Ep 46: Moving Your Retirement Goalposts - Is It Worth The Risk?

Ep 46: Moving Your Retirement Goalposts - Is It Worth The Risk?

Do you ever feel like your retirement planning goals are always moving? You're not alone. We’ve found that people often move the goalposts in their own retirement planning, often to their detriment. In this episode, we're diving deep into the psychology of retirement planning and the dangers of moving the goalposts.


Prepare to expand your financial acumen as we navigate the often-unpredictable journey toward retirement with Sherry Rash. You'll gain a comprehensive understanding of why having 3 to 6 months' worth of expenses in an emergency fund is a critical safety net and how it fortifies your overall financial plan. Beware, though, of the perils of having excess cash sitting idle; together, we'll uncover strategies to make your money work for you.

In our discussion, we dissect the concept of shifting financial goalposts and its potential impact on your retirement plans. We'll share the value of setting bite-sized, achievable financial goals and the cumulative power they have in securing your future. Equally important is the flexibility to adjust your trajectory, especially when life throws you a curveball. We also delve into the diverse investment landscape and the inherent risk levels tied to each. Plus, we shed light on how to manage these investments wisely for the long haul. Wrapping up our lively discussion, we stress the importance of selecting a retirement date, coupled with the imperative need for a plan that can adapt to life's surprises. Buckle up and let's demystify retirement planning.

Full Transcript

"0:00:00 - Speaker 1

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research Inc. A broker-dealer member, finra, sipc Advisory Services through Cambridge Investment Research Advisors Inc. A registered investment advisor Cambridge and Greenway Wealth Advisory are not affiliated.

0:00:20 - Speaker 2

It's time to dive into some insider secrets of investing and retirement planning To make your retirement as smart and as elegant as possible. This is Money Chic with Sherry Rash. Back for another edition of Money Chic Women in Retirement, with Sherry Rash and myself, to talk investing, finance and retirement, and we're going to talk about moving the retirement goalposts. Is it worth the risk? That's the topic that's going around on the podcast. Thanks, as always, for hanging out with us, sherry. How are you?

0:00:48 - Speaker 3

I'm doing all right. How are you?

0:00:50 - Speaker 2

Doing pretty good, enjoying a little pollen Not really, but spring is starting to happen, at least around my neck of the woods, and I had a nice little green blanket of pollen this morning. So I was like, oh, here it comes.

0:01:04 - Speaker 3

Does your green week last for a week or how long does?

0:01:07 - Speaker 2

it last, for it's like six weeks.

0:01:09 - Speaker 3

Oh, my goodness.

0:01:10 - Speaker 2

Yeah, yeah, that's not fun. No, it's that time of year.

0:01:13 - Speaker 3

What's worse? Pollen or snowstorms in March. So you know, yeah, that's a tough one, right?

0:01:19 - Speaker 2

I guess it depends on how bad your allergies affect you, you know. But thank goodness for flow nays. So how are you doing? You doing all right.

0:01:27 - Speaker 3

Doing all right, can't complain. I have flash here. He's taking a nap right now, so hopefully he continues napping throughout our time together.

0:01:36 - Speaker 2

Maybe we should call it the flash and Reno show, because Reno is right here, next to me as well.

0:01:41 - Speaker 3

Oh, okay, he's doing this. We'll get them talking to each other at some point.

0:01:44 - Speaker 2

He's napping as well, so maybe it'll be money, chic dogs in retirement Women, dogs in retirement. I don't know. We're helping you plan for your dog's financial future.

0:01:55 - Speaker 3

That's right. Our other children, that's right?

0:01:57 - Speaker 2

Well, you got to love them, though. They're so much fun, right.

0:01:59 - Speaker 3

They are.

0:02:00 - Speaker 2

They bring so much joy to our lives. So, hey, let's jump in here and talk about this, what the retirement goalposts. What we're talking about here is, you know, kind of moving things back. I mean, we've found that people often will move that goalpost, so to speak, in their own retirement planning, often to their own detriment. So I guess we all dive in and take a look at the concept of what that looks like, if the psychology, if you will, of retirement planning and the dangers of moving those goalposts and for whatever reason you feel like you need to do that. So, for example, like the first one is, you know, having cash, like how much cash do I need? And that conversation has certainly changed, sherry, because of interest rates ticking up over the last little bit. People are like, hey, you know, putting more cash in the banks not the worst idea right now, like it was the last 12 years.

