Yes, You Can Spend During Retirement

Welcome to Money Talks with Ken Wink from Summit Financial, working with people you trust. Planning for your financial future means navigating challenges like market volatility, inflation, and retirement income. Money Talks is here to help by addressing common financial concerns, sharing valuable strategies, and exploring ways you can work toward your financial goals. Now let's get started with Money Talks.

Today we'll be discussing how you can spend money leading up to and during retirement. Hello and welcome to Money Talks. My name is Ken Wink from Summit Financial Consulting. If you'd like to get a little bit more information after listening to our show today, be sure to subscribe to the podcast. You can find that at www.summitfc.net or on all your favorite podcasting sites like Apple Podcasts, Spotify, or Amazon Music. If you'd like to get together with us after hearing what you hear on the show today, give us a call at 586-226-2100. So For many people, the idea of retirement, it feels like a balancing act. Every single decision that you make could potentially impact it. Can you get this coffee every single day? Can you go on this vacation this year with your family? Sometimes that's a little bit stressful for some people because they feel like they're getting behind when it comes to leading up to retirement. And then once they're actually retired, they're not sure what they can afford. So today we're just going to talk about how you can do both. You can save for retirement. You can enjoy your retirement at the same time. Before we jump in, let me introduce my co-host, Tony. Tony, it's been an entire month that we have had guests on the show. Today, it is just the two of us.

For the listeners out there, that was not me and Tony singing. Sure it was.

Was it Marge and Homer, or was that Ken and Tony? I don't know. I think something started on fire during that song. It sounded like there might have been a small explosion. Ken, it is just the two of us again. I'm getting weepy. It's been a while. It's been a while since just you and I have had to carry the show. I hope we can make it.

Yeah. I hope you're not bummed out.

You know, we've had, I don't know, Jim, your brother, Jim is great. We need to get him back on the show.

I'll pass that along, you know, if we can get into his busy schedule.

Yeah, yeah. He's a popular fella, that's for sure. That's what all the kids out there are screaming for is Jim. Everybody loves Jim, right? Yeah. Yeah. Well, and the other Jim, James, we had two Jims on over the past month. Oh, one of the Baldwin brothers, yeah. One of the lesser Baldwin brothers, but a Baldwin nonetheless, right? Right. So, great topic today. How have you been? Now, you were actually out for a week. How did that go?

Yeah, that went great. I went to Florida with my family. It was supposed to rain all four days, and it only ended up raining for one hour during what I would call sun time, like where it would be outside enjoying it. So, it rained a couple times at night, but no harm done there. So, yes, much, much better than expected. Refreshed, ready to rock today with you.

Yeah, I've never been to Florida where the rain has been like a whole day, right? It usually rains and stops or rains and stops or it's at night. So even if the rain is forecast, it usually comes and goes pretty quick in Florida, usually, right?

Yeah, yeah.

Except maybe during hurricane, unless a hurricane's hitting. Other than that, I think you're pretty good. Well, that's good. I'm glad you came back refreshed, had fun with the fam. You and the wife and the kids, right? Yeah.

Yeah. I was having a visit with my neighbor the other day, Jessica, who happens to listen to the show. And she's like, yeah, while you were gone, Tony mentioned that you were in rehab for the week. Did I say that on the show? He said, I was in rehab facilities in Florida. That's great. Ken's getting some help or something like

It was a joke. I would assume everyone knows. I mean, you're the most straight-laced guy I know. So that was an obvious joke. I hope none of our listeners or your clients who are listening thought I was serious. I didn't even remember I said that, but it does sound like something I would say.

Oh, yeah. We're all good.

I'm sure everyone knows that.

I've got all of my vices well under control. Good.

Oh, yeah. No, yeah. Well, hey, that's good to know. Glad you cleared that up for us before we get into talking about spending money. And I bet, Ken, before you jump into some of the facts here, I know this happens to you where you get people – when they retire, who are, even if they've saved really well, you probably have some people that are afraid to spend, right, in retirement.

Absolutely.

