Episode 5: Transition to a purposeful retirement

Oscarlyn Elder:

Retirement is changing. We’re rethinking what it means to retire and what we want out of retirement. It isn’t so much about slowing down. More often it’s about deciding the next location in your journey, how to invest your time and energy and to what end, how you’re achieving your why. Retirement can last decades. So it’s more important than ever to be mindful about our plans for these years.

Welcome to “I’ve Been Meaning To Do That,” a podcast from Truist Wealth, a purpose-driven financial services company. I’m Oscarlyn Elder, co-chief investment Officer for Truist Wealth. Thank you for joining us today.

So much of the investment portfolio you’ve built over the course of your career is likely intended to enable the retirement you’ve envisioned for so many years; but preparing for your next stage isn’t just a financial transition. Have you thought about your day-to-day life in retirement? These years can be more meaningful when you think through the nonfinancial aspects of retirement and how to live out your purpose.

In this episode, we’ll talk to two people who’ve helped many clients successfully prepare for both the financial and the nonfinancial aspects of retirement. They’ll challenge you to contemplate your purpose in retirement as well as think through your expenses. They’ll also share successful practices of clients living in their retirement years. Before we begin, the podcast team has created a downloadable printable worksheet you can use to take notes for this and other episodes. You can find it at Truist.com/DoThat.

Today I’m joined by Tony Bryan and Paul Shorter, who have worked with many Truist Wealth clients on preparing for the financial aspects of retirement and living with meaning during the stage of life. Welcome to you both. Paul, why don’t you share with us what you do for Truist Wealth?

Paul Shorter:

Thanks, Oscarlyn. I’m a wealth advisor with Truist Wealth in Charleston, South Carolina, and I work with clients that are looking for guidance and planning to help them meet their retirement and family planning needs. My goal is really to bring clarity to their lives, and we focus on investment management, trust and estate planning, banking needs, just kind of a concierge style service, so it’s a lot of fun and we have a great time doing it, and our clients really appreciate what we do for them.

Oscarlyn Elder:

Wonderful. Thank you, Paul. And Tony, how about you?

Tony Bryan:

So I’m a financial planner with Truist Wealth, and I have been tasked specifically with helping our clients navigate Social Security and Medicare, which are two areas of expertise of mine. So all day every day, I’m helping couples with claiming strategy analysis. I’m helping widows and widowers with survivor benefit strategies, and also answering questions from clients and teammates about those subjects all day long. Keeps me very busy and out of trouble.

Oscarlyn Elder:

All right. Well, I’m so excited to have you both on the podcast today. Importantly, you both work directly with our clients, and that’s because you understand the transition and the preparation necessary for a fulfilling and purposeful retirement. So when people are preparing for retirement, their primary concerns are often focused on the financial aspects of it. What is life going to be like without a regular paycheck or how will I adjust financially after I sell my business? That’s certainly critical, but I first like to discuss an aspect of retirement that’s no less important. Paul, what’s your experience in helping clients prepare for the day-to-day life of retirement?

Paul Shorter:

That’s a really important question. I would say that everyone’s different, but we want our clients to start thinking three to five years out of retirement. My goal is to really want to remove any uncertainty that they have about retirement. We ask a lot of questions that are nonfinancial about what kind of lifestyle do they want to have. Quiet? Active lifestyle? What are their travel plans? Do they want to start a business, move to a new home? Do they want to work part time? Health, family history, lots of things like that just to try to identify some other risk factors that we might need to think about when they’re retiring. And I would say one key part is we want them to think about instead of saying, what am I retiring from, but what am I retiring to. It’s a shift of what are you passionate about? What do you want to do? What do you want to try to accomplish in this next phase of your life?

Oscarlyn Elder:

Absolutely. And I really appreciate that perspective that you’re sharing, which is the place to focus is not on what are you leaving behind, but what are you moving to. So what are you retiring to? What does that look like? What does the vision of that look like? And what I heard very clearly from you was that that planning, that vision creation, doesn’t need to happen three months in front of what you’re retiring to. It starts to happen well ahead of that. I heard the suggestion was three to five years.

Paul Shorter:

That’s right. Absolutely. The sooner you can start thinking about that, the better, just to get your mindset changing and ready and preparing for that time. Absolutely.

Oscarlyn Elder:

Great. Tony, in your experience, do people have a common emotional response to starting their retirement or to even contemplating it? So I should back up. In this three- to five-year window, and then upon making that move and retiring to something, what are the emotional responses that you typically see?