0:02:45 - Speaker 3

This comes up a lot as far as whether my clients are looking at retirement in retirement or they're, you know, just graduating college and they have their first job and they're starting to build up a bank account. This comes up all the time and when I start working with a client, that is probably one of the first things we talk about is what do you have in your checking, savings, emergency fund accounts and what's an appropriate amount? This is important, although it's pretty basic. It's often a question mark for many people and a lot of times it's a feeling of what feels good to me as far as having cash.

And I will say, when we move goalposts, are we moving on because you're not confident in your retirement plan or your decision, or are things just changing? Because life changes? Every plan needs to be a little bit fluid and not be so rigid that it cannot change or it's detrimental if it changes. But moving a goalpost for the sake of moving it, because you're not confident, that's the big issue. But if you keep saying, well, if I have 50,000 and then I need to say 50,000, then I'll start investing, well, now I have 50,000. I'd really like it to be 75,000. Where are these numbers coming from. So if we have some logic and know where they come from, then that's a different story versus a feeling. So basic rules of thumb as far as cash, an emergency fund so a true emergency fund that is used for emergencies and it's not a slush fund, a rainy day fund. It doesn't. You don't move money to and from your checking account from your emergency fund. Think of your emergency fund as break glass in case of emergency right.

0:04:36 - Speaker 2

This is a true emergency fund.

0:04:38 - Speaker 3

Three to six months of expenses is what you should have in there, and then, once you get to that number and you know, three months is a little bit less conservative a number, so a little bit less cash. Six months is obviously more conservative I want to have more cash socked away, but then, once it's fully funded to whatever number you want it to be between three and six months forget it exists. It no longer exists to you. If you still want to have other cash for that slush fund, that rainy day fund, we can have another savings account for that, but we don't want to have too much cash on the sidelines, because, although, yes, the market is choppy right now, interest rates are creeping up, it does take a while for that to impact bank accounts. There is a risk, though, of having too much cash on the sidelines, because that means your money is not working for you.

0:05:31 - Speaker 2

Yeah, and it's easy to move those goalposts regardless of your age. You know, you and I were just chatting before we started rolling. Today, sherry, my daughter's 25 and she's got, you know, she's in the Navy, she's got an actual career now. It's her first real job and she's making decent money. And she's gotten into this thing where she likes seeing her savings account grow.

And I'm like, well, are you putting something you know? I'm like, are you putting a piece of your you know, into your TSP? And she's doing the bare minimum because she wants to grow her savings account, because she likes seeing it move. She's like, well, I'll add more to my you know TSP, which is the government equivalent of 401, right, I'll add more to that once I get to X number of dollars in savings. So it's that same concept you were literally just describing. It doesn't matter if you're 25 or 65. Sometimes you kind of go well, once I get to 50 grand, then I'll do this. Ooh, that looks good. Once I get to 60 grand, then I'll do this. Right. So it's easy to kind of move that goalpost.

0:06:25 - Speaker 3

It is, it is, and what we need to figure out is 50,000, 60,000. Are they arbitrary numbers?

0:06:31 - Speaker 1

Is it just a?

0:06:32 - Speaker 3


0:06:34 - Speaker 1

It looks good, Sherry Right.

0:06:36 - Speaker 3

Well, and I would say also wouldn't it feel, look good if your TSP starts growing like that?

0:06:41 - Speaker 1

too Due to your contributions and your investments.

0:06:44 - Speaker 3

So at the end of the day it does come down to when you open up the app on your phone and you see a number, you get a good feeling in your stomach or you get a bad feeling and we need to figure out a happy medium between the two.

0:06:56 - Speaker 2

I wonder if the disconnect sometimes is if you've got the 50 grand in the savings account, for example, you know you could walk down to the building and walk out with it, right, whereas if the 50 grand is in the TSP, you can't do that right. You can get it but you're going to. You know you're going to pay taxes. If you're under 59 and a half, you're going to, or the 401k, whatever what you want, it is 403B, so on and so forth. You're going to pay, you know the taxes and the penalty if you're under 59 and a half and you can't just walk down to the bank and grab it tomorrow. I wonder sometimes if that's the disconnect, if people feel better knowing that it's more liquid, so to speak.

0:07:30 - Speaker 3

Right or you know to talk in. You know I can move it quickly from my savings account to my checking account via the Apple my Phone, yeah, and then it's there, which that's a very fair point.