They want to hold on to it. And you know what I've never seen, Ken, and I've said this before, I'll say it again, I've never seen a hearse pulling a U-Haul. So you can't you can't take it with you is the message there. And yeah, I mean, if you know, I've seen people in their 80 late 80s who have all this money still and they're starting to maybe get early onset dementia and they're like, you know. You want to do something for your grandkids or your life? No, no, I don't want to run out of money. And I'm like, you're not running out of money. You need a financial advisor. And, and it frustrates me when they're not with somebody who's straight up. And I know this person, the person I'm referring to was not working with a good person. And how I know is that person said, Oh no, you don't want to touch your investments. And I like, yeah, I'm like, she's in her mid 80s and she's got early onset, obviously. And he's telling her to leave that almost a million dollars. She can't dip into that. But for her own needs, that's your money. You don't want to, you know, give it away to the kids or grandkids or help pay for their college. And I'm like, that is terrible because they're just doing that so they can keep making fees off of it or something. And that's what I love about you guys. You're going to do what's in your client's best interest, not what's in your best interest. And that's the difference right there, isn't it?

I had a client the other day that, you know, things are going great around here. And I felt that this client definitely had more than what they needed. They retired a few years ago. They're both healthy and active. And his wife had to leave to go to the store or a doctor's appointment or something. And it was just me and him. And I said, you know... I really think it's time for you guys to just do something great. You know, go on a European cruise, you know, rent a place down South, go to the Caribbean, something like that.

Take all the kids and grandkids to Disney world.

Yeah. It was in, it was in the budget for sure. And he got real serious with me and he said, Ken, if, if you ever mentioned a full fledged European cruise and trip in front of my wife, we're going to have problems.

Oh no. Oh, no. Well, he either just didn't want to go or he doesn't want to spend money. Yeah, one of the two. But you've had people, I bet. It's funny because usually a lot of times it's one area or the other. Either they want to spend too much too soon and blow through it when they probably shouldn't, or they don't want to spend a dime even though they can and they don't want to spend. And I think some people need permission to spend. Have you ever had that situation with a client?

Absolutely. That's actually one of the biggest reasons we get new clients is because we, through our software, can tell people, okay, there's a 100% chance of success. There's a 90% chance of success even up until age 100, which most people pass away in their early 80s. So there's tons of breathing room there. So yeah, that's one of our favorite reasons to meet with clients. And definitely one of the number one reasons that we onboard clients is we will tell them, yes, you can afford to spend this much per year on your vacations or this much gifting to grandchildren or this much setting money aside for college for grandchildren.

See, I think that's good. No, no, I'm not telling people. We're not telling people to go out there and spend like crazy either. And we're going to talk about this. But yes, then the title of our show, you titled it. Yes, you can spend money leading up to and during retirement, especially if you've been diligent about saving and you're working with a trusted financial services professional like you and the team at Summit, I think that's really good because sometimes people need that. And I get it if people have, no, I have a charity or a church or a college and I want to give this money or a grandkids, I want to leave it for my grandkids. Well, the grandkid thing, as I get older, I see that being more and more important to people. And I'm sure you see that too or hear that from your clients. And if you have grandchildren, you want to, But my advice, my view of it is, is do it while you're still alive to see them enjoy it and create experiences and things like that. Not necessarily gifts or, you know, they'll forget about, you know, material goods. But man, if you can help them with their careers or with creating events and travel or taking the whole family on a vacation, those are memories that Plus, you don't want to leave them with a tax burden. Some people say, I want that money to leave to my kids. Well, you better be working with a financial professional. So I know we have a lot to talk about today. What's one of the first things you want to dive into here then giving people what I call permission to spend?