Tony Bryan:

So I’ve seen just such a wide range of emotions for the ones who’ve done it right, who’ve adequately prepared for the financial and the nonfinancial. They’re just so excited about retirement. And for some they just seem giddy and it’s impossible to wipe the smile off their faces. But those are the ones who’ve adequately prepared, not only prepared the financial, but also the nonfinancial. But then there are others who have not adequately prepared for whatever reason. And the best way I can describe these people, they’re just miserable. So in my experience, these mainly were the ones whose total identity was tied up in their work.

So for these people, retirement meant losing many things, like losing their identity, possibly their status, losing their daily routines. Now they have all this extra time in the day and there’s just no structure. So this could also include extra time together with their spouse or partner. And I know I’m leaving out many more things, but they really need to think through this and replace those things that are lost with good things. And that’s why it’s so important for this type of person to work on this as soon as possible before retirement.

Oscarlyn Elder:

That’s very powerful. So you said an important word. I caught the word identity. And look, I’ve got to confess, my identity is heavily connected to my work. It just is, right? It just, it’s in my DNA. I’ve been a banker for almost 30 years now, and it’s critical. I think Oscarlyn I think mother, wife, banker, right? So, it’s right up there, if you will. And what you’re saying is that it’s really important if your sense of identity is really strongly aligned with your work, your professional work day to day, to ahead of time to really begin to probe that and to be intentional about building an identity outside of work.

Tony Bryan:

Exactly. Discover new activities that can really ignite some passion and create that new identity like you just said. Yes.

Oscarlyn Elder:

Yeah. And so creating that passion, being intentional around the exploration of identity and the elements that lead to identity years ahead of when you anticipate making the transition.

Tony Bryan:

Yes, absolutely. Couldn’t have said it better.

Paul Shorter:

And Oscarlyn, we see that a lot with business owners. That’s the first thing I think about when we’re talking about the passion and then the shift into retirement. For business owners, or even a job role that is like a business owner, they’ve been so productive; they’ve cared for their employees for so long. They’ve built a legacy. Their employees have been able to buy homes and educate their kids, and they’ve played a huge role in that. And they feel like there’s a huge void when they leave.

So, you’ve got to have a passion that you’re moving towards. And that could be doing some complex planning that—you work with your advisor to develop planning for your grandkids and the heirs in your life. It could be something like that, but you just need to have something that you’re passionate about to move towards. Absolutely.

Oscarlyn Elder:

And I want to acknowledge that it is completely normal and expected that as we transition from one phase of life into another—we’re focused on retirement today. This can happen at other critical transition periods too. It’s normal that there be some grief, that there be also some feelings that maybe aren’t rosy. And it’s just important that we acknowledge that. I mean, Tony, you talked about it in the context of someone whose identity is really strongly aligned with their day-to-day work. It can even happen if that’s not the case, that there be some grief along the journey. And so we want to acknowledge that, normalize that.

And the key is, again, I think I’ve heard you both say the key is being deliberate and intentional around knowing that this can happen and establishing a path, establishing the thoughtfulness, the exploration that helps you move towards those positive emotions and those positive actions that can support and really launch you into retirement successfully. We talk a lot about launching young adults into adulthood. We talk about that transition from teenage years into adult years. And we talk about launching. What we’re trying to do is really help people identify the factors that can help them launch into retirement successfully. And the mindset is a really critical piece of that. Tony, go ahead.

Tony Bryan:

I was just going to say that it took me a while, but the light bulb came on when I read a survey that retirement is one of the most stressful activities you’ll ever face in your life. And it just hit me that why is that? But then when you think it through, there’s so many things that are changing for somebody, it’s absolutely stressful. And if they really, like we’ve already said, if we haven’t thought it through, in my experience, what I found is it doesn’t matter how much money you have, if you really haven’t thought through the nonfinancial, you’re not going to have a fulfilling retirement.

Oscarlyn Elder:

And having a plan in place, financial, nonfinancial, having that guide likely decreases the stress. It gives you the direction which is really what we want to encourage folks to do. Three to five years out, start thinking about that guide and putting it together.

Well, you both have given us a lot to think about, so I really appreciate your perspective.

Next, let’s discuss steps you can take when planning your retirement to help with the transition.

People often think of retirement as a time of life where they spend their days relaxing, enjoying leisure activities, and visiting family. That may have been the primary vision of retirement at one time, but that doesn’t need to be the case anymore, does it, Tony?

