$2 Million Retirement Plan, Ep #264

Envisioning what your retirement will look like can often be a challenge, so it may be helpful to hear some examples of people in similar situations. In this week’s retirement headlines segment, we’ll explore a WSJ article from Veronica Dagher and Anne Tergesen that interviews 4 retirees who saved enough for a comfortable retirement. Listen in to hear how they spend their time and money.

Make sure to stick around until the end to hear the answer to Donna’s question about changing her husband’s variable annuity to a less expensive option.

Outline of This Episode

[2:02] What a $2 million retirement looks like in America
[12:45] How to move a variable annuity to a less expensive option

What direction will your retirement take?

Americans are told that they should save for retirement but are not given much direction on what to do with their savings once they have acquired them. Many retirees worry about how much they should spend in retirement. Hearing what others do with similar portfolios and expenses can help.

One thing that each of these 4 retirees agreed upon was that it is important to have a sense of purpose in retirement. Suddenly having an empty calendar can be quite daunting, so it is important to have more than just a financial plan.

What a $2 million retirement can look like in America

John Fitzgerald is a retired police lieutenant with about $2 million in savings. He spends about $144,000 per year. He also receives a monthly pension of $6,900. John’s financial plan is solid even without his generous pension. He won’t have much to worry about if he uses retirement income guardrails to find the specific portfolio number where he should reduce his income. He can ease his worries and spend his time focusing on being a coach for his local youth baseball league.

James Compton is 84 and recently retired. He has savings of $1.5 million but is concerned about the recent market volatility since 70% of his portfolio is in stock mutual funds. While James is worried about portfolio risk, my main concern would be his adjustable rate mortgage of $200,000. With interest rates rising, he could see that ARM balloon pretty quickly. If he chooses not to pay it off soon, he should refinance as soon as he can so that he can focus his time on his physical fitness routine and socializing with his friends at lunch.

Judy Hall retired in the midst of the financial crisis. She was a workaholic who saved 6% of her salary in a 401K with a company match over the course of her career. She now volunteers with the same dedication that she put into her work. Even though she retired at such a stressful time, she has only just dipped into her retirement savings. She still has $1.8 million of the $2 million that she retired with.

Listen in to hear how Bob Bradley spends his time and money in retirement and hear how Donna can save on fees from her husband’s variable annuity.

Be on the lookout for Retirement Income University!

Retirement Income University is almost here! I just finished recording the last module and am now patiently awaiting the editing process. If you are interested in becoming a beta tester to get a firsthand look at the program and help us tweak it for the big rollout, make sure that you are signed up for the Everyday Is Saturday newsletter so that you can hear how to become a beta tester.