So that would then introduce the idea of maybe diversifying the account you're saving your money into. So if that is a concern of well, why would I want to save, and save so much money into my TSP now, for example, because I'm young and I'm not retiring for a long time? Okay, fine, let's save it into maybe an after tax account instead, so then you still get the benefit of investing. You're still saving. You're still getting the market appreciation when the market is cooperating, but then you still do have access to it without penalties.

0:08:15 - Speaker 2

Yeah, yeah, good point.

0:08:17 - Speaker 3

Maybe getting down to the root of why you're doing or not doing something.

0:08:21 - Speaker 2

Yeah, great point. So certainly a good conversation here on moving goalposts. That was cash. What about that goalpost moving of? Well, I'll get serious about it next year. Or you know, well, I got these things I got to handle this year. I got a couple of big bills coming up, I got to redo the kitchen or I got to get a new car right or something like that. So you use that excuse to kind of punt and move the goalpost.

0:08:45 - Speaker 3

Yeah so, but think about what your future self would thank you for. Your future self obviously would much more appreciate even if you put 50 bucks away automatically each month. So I would say start small. It doesn't have to be all or nothing. You don't have to save $500 a month or nothing. Start off with the A manageable amount $50, a hundred dollars, something small that you're not going to feel it missing. But it can add up over time and then, as you conquer some of those challenges, such as you did a home remodel, you need to repay yourself back for that.

Or when the kids are done college, then start saving more aggressively. Or I paid off my debt. Once the debts paid off, I'll save more, but keep on ticking up that amount. Get on an automatic savings plan so it's automatically pulled straight from your checking account Into the investment account or into your savings account. If that's not fully funded. Do it automatically and then over time realize that wasn't so bad, that wasn't so painful, and increase it every so often. Because the problem is, if you keep saying, well, I'll do it next year, I'll do it after this, I'll do it after that, this and that always, always comes up, there's always going to be a reason to not save.

0:10:07 - Speaker 2

Okay, so share for the next one. Here it's the conversation around risk great. So people will say, well, if I can just get X amount in my savings, so this may be the point of growing now money in an account like a 401 or whatever. Then I'll get a little more conservative as I get, as I'm getting older. We're supposed to be doing that. We're supposed to start thinking about peeling back some of that risk, right? But when the markets been great like it was, for what? 12 or 13 years is very easy to go. Well, we'll go one more month. Right, we'll go one more month and then.

I'll make that change. Well, if you didn't make the change before 22, what happened right? The? What was the S&P and the Dow? Roughly around 20%, somewhere Different. You know, in different indices were different, different levels, but overall the markets didn't fare so well in 22 and you probably waited too long. And that's what can happen sometimes if you move those goalposts.

0:10:57 - Speaker 3

Right. So risk is a funny thing. So when I talk with my clients I say you should not treat every dollar you have the same way. When you think about your risk, you have your overall risk tolerance and usually I assign that a number based on my questionnaire and conversations with my clients. So from 0 to 100, 100 being most aggressive. So let's say you are a 60. That doesn't mean every single dollar you have should be at a 60. Every account could have different levels of risk depending on their purpose. So if someone were to say well, if I can just get a certain dollar amount in my savings account, I'll make my investments more conservative because it feels like they have that cushion. Having too much cash can have its own amount of risk. So just cash isn't always a zero risk because you're missing out on potential earnings and what have you.

0:12:00 - Speaker 2

Well, bonds the same way. Right, people tend to go well, go to bonds to get rid of risk. But that was the same problem last year as well, and possibly a share exactly so.

0:12:08 - Speaker 3

Bonds were had just as much risk potential as investing in the market did because of the rising of interest rates. So don't fall in the trap of treating all of your dollars the same way. So if you have money in a 401k, for example, you could take a little bit more risk with that because you're actively contributing to it and you can take advantage of dollar cost averaging. But then other dollars you have maybe the after tax dollars you could have that a little bit more conservative, because you may need it within the intermediate term and you don't want to see what. So much volatility, but at the as long as at the end of the day, all of those investments Average together to meet your risk tolerance. That's what we need to focus on, instead of treating everything the same. Also, when you retire, not every dollar should automatically go to conservative either, because you're living 2030 plus years into retirement ideally, hopefully right yeah.

So you don't want to go all the way to no risk because we need to make sure your money last for that amount of time. So if you think about you know 30 years ago, that's what you're gonna have for retirement. It almost seems silly to go super conservative. The second you hit retirement because that's a really long time and we need to have your money invested not all of it. Pedal to the metal, but that's what. Why I have my bucketing strategy for my clients is that the money that you're going to use Soon have more conservative, but the money that you're not using for 15 plus years, that doesn't have to be as conservative, because we need it to grow, we need it to outpace inflation and Be there for you 15, 20 years from now.

