Episode 82: Retirement Regrets - Avoiding Common Pitfails
In episode 82 of Accessible Finance, hosts Eric and Rachael Johns delve into retirement regrets and how to avoid common pitfalls. They discuss personal stories from retirees who wish they had started saving earlier, misunderstood Medicare coverage, mismanaged investment strategies, failed to seek professional advice, and avoided important financial conversations with family. The episode emphasizes the importance of early saving, thorough research, balanced investment approaches, engaging professionals, and open family discussions about finances.
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Read the Transcript
Episode 82
Eric: Welcome to episode 82 of Accessible Finance. I'm Eric Johns. And
Rachael: I'm Rachel Johns.
Eric: Let's dive in.
Rachael: Alright, Eric. Today our episode is about retirement regrets and what retirees wish they had done differently.
Eric: Okay.
Rachael: Um, while scrolling the interwebs, um, I came across this post that was asking people to share, um. What their regrets were.
Eric: Okay.
Rachael: So we're gonna talk about it, we're gonna talk about things that you can do now to avoid that and things that we recommend to our clients.
Eric: Absolutely. Let's go.
Rachael: All right. Um, so our very first one, oh, and, uh, the names are anonymized to protect the people out there in the world.
Okay. Um, okay. So the very first one we're gonna start with is, um, Linda. Linda said that she wished she'd started saving for retirement in her twenties instead of waiting until her forties, her late forties. Right. She said quote, um, I always thought I'd have more time, but life got busy kids a mortgage, unexpected expenses, and suddenly retirement was right around the corner and I felt behind.
Right. Um, alright, so what are some takeaways here?
Eric: Compound growth is a real thing. And you know, if you're using the rule of 72, right? Uh, 7.2% will, your money will double every 10 years. Does that make sense? If you, if you have a 7.2% annual return, your money will double every 10 years. So that's two doublings that you would've missed out on if she.
Could have started saving at 20. Yeah. So the idea is, yeah, it's, it's, it's harder later. You just have to put away more later because you're late to the game. You have to catch up with those that have been compounding since they started, entered the workforce. So we would, we would typically say, well, we would always say, um, to contribute or defer your salary up to the employer match.
Mm-hmm. So you should capture all of the match that's free dollars. Um, also side note, can I talk, can I talk about FICA taxes? This is so important. Everyone will love it. Yes, go for it. I have permission guys. I don't think everyone will love it, so they probably won't, but this is important.
Rachael: They will learn.
Eric: Yes. So I did not realize we were talking the other, we were talking on a couple episodes ago about, um, the employer contributions and that's when the employer just give you a flat amount and the employer matching where they match part of your deferral. Mm-hmm. I was unsure whether or not the employer paid their portion of FICA taxes on the contributions.
And on the matching, it turns out they don't. Um, I didn't know that, but I learned something. It's, it's interesting. So anyway, the point is what this is, this is good.
Rachael: I feel like
Eric: that always take the match. You don't even, and then the government gets less money for social security and Medicaid. Yeah. Or Medicare.
Rachael: No, I really want to make one of those. Do you remember? Um. Was it the Reading Rainbow? And then they had the, like, the more you know it, the star. Okay, I we're gonna do that. I'm gonna, I'm gonna put, gonna
Eric: Please do. I'm, I want, that'll be funny.
Rachael: I wanna make one. Yeah, it's funny. And just hold it over your head when you talk sometimes.
Well, that's
Eric: less, that's less entertaining than if you did some kind of little, you know, cinematic on the YouTube. No, no, no.
Rachael: It's gonna happen.
Eric: Okay, good. I'm
Rachael: gonna, I'm gonna, this is important. Um, but I have to, I have to not have copyright laws violated. Correct. So I gotta, I'll be creative. Yeah. Um, but that's coming.
Um, well, you've already seen it so. That happened. Um, but yes, I just, I couldn't not want that. Um, right. I think that is huge and you know, there's
Eric: always gonna be a reason to save later, right? Like, there's always gonna be an expense expense.
Rachael: It's easy to kick that can down the line,
Eric: right? There's always gonna be a, I have to buy a house, or I need to buy a new car, or, oh no, I need a new roof or a hot water heater.