Yeah. Well, once you get into your 40s, 50s, 60s, that's when it seems like people really start thinking about retirement. So I know we've just been talking a lot about people who are already retired and permission to spend money. But just leading up to it, too, there's millions of tiny decisions that people have to make. You know, you hate to say it, but every dollar you spend technically pushes off your retirement or makes your retirement less successful. You know, now there's tons of people, and almost everybody we sit down with ends up having a successful retirement through proper planning, but the main thing is you just got to be responsible. You don't want to stress out about every single little decision, but you do have to save and in my opinion, invest and make sure that your future is secure. But on the other hand, you know, you gotta make sure that you're living your life right now to some degree because you just never know what tomorrow holds. So, you know, when it comes to these five, six, $7 cups of coffee, or, uh, maybe a new gadget that you technically don't need, but you really want, or, um, If you're talking to my wife, a designer purse or bag.

Wow, throwing the wife under the bus again already. You must be pretty confident she doesn't listen to the show, Ken.

Yeah, she confidently said this weekend, I get enough of that financial backlash every single day of my life.

I don't need to listen to Ken's podcast. But even with my golden pipes, she doesn't want to hear these golden pipes on the show. Yeah, it just hasn't done it for her yet. Not enough of a draw to listen to her husband talk more about finances.

We'll just keep grinding. Maybe at some point we'll get good enough that my own wife wants to listen.

Oh, it's the same with my, Sarah doesn't listen to my podcast or my voiceover work. She's heard it enough. She goes, I live it.

Yeah. They get the pleasure of our voices every day. They don't, but they don't need an extra.

But you're right that you said the, the, the, the, the used to be $5. Now it's six or seven. If you have the gourmet coffee and, you know, or gadgets or the bag, like you said, you know, you want to get this purse. A lot of people feel guilty about those things, right? I mean,

Yeah. And I don't want to bum everybody out. The reality is that enjoying money today, but also saving for the future, they can coexist, but you got to be intentional about things. And I would say the number one issue that we see people have is what we call lifestyle creep. So that's when you get a raise and you're spending raises and then your retirement savings maybe fall behind. So the biggest big ticket items that I've seen is people getting a bigger or a more expensive vehicle, people buying an in-ground pool. People doing a huge vacation every single year or one really big vacation. And these are things that you have to make sure work with the overall budget and that they're not going to hurt you either leading up to retirement or during retirement.

Yeah, and I think that's especially important for people in their 40s, beginning in your 40s, though, because that's a stage of life where you earn more than you did earlier in your career. And you're starting to juggle a lot more financial priorities. So you've really got to watch it then.

Yeah. Well, you know, the worst call that I can get is somebody calling to say, Hey, I want to dip into my retirement accounts because I need to blank, you know, huge vacation, even, even paying for college. And I know that's a hot button issue sometimes, but your kids can always get student loans. Yes. You cannot get a loan to pay for retirement. Nope. You know, you just keep working. No.

Yeah, that's that's the big difference right there. And I think you do see people make that mistake and that's too bad. But again, you know, the truth, it doesn't have to you don't have to panic. You know, don't necessarily sweat the small stuff. Just be smart about it. Give yourself permission to spend. But after you've saved and work with somebody like yourself to avoid that mistake. mistake. Don't make that mistake. Because if you call, if you have to call your financial advisor to say, hey, I want to take this money out of my retirement account, how's that going to affect me? That's a good call to make before you do it. Give it three days. Give it three more days. Call your financial advisor and they will say, wait, because your retirement accounts are for retirement. They do not exist. That's the way I look at them. I don't have that money. That money is not mine until I decide to officially retire. And until Ken Wink tells me I can, I'm going to keep working. And those accounts, it's not my money. I don't think of that as my money. I don't think of that as accessible. And if you have that mindset, I think that really helps. It helps me. I have to do that. Because if I start thinking about that, hey, I've got this money over here. No, you don't. Are you retired? Then it's not your money. Because that's retired Tony's money. That's not my money. I'm not retired Tony. I'm not RT. I'm WT. Working Tony. Let's say working Tony. Let's not say WT. We can mistranslate that. But yes.

Well, something that you said that is really great, as you pointed out, like, hey, before you spend it, talk to your financial advisor, wait a few days. Now I will say something wonderful about my lovely wife, Nicole. She has a rule now where she only does online shopping on Sundays. So if she thinks she needs it Tuesday, Wednesday, Thursday, rather than do it, especially on the TikTok shop, there's just some stuff on there that is so enticing to buy. So she'll set it aside and make a note of it. And then on Sunday, she'll say, okay, here's the budget. And here's the extra stuff, discretionary stuff that I want to spend money on. And sometimes after that, that little, oh boy, this would be really cool. It wears off after a few days. So that's a really good thing.

