 Hi, let's go ahead and get started. I am Christine Ben, some of you know me from my work at Morningstar. Welcome to this Boglehead Speaker Series event. I am on the board of the John C. Bogle Center for Financial Literacy. The Bogle Center, as many of you know, is a 501C3 nonprofit organization. It was created in 2012 by the founders of the Bogleheads organization with the assistance of Jack Bogle. The center's mission is to expand Jack Bogle's legacy by promoting the principles of successful investing and financial well-being through education and community and events like this one. The website is bogelcenter.net, and your tax-deductible contribution to this cause is greatly appreciated. It helps us put on educational events like this one. We hope that you'll enjoy today's presentation and tell other people about it if you think that they might find events like this one useful. Today's event is being recorded, and you'll be able to find the recording and share it with others if you see fit. The video will be available at bogelcenter.net, and a post will be made to bogelheads.org when that is available for viewing. We'll also be tackling your questions during this event, probably after I cycle through some of my own questions. So if you have a question you would like to submit to Carabeth, please submit it using the chat function. For today's session, I am so excited to introduce you to Carabeth Vance. She's here with me. She is a senior advisor at Timothy Financial Council, which is in the Chicago suburbs. Carabeth is a certified financial planner at CFP, and she provides holistic financial planning advice to clients on an hourly basis, which I happen to think is a really good fit for a lot of bogelheads in terms of a business model, because I know that many of you are very competent and comfortable in terms of managing your portfolios. But you might have other aspects of your plan that you would like assistance with. And I think that the hourly model can be a really great fit in those situations. Carabeth currently serves as the primary advisor for over 125 clients. She partners with the firm's other advisors to collaborate on their clients, and she leads the firm's investment committee. Carabeth holds a bachelor's degree in economics from Wheaton College in Illinois, and she's a NAFSA registered financial advisor. So we'll get into our discussion. I thought it might be useful to start with a few general questions, but otherwise, Carabeth and I have organized this session by life stage. So we've got topics to cover for people just getting going with their financial plans, as well as for those of you who are further along in your investment careers and potentially thinking about retirement or already in retirement. So we're really going to hit the whole life cycle during this conversation, but I just want to start with a few really general questions. Carabeth, you're an hourly fee only advisor. Maybe you can talk about why Timothy uses that business model and what sorts of clients, what sorts of investors do you think it's a good fit for? Yeah, that's a great question. And thank you so much for having me today as well. So Timothy got started by our founder, Mark Berg, about 20 years ago. And when he started the firm, it was because he was working in a different fee only model, asset center management, which is the most prevalent even today, and saw that there were people out there who weren't working with that type of advisory firm with an AUM firm who really could benefit still from financial planning advice and who were interested even in receiving that. And so he saw that as both an opportunity and just a large group of people who weren't able to be served or in that prevalent business model. And so he started Timothy Financial as an hourly financial planning firm 20 years ago. We've always been an hourly only financial planning firm. And some of the sorts of people that maybe fit into that group, especially even when he was envisioning it back then, there may be people who actually have a fair degree of wealth, but it's tied up in an illiquid asset like a business. Those people can't work that easily with an asset center management model because there are no liquid assets or very few to be managed in for advisors to get paid that way. Similarly, I mean, I'm here in Illinois and there's a number of people who have quite a bit of their wealth tied up in either state or federal pensions. Again, maybe there's quite a few financial planning related questions, even big decisions around those assets. But those are not people who are going to be able to be served well under that model. Younger people, and I say younger, but not even necessarily right out of college or something, but maybe people in their 30s and 40s, really in peak accumulation years, they may have a large amount of assets already, but maybe not quite hitting minimums for some of those other advisory firms or it's all in a retirement plan that really can't be managed by such a firm. So there's all these different groups of people who have unique questions and certainly would be served by having an objective advisor come alongside of them, but they're not able to get advice in that manner. And then there's just a whole group of people out there who, and maybe this group today fits into this, who aren't that interested in paying for the asset management. Maybe they have real life financial planning questions, both in, and we'll get into this with the different life stages, but thinking about optimizing the different opportunities that are available to them at different stages of life. There's tax planning related questions. There's the question of am I on track to retire at some future point? How do I balance these priorities of saving