There's always a reason not to save.
Rachael: And I saw it a lot, you know, working as a teacher, the, you know. You get paid nothing. Teachers are living paycheck to paycheck and so
Eric: mm-hmm.
Rachael: You'd have these young teachers coming out that just couldn't afford it or couldn't, you know, um, contribute to the 401k or to the matching, and then you get used to not doing it.
And then next thing you know, 20 years have gone by and you have nothing in a retirement account.
Eric: Right.
Rachael: It's also really dangerous sometimes, you know, when they come and they do the. Um, benefits and stuff like that, and they talk about how great their retirement plan is. Some of the mistakes we also see are that people think that contributing up to the matching and then setting it there is gonna be enough for retirement,
Eric: right?
Um, no, you gotta do the math,
Rachael: right?
Eric: It's, you gotta do the math. I think that's very real. The case obviously compounding interest. Um, the, say, the earlier you save, the larger, that number is at the beginning, the larger it's gonna be at the end,
Rachael: correct.
Eric: Like you can do the exercise with a dollar at like a 10% interest rate and compound it, you know, over 60 years or whatever, and you'll get a reasonable amount of money.
But the point is, if that dollar instead were 10 grand or so, now you'll have a really big sum of money.
Rachael: And it was interesting 'cause what she said, you know, she was like, kids mortgage, et cetera. And it's, it's so true because it's so much easier to save. When you don't have kids, when you don't have a mortgage.
Yeah. Sometimes people when they're fresh out and are working, still are living with their parents. Mm-hmm. Um, and so you don't necessarily realize how much you're saving. It's the first time you have money, and so you're like, oh, now I can be like an adult. And so it's really, really hard because every phase that you're in, it's easier to say like, oh, I could save more later.
And then later happens. And you realize, like with. Kids, the mortgage, the broken area. It turns out
Eric: that by the time the real, really the time where you'll finally have some additional discretionary income usually is in your fifties or so when your kids are out of college. Yeah. Right, because you're gonna be paying for college.
Usually parents wanna pay for college. Less compounding to right. There's less compounding and you know, you're less able to utilize the funds in the way that you might want. So, I don't know, it's just, there's always gonna be a, there's always gonna be a, it'll be better tomorrow. There's always a reason not to save.
It's better to just do the hard work early.
Rachael: And the good news for Linda is that she made this realization in her late forties. And so she was still, you know, decades out from retirement and was able to. You know, contribute some towards her retirement, but just not as much as she would've hoped for. Right.
Eric: Which fair? I fair. I mean, hopefully your career trajectory, I mean, you mentioned the teachers don't make substantial salaries. You know, that shouldn't come as news to no one. Yeah. And it's unfortunate, but. Um, hopefully you can think through your career trajectory and you won't have to adopt austerity measures in order to save, right?
Yes. Like, you don't want to have to do that. But I did wanna mention, even if you're gonna just take the employer match, um, and then try to rip the money outta the retirement account and pay the 10% early withdrawal penalties, that that's still better. You're still ahead if you did that. Does that make sense?
So like, if you put your, if you defer your salary to take the match and then rip the money out, pay the taxes and penalties. You're still better off than not having the free dollars that they were gonna provide you on a match.
Rachael: So you're saying, right, like let's say that you're contributing to the match.
Okay. Um, but then you're like, oh my gosh, I don't know if I can do that because I might need this money before retirement. Mm-hmm. Your point is if you need the money before you hit that age where you can take it out, you know, without penalties, penalty free. Yeah. Correct. Well,
Eric: not, it's never gonna be tax free salary.
I was gonna, oh. Say without penalties. Unless it's, um.
Rachael: Even if you end up finding out, you know, you've contributed when you're 20, you're now 28, um, you're buying a house. Yep. You decide that you want to withdraw all of that money and you're paying that penalty, you're still ending up with more money than you had if you had just kept it.
Eric: You used buying a house too. There are actual exceptions. And buying a house, I believe is one for a Roth. I'm not sure if it's one for 401k, but there are exceptions that will actually um, um.
Rachael: I know they'll loans exempt you from the penalties, loans against it.
Eric: You'll still have to pay the taxes, um, because it's again, deferred.