Tony Bryan:

No, no. Many times I’ve experienced newly retired clients that go through somewhat of a honeymoon phase. They get up at the crack of 10:30, maybe they go golfing, maybe they sit by the pool, they may go on a couple of trips. But trust me, the novelty of retirement’s going to wear off quickly because we’re just wired for more. We’re not wired to be on a permanent vacation. So that’s why we all need to figure out what that “more” is. I’m using the air quotes here. We need to figure that out and the sooner the better.

Oscarlyn Elder:

And so have you had, the clients that you’ve worked with that didn’t see retirement as this one specific date where they turned to something else but they eased into the new lifestyle?

Tony Bryan:

I’ve seen many clients like that, and they were fortunate to be able to work with their employer to do a phased retirement, and were given a lot of freedom to work as much as they want or as little as they want. So they would do a couple days a week, and that seemed to work out great for them because they were ones that their identity was tied up in their work. So just completely stopping would not have been a very healthy plan for them.

Oscarlyn Elder:

And in today’s labor market, I’ll say more and more highly skilled, engaged, professional organizations are often much more likely today to work with an individual to develop kind of that part-time engagement that someone may be seeking as they move into that next step within their journey. I’ll also say, and Paul, I’ll be interested in your perspective on this too, what I’ve seen with some business owners, they may know well ahead of time, their plan for their exit, for their business exit. And especially if they have a plan to sell the business to leaders that are already senior within the organization, they may plan that so that there’s a multi-year step back. They don’t go from 100% engagement in the business that they’ve cared for and loved to 0% overnight.

Again, I’ve seen it be very successful where there is maybe a five-year glide path from being highly engaged to really being senior advisor, if you will, to then ultimately being totally exited from the business. Sometimes that’s all tied to an earn-out and other things that we’re not going to get into today, but we may get into in the future. But that glide path for a business owner I think can also be quite valuable. Anything that you would add?

Paul Shorter:

You’re so right. Typically business owners, they’re going to want to identify those people taking over the business very early, five, 10 years out. It’s possible to do it in less time, I guess. But a lot of times what we see when they’re positioning for retirement, they could move states early, they can move to sunny Florida or Charleston where we are, and their business is in the northeast and they’re able to travel back periodically to help run the business, but kind of give that next generation some time to do it on their own a little bit without the patriarchs, matriarchs kind of running things and give them a little freedom to run their business.

So we see that quite often. The remote work, consulting, we see that very often now where clients aren’t just quitting cold turkey, they’re still working a little bit. It’s hard to just separate 100% and go from 100% full speed ahead to zero. Business owners are wired differently. They love building things, creating things, creating value, and it’s so hard to go straight into retirement and not being able to do that. So a lot of times we’ll see them start a new business down the road, and we want to encourage that and help them feel like they’re engaged and adding value in the community. So lots of options now. It’s not just setting sail and having fun and traveling with your friends, which all those things are good, but there are a lot more options now. It’s great.

Oscarlyn Elder:

Absolutely. All right. We’ve discussed a lot about that gentle glide path into retirement. That can happen for some folks because they may own their own business or they may have a work environment that allows part-time work or a different type of engagement as one moves to retirement.

Now what I’d like for us to do is take just a few minutes to think about the experience of the individual who may be working on the 30th or the 31st of a month and then the next day will be at home, officially retired. And so in that situation, Paul, what are our recommendations for someone going through that particular transition?

Paul Shorter:

Really want them to think about how they’re going to relate socially and professionally once they retire. What really helps is to be around others that are going through the same thing. I would just recommend, you’re going to be doing lots of social leisure activities. Just being around those others that are going through something similar to you is going to help you kind of navigate this new area of your life.

Oscarlyn Elder:

Yeah, absolutely. So being around others. Tony, when you think about this, do you think about it in the context of you need to have a leisure plan or an engagement plan like you need to have the financial retirement plan?

Tony Bryan:

I just think it’s incredibly important that the person we were talking about introduce some type of structure into their day. And so it could include many things, volunteering, like we talked about, maybe mentoring somebody, playing a sport, auditing college classes. I know that when I retire, I would love to go back to school and get some additional degrees maybe in history, philosophy. And I know if you guys didn’t think I was the most boring guy on the planet with the Social Security and Medicare, I know now that you’re convinced, I know. But with all kidding aside, find things that you like to do to introduce that new structure that you’re going to need and to develop those new daily routines.