for retirement and education? But they just have no interest or they're already really comfortable managing their own assets. Maybe they're already committed to a low-cost, long-term, relatively passive investment strategy and don't want an advisor to place those trades for them or they want to have direct access, not have to call someone to make that happen if they need money or want to put money in or anything like that. So there's a lot of people who benefit from objective, fiduciary financial advice and they can get that in an hourly sort of a model like ours, but it's a little bit harder to get some of that advice for the examples that I mentioned in what was the more traditional pattern for fee-only advice. Most of our clients who are interested in the hourly-only model, they may fit into one of those categories, but a lot of times they're thinking on kind of in three areas of what they're looking for. They may be looking for validation, am I, those questions of the am I on the right track, am I, is everything that I'm doing, is it the right stuff? Should I have thought about anything else? And then ideation, which are there opportunities that they haven't thought of? Some of these little strategic planning tactics, and I say little, they could be little, they could be big, or tax planning tactics. And then having a trusted thought partner. So there's a lot of information out there in the world, and maybe even some of the questions that will come up today, we can all read so much information out there and having a place to go to either to see, is that a good idea, the thing that I read about on the internet or things are changing in my life, which by the way happens in everyone's lives, even when they seem relatively stable. So how does that change what my game plan is or things that are beyond my control completely like tax laws that change periodically here and there? How do I vet through what changes I need to make to my game plan? And then I think too, just, yeah, I don't know. Even when you're looking forward, there's a lot of other things to consider with estate planning. What are your goals? Are you trying to leave money to charity or to kids? And having someone come alongside you who is an objective third party is really helpful as you think through those different questions that you may have. That's a great summary. And for people who are interested in hearing more about sort of how Timothy works, I was interested in a podcast episode that Michael Kitzes did with Mark Berg for people who wanna hear from Mark and sort of his thesis for starting Timothy and kind of what their clients are like. I thought that was really helpful, a kind of a helpful compliment to what you've just talked about, Kerabath. You talked about the retirement readiness as being a real sort of pivotal life stage where even people who have been very comfortable do it yourself, investors might want another set of eyes on their plans. So can you talk about, if I were to see someone at your firm for that type of sort of checkup on whether I'm ready to retire, can you estimate how long that takes and also provide, and I'm sure it's difficult but provide kind of a ballpark estimate about what the all in costs for such a project might run me as a client? Yes and no. I'll give you kind of an idea in just a moment but the way that we kind of think about new clients coming in to our firm is we do categorize them by how complex their situations are and that is not necessarily tied to life stage. So that can come in, it does come into play that's part of it but there are people that are pre-retirees or who are really kind of wanting to do a deeper dive into am I ready to retire? Whose situation is a lot less complex in the amount of time that it's going to take us to go through that validate, analyze it and then there are others that are far on the other side of the spectrum. But just to give you a very general idea you can certainly on our website go and look at our complexity levels under our fees page very straightforward. Our current hourly rate is $300 an hour for most levels one through four clients and I'm just going to use level three complexity to kind of address that because a lot of people do fall into that category especially a lot of dual income households or a single income household with any complexity in terms of pension plans or unique types of compensation from their employer. So level three can range from 15 to 30 hours and for most people that are again kind of working on preparing for retirement and we're getting close to that it's probably going to be more in that 20 to 30 hour range if they are in that level three complexity and so that's going to range from $6,000 to $9,000 to go through that initial financial planning engagement that initial financial planning process. And when we do work with clients that ends up being we do actually quote for most of our engagements at the beginning so that's a known cost without larger investment. But the majority of our clients do work with us on an ongoing basis. And when we are working when I'm working with a client we'll say three years down the line it's not going to take us another 30 hours to continue to be working with them in that year. It's usually more in the ballpark of a fourth to a third of the initial plan cost when we do that and we just we bill our clients at actual time. So it's that number. I don't know if anyone has any experience on here with hourly financial planning but it's a bit different than walking in and thinking you are going to sit down with someone and have kind of an informal conversation for one or two hours and somehow we would be able to give you great confidence that you could retire at that point. We need to really understand