You didn't pay the taxes when you put the money in, in 4 0 1 Ks and tax deferred accounts. So you will pay ordinary income taxes when you're pulling the money out, but you won't incur the penalties if there are these, you know, special, uh, qualified distributions.
Rachael: Oh, it looks like hardship, disability, death, military.
Um, birth or adoption of a child up to a certain amount. Financial emergencies. Yeah. Uh, disaster relief. The first
Eric: home purchase, I believe is Roth IRA, but I could be wrong. Okay.
Rachael: But that's interesting. So
Eric: sorry, it just triggered memory there as well when you said
Rachael: No, that's good. That's good. I like that.
Alright. Um. Number two is Bill. Bill retired at 62 thinking that Medicare would cover everything.
Eric: Mm-hmm. And
Rachael: he was surprised by the out-of-pocket costs, premiums and the price of prescriptions. He said, quote, I wish I had done more research and built a bigger cushion for healthcare. It's now my biggest expense.
To be clear, bill did not get supplemental insurance.
Eric: What do you mean? Like a plan? Like a part G? Mm-hmm. Um, fair. Yeah. There's, there are ways to quantify this, right? So this does not have to be the case. Yes. Um, this is not as, we can't, like, no one could have known kind of a thing as if like, you know, you're 20 years old and just forgot to save.
This is a, just didn't Google it. Do the honestly, and
Rachael: that's what he said. I mean, he said he That's fair. Wished he had done his research. I should
Eric: be nicer to bill.
Rachael: Poor Bill. Yeah. No, bill did say he wished he'd done research. I think that Bill was going off of, um. Just what he'd heard from friends and the assumption and assumption.
If you watch some of those
Eric: Medicare, uh, yeah. Advantage commercials. Yeah. Sounds,
Rachael: it sounds like Will He'll, they'll fix everything.
Eric: It's all free.
Rachael: Correct.
Eric: It's free. And they'll give you, they'll throw in gym memberships and everything else.
Rachael: Mm-hmm. And if you're meeting with any of those salespeople too, right?
Like when you go in and you're meeting with, uh, insurance salesmen, like, they'll also sell you every, I mean, they will sell you that. It will fix all of your problems and it's made of gold and all the things. Um, and so, you know, my recommendation to Bill would also be to. Like you're talking research and I'm gonna let you get to that.
But again, we say this about every important decision in somebody's life. Bring a trusted second person always.
Eric: Yeah.
Rachael: Um, okay. So you're saying that Bill could have done research and quantified? Yeah, so
Eric: right, so it's a round of $175, um, Medicare Premium, and then there that's for baseline Medicare. So Medicare Part A is gonna be free.
Mm-hmm. Um, that's hospitalization. Then Medicare Part B covers, you know, specialist visits, doctor's visits, and, um, it'll cover short stints in nursing homes after three day hospital stays, but it only covers up
Eric: a certain amount of days. It's
Eric: a hundred day max and the 20 days are a hundred percent coverage.
And then the next. Yeah. 60 or something. Something like you can, you can, I, I could Google it. I could have, I guess, researched it and had it up here, but Well, that's
Rachael: why like on the 20th day, they're like,
Eric: they boot you because then the Medicare's, what happens to Medicare cover's supposed to dad in, right?
Mm-hmm. Um, so the idea though is you can get, uh, Medicare Part G and you'll pay like a flat premium per month. And, um, and then you will have coverage for everything that Medicare's not gonna cover immediately. Mm-hmm. They st you still won't have coverage for long-term care costs or the things that Medicare's just, you're just not eligible for.
If you're not, if the condition's not expected to recover, then they're gonna consider it, um, long-term care and they're not gonna wanna cover it past their, you know, a hundred day period. And they only, they pay, you know, declining values by the day. But point here is that you can quantify what it's gonna cost.
So it's about 175 for the baseline Medicare. Um, premiums. And then they have Irma surcharges, which are like Medicare premium surcharges that are usually taken out of your social security. Mm-hmm. Um, so, and that's for part B, just and based on your modified adjusted gross income for the Irma calculation.