Oscarlyn Elder:

What we don’t want folks to do is to wake up on that first day and go, oh my goodness, it’s nine o’clock. What am I going to do? We really would recommend that especially in those early days of retirement, that there be a plan, that you have a sense of what are the trips you want to go on. What are the things around the house you want to do potentially. Hopefully you’re already engaged with an organization and you’ve got volunteering set up in your future. Your social calendar. It’s a great opportunity to really start connecting with people and launch into your retirement fully.

So we want the plan, we want you to be ready for when you flip the switch and you retire to something just critically important. There’s also another element that’s in my brain, Tony, and that is—and Tony, you just mentioned this, the thought of doing something that you haven’t had an opportunity to do before. So you talked about your desire to maybe go back and engage in learning more about history. Maybe there’s a different impact that folks want to make.

Maybe unpack that a little bit for me. How do you think folks can view this time, this transition as an opportunity to do something different?

Tony Bryan:

Yes. So like we mentioned, retirement is one of the most stressful events that someone’s going to go through in their life just because of all the drastic lifestyle changes. So spending some time and energy to put into plan is going to help reduce some of that stress. I like George Kinder, he’s the founder of life planning, and he came up with some really great questions to help retiring people, prioritize what really matters most. One of the questions was imagine a doctor telling them that they only had five years to live.

So based on that news, what’s going to stand out to you as being most important? And then even going beyond that, what if you only had 48 hours to live? What would you do? What would you prioritize? What regrets would you have? What is it that you wish you would’ve accomplished? I think this is a huge exercise to prioritize, and you should do that with your spouse or your partner, and definitely write these down.

Oscarlyn Elder:

And I would expect that as you make the list that it’s highly likely your values, your purpose, your passions are going to come through in that list, and you can use that list as an opportunity to really build out your initial retirement plan around how you’re going to engage.

So lastly, one other thought comes to mind and that is that as folks move into this new phase of life, it’s really important to stay very nimble and engaged in a new and different way, but also to be open to change. Paul, maybe you can share with us, do you have examples of clients that you’ve worked with who really exemplify that nimbleness, that flexibility in retirement and how it has hopefully helped them on the journey?

Paul Shorter:

Absolutely. There’s some clients that think they’re going to quit cold turkey and then they realize, I really want to get back into the business community and then they do a consulting job or something different that maybe they haven’t done before. A client might decide, I want to be involved in not just on a board, but just heavily involved in a charitable organization and really giving back in that way. Some clients start playing golf and they realize they don’t want to play golf every day, and so they need to adjust and find other ways to enjoy themselves on the social or leisure side.

So yeah, just definitely stay nimble, stay open to change, be willing to think differently, and just have fun. You’ve worked hard for this. There’s no reason why you should be doing something you don’t want to do. So enjoy yourself. Our clients have spent a long time in the business community to grow their assets and we want them to enjoy them. So our goal is to make sure that our clients are not just getting by, but enjoying their retirement and doing the things that they want to do, spending time with their families and the people that they love.

Tony Bryan:

Can I piggyback on that, what Paul just said?

Oscarlyn Elder:

Absolutely. Jump in.

Tony Bryan:

I think one of the best things that we can do as financial professionals is to help clients manage their expectations of retirement because they may have these huge expectations and when it doesn’t go the way that they’ve planned, then they get all depressed and it just doesn’t go well. So we need to help them manage their expectations and also let them know that things are going to be different, things are going to change, things won’t go as planned, and just help them through that.

Oscarlyn Elder:

Absolutely. And one of the ways that we’re doing that right is discussing this upfront with folks who hopefully have retirement on the horizon so that they’ll be better prepared as they move along the journey.

What I’d like to do now is I’d like to shift our conversation to really talk about the financial side of the retirement transition.

So far, we’ve focused our conversation on the nonfinancial side of retirement. Now we’ll turn our attention to the financial side of making the transition. Tony, people tend to spend most of their time on making sure they have enough money saved and invested for retirement. But can you offer guidance based upon your experience with clients that will help folks make sure they’re financially prepared?

Tony Bryan:

When we think of the financial side of retirement, normally we just think of money. Do we have enough money? But really that’s just the beginning because there’s so much more. Not only do we have to worry about our retirement income plan, how our money’s invested, we also need to worry about protection planning. Do we have the right insurance coverages? Do we have an adequate emergency fund of one to three years’ worth of expenses in cash? Do we have the right estate plan? Do we even have an estate plan? Do we have an idea what our monthly expenses are and have we included cost of living adjustments to those expenses? Have we listed our future financial goals? Have we decided when to start Social Security? What about Medicare?