your financial situation today and looking into the future to stress test that and understand your tax situation today and as much as we can now into the future to be able to stay with great confidence what the trade-offs are with those decisions including retirement. Yeah, that's helpful. One thing I have thought about is for people who are older retirees it seems like maybe one of the best uses of an advisor who charges you a percentage of your assets under management would be to have kind of that ongoing oversight. Like if I completely dropped the ball for some reason is there a set of eyes on my investments in my plan? So do you think that the hourly works for people who need that sort of thing or would they be better served by some sort of AUM arrangement assets under management arrangement and you can find kind of robo advisors I guess to do that for you but how do you think about that issue? Yeah, I mean we are serving clients who are older and who would like more support maybe than the average do-it-yourselfer or maybe they were a true do-it-yourselfer earlier on in their lives but are looking for more support now and one of the things that we do is we actually do have a way to support our clients with we call investment implementation. So sitting down either in the old days having them sometimes come into our office or certainly sitting with them virtually to coach them through things like rebalancing trades and when they're in retirement most of the things related to the portfolio management are either rebalancing type of opportunities tax loss harvesting opportunities potentially or raising cash if needed for withdrawal in retirement for living expenses. We may also be working with them on again other things like where you're gifting from and to kids or to charity and stuff like that but they have the opportunity to receive a lot of support from our firm in that area and so that we have clients doing that. There are also times when our clients have brought in another for them another trusted person family member it might be their power of attorney to kind of be a part of that process with them and that's a fine choice for them to make as well but the question of do I think a client like that can be served in this way? I think the answer is yes with support because they don't have to go and execute everything without any assistance but there may be times when we didn't really bring that up necessarily but there may be times when another route that needs to be looked into if a person thinks or it becomes clear that mental faculties are failing and there's not a power of attorney or co-trustee or something in place to be working with them on that. That's great. I wanna talk before we get into this life stage discussion the market has had really strong gains over the past few years. What kinds of issues are you seeing in client portfolios and specifically I'm curious are people reticent to de-risk even if you're telling them that that might be appropriate given their life stage? What sorts of portfolio issues are you seeing and contending with with your clients these days? So great question and I'd say on the whole with our clients especially those who have been around with us for a long time and are on the same page in terms of investment philosophy they are not necessarily that resistant to that idea of rebalancing which when stocks are up we're looking at selling stocks and potentially buying bonds or using those stock winnings to fund living expenses and retirement things like that they're committed to that idea of rebalancing. I think when those clients or individuals who have had a little bit have given a little more pushback on the conversation or maybe those who are still for various reasons holding on to a handful of individual stocks which right now may be in the tech sector and they've seen a lot of growth in the individual securities that in some cases is outpacing the index returns and so if they see an index in their portfolio and an individual stock in their portfolio that's outperforming that is a little bit harder or that I have seen that be harder for clients to make the choice to sell when stocks are so far up like that but the conversation always is still about risk. I don't know, we can look out there and say valuations are higher the stock market is high and we expect that at some points we will see a market drop and if we all knew exactly when those things were going to happen and we could make then perfect timing decisions then we could make a little more money doing that. But we don't know and individual investors and investment professionals have not been able to historically make those perfect timing decisions and so that that kind of trying to do that has usually led people to have lower returns than the long-term kind of market returns that they can get in a more passive portfolio. So these are conversations that I'm having I think one of the areas where this can be where people get especially concentrated is in the area of employer stock if they're being issued that and this is one reason not because I know whether that employer stock is going to appreciate faster or slower than the broader market index but this is one of the reasons why when there are opportunities in a relatively tax efficient manner to be exiting out of individual stocks even those employer stock programs that are out there that is often something I am encouraging clients to do because of the psychological difficulties both on the upside and the downside to shift out of them. You may have a really outside stock position that is up so much and now there's a huge or what feels like at least a huge tax burden if you go and sell that but you want the stock to go up you don't want to lose money