So they'll just, instead of the 175 applying to all Americans, the 175 applies to all Americans that earn under a certain amount. And then as you. Go up in the tiers, they're cliff tiers, which means if you, if your modified adjusted gross income goes over the tier by like a dollar, then you're paying the entire step up in premium cost, which is usually no going back.
Yeah, they're usually in increments of about $75 a hundred dollars. So it'll go from like 1 75 to say, you know, two 50 or so.
Eric: Mm-hmm.
Eric: As the second tier. And then it might go to three 50 and then, you know, 400, something like that. So the idea is that it climbs up and there's a cap, but that's the Medicare baseline for Part B.
And then there's supplemental coverage you can get. Uh, Medicare supplemental coverage, which are like, it's called Medigap, where there's a flat plan and those are standardized. And there's also Medicare Advantage, which is not standardized at all. Mm-hmm. And varies tremendously. There's a huge amount of variance there.
So you wanna talk to, you know, a local broker that you trust. Yeah. Um,
Rachael: and if you don't trust one. Yeah. Find one, bring a person.
Eric: Yeah. Well you, yeah, you multiple, you probably want a trusted perf you probably want, you know, uh, someone you trust to come with you to those meetings anyway. Yeah. I would, I would advocate, and I think I've said this here before too, all of, yeah.
If you're gonna meet with a financial planner, I would have somebody you trust there as well.
Rachael: Yes.
Eric: Particularly if you lawyer,
Rachael: I mean any of the professionals that you're gonna be dealing with in your life. I, so I do too. I think
Eric: it's just generally speaking, good advice. Best practice. Best practice, yeah.
Mm-hmm. It's a good thing to do.
Rachael: For sure.
Eric: But sorry, I was, I, I got off track. But anyway, there's a Medicare, um, part D as well, that's prescription drug coverage. Mm-hmm. So you're gonna want to quantify all of this stuff. You can quantify your Irma, you can go and get, um, quotes for Part G, and then you can quantify your, um, um, healthcare, I'm sorry, the, uh, the prescription drug coverage as well, because
Rachael: it sounds like he did not do that because he, you know, Bill's 62, so you have to figure he's young.
Yeah. To be experiencing. You know, alarmingly high costs. Already in his healthcare situation, right? Mm-hmm. So he says he was surprised by out-of-pocket costs, premiums, and the price of prescriptions.
Eric: Right? And the prescription drug coverage, that'll vary. They'll actually usually ask you for a list of prescriptions you take when they're trying to compare the plans.
Mm-hmm. Um, and by they, I mean the, uh, the, the brokers. Brokers, um. But generally speaking, like the, the healthcare costs, unless we're talking long-term care costs that are not gonna be covered by Medicare, the things that are covered by Medicare, Medicare is actually pretty, pretty substantial. Mm-hmm. And it's pretty good.
So like the most you might pay, right. If you're, even if you're paying. Well, you, you could pay like $500 a month in baseline Medicare if your Irma's just through the roof. Right? So you could just pay the, the, the top amount there, the maximum amount there. But typically speaking, if we're talking like the part G plus prescription drug, it should be ballpark two 50, $300 a month.
Eric: Mm-hmm.
Eric: So not back breaking. Right. It's not a, it's not free, but it's not backbreaking again, if, if you've thought about it beforehand.
Rachael: Yes. And again, the, the cost, um, perception depends upon, you know, what your spending looked like. You know, prior to Medicare, like if you're somebody who had to pay for your own health insurance
Eric: mm-hmm.
Rachael: Um, that's gonna be vastly different than somebody who didn't have to pay for health insurance ever. Right? Yeah. So, um, it's definitely gonna be a comparative situation, um, because when you start getting there, the costs. You know, are relatively equitable.
Eric: Yeah. So I did wanna say, um, no affiliation whatsoever.
No kickbacks. This guy, Mike, has no idea that I would say this, but, um, we met with somebody, um. Called Mike Dunbar, who works with clients in Louisiana and the New Orleans metro area. And he, I think he was very fair in his presentation of Medigap coverage and um, Medicare Advantage. So just shout out to Mike Dunbar if you need this.
