[00:00:00] Speaker A: Well, planning for retirement has changed drastically over the years, but it also changes during your own lifetime. You know, you've got to make that change, turn that corner from accumulation to distribution at some point. And along those lines I am very glad to welcome on Gene Chatsky, who is with aarp.
She is a best selling author and author of a new book that is called the Forever Paycheck, which sounds like something that's right up our alley here. Gene, thank you so much for being here. I appreciate it.
[00:00:27] Speaker B: I'm thrilled. Thanks so much for having me.
[00:00:29] Speaker A: Well, no problem at all. I'm thrilled to have you because, you know, it's, it is something that's of the utmost importance to our audience here. And you know, for people who have spent these decades saving and investing and doing all the things that during your working years you're supposed to do, how do you turn that corner and say, you know, a lot of it's mental, of course, but how do you turn that corner and say, okay, now I have got to generate my own paycheck rather than somebody else paying me every couple of weeks.
[00:00:59] Speaker B: Yeah. What we're learning from the research is that it's really hard.
It's a hard math problem because by the time you get to the end of the road, you probably have money in a maze of accounts, taxable, tax free, tax deferred. You're trying to avoid Medicare penalties, you're trying to avoid bumping yourself into a higher tax bracket bracket. But it's also hard because after saving for 20, 30, 40 years, spending down and seeing the balance in your retirement account go in the other direction is deeply uncomfortable. And what we're finding is that retirees are not spending. In fact, they're hoarding their balances to a large degree, which is such a shame because this is what we saved and invested all of the money for. And so I wrote this book to give people a solution to help them set up a paycheck. They can buy it, they can build it, we can talk about that. But once a paycheck is in place, the research shows it's easier to spend.
[00:02:08] Speaker A: Yeah. And that's, I feel like so key. And do you think that maybe that's one of the biggest mistakes that you have seen people, and maybe the research bears this out as well, that people make in their retirement planning is they have that plan to accumulate. They may think, oh, I've got that 401k at work, I've got maybe an IRA or something like that. I've got a plan. Well, you Know you've got an account or two, but you don't necessarily have a plan for your actual retirement years.
Is that really kind of one of the bigger mistakes that you see people make is just not planning for that distribution phase?
[00:02:43] Speaker B: Absolutely, yeah.
Thinking that you're done when you have accumulated is the mistake. You're not done. You need a plan for income. You need a plan for getting the money out. You need a plan for leaving a legacy, if leaving a legacy is something that you want to do, but your plan should take you from accumulation through distribution or decumulation, whatever you'd like to call it. And having a paycheck to cover those things that you not only need, but really want enough, not to want to compromise on them is important. It should be enough so that you can combine Social Security with these paychecks. And know this stuff is paid for. No matter how long I live, if I live into my 90s, if I look past 100, I don't. You don't have to worry about these things. Then you can take the rest of your money and you can invest it even more aggressively because you know that these things are covered.
[00:03:48] Speaker A: Yeah, it's, that's an amazing thing and I think gives people a lot of peace of mind, you know. The book is called the Forever Paycheck.
One of the things that I think about when I think of, you know, like forever paycheck would be something like a pension, which has largely gone the way of the dinosaur for most workers out there. If you have a pension, you are very, very lucky these days.
How do you go about in the book explaining how to create a forever paycheck for yourself so that you don't have to worry about, as you just said, running out of money before you run out.
[00:04:25] Speaker B: Generally, I suggest taking a quarter to a third of the money in your retirement account and using it to build or buy a paycheck. If you're building one, you're building it with investments, you're building it with a ladder of tips or a ladder of treasuries or CDs or some dividend paying stocks or a combination of those things. If you're buying one, you're buying an annuity or several annuities and which one is right for you? I'm agnostic. But which one is right for you depends on your, your risk tolerance and the degree of FOMO you've got. So if you are risk intolerant, you're going to want the kind of guarantees that you can only get from an insurance product or an annuity. If you've got more fomo, if you have fear of missing out, particularly of upside in the market, then you're going to want to build with investments.
Either one works, but the point is that you need a plan to get it in place. And then again, this is only a quarter to a third of your money. You take the rest of your money and you invest that to keep up with inflation.
[00:05:39] Speaker A: Very good. And quickly here just as we wrap up. This was written of course, the book Forever Paycheck was written in collaboration with aarp. Where can folks who are listening or watching go to find out more about not only the book but maybe some resources that are available through AARP as well?
[00:05:57] Speaker B: Sure, there's some great calculators, retirement calculators, Social Security
[email protected] money very good.
[00:06:06] Speaker A: Gene Chatsky is best selling author and AARP personal finance columnist, author of the new book Forever Paycheck. Gene, thank you so much for joining me. Really do appreciate your time.
[00:06:16] Speaker B: Thanks for having me.
