcare, right? Those are your big three decisions. So that’s all we’re going to talk about that on the show tonight. But right now I want to kind of transition a little bit. So before we go to break, we have something happened. I guess it’s tomorrow night, starting tomorrow night. I mean, this is crazy. I can’t believe it’s coming already. Right tomorrow night, I’m going to do a live. It’s going to be a two week class, a financial planning class on how to make work optional. Right. It’s called retiring well university. And it’s going to be live on zoom from six 30. This is gonna be great. I’m giving the information. Zach’s looking at me like he’s looking at me right now saying I hope. Yeah, get it all correct. So six 30 to eight 30 knowing me it’ll go a little late each night, but it’s part one is tomorrow night.
Mike:
Yes. Right? And then Tuesday the 20th and then part two is the following Tuesday night. Same time. Yep. For at six 30 to eight 30 on the 27th. Yep. And this is like a live class on zoom. I have a lot of fun on this and I know we already have over a hundred people registered for the same. We’re probably going to have a couple of hundred people by the time all is said and done. But the point is it’s a free class. What you do is you simply go to a website to register and the information’s there super easy to register and it’s live zoom. So you can just kind of sit in the zoom room with me. And I teach at section and then I open up for Q and a. So if you have questions, you can ask them super easy. So what’s a website. I mean, there’s a website they go to, right? Oh yes.
Zach:
Super simple. So it’s going to be five 90 that’s 5 9, 0 class.com five 90 class.com. He’s got to enter your basic information. You’ll get signed up immediately and we’ll send a confirmation your way with additional instructions.
Mike:
So you just put in what like name, email address and boom. You’re in, that’s it, it starts tomorrow night. You want to make sure to be there, it’s free and it’s going to be a blast. We have a lot of fun. So. All right. I know we got to take a break, right? Yup. Okay. So coming up, don’t go anywhere in our next segment, we’re going to talk about this concept of income that you need. Not necessarily the amount of money that you need. We’ll be right back.
Zach:
Hi. And thanks for checking out retirement today. If you like the content we share on our channel, make sure to like comment and subscribe. So you can say notified about all of our latest content and videos. Be sure to share all of our information with your friends and family as well. Thanks for joining us. We’ll see you next time.