and the best time tax wise to sell is when it's down. So you have kind of competing desires for that stock and it's just that's a lot of stress that people are choosing to retain I think and on the flip side of course when it's down then you're having to make this decision maybe the whole market is down maybe we're looking last March and February, March and individual stock position or employer stock position is down so is the broader market but holding on to your individual stock is still kind of a decision to say well that's gonna recover faster than the rest of the market and how do you make that decision? So anything that I can help clients to do to kind of limit that level of stress in their lives regarding these individual stock decisions I try to be an encouragement to do that along the way and that really helps because clients again who are committed to kind of the broadly diversified portfolio and committed to this idea of rebalancing they see this and whether the market's up or down and see either potentially it's an opportunity or it makes sense to take some risk off the table at this point because we don't know when that downside is gonna come and we wanna make sure that the portfolio is appropriate especially for those around the cost of retirement or in retirement we wanna make sure that it is still the right mix of assets so that they know where living expenses will come from if they need to come from the portfolio in any particular year. Right, I wanna talk a little bit about some of the key life stages. People just starting out even if our audience might not be composed largely of those people chances are we've all got people in our lives who we wanna try to help make smart decisions. So what are some of the key financial challenges that people who are just embarking on their careers in their say 20s and 30s run into financially? Can you talk about some of those things that you confront with your practice? Sure, I mean one of the easiest things I think about is employer benefits and navigating what those are and what opportunities are available. Somebody just starting out may or may not be able to kind of maximize all of their potential savings opportunities but even making decisions around benefits should I be contributing to my 401k. I still have student loans over here. How do I think about that? And even just working with them through kind of some initial things about let's make sure you have or be working towards having some cash so you have a month or so float in checking and we work towards a real a stronger solid emergency fund. And maybe even along the way with that we are also looking at at least contributing to 401k to get our free money from our employer. Those sorts of things and helping them to balance this idea that there are a lot of things vying for their potentially more limited income especially when they're first starting out but how do they build good disciplines and habits even in those early ages that really do make an impact because we've all seen the charts about the power of compounding and that's a really wonderful decade to start systematically saving even for retirement which is not on the minds of most 23 year old. So just thinking about being older people in younger people's lives I think anything that we can do to encourage those initial habits which probably many of you are already doing in the lives of younger people in your lives kind of letting them know to take a look at that that it's worthwhile even if it's not the most money ever they could be contributing to start that sooner than later and then something that I think is really beneficial to is thinking every year in those that first 10 years or so people's incomes tend to change fairly dramatically from we'll say 23 to 33. And so as that's happening again how do we in a disciplined way continue to build our savings rate because at the beginning when we maybe or some people are still paying off student loans or there's just not as much money to go around but there's not as many resources to manage maybe they're not getting up to probably they're not putting $19,500 in their 401k but how do we work toward that just so that as our incomes grow and our lifestyle probably also is growing that we are matching that with as commensurate increase in savings and it is the least painful way to do that when your income is increasing because you're just capturing some of that growth by increasing those contributions to retirement. So I think that is really handy if they can get away with doing a high deductible health plan which is what many of their employers are offering obviously everyone's health situation is different but if they start using that HSA as an investment vehicle I think that's a good opportunity for them too just because of the triple tax savings. So those are just some things to think about. I think the one other thing when people are just starting out and especially if they're thinking about things maybe they're planning to get married or they're going to buy a home maybe the wedding is easier because that's more of a one-time expense but how do they if they need to save for that at all what does that look like when we're talking about that initial home purchase you can go out there and have people tell you that you can afford a home that you probably ought not decide to buy and so how do working through that decision with people and just the trade-offs that are associated with that and especially I know we're not in maybe to the married couples yet but especially when I think about married couples who don't have kids yet there is just when you have two incomes and you feel like you have a lot of discretionary income it can certainly feel like the right thing to get again maybe