He's always really
Rachael: nice to find somebody who's absolutely, he's local. Willing to be very, yeah. Yeah. Good guy. Caring about things. And, um, and again, if you meet with a broker, it doesn't mean you have to go forward with that broker, correct? Right. Um, okay. Regret number three. Um, we have Maria who shared that she moved all of her investments into bonds and cash right after retiring.
'cause she was worried about market volatility. Huh. And she said, quote, I missed out on years of growth and now I'm really worried about outliving my money.
Eric: I wish this were more uncommon. Yeah. Iue. Yeah. Um, and I get it and I, I actually probably push back a little bit. Um, well, I don't. Push back a little bit.
I, I push back against the idea that there's, you know, that the sliding scale should be as pronounced as it oftentimes is, even with targeted. And you mean you put a lot
Rachael: on that? Yeah.
Eric: Right. Um, and the idea is that why might I do that first, let me talk about what I'm actually referring to. So the idea is that conventional wisdom says, you know, the older you get, you've, you'll hear things like maybe 120 minus your age is the amount of money you should have in equities.
Or some might say if you're really, if you're, you know, risk averse, maybe it's a hundred minus your age.
Eric: Yeah.
Eric: Right. So the idea is there's, there's these. You know, rules of thumb or ballpark estimates, there's of them, of how you, your, your allocation, your split, um, your securities allocation between equities or stocks and bonds or fixed income should change over time.
Mm-hmm. And that you should just reduce your equity holdings. And increase your fixed income as you get older, as you get closer to retirement, to the point where they might, you know, some might say when you retire you might have 70% fixed income and 30% equities. Well, a lot of that depends on your risk profile.
It depends on your goals. There are people where that absolutely makes sense. There are people where you could want a hundred percent. You know, fixed income or some annuities and fixed income component where it just feels they're not gonna outlive their money and they have no desire to leave anything to their heirs.
Rachael: It feels so arbitrary to do it based on age.
Eric: No. Yeah. Correct.
Rachael: There's just so many other factors that go into it. Age is like the least
Eric: relevant. Exactly. Yeah. So, right. So the idea is that inflation will erode your purchasing power of bonds over time. We've talked about this, a number of, yeah, a number of times, right?
If. I have a bond that I buy for $10,000 today, and then I spend, let's say it's 5% bond. Okay? So I'm getting $500 a year. I spend my $500 a year at the end of maybe 10 years, I get my $10,000 back. Well, my $10,000 in 10 years is gonna have far less purchasing power than $10,000 does today when I bought the bond.
And so equities tend to keep up better with inflation. Over time, they've had better inflation adjusted returns. Yeah. And the bonds should be, or fixed income component of your, your portfolio can be thought of as a hedge to equity market downturns. Right. Um, you know, there are ways to, you know, ladder bonds and to think about this stuff to, to fund your spending needs.
But to say that, you know, you should automatically shift heavily towards bonds based on your age or your. Proximity to retirement. I, I'm not a huge fan. I don't ascribe to that conventional wisdom.
Rachael: And I mean, bless Maria. We don't even know if Maria was working with somebody who allowed her to do this without, you know, pushing or having the conversation.
Um, but she definitely, you know, in retirement was so worried about market volatility. She just, she pulled it all out and then. Years later realizes, oh no. Like I've watched my nest egg essentially get eaten away by inflation.
Eric: Right?
Rachael: Um, and that is such a scary thing to do. So like the understanding that a balanced portfolio, which we seem to be.
Pretty comfortable having before retirement, um, for some reason. And there's so much information out, misinformation out there, like you were saying. Um, we tend to think that that balance no longer applies, like the day we retire. We're no longer need to be balanced in the same way. Um, and there are even some that say like, you know, you should be moving towards like 0% inequities and that's.
Eric: Yeah, if you know there are people where that makes sense, but I would say that even if you were a person where that makes sense, right? If you were just ultra risk averse, you couldn't handle any volatility in your portfolio. And
Rachael: to be clear, you keep saying people that it makes sense and every. Like variable you're using to say it makes sense is based on their risk profile, not their age.
Eric: A hundred percent. It's never gonna be based on your age.
Rachael: Right? Well, we It should never be based on age. Exactly.
Eric: You could be 95 and be a hundred percent equities and that, that might be okay.