That's always a good rule, Ken. And I've heard you mention that, I think, in a previous show where, you know, if you see something you really want, it's not a need, but it's a want or it looks cool. Oh, man, that's a cool looking shirt or, oh, man, I need this gadget. Wait through, say, never buy it then. Say, I'll get it in three days. And then see if in three days, is it still that enticing? You know, when you really think about the money you're going to spend. So, yeah, that's a good the cool down period is what I call it. Yeah. Right?

Absolutely. Another great tip is to if you are working and you've got a 401(k), make sure you are at least contributing enough to get the company match. And if you're self-employed and you don't have a retirement plan, please call us right away at 586-226-2100. There's a good chance you're paying way too much in taxes. There are circumstances where people literally, instead of giving the money to the government in taxes, you can just put it into a retirement account. Because if you're just getting going with retirement, there are tax credits that are available for saving. So if you're self-employed, you don't have a retirement account, give us a call. If you are working and you have a 401(k), absolutely make sure you're putting in at least enough to get the match. You can't leave that money on the table.

No. Yeah. And make sure you're putting in enough to get the full match because that's a big one. And now I know that you've mentioned this before, but organizing finances into different categories is a method you've talked about so people can actually see where their money is going, right? Is that something that we could do here?

Yes. So absolutely everyone should segregate their money based upon what it's needed for. So bucket one, we would say, is fixed expenses like housing, utilities, health insurance, life insurance, groceries, and retirement contributions. I'll say it again, retirement contributions. Yes. If you are saving 10% or less towards retirement, in my opinion, you won't retire until your late 60s or early 70s. If you're saving 15%, there's a good chance you're going to retire in your mid 60s, maybe early 60s, depending upon how frugal you are. And then if you're contributing 20% or more, you're definitely, in my opinion, looking at retiring in your 50s. Most people aren't hitting the numbers that lines up with what age they actually want to retire at. So make that decision first. When do I want to retire? And then start saving accordingly. So that is bucket one. Bucket two is the emergency fund. So this is in a perfect world, somewhere between three to six months worth of expenses, just in case something unexpected pops up, you don't have to use credit cards or a home equity loan to pay the bills. And then lastly, bucket three, this is the fun bucket or the splurge bucket. This is where you can do whatever you want with the money after your priorities are covered. So this is family vacations, purses, things that you don't have to spend money on but you would love to. And like you said earlier, try to create memories with your family.

Yeah, there you go. I love that. So that first bucket is basically the foundation, right? Yeah.

Yeah, absolutely. That's what you got to make sure you're taking care of first. If you systematically say, I'm just going to save for retirement with money that's left over from everything else. We talk about this almost every show. The general fund is not where you want your savings to come from or go to.

No, the checking account, and it's gone. And it's gone.

Yep, absolutely. So yeah, when you get a big bonus at work, it's tax time. If you get a big tax refund or if you get a raise, all of these, in our opinion, should be used to help grow your savings so that you can retire sooner. Or maybe you go 50-50. Maybe you say, okay, I'm going to put half the money towards my retirement and half the money towards a trip. I just talked to a client, Nick, who lives around Chicago yesterday, and he was sort of bummed out. He got a really nice bonus at work. But he's like, yeah, I decided to put 100% of it towards my 401(k) so I could max it out for the year. He's like, but now I'm sitting here kind of bummed because I worked so hard and I saved so much and I sort of didn't treat myself at all. So if you want to keep back a little bit of money if you're working hard to reward yourself, it's always good to incentivize yourself, especially when it comes to working hard.

Depends on the size of the bonus. And we're not going to get into his personal business, but if it's a pretty decent bonus, save some of it back. I mean, if it's a really big one, you can hold at least some of it back to do something. But you're right. So what's the second bucket?

