Jude Wilson  01:03

I’m doing well. I’m glad to see you, buddy. This is a topic that’s near and dear to my heart because my dad was in the same situation. Okay, I believe my dad was 57 when he suffered a disability at work. He tried to work for one more year, and then just couldn’t do it, and and had to retire early, and it really made things kind of difficult because, you know, I tell the story all the time about my my my parents being Haitian immigrants, and you know, not having much working really hard is how long is my money going to last? If I have to retire early, oh my god!

 

Marc Killian  01:39

Right, yeah, and you know, and Jude to this research, not really like groundbreaking research here on a part of this, where they’re like, “Oh, well, people with higher incomes are are more likely to go ahead and say, ‘Fine, we’re forced to retire three years early for a medical reason or whatever. Cool, we’re just going to walk into it. It’s like, well, yeah, no brainer. They got the resources. Lower income folks or lower earners certainly have a bit more panic, but I think people in general tend to just go, “Oh, I’ve got to retire three years early because of X, Y, or Z. I’m really nervous about it. So, with that said, Jude, let’s kind of look at it from two angles. Okay, number one, an existing client. Now, you’ve already got a strategy, you’ve already got a plan. You’re already working with them, but something in life throws a curveball, and they come in and say, “We’ve got to pull this trigger three years earlier than expected. How do you guys then kind of rework the the existing plan? What do you guys look at and

 

Jude Wilson  02:35

do? It’s that’s such a great question because when a client comes in, we set the target first, and the target may be 6560, whatever the target is. And every year we’re monitoring: Are you getting closer or farther away? And we’ve talked about this before. We’ve we have our three bucket scenario where we have safety money, income money, and growth money, and and so what that allows us to do is constantly test these different scenarios. And so if something happens, like you have to retire early, if we’ve properly set up the buckets, then we need to just revisit. Okay, instead of 65 as we plan, it’s 62, or it’s next year, or it’s now, and then adjust the buckets to taking those withdrawals that are helping you sustain your retirement, and that’s the really part of the magic of why I love this financial planning industry that I’m in because we’re we’re able to take those numbers and make it come alive for the client and say, okay, now you were planning on retiring at 65 and needing $100,000, and now you’re retiring at 62. So now we can run a bunch of different scenarios and see, hey, should we adjust the income that you need higher or lower? Maybe you have more medical bills than you expected, and that just really allows us to come up with the game plan of which lever to pull. Should we be taking Social Security early? Should we be pulling more money from your income bucket early? And and it’s our job to run those scenarios and then to come back and say this is how we’re going to adjust to make sure that you can have the retirement that you need, even though our plans went off a little went off track a little bit.

 

Marc Killian  04:28

And I’m, you know, I imagine for most people when this happens, Jude, it’s like they they come in and they go, “We’re going to have to change our lifestyle. I just know it. It’s just going to wreck everything, right? There’s a tendency to panic, and that’s you know normal. But that’s why you go through the you know kind of adjusting and making some changes, and oftentimes, hopefully, again, if you’ve already been working with an advisor, hopefully there’s little minor changes that can help you with that gap. And again, we’re just talking about a specific kind of a three-year window based on this research right this minute. So you know, again, if something like that is happening, or you think it’s coming down the pike. You certainly be getting back in and talking with your advisor and getting those changes and updates and working through things. However, the the oh, go ahead, Jude.

 

Jude Wilson  05:08

Well, I wanted to just give you a specific example that happened to me just last week. Had a client that was planning on retiring at 65, and because the the husband made more money during his lifetime. His Social Security was going going to be more than the wife’s. And in the original plan, we had deferred for him to take Social Security at age 70 because every year past your full retirement age, Social Security guarantees a 8% increase in the income up to 870. You max out at 70, but unfortunately, this gentleman started to show signs of dementia, and he just wanted to live his life now instead of postponing. So, when rerunning the numbers, looking at the budget, looking at his potential taxes and looking at at Social Security, what we decided to do was to take the Social Security early. It was a nice to have to have the Social Security go delay to 870 because of that 8% automatic increase. But when we ran the scenarios and saw that by taking Social Security early, they were going to get the same amount of income, but they were going to get the income that they needed to have the lifestyle that they became accustomed to. So it wasn’t mandatory that he had to wait to age 70. It it enhanced the plan, but taking Social Security early in this situation, made a lot of sense.

 

Marc Killian  06:42

Yeah, and so, and again, an existing client, you know, you’ve got a lot of that information there. You can kind of start to see those things to change. Now, what probably happens more times than not, Jude, is that people have procrastinated. They haven’t sat down with an advisor. They know they need to, and they get now some news that says you’re going to have to retire sooner than you thought. So they come in. They finally, you know, it’s the catalyst that makes them schedule an appointment. They come in for that first consultation and go, “Okay, nice to meet you. I’m having to retire three years earlier than we planned. Oh my gosh, I’m panicking. What do we do? So in that regard, do you walk through it just like you would any other new client potential, or or do you kind of address it a little differently because they’ve got that urgency they’re worried about? What does that look like from your planning perspective?

 

Jude Wilson  07:31

So that’s another very good question. Someone comes in; they’re usually very stressed when this situation happens.

 

Marc Killian  07:36

Sure,

 

Jude Wilson  07:37

it’s our first time meeting them, so one of the first things I have to do is tell them it’s going to be okay. We’re going to figure this out together. Once we’ve taken the temperature down and everybody’s a little calmer, now the next test is really to to get all of the data. And sometimes that process, in and of itself, helps relieve the stress because they may not be looking at everything that they actually need. They may believe there’s going to be more expenses than they expected, but actually sitting down and looking at the data then gives us the foundation to put together the plan, to stress test it, and to come back to the client and say this is actually how it’s going to to look and give them that sense of confidence that they want.

 

Marc Killian  08:26

Well, that makes sense because, like, you’re panicked because you’ve just found out something that’s going to force you to retire early. You’ve never talked to an advisor, so you come in, you’re like, “Just tell me I’m going to be okay. Just tell me, you know. And so you got to put it together, and then once you see stuff, you might find a lot of people do find. Oh wow! Okay, we’re in better shape than we realize. Now, granted, the three-year early retirement causes a few wrinkles. So now let’s address those wrinkles by X, Y, or Z. Is that is that fair?

 

Jude Wilson  08:53

One 100% 100% Because it’s really about being able to give them that sense of confidence and calm that they need, and when you’re panicked like that, it’s it’s hard to see the forest for the trees. So part of our job is the mathematical part, but part of our job is the psychological part also, making sure that they understand that if we put together a plan, we have a higher likelihood of being successful. If it’s just a hope and a wish and a prayer, it that that’s not that’s not truly a plan.

 

Marc Killian  09:24

Very true. Well, usually Jude, I think with this data, this kind of thing, where 65 was the target, something happens, and you’re retiring three years early. The medical side becomes the big concerning piece for a lot of people too, right? First, it’s do we have enough assets saved and built up. Second is, what do we do with this potential three-year gap to no inc with no insurance, right? So that’s gonna that’s gonna potentially you know dwindle that nest egg as well. So that’s where a lot of the calculation and kind of planning comes into play, seeing what options are there, right?

 

Jude Wilson  09:57

That’s that’s the number one thing that we stress to. In the plan, because in these in these scenarios, most of us have health insurance through our employer, and so if you’re no longer having health insurance through your employer, then purchasing private health insurance is highly expensive, and so that’s one of the biggest concerns that they have, and so that’s the first part of the plan that we address and stress test that. Once you’re over that hump, then usually the rest can fall in place. Whether we take Social Security earlier or later, whether we stay on the same path if they were doing Roth conversions, whether we stop that, all of those those things are important, but they’re not as important as making sure that they can have the adequate coverage that they need for their medical expenses.

 

Marc Killian  10:42

Yeah, yeah, and again, that’s a big concern. It’s a big gap that people have to, you know, certainly deal with. So, at the end of the day, with this study, Jude, that’s out there again, you know, nobody plans to be forced to retire early, but certainly these things can come up. Whether it’s a job layoff, whether it’s an injury, whether it’s you know disability like your father or whatever the case might be, right? You’ve got to start with a a strategy of what do you have, what do you need, and then how do we go about kind of tweaking and making those things and those adjustments instead of the initial panic of oh my gosh, I’m going to have to eat ramen noodles and you know live on my kid’s couch forever, right?

 

Jude Wilson  11:18

Right, right. Nobody wants to do that, not on the kid’s couch, right?

 

Marc Killian  11:22

So hopefully, you know you’ll get a strategy in a place, a plan in place, or you have one. And to Jude’s point earlier, if you’re an existing client with a financial professional, you know you’re already done a lot of the work to hopefully kind of tweak that and you know kind of put a band-aid on this situation, if you will, a little bit easier. But at the end of the day, it comes back to having a strategy, having a plan, right, Jude? So get started, right? Reach out, have a conversation. You know, Jude, you got the five pillars. You guys got the bucket strategy there that you’re working with people on. So if you need some help, reach out to Jude and the team, get some time on the calendar, and have a conversation. It’s no cost or obligation, so there’s really no reason not to just see you know where things stand. So we’ve got links in the show descriptions down below. Click on one of those and get some time with Jude and the team and get started today. And my friend, I think that’ll do it. Unless you got any final thoughts,

 

Jude Wilson  12:08

yeah, for sure. If you find yourself in this situation and you don’t have a financial professional, one of the first things you probably need to do is look at your investment portfolio because you’ve probably been investing for growth because you you know that you’re going to retire in 10 years or in seven years, and then all of a sudden you get thrown this curveball. Well, if your investment portfolio is aggressive or even just a growth portfolio, you’re just trying to continue to grow your nest egg. You probably at this point need to look at that portfolio and become more conservative, and that’s why we we highly highly suggest having your safety, income, and growth buckets align with your goals and the and what’s going on in your life currently.

 

Marc Killian  12:54

Well, we appreciate your time as always right here on the Roth Guy. Don’t forget to subscribe to us on Apple, Spotify, and of course here on YouTube. And we will catch you next time here on the program.

 

Speaker 1  13:08

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