purchase a home that maybe fits in that income and expense ratio now but doesn't give you a lot of flexibility for things to change and there are so many things that change in those first couple of decades of adulthood and being in the workforce. Again, both incomes increasing that's hopefully going to happen but if people decide to have children maybe one spouse decides to either stay home completely or work part-time or what are we doing for childcare? That is a large expense that a 28 year old couple without kids probably hasn't really thought about yet and they haven't needed to but one of the best ways to retain flexibility to make changes in those decades is by kind of keeping your core living expenses. I'm going to say at a reasonable level but I do help younger clients to think through that process so that they don't get I'm going to say in over their heads or locking in really high living expenses that may not be sustainable. Right, that's super helpful and I know that message will resonate with this audience because part of the Bogleheads philosophy in addition to low-cost investing is also just absolutely living within your means so I think you're speaking to people who really believe in what you're saying. How about for people once children do arrive a key fork in the road would be whether to fund college and we know that the cost of college has gone through the roof whether to start saving for college or and or what to do about the retirement accounts and how to balance those two competing goals the one that is coming up sooner the college goal alongside retirement how do you help married people with kids or unmarried people with kids navigate that decision? Sure, that's a really good thing I mean that so many people are having to wrestle with those competing priorities. I think one thing is not necessarily I think it is valuable for I'm just going to speak to couples for a second but people to think about college if they desire to contribute to college to try not to think about that as a blank check because you can't plan who knows then what that number is that we're talking about you may have a desire to fund I'm just gonna say 100% of college education that value differs certainly across spectrum but if you were trying to fund 100% of a child's college education well that number could range from you know I don't know with scholarships and things $10,000 a year up to 80 plus $1,000 a year and those two numbers over a four year period and when we talk about today's dollars and then what that might be in the future those are just vastly different pots of money to put towards that child's college education so one thing I really encourage parents to do or to think about is not necessarily so first of all to think about what their goal actually is and try to set a realistic dollar target different people go about this in different ways one way that I've seen is maybe their goal is to fund three out of four years of the college education and they pick a school that's kind of the target budget for that child and so we work through how that fits in with retirement savings as well but coming up with what our initial goal actually is as a dollar amount and then working through that the details of does that go into the 529 plan does that go somewhere else? I am hesitant to have clients overfund their children's 529 plans especially just because usually when people are working on building those assets the range of outcomes for the rest of their life and retirement are so wide we don't have clarity on what that looks like yet so I think 529 plans are a great idea we get that tax free growth in there for educational costs in a lot of states you get an estate income tax deduction so you might decide to do a small amount in there just for that purpose but there are certainly circumstances where I have advised clients to either at some point or splitting their savings along the way into both the 529 of course the retirement accounts will work on that as well and then maybe after tax savings to have more flexibility around those dollars and then just the other thing is about communicating with your children about it before you have clarity on what is possible it is best not to tell your children that or I think it's a good idea to wait to tell your children until you have greater clarity around what is doable for you in your circumstances and then once you do have some clarity around that it's great to share with your children to give them that expectation especially if that expectation may involve them contributing in some way to their college education that can be a really great way to bring them into the process and again be instilling some of these disciplines and values I have seen teenagers and when they started working setting aside funds for college as well just as a practice to be a part of that and it may be a smaller contribution than their parents in many cases it is but they have some skin in the game and know the value of what they're looking to make a decision on at age 18 so. Right that's a great help and I will also tell the audience that we have in June our speaker series guest is going to be someone I'm not sure if it's public yet so I won't say who it is but it's someone who has a lot of expertise in this area specifically paying for college so stay tuned for more information about that I know we're all interested in helping our young loved ones get off on the best foot and college is such a heavy lift. Karabath can we talk a little bit about sort of moving along the life cycle peak accumulators people who are maybe in the early 50s or something like that who are making the most money they've ever made in their careers and perhaps they're maxing out their IRAs and their 401ks like to