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Financially Prepare for Retirement Podcast


In this episode of The Science of Economic Freedom, we dig into the basics of how to construct your retirement framework, and how to ask the right questions that could ultimately determine your retirement success.

Topics covered in this podcast include:

  • What will you do in retirement? Where will you live? What lifestyle changes do you plan on making? The answers will drive your spending decisions.
  • Key Medicare and Social Security age considerations.
  • Income streams—the more, the merrier.
  • Spending—essential vs. discretionary.
  • Assets, liabilities and fine-tuning your personal balance sheet.
  • The “4 percent rule.”
  • Monitoring assets, spending and future income streams.
  • The importance of hiring a Certified Financial Planner.


Doug Fabian: Are you retirement ready? What do you need to do as your first step to get ready? How to put together your framework for retirement readiness on this episode of the Science of Economic Freedom.

Announcer: The Science of Economic Freedom is intended as an investor education resource. The views and opinions expressed on this program should not be construed as a recommendation to buy, sell, or hold any specific security. Consult your investment advisor and read any investment perspectives carefully before making any changes to your investment portfolio.

This program is sponsored by Mercer Advisors. Mercer Global Advisors Inc is registered with the Securities and Exchange Commission and delivers all investment-related services. Mercer Advisors Inc is the parent company of Mercer Global Advisors Inc and is not involved with investment services.



Doug: Welcome to the Science of Economic Freedom. I’m your host, Doug Fabian. This podcast is all about helping you achieve your financial dreams. We call that economic freedom. This program is about your journey to achieve economic freedom for yourself and your loved ones.

Today, we want to help you identify your next step on that journey.

This is Episode 18, Retirement Ready Part 1: How to Build the Framework for Retirement. This is Part 1 of a multi-part series on retirement readiness. This series will be for those who are within five years or less until retirement and those who have just retired in the last few years. Now, if you want to get ahead of the game, and you’re not in this window, tune in.


How to financially prepare for retirement

If we place this on an age continuum it would be for those between age 55 and 70. So let’s get to it. Here’s what we mean by framework. There must be some basic structure to retirement readiness. Let me put some context on this. Being retirement ready is both a mindset and financial readiness.

Once you stop working you will still need an income stream. Bills don’t stop. Expenses may go down if you plan for that, but sometimes people spend more money in retirement. This can happen in those early years when you have lots of times on your hands.

If you are already in retirement, then let’s do a checkup on your finances and see how things are going. We advise using a professional to assist you with this entire process. A certified financial planner will be a valuable advisor to make sure you have success.

Now, you can do some work on your own, but having professional advice on planning your retirement and updating your plan will greatly improve your results. Let’s talk about mindset. Retirement is different for all people. Some may continue to work part-time or even full-time in retirement. Others want complete freedom to not work again.


Questions to ask before retirement

For those of you who are not there yet, you should ask yourself some questions. If you’re married, or in a committed relationship, discuss these with your partner. What will you do with your time in retirement? Where will you live? What lifestyle changes will you be making? Now, these questions are important because the answers will drive spending.

For example, working part-time in retirement keeps income flowing. Now, if you plan to travel the world and maybe take two trips a year for ten years, this is an expense that needs to be planned for. And, also, where you live makes a big difference to your finances. Many people move out of high-tax states like California, New York, and New Jersey, when they retire.


Government retirement benefits

So where you retire, your lifestyle, and your activities matter. Let’s talk about the government retirement benefits of Medicare and Social Security. Medicare insurance begins at age 65. If you plan to retire sooner, say 62, you will need to fill the gap with private insurance until you are eligible for Medicare.

The other major government program is Social Security. Choosing benefits here is a moving target. You get to choose when you want to begin. You’re allowed to take benefits at age 62, but most experts agree that your retirement eligibility age or older would be a better time to enter this program.

Now, here are the guidelines right now. Currently, the full benefit age is 66 years and two months for people born in 1955. This will continue to rise to age 67 for those born in 1960 or later. Early retirement benefits will continue to be available at age 62, but they will be reduced even more.

Since you are planning to stop working, or significantly reduce your income from work activities, planning for essential expenses is critical. Income streams and medical insurance are high-value factors that will drive your retirement plan. The focus of this discussion is your framework.


Timeline and big picture for retirement planning

This means a timeline, understanding how income streams, spending, and assets will work together. Let’s talk timeline first. We want to track where we are on the continuum of five years prior to five years into retirement. Keep thinking about the big picture here. Annual planning. How many years until retirement? What will be my annual expenses, income, and taxes?


Income streams

The more the better. Retirement should be a multi-source income experience. What income streams will you have? Social Security is one, a pension could be another, rental income a third. If you continue to work full- or part-time, this is income. Do you plan to draw on your savings and retirement accounts or other assets during retirement?



We all do it; spend money. Financial planners will tell you that expenses fall into two categories. Essential and discretionary. Essential examples are utilities and insurance. Discretionary examples are travel and lifestyle.


Framework discussion is your asset

What have you accumulated so far in your life and what is it worth? Offsetting your assets is any liabilities you may have. This is your balance sheet. Assets minus liabilities equals your balance sheet. In retirement, are we drawing on our balance sheet? If so, at what pace?

You have most likely heard of the 4% rule. This relates to the amount of income you’re withdrawing from your liquid assets. This rule may or may not apply to you depending upon how your assets are invested. We will be discussing investment strategy in our next podcast in this series.


Framework monitoring

Going into retirement, you need to be monitoring the key components of your plan. Income, expenses, balance sheet along with your timeline. Now, let me show you how this works.


Questions for one to five years away from retirement

If you are one to five years away from retirement, you should have the following questions answered. What will be my income streams and the amounts when I retire? What are my essential expenses and my discretionary expenses? What is the value of my assets today and how have they changed in the last 12 months?

Each year you ask yourself the same question. Monitoring your assets, spending, and future income streams is key as you’re starting to move towards your retirement date. Now, if you’re in retirement, the sequence shifts to actual.

What have my income streams been in the last 12 months? What was my actual spending versus my plan? Did I spend more or less? What is the value of my assets today and did I draw down or pull income from my assets?

Monitoring your actual results is as important as your investment strategy and your spending. This is what will indicate if you have any serious issues like spending too much than your assets will produce, or your investment strategy is not meeting your goals.



To review this discussion of our first retirement ready podcast.

  1. Have we asked and answered the lifestyle questions?
  2. wWe need a timeline to follow that represents when or since we will have taken this big step in life.
  3. We need to know where our retirement income streams will be coming from and what their approximate value is.
  4. We need to know our essential expenses along with our estimated discretionary expenses.
  5. We have a current balance sheet, and number six, we need to monitor the situation. It is fluid and dynamic.

Again, we want to reiterate that doing this on your own is difficult. Hiring and using a certified financial planner, who will be there each step of the way is the preferred method.

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