Eric: Yeah,
Eric: that's, that's in my mind, that's reasonable. Yeah. Right. I would happily make that argument to, you know, FINRA and the SEC.
Mm-hmm. But. You know, again, risk tolerance, that's not advice. All 95 year olds should not go a hundred percent equities, yada, yada.
Rachael: It's very individualistic. But
Eric: what I'm, my point here though was even if you were highly risk averse all the way on one side of the spectrum, I would argue that there are other products or other securities or other ways to invest yourself, or really in this case, it's in, it's an insurance product.
Yeah. So you might want to annuitize some portion of your portfolio with usually like an SPIA or a single premium immediate annuity. And that will give you like a larger return for your lifetime. You're
Rachael: saying because of like bonds,
Eric: correct? Correct, correct. Correct. It, it may make more sense. Yeah. Or at least to supplement your bond income and you can do inflation riders and essentially you're just, you're trying to just make a huge pension out of your portfolio.
Mm-hmm. And then you can just spend the pension and you don't have to worry about the fluctuations. Uh, again, probably not the recommendation for most particularly those with, uh, legacy concerns. Like if you're looking to leave money, you know, to your heirs and beneficiaries. But
Rachael: I think it's a really wanna a good point that like, but it is
Eric: a tool.
Rachael: Bonds are not the only option for people who are more risk averse.
Eric: Correct.
Rachael: It also could be that. If you're starting to feel nervous or more risk averse, then yes, maybe there's a shift in your portfolio based on that. But it's not gonna be, let's pull everything out, right, and leave the market entirely,
Eric: right?
You're gonna want the, you're gonna want some exposure to equities because they're going to provide superior long-term, uh, growth.
Rachael: Alright, we're moving on to regret number four. Oh, no, I dropped my
Eric: pen, but I got another one. We're good.
Rachael: Already had a backup. We're good. You knew yourself. Yes, ma'am. Um, regret number four.
Is from Tom. Tom tried to manage everything himself from taxes to investments and said, quote, I made some costly mistakes that a professional could have helped me avoid. I wish I'd gotten professional advice sooner.
Eric: Yeah. Um, I.
Rachael: We've seen that too.
Eric: Yes. Unfortunately, you, you cannot reverse Roth conversions and while they are a viable tool that I champion regularly,
Rachael: an amazing tool.
Eric: Yeah, absolutely outstanding when used correctly. Yeah, they can be dangerous when used incorrectly. You can try to bite off more than is necessary. And what'll happen is you'll spike your tax bracket where you wind up doing a huge Roth conversion in one year. Right? And so you're paying taxes all the way into the 37% bracket, but then in subsequent years, you might be in the zero, 10 or 12% brackets where you don't even, you're not even able to use the standard deduction here.
Rachael: Do you know what I'm gonna say? Yes.
Eric: You're gonna talk about the Mario I am. Uh, analogy. You hit the top
Rachael: and the bottom in that one.
Eric: Exactly.
Rachael: Um, I mean, that's exactly it. I think that, you know. Uh, there's such an intricate bond and, and inextricably linked relationship between taxes, investments, withdrawals, and if you don't know how all of those pieces play together, yeah, you're messing with the right hand without looking at the left, and then you're left with whatever the consequences are and that can be so scary.
The professionals that do this are dedicated to doing this and spend their time doing CES and making sure that they're up to date on the latest and greatest stuff. It is what they spend all of their time doing. If you are not in that field, you are spending your time mastering whatever your craft is.
So it's okay to not have the same level of expertise as the people who are doing it full time. You shouldn't, right. Um, that's not to say that there aren't people out there who are doing it themselves and being very successful, but
Eric: no, you can learn about a lot of this stuff. A thousand percent. The issue is that you, you know, our goal
Rachael: is to help you do that.
Eric: Absolutely. We wanna provide education. We want everybody to know what's going on. But, um,
Rachael: there are some very unforgiving correct situations that are worth reaching out to a professional. Even if it's for a one-time plan to figure out like, I wanna do a Roth conversion this year, what should I do? Correct.
Eric: Yeah. Just ask 'em to quantify it.
Rachael: Yeah.
Eric: Ask them to make sure your thinking's correct.