0:13:57 - Speaker 2

Yeah, and that's why it's not necessarily a good idea to keep putting things off, because you can either get burned or you can wait. You know you can just put too much out on the table there and and have that issue. What kind of bite you right. So we want to make sure we do not do that as well. Let's do the last one here. I'll move in goalposts.

It's certainly a good conversation with Sherry on the podcast this week Picking the retirement date, for example. So a lot of this stuff we just talked about could really affect any age, no matter really what age you are. But let's just do this last one for folks getting closer to retirement and that might be the concept of well, you know, I'm worried about being bored or you know whatever kind of Criteria you want to set in front of it but there's a reason why you back it up. Well, I'm gonna retire 65. No, I'm gonna retire 67. Now, I'm gonna retire 69, right, not necessarily a problem, unless you're doing it for the wrong reasons, like if you're doing it because you're afraid of not having Money, is that because you don't have a plan and you don't know if you're gonna be okay, or is it just truly, because you're just worried about being bored, or something like that.

0:14:55 - Speaker 3

Yeah, that's definitely a gut check moment, right? So if retirement you keep pushing it off, why is it really? Because you're gonna be bored or you know you don't want to be home all the time, that's okay.

You know, or is it because you don't? You might not understand Going into this next phase of life. You now are responsible for paying you, and that's a big, a heavy responsibility and Many people, if they don't understand where the money is coming from, or if they have enough or they don't have a plan, then that's daunting and it's easier to just keep doing what you're doing and what you're comfortable with, which is working and having someone else have the responsibility of paying you and just putting off retirement. So it's really. Are you nervous about where your money is coming from? If you have enough? And that's where you get a financial advisor involved, because it's not easy to Retire and start paying yourself it, and it shouldn't be taken lightly. Right, it is a very important job For someone to make sure you do have money to pay yourself in retirement. So do a gut check. Is it because you're not confident in your plan, or you don't have one at all, or you don't necessarily understand what you're going to do?

0:16:11 - Speaker 2

Yeah, there's a lot of us, I think, that fall into that category. We find it find ourselves going I don't know how to convert all this stuff that I've accumulated into a paycheck, and that's not really a plan. Well, I've got a bunch of stuff and that's gonna work, but I don't really know how to make it work right. So many of us kind of get into that category and that's where we need to have that strategy in place and one that we understand, so that we then can make that true, informed decision of, well, I don't want to retire just because I like what I do or because I don't want to be bored of. Then. It's not the math of money anymore, it's really more about your time and that's a much accumulation.

0:16:45 - Speaker 3

Accumulation is is the easy part. Accumulation is actually a lot harder. So it and it requires a different strategy, different mindset, different skill set.

0:16:54 - Speaker 2

Yeah, and it clearly it comes with all the other things right that we worry about. Well, I'm no longer getting a paycheck. I'm devil, you know, tapping into my own resources that I've accumulated and I'm too old to maybe go back to work or maybe do the hard job that I was doing or whatever that might look like. So it's certainly understandable that it's easy to want to, you know, move that goalpost, but with the right strategy in place, it'll help you make a more informed decision, just like any other piece of your financial life. And, again, doesn't really matter your age. It all comes down to the same thing having a strategy for whatever it is that you're trying to accomplish, whether it's the immediate you or the future you, right.

So have a conversation, get on sherry's calendar if you need some help, don't forget you can subscribe to the podcast on Apple or Google or Spotify. You can find all that information by simply typing in money chic women in retirement in the search box of those apps, or just go to her website, greenway wealth advisory Dot-com. That's greenway wealth advisory Dot-com. Sherry. Thanks for hanging out, as always, I appreciate you.

0:17:51 - Speaker 3

Thank you.

0:17:52 - Speaker 2

We'll catch you next time right here on the podcast. This has been money chic women in retirement with sherry rash.

0:18:03 - Speaker 1

Discussions in this show should not be construed as specific recommendations or investment advice. Always consult with your investment professional before making important investment decisions. Securities offered through registered representatives of Cambridge Investment Research Inc. A broker dealer member, finra SIPC Advisory services through Cambridge Investment Research Advisors Inc. A registered investment advisor Cambridge and Greenway Wealth Advisory are not affiliated. "

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