So the point I’m trying to make here is that this stuff can get very, very overwhelming very quickly. So I wanted to make the point that it’s going to be imperative that you engage a financial professional sooner than later. There’s simply just too much to know and too much to remember. And I’ll be honest, when I retire, I’m going to engage an additional planner to help me make sure I don’t miss anything.

Paul Shorter:

Yeah. We want our clients to be educated, so educate, plan and act. We want them to educate on their own so when they talk to us, it makes the conversation go a lot easier. Plan versus no plan. The people that have the plan, they’re going to have more peace and knowledge. If you’re not going to do a plan and you’re just going to kind of stick your head in the sand, you’re going to be more anxious and nervous in retirement. So the more you can educate yourself, be educated by professionals, the better off you’re going to be.

Oscarlyn Elder:

So I really heard there, Paul, a recipe for tackling the financial elements of retirement and it was EPA, so educate, plan and act. So I’m going to take that away. That’s a great insight that you’ve offered up there. Tony, I’d like to go back to you for a moment because you gave us a very quick laundry list of some items that folks are typically dealing with when they’re planning for retirement. And even that list was just overwhelming to me as I heard you kind of walk through it.

So I’d like to go back and let’s unpack a couple of items. Number one, a fundamental element within financial planning is determining your wealth objectives, what do you want to achieve. It seems to me that as someone moves towards retirement and then moves into retirement, making sure that the wealth objectives that individual is focused on are well defined. And they may have changed. The last time an individual may have really thought about the wealth objectives, hopefully it happens at least annually, but it may have been a while.

So what are some of maybe the common wealth objectives that you hear from clients as they’re preparing and then moving into retirement?

Tony Bryan:

So there’s lots of... and you said it, so having time with your spouse or your partner to write down your different financial goals, that is a big piece of the plan. So that takes time, it takes energy. And we tell clients that definitely it’s going to change because we’re living longer. Clients are spending 20 to 30 years in retirement, so the goals are going to change. And like you said, they’re going to change probably annually, maybe even more frequently than that. So it’s important to revisit those goals and an advisor can help you brainstorm some different financial goals. Because it’s real easy to forget some.

Oscarlyn Elder:

And let me ask you this, have you seen within the clients... you or Paul, I mean often what I’ve experienced is that folks approaching retirement and are at retirement, often they want to renovate or update a home. They want to go into this part of their lives and the home and the space that they’re most comfortable with that brings them joy. So often I think we see home renovations as a key wealth objective as folks move into retirement. Does that resonate? Does that seem accurate to you?

Tony Bryan:

It does. It does to me. And clients sometimes forget that, yes, I’m living in a home. Yes, things are going to go wrong with it. I need to fix it or I’ll need to put in time for this. I’ll need to put in money for a new roof. So those things come up very often and so that’s why it’s so important to put these different goals down on paper and to revisit them as often as possible.

Paul Shorter:

A lot of our job is to identify the things that they might be missing. They may have done a lot of the planning already, but what are they missing? What haven’t they thought about? So, our job is to make sure we’ve uncovered every rock to figure out what are those one-time items. Inflation is a factor. The unexpected expenses that you might have that we’ve seen before with other clients, but clients might not think about it. Those are typically the things that will be detrimental in retirement is if you’re not thinking about those random one-off occurrences, long-term care, healthcare costs, that is a huge item that we like to try to identify. And family history, those kinds of things all factor into that.

Oscarlyn Elder:

The other one that I would add in as well would be travel. Because often folks are wanting to travel pretty extensively the first few years of retirement, not everyone, but some folks do. And so making sure that that’s appropriately worked into the financial plan can be very important.

Tony, there was one other item that you listed that caught my attention and that was, you talked about a liquidity cushion or we could call it a retirement cushion, but you talked specifically about cash. And I heard a number that I think may be surprising to some folks because often when we’re talking about financial planning, we talk about three to nine months of cash on hand for an emergency fund. But you said something different than that and I want to unpack—we’ve got the thought of an emergency fund, but you were talking about something else. So share with me what you’re thinking about there.