Rachael: Yeah.
Eric: Say, I'm willing pay for a couple hours of your time. Correct. You know, we can sit at a table together. Yes. I'll, you can charge me for the time and then you tell me if I'm right or wrong here. Yes. And most people will be willing to do that for you.
Rachael: Yeah.
Eric: Right. Or at least very many will. Exactly. So, um, and to be clear,
Rachael: we don't know for sure that that is what Tom did, but that is definitely one of the biggest, it's
Eric: blow yourself up the stake that we see it. Correct. It's not great. I mean, you could do the same thing could be true for just taking a ton of money out of a 401k, not realizing that you can roll a 401k into an ira, right?
So you just pull the money out instead, if you
Rachael: re categorize or, or classify like the funds before you, I mean, there are so many ways that you can make a mistake by, um. Withdrawing at the wrong time, recategorize funds incorrectly. Um, ugh. It stresses me out thinking about it. It really does.
Eric: I love it. It's great.
Rachael: I know you do. Okay. So yes. Um, Tom regrets not getting professional advice sooner. And to be clear, that advice again, does not have to come with like, oh, I don't know. I mean, I think, you know, my dad in particular comes to mind here. He, um. It was a very knowledgeable individual, prided himself in knowing how to do all the things.
And so it becomes really difficult to reach out to a professional if it's something that you've done this whole time. So reaching out to a professional doesn't have to be an acknowledgement of like, oh, I can no longer do this at all. It doesn't have to be an, I'm gonna work with you now and I'm gonna work, like we work with the majority of our clients in long-term relationships.
Mm-hmm. Um. But there are others that don't. We enjoy doing that, right? Correct. But there are people who will offer to work hourly. There are people we will, we do do one-time plans. Um, there are people who do one-time plans, but there are a variety of ways to work with a professional that doesn't involve handing over all of the reins.
Correct. And to be clear, some of the clients that we work with really enjoy this stuff and wanna talk about it. And so it's not a, like, I'm handing over the reins, do everything. I don't wanna. Touch it. It's very much a, like, I enjoy having a thought partner. I wanna talk through this with you. Mm-hmm. Um, so there's a variety of ways to work with people.
Correct. So you don't have to not reach out to a professional because you think that they only like handhold and do all the things and say Okay. Like, sit yourself in a corner. Hmm. It doesn't have to be like that.
Eric: Right.
Rachael: Um, alright, so regret number five, our last regret. Um, was not talking about money with family.
Um, so Susan says that her biggest regret was not having open conversations about money with her spouse and her children. She said, quote, we avoided tough topics like wills, long-term care inheritance, and when issues came up, it became very stressful for everyone.
Eric: I mean, that's unfortunately the, I think that's more the rule than the exception there.
Yeah. Nobody wants to talk about it. Um, I mean, I, we get it. It's morbid. Nobody wants to think about their own demise. That's. It's not fun. Um, especially not fun, you know, if you're going over on a barbecue on the weekend at your kids' house Yeah, for sure. But you have barbecue on the weekend at your kids' house.
Um, you're not gonna wanna sit down and talk through wills and you know, how we're gonna divvy up assets or anything like that.
Rachael: But surprising them on the backend is
Eric: also not great.
Rachael: No. Um,
Eric: also not great. And, and there are, particularly for those with, you know, valuable states, there are a number of planning tools.
I mean, estate tax exemption is relatively large these days. Mm-hmm. And it's slated to potentially be. Codify, depending on whether or not current legislation, um, passes. But point is, well,
Rachael: so it's interesting, like both of our dads have passed away, right? Yep. Um, did yours ever talk to you about will's?
Long-term care inherited? Nothing. No. Yeah,
Eric: no.
Rachael: Um, granted, and, and, you know, your dad passed away very unexpectedly. Mm-hmm. And so it becomes something where. Like, you don't really know what the plan is, like you and your brother kind of, I mean, you handled it amazingly well, but it was very much a, y'all kind of had to figure it out.
Sure. Right. Yeah. Um, my dad was very much more of like a talker about the things. Um, he, uh, you know, I knew there was a will. I didn't know what it said. Um. I did not know.
Eric: Tried carefully
Rachael: long-term care, um, you know, concerns or anything like that. Um, and inheritance. We didn't talk about that either. Um, but, you know, my mom is still alive and I think that she's done an amazing job of having a really open conversation with my sister and I to make sure that we're not in a position where.
You know, we're kind of blindsided by what happens. Um, I do think that the older your children get, the easier it becomes. Yeah. Um,
Eric: for sure.
Rachael: You know, it's a really daunting topic for us to have a conversation with our kids about. 'cause they're 10 and 11. Um, but you know, you never know when something's gonna happen.
And so going through, um, what I am right now definitely makes you think and, and. And plan out kind of how you're gonna have those conversations. Um, and it's so hard, but we have to normalize having those conversations and make it less taboo and it's nothing anyone wants to have. It's something you can even say, like, look, I know this is not a fun topic to talk about, but I really just wanna make sure that you're well informed.
Um, we actually did an episode, I think, where we discussed. How to have those tough conversations with family members. Mm-hmm. Um, but I mean, Susan is absolutely right that if an issue comes up and you haven't had those conversations or you don't even know that there is a will, you don't know to look for a will.
Like those are problems, that's problematic. Right. Um, but yeah, I just, I thought it was really interesting 'cause our parents definitely handled it differently is what it is. But, um, having those conversations are. Crucial. Um, and I think normalizing having those conversations are important. Um,
Eric: yep.
Rachael: It doesn't have to be morbid.
It can be more practical. I think you're gonna be a lot better about doing that with our kids than I'm
Eric: hopefully, probably, I'm gonna be a
Rachael: mess time. Eric tries to, I'm doing a really terrible job at practicing what I'm preaching right now, and I, I'm really. Telling myself this because every time Eric tries to talk about that kind of stuff, I get really emotional and it's really difficult for me.
Um, so yeah. Any thoughts on,
Eric: on that? Have the conversations. They're hard, but they matter and, um, it's better to know what's gonna happen beforehand.
Rachael: Any recommendations on how to have the conversation?
Eric: You're better in that arena, but, uh, lead with empathy and, um, I think that's probably it. Right? I,
Rachael: and I, I think that, you know, speaking as a, as a child who parents did have those conversations, as offputting, an alarming as it is to have those conversations and to think about like.
Your parents not being there one day, there is a certain level of comfort that your children will get from knowing that there is a plan Yes. That there's something they aren't having to worry about. Um, my mom likes to tell a story that when I was like six I told my parents, you know, I know you guys are older, so like.
I know that y'all have someone to take care of, like, um, or I know I'll be here to take care of my Becky, my younger sister, but like, who's gonna take care of me? Um, so at age six, I was already like angstily thinking about like them being gone. So whether you're having the conversation about what happens when you're gone or not, the reality is that your kids are thinking about what happens if mom and dad aren't there.
So being able to give them that kind of answer and that kind of comfort, um. You know, while not a pleasant conversation, we'll give them some peace of mind that you may not be aware of.
Eric: Agreed.
Rachael: Yeah. Alright. So those were our five regrets that were shared, that I chose to from. There were a lot of regrets that were shared, but some of them are ones that I don't think the average person is making.
Eric: Fair enough.
Rachael: Um, so, you know, main takeaways from today, Eric. Save early, everything's
Eric: easier. Yep. The more money you have. That's how capitalism works.
Rachael: Love it. True. It's so
Eric: true. I mean, and, you know, discuss it with family member, discuss your wishes with family members beforehand. I think that's important.
Mm-hmm. Agreed. You know, it, it's specific to the individual. Uh, regrets, but, but having a plan, having some idea of what's gonna happen as you age, is researching information always gonna be better. Yeah.
Rachael: Yeah. I mean, exactly. And then. At the end of the day, if you're still not sure and you just really want advice, there are professionals out there who are happy to provide it.
Eric: Yep. That's the, that's our wheelhouse. That's our jam.
Rachael: Perfect. Alright, well again, if you have any regrets you'd like to share with us or any positive stories of a regret that you were able to turn around, please don't hesitate to email us at podcast@equilibriumfp.com.
Eric: All righty. Thanks guys.
Rachael: Till next time.
