Today's Hack

What’s fact and what’s fiction when it comes to these financial planning concepts? Phil sets the record straight in order for you to plan accordingly.

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Show Notes For This Episode

Other Retirement Facts:

Is it fact or fiction? On today’s episode of the podcast, we’ll attempt to play a game of “fact or fiction.” That said, a common answer from financial advisors is often “it depends” when playing games like these. So many financial decisions and plans really depend on your particular situation. Phil will shed light on what’s what and why. 

Let’s start with by asking this fact or fiction: your Social Security can be taxable. This is a fact. How much it’s taxable depends on your income and the makeup of your income. Phil shares what you might be taxed on, which is different than your tax brackets.

Will your taxes be lower in retirement? It’s likely overall, but not a sure thing. Taxes will be lower because you won’t be paying Social Security and Medicare anymore. But, the reality for most retirees is that their income tax burden is likely to go up, especially if you’ve done a good job saving. Think about what might happen to your tax bracket once you start taking RMDs or if one spouse were to pass.

Is term life insurance better than whole life insurance? These are different policies and which one is better depends on your scenario. Term life insurance is really good at specific timelines, which is great for younger people who may need to cover a mortgage or kids in college. What purposes will life insurance fulfill for you?

Are you counting on Medicare to cover most of your medical needs in retirement? Will it cover you? This might depend on what your definition of “most” is. It covers certain basic medical needs but general eyecare or dental insurance isn’t covered. It depends also on what you’re used to having covered.

As you get older, should you gradually shift from stocks to bonds? This is true, but don’t get out of the stock market all together. You have to prepare for inflation, so stock exposure is important to help your money grow. Are bonds considered safe or more volatile today? Do you understand risk? It’s important to put together a plan of how to make your money last, grow with inflation, and position the risk so it’s not going to harm you.

Listen to the entire episode or use the timestamps below to find out what’s fact or fiction.

0:50 – Listen for Phil to say “run the numbers” on the podcast.

2:11 – “Your Social Security can be taxable.”

4:00 – “Your taxes will likely be lower in retirement.” 

8:01 – “Term life insurance is better than whole life insurance.”

9:45 – “Medicare will cover most of your medical needs in retirement.”

13:33 – “As we get older, we should gradually shift from stocks to bonds.”

A Quotable Moment:

What happens in that first 5-10 years in the plan, changes everything. Just a little bit off here or there changes the whole picture. It’s absolutely not a set it or forget it. You have to revisit it every single year.

-Phil Putney

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