Tony Bryan:

If you speak to many different planners, you may get some different opinions on this, but in my opinion, when we’re working, we don’t need as much of an emergency fund because we have income coming in. But when we’re retired, I think it’s imperative that we have at least one to three years of expenses in cash just because of things such as the market today. The markets—we have a down market, so taking money out of our portfolio is not ideal, but if we have that cushion in cash, that’s great, then that’s going to help reduce some stress. And that’s why I list one to three years

Oscarlyn Elder:

Yeah. That cushion, if you have that larger cushion that takes into an account your travel plans and your remodel plans and gives you some extra liquidity, if there’s some things that you decide you want to do that you hadn’t even contemplated, if you have that liquidity, that retirement liquidity cushion, it really does help protect you or it helps insulate you from needing to go to your portfolio and make a large distribution perhaps when the market is under some distress or it’s trading down. And so it gives you more flexibility.

And that’s really important because maintaining an appropriate distribution level off of your investment assets, especially early in your retirement, can have significant impact over your lifetime. And so it’s very important that if you can build that liquidity cushion, it may give you greater flexibility in those early years, especially should there be some difficult markets to put you in a better position to navigate the long term, which is really important because we want to make sure that folks are appropriately situated for really decades of retirement.

For a lot of folks, retirement is not five years, it’s going to be multiple decades. And we know ultimately that return of investments is very important to the equation as well as—the lever that we control really the most is that distribution rate off of investment portfolio. So it’s important to keep that at a reasonable level. That was a bit of a mouthful.

So with that, Paul, let me turn to you because you work directly with clients and their investment portfolios. So what’s some high-level guidance or advice that you would recommend to folks that they consider as they’re thinking about that retirement portfolio?

Paul Shorter:

That’s a really good question. I think we want to look at things holistically, right? So we want to make sure we understand current income sources that they have. Do they have a pension? Are they getting Social Security income? How much of that is going to help with their expenses? Is it a small portion of their expenses or a large portion? If the pension is a larger portion, then there’s less need to generate a lot of return on the investment. So all that plays into account. We want to make sure we’re looking at things holistically.

You want to focus on total return. We want to look at are your assets going to be able to sustain the rest of your life. So we want to look at things from a total return perspective, that’s going to be dividends, capital appreciation, all of that. And even if you’ve done a lot of the planning yourself when you’re working with an advisor, they’re going to help provide you with that emotional stability during hard times when the market’s down, that’s going to be someone you can lean on to help feel like we can get through this, and maybe there’s some adjustments.

We want to make sure that our clients aren’t taking on unnecessary risk. Are there ways that we can reduce risk without sacrificing a lot of return? So those are just a couple of things to think about.

Oscarlyn Elder:

Great. Thank you very much. So I heard focus on total return. That’s very important that the focus not be solely on generating current income from a portfolio. Because if you focus just on current income, it can actually lead to portfolios perhaps that are overly concentrated in a particular sector or that don’t have a more balanced perspective. So total return is certainly an important element of portfolio management over the long term, and we want folks to consider that.

And then the other element that you mentioned there was really what we call advisor alpha. So it’s the ability of a neutral voice to help clients through difficult periods and through great periods, through kind of the entire journey. But especially in times when markets are under pressure, when they’re trading down the ability of someone who has a more neutral perspective to look at the plan, to look at the portfolio, and to give guidance regarding what’s appropriate for the portfolio at this particular time, to help folks not overreact or react in a negative way to an environment. It’s just really critical. With that, Tony, let’s dig in to some of the retirement costs that often folks need help with or that perhaps they often don’t appropriately assess going into retirement.

Tony Bryan:

Yes, that’s a great one. The big one that I come across all the time are healthcare costs. I’ve found that people really don’t know what—their healthcare costs, and it’s not really their fault. It’s mostly because their insurance is tied to their employer and they’re just not sure what their different healthcare is costing them. So I tell advisors all the time, make sure your clients know what their healthcare is going to cost in retirement, educate them, and trust me, I know talking about healthcare costs and Medicare, it’s not fun or exciting. I like to say that it’s like going shopping for new socks. Nobody is excited or giving each other high fives on the way to the store to buy new socks, but you have to do it. And so you just have to have the healthcare discussion. So you have to know what it costs.

Oscarlyn Elder:

Yeah, so you want folks to know you have to do some research around healthcare. I believe Tony, I think I just saw an article where maybe the typical retiree is spending about, I’m going to say it’s about $7,500 per year on healthcare. I’m not sure if you saw the same source that I did on that. Yes, I think there was a great article in the Journal, but having a sense of maybe what’s average, and then look at your own experience with medical costs and the leadup to retirement. We know everyone has their own path, their unique situations. We just want to make sure that folks are appropriately estimating healthcare costs and also envisioning what those costs may look like even 10, 20 years down the road.