Oh, so the second bucket is the emergency fund. That's where you want to hold three to six months worth of expenses. Yes. And then the third bucket is the fund money.

Oh, yeah, the fund money. Yep, yep. You mentioned that. Okay. And the idea isn't to eliminate splurges then. It's just a plan for them, right?

Yes. Absolutely. Just make sure it's with the leftover after you get, as you appropriately described, the foundation finished. So, you know, we've been talking a lot about saving for retirement. And I really want to emphasize when it comes to retirement, you really have to do the same thing. You figure out what your must pays are. At this point, you're not saving for retirement anymore, but you're still going to have health care expenses and housing and utilities and streaming services and entertainment and going to the movies and, you know, create a budget and find out what the extra is. So you mentioned at the beginning of the show, but this is where retirees sometimes really get uncomfortable is they just feel like they can't spend or they're very uncomfortable spending. So when you are retired, it is a mind shift. The purpose of saving during the working years was to support life after work. It's okay to spend money, but you will, I believe, especially feel better about spending money if you have a game plan in place, you've met with a financial advisor, you've put together a plan, we've put some money aside just in case you need long-term care. My wife, Nicole, cannot pick me up out of a bathtub right now. There's no way she's going to be able to do that in 40 years, right? So you got to set some money aside just in case you need some help getting around as you get older. We plan for that inside our financial plans. So if you haven't met with an advisor before, highly recommend you meet with a fiduciary advisor who has the type of software that can do this type of planning. Our phone number is 586-226-2100 for all the listeners and viewers that would like a custom plan put together. We'd be happy to do that for you.

Awesome. Awesome. And I really want our listeners to understand that, you know, you can have permission to spend, but you also need to have a really solid savings plan for retirement. And then you can have guilt free spending. After you've paid yourself and saved for retirement and created that emergency fund, the things you've been talking about. So once again, before we go today, let's talk about how our listeners and viewers out there can set up that no charge, no obligation consultation with you and the team there at Summit Consulting.

Yeah, so give us a call at 586-226-2100 or visit us on the web, summitfc.net. We'd be happy to get together with you and figure out exactly when and how you should be spending money, especially when people are first retired. I tell my clients all the time, hey, you're physically able to do stuff right now. I want you to go on that European cruise and go see Italy. I want you to go on that Alaskan cruise and go climb around the mountains. You know, there's a time and a place for things, because when you're in your 80s and 90s, that stuff may be harder to do. So we, we bake that into the cake, and the most important thing is, is that we will stress test this for you. We will make sure that if we recommend it that you do spend money that it'll all work out in the end. To the best of our ability, nobody exactly knows the future, but we feel very confident when we're putting these plans together that it is all going to work out. So give us a call today. We'd love to put together a plan for you or just give your existing plan a second set of eyes. If you already have a plan, we'd be happy to check it out and make sure all of the numbers line up. I've had a client, Tom, for almost 25 years. He reached out to me this week, and he put together an amazing spreadsheet, and he just asked me to double check it. I'm taking his whole spreadsheet and putting it into our software. If you don't have a retirement income plan, if you don't have a retirement plan, if you don't know if you're saving enough for retirement, please give us a call. We'd be happy to give it a A first set of eyes, just make sure that you're on track.

Yeah, a first set or a second opinion if you feel you already have something. Well, I think that's great, Ken. And again, that number is 586-226-2100. 586-226-2100. 2100. Great show today. I want to encourage our listeners out there to check us out on YouTube. If you're not already, you can actually watch this show and see Ken's unbelievable facial expressions when I say the crazy things I do. You got to check that out. Just go to YouTube and you can search Summit Financial Consulting. Should pull it up or Ken Wink. And that does it for today's episode of Money Talks with Summit Financial Consulting, LLC, and our host, Ken Wink. Thank you for joining us for money talks. Don't head into retirement without a strategy that addresses both income and taxes. For more information, please contact Ken Wink at Summit Financial, working with people you trust. Call 586-226-2100 or visit summitfc.net. Join us again soon for another episode of Money Talks.