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Five Tips to Flip Your
Retirement Switch
Dr. Barbara O’Neill, CFP®, AFC®
Owner/CEO, Money Talk
Money Talk: Financial Planning Seminars
and Publications
https://www.moneytalkbmo.com/
@moneytalk1
Three Book Sections
 Financial Transitions
 Social Transitions
 Lifestyle Transitions
Amazon Link:
https://www.amazon.com/gp/pr
oduct/1620236869
Book Inspiration #1
Book Inspiration #2
Research presentation at 7/18 ASEC
meeting about Spending in Retirement
Described some retirees with a unique
“problem”: they saved their whole life and
are not comfortable spending
Speaker quote: “We need financial
education to teach people how to ‘flip a
switch’ from saving to spending”
Book Inspiration #3
Grasshoppers and Ants in Retirement article
(Finke, Guo, & Johnson, AAII Journal, 6/18):
https://www.aaii.com/journal/article/grasshoppers-and-ants-in-
retirement
Describes thrifty “ants” who spend less in
retirement than they are financially able to
“Habit formation hypothesis”: people get
accustomed to a certain lifestyle and
spending habits are hard to break
There are Many “Switches”
That Need to Be Flipped in
Later Life (Transitions)
Some Transitions Are Like
“Dimmer Switches” and
Change Over Time
Working
Spending
Investment asset allocation
Downsizing
Disengagement/engagement activities
Simplification
Five Financial Switches
Spending Down Savings
 Step outside of your spending comfort zone
 Automate savings withdrawals
 Answer some hard questions:
 Why did you amass savings if you aren’t
going to spend it?
 If you don’t spend your money, who will?
 What are you waiting for?
Creating a “Paycheck”
 Set up automatic withdrawal plans (e.g., mutual funds)
 Create a bond or CD “ladder”
 Purchase an annuity
Tweak the “4% Rule” for personal circumstances
Adjusting to Changes in
Income
 Income will either increase or decrease
If it decreases…there are catch-up strategies:
Work longer or during retirement
Spend less
Consider “geographic arbitrage”
Tap home equity
Reverse mortgage
Sale-Leaseback
Managing Income Taxes
 Request income tax withholding services
Consider the impact of RMDs and widowhood
 Determine your new marginal tax rate
 Time elective cash withdrawals
Consider hiring a tax professional
Ramping Up Philanthropy
 “You can’t take it with you”
Check out potential charities
 Specify a purpose
 Plan your donations (gifting budget)
Use tax-advantaged strategies (bunching,
QCDs, donor advised funds, charitable trusts)
Questions and Comments?
Order book on Amazon or $12 at AAFCS
meeting….wine and signs in my room
https://www.moneytalkbmo.com/

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Five Tips to Flip Your Retirement Switch-06-22.pdf

  • 1. Five Tips to Flip Your Retirement Switch Dr. Barbara O’Neill, CFP®, AFC® Owner/CEO, Money Talk Money Talk: Financial Planning Seminars and Publications https://www.moneytalkbmo.com/ @moneytalk1
  • 2. Three Book Sections  Financial Transitions  Social Transitions  Lifestyle Transitions Amazon Link: https://www.amazon.com/gp/pr oduct/1620236869
  • 4. Book Inspiration #2 Research presentation at 7/18 ASEC meeting about Spending in Retirement Described some retirees with a unique “problem”: they saved their whole life and are not comfortable spending Speaker quote: “We need financial education to teach people how to ‘flip a switch’ from saving to spending”
  • 5. Book Inspiration #3 Grasshoppers and Ants in Retirement article (Finke, Guo, & Johnson, AAII Journal, 6/18): https://www.aaii.com/journal/article/grasshoppers-and-ants-in- retirement Describes thrifty “ants” who spend less in retirement than they are financially able to “Habit formation hypothesis”: people get accustomed to a certain lifestyle and spending habits are hard to break
  • 6. There are Many “Switches” That Need to Be Flipped in Later Life (Transitions)
  • 7. Some Transitions Are Like “Dimmer Switches” and Change Over Time Working Spending Investment asset allocation Downsizing Disengagement/engagement activities Simplification
  • 9. Spending Down Savings  Step outside of your spending comfort zone  Automate savings withdrawals  Answer some hard questions:  Why did you amass savings if you aren’t going to spend it?  If you don’t spend your money, who will?  What are you waiting for?
  • 10. Creating a “Paycheck”  Set up automatic withdrawal plans (e.g., mutual funds)  Create a bond or CD “ladder”  Purchase an annuity Tweak the “4% Rule” for personal circumstances
  • 11. Adjusting to Changes in Income  Income will either increase or decrease If it decreases…there are catch-up strategies: Work longer or during retirement Spend less Consider “geographic arbitrage” Tap home equity Reverse mortgage Sale-Leaseback
  • 12. Managing Income Taxes  Request income tax withholding services Consider the impact of RMDs and widowhood  Determine your new marginal tax rate  Time elective cash withdrawals Consider hiring a tax professional
  • 13. Ramping Up Philanthropy  “You can’t take it with you” Check out potential charities  Specify a purpose  Plan your donations (gifting budget) Use tax-advantaged strategies (bunching, QCDs, donor advised funds, charitable trusts)
  • 14. Questions and Comments? Order book on Amazon or $12 at AAFCS meeting….wine and signs in my room https://www.moneytalkbmo.com/