Tony Bryan:

That’s a great point. That’s a great point. And another thing that I see often is that clients will get signed up for Medicare and they just go along and just continue with the same coverage, not knowing that things can change and it does change annually. So one of the messages I would like to relay to everybody is if you’re on Medicare, make sure you go over it annually. Go over your coverage, just take about 30 minutes and spend the time. It’ll be worth it.

Oscarlyn Elder:

Okay, great. Great advice there. Are there other areas that you want folks just to mentally make a note of that you’ve seen folks underestimate how much they’re going to spend?

Paul Shorter:

I think we touched on that earlier, the home repairs, new windows, new vehicles, kids coming back home to roost.

Oscarlyn Elder:

Grandchildren wanting to go on trips.

Paul Shorter:

Grandchildren don’t want to go on trips. Parents coming home or parents needing care. We see that a lot where those are typically the clients that understand the expense of long-term care is when they have to deal with it for their parents. And it happens quite often where they’re having to take them somewhere or they’re getting at-home care, and those expenses can be pretty substantial and drain your assets pretty quickly.

So one thing that we see and that we like to do a lot, and Tony’s great at this, is modeling scenarios. What if there’s a situation where you need to provide care for your family, for your spouse, and we can model that and show what the results could be, how has that impacted you and what are your options?

Tony Bryan:

Great point.

Oscarlyn Elder:

That’s a great point, Paul. So within your financial plan, within your financial preparation for retirement, utilizing tools, financial planning tools, that describe the world or the potential outcomes, not just in one way, but that work in the ability to create various scenarios, various what-if situations, so that you can have a better view of how things may play out under different circumstances. It’s really important. And then you need to continue to update those what-ifs as you move through the retirement journey specifically, I think is what you’re sharing with us.

Tony, is there anything that you would add to that? And look, there’s a word that’s on the top of my mind right now. Folks are definitely focused on the inflation word. Paul, I think you brought it up earlier in this discussion. Maybe talk to us about those planning tools and what you’ve seen around inflation estimation and projection.

Paul Shorter:

Planning is going to be really important when it comes to inflation because everybody’s different. If you have $500,000 saved for retirement or $10 million saved for retirement, it’s going to impact you differently. The less you have saved, the more inflation is going to impact you. And in our planning tools that we use in our software that Tony’s so excellent at doing, we can model in inflation of whatever amount we want to expect short term, long term, and how that’s going to impact you. Healthcare costs and those kinds of things, we’re going to inflate at a higher rate than other goods.

Hopefully we don’t continue with the inflation that we’re on now, but we need to plan for it. And that’s why we like to update our plans for our clients at least once a year just to make sure that we’re addressing those needs and that we’re on top of it and we’re staying aware of what’s going on. Sticking your head in the sand is not a good plan. Those are the plans that are going to eventually fail. So we want to make sure that we’re constantly addressing them so we can get on top of issues early rather than waiting until later.

So some clients overestimate inflation, some underestimate. So it just depends on your situation, and that’s what a professional can do is help you navigate how it impacts you.

Tony Bryan:

And I just wanted to piggyback on that great point Paul made because that’s why it’s so important to engage a financial professional, because we have access to this software and we can stress test the clients’ plan not only about inflation, but what if investment returns are low? What if there’s a long-term care event? What if Social Security benefits get cut? We can run all of those tests on the client’s plan and it really gives them peace of mind and will give them more confidence in retirement when we do that.

Paul Shorter:

Exactly.

Oscarlyn Elder:

All right. Let’s turn to a couple of other topics, and I want to make sure that we touch on the thoughts around 401(k)s. And so for a lot of folks, one of their primary avenues for saving and investing for retirement is the 401(k). And Tony, I’m going to turn this to you, this question to you. One of the key decisions that will have to be made in the retirement journey is around that 401(k). So maybe you can just sketch out for us at a very high level what those key decisions are and what are some of the elements that folks should be considering.

