Transcript:
Easan Arulanantham:
So this is kind of a little bit stepping back to the kind of fundamentals of retirement. But we’re kind of like the basic factors that are like inputs that you for figuring out retirement.
Tom Vaughan:
Yeah. Okay. So on a very basic level, one of the most powerful ways to look at retirement planning is just, you know, kind of imagining this big asset base that you’ve got in your retirement, either now, because you’re retired or you want to have, you know, if you’re not retired, and then what I look at is kind of what are the inputs? What’s coming in? I call it from the top, so so security be great example, or rental income that might be coming in, or pensions, or any of those things. So those are all inputs on the top? And then what are you pulling out the bottom travel in this, you know, basic living expenses and medical costs? And all those? So the whole financial planning is that inputs, assets, outputs, right, that’s it. And the planning process is just to determine whether there’s a balance there is that those three pieces work? Are there enough assets? Are there too much withdrawals are not enough inputs that are coming in are how do we maximize these, and the planning process is just that input assets withdraws? Now, there are other aspects to that that are kind of interesting. And that has to do with really just the number of years.
So if you’re not retired yet, how long do you have to put money in. So that’s an aspect that we can actually change somebody comes to us and says, Hey, we want to retire at 50. And it doesn’t work, I can’t get it to balance for what their parameters are. But maybe it works at 55. So that’s another aspect of like flexibility potentially, as far as that goes, or we leave it a 50 and a try to stay more motivated to save more, you know, there’s some different things, because you either have to save more, or move the time off to make some of these work as far as that goes. So somebody who is, you know, in their 20s, that wants to retire in their, you know, say, early 50s, one of the challenges there, they’re gonna have left years to save, right, there’s no doubt, and then they’re going to have more years that they’re going to be withdrawing. So if you live into your 90s, you know, you retired early, that’s those are the challenges that have to be met by that. So that person has to be very, very motivated to save a lot of money to make that work, and to possibly even make sure that their standard of living after retirement is is reasonable. So it’s not so hard to accomplish. But yeah, those are some of the big parameters, just inputs, assets, outputs, number of years, you can save, and then you know what age you retire, for example, those are some of the big ones.
Easan Arulanantham:
Yeah, and so like, basically, factors that we can kind of change around is, can we move your savings? Oh, can we lower your expenses? Or can we maybe give you a longer time horizon, if you’re at the kind of edge, those are really kind of inputs that we change, and try and help you decide on?
Tom Vaughan:
Yeah, I would say that there’s a couple others, and some of them are more important than others. But maximizing self security is interesting, it’ll add a couple percent to the probability of success if you do that correctly. So that’s one piece. The other part is if somebody is really, really interested in retiring in a certain age, and it’s really not working, and they have some equity in their home, and they’re willing to move, you know, putting that in there, you know, hey, we’re gonna move and this is how much money is going to be captured out of that move. So but what you’re doing there is you’re adding in assets, that wouldn’t be counted otherwise, because most of our clients say, we’re not going to move so that house is worth a lot here in the valley.
But essentially, you know, if you’re not going to move that is just a place to live. But if you’re going to move you’re gonna go to Arizona or something, you might capture a bunch of money that then just increases that asset base that you can withdraw from. So those those are a couple of other things that that can be looked at to see you know, again, in a scenario that is tight scenario, or doesn’t quite work without a little bit of, you know, maneuvering and thought. But those those are the basics that I think it’s really important to understand the basics of retirement planning. Just makes the conversation with your planner, a lot more productive. You know, the more you can understand the basics of how it works. You know, the more that you have a chance of having a successful retirement. I think planning is a really critical part of this. It’s it’s something that, you know, we we lean on pretty heavily