Tony Bryan:

That’s a great point because I’ll read different financial publications and I’ll be listening to the radio and I’m listening to financial advice shows. And some of these individuals will just automatically say, you need to move your 401(k) into an IRA when you retire. And I just kind of cringe when I hear that because when you hear the word always, well, that’s just a fallacy. It’s not true. So you need to think through these things. One of the biggest ones with the 401(k) is the asset protection piece of a 401(k) or a 403(b). You have a lot more asset protection if it’s in that type of account as opposed to an IRA. So there are some reasons to move money from a 401(k) to an IRA, but it’s not always. You have to think that through with a financial professional.

Oscarlyn Elder:

So what you’re saying is 401(k) and IRA isn’t automatic. It’s a decision that you need to consider the pros and the cons very significantly before you make that decision. And one of the pros for the 401(k) involves some of the legal protections. And then I think one of the pros in the situation, one of the pros for an IRA might be investment control, if you will, within the IRA. But there are puts and takes, there are pros and cons to both pass, and it’s important that folks understand those and get the advice that’s right for their situation or that’s most appropriate for their situation.

All right. Well, Tony and Paul, we’ve come to the part of “I’ve Been Meaning To Do That” that I’m not going to say I love it the most, but I do really love hearing from our guests, what’s the one thing that you’ve been meaning to do but haven’t done and will commit to doing in the future? Let’s start with Paul.

Paul Shorter:

The one thing I’ve been meaning to do that I haven’t done yet is getting a health checkup, and I owe it to my family. I need to do it. I don’t get sick that often, but it’s something, it’s kind of like finances, you need to do a health checkup on your finances and you need to do it on your personal health too. So I commit to doing that and I’ve taken some steps already.

Oscarlyn Elder:

Paul, thank you for being vulnerable and sharing that. It’s a very vulnerable moment and an important message I think for everyone—right?—that physical health is absolutely critical and proactive healthcare, preventative healthcare, is essential. And so I’m glad to hear that it’s on your list. I’m hoping that everyone really engages in that preventative care, especially as it relates to retirement. We want our bodies to be in the best shape possible as we move into this next phase. Tony, what about you?

Tony Bryan:

Well, it’s so interesting, Paul, you said that and that we’re talking about that because, well, there are many things I really needed to do, but one sticks out more to me and that’s to eat healthier. So I eat like a 10-year-old kid. I eat chicken fingers, I eat french fries, I eat burgers, pizza. I go to Dunkin’ Donuts every day. Matter of fact, when this is over that’s where I’m going to go, and I have a 23-month-old baby, so my daughter needs me around, and if I continue to eat this way, it’s probably not going to happen. Plus it’ll make me feel better because I feel miserable all day, so I need to eat better.

Oscarlyn Elder:

Wow, Tony, that is not what I was expecting you to say. So I’m processing what you shared, but I don’t think you’re alone. I think there’re a lot of us who are focusing in on maybe more mindful and healthier nutrition every day, and we certainly want you to be around a long time for your child, so fully support you in your journey. And I’m really glad that we’re actually going in this direction, right? Because we’ve talked about nonfinancial elements of retirement. We talked about healthcare costs, we’ve talked about mental well-being, we’ve talked about financial well-being, but we hadn’t directly talked about physical well-being, and nutrition is so important within that journey, and we certainly want everyone to enjoy good health and longevity.

So I wish the best of that for you both. I appreciate your vulnerability and hopefully what you shared inspires others too, to get started. Because part of this podcast, the intention here is that we just start doing it. We just begin to take steps forward. We move from inaction to action. So I’m going to call you both up in a couple of weeks and ask, “Hey, what are you doing for your steps forward on your ‘I’ve Been Meaning To Do That.’?”

Look, it has been phenomenal to have you both here today, really appreciate the perspective that you’ve brought. So glad to be your teammate. I really appreciate you both joining the show today and helping folks prepare better for retirement.

Tony Bryan:

Thanks for having me. This has been very fun.

Paul Shorter:

We had a blast. Thank you so much, Oscarlyn.

Oscarlyn Elder:

Hope to have you back at some point in the future.

The podcast team has created a downloadable, printable worksheet you can use to take notes for this and other episodes. You can find it at Truist.com/DoThat. Many thanks to Tony Bryan and Paul Shorter for joining me to talk about making the transition to a purposeful retirement. And thank you for joining me today. If you like this episode, please be sure to subscribe, rate, and review the podcast, and tell your friends and family about it.

If you have a question for me or suggestion for the podcast, please email me at DoThat@Truist.com. I’ll be back soon for another episode of “I’ve Been Meaning To Do That,” the podcast that gets you moving toward fulfilling your purpose and achieving your financial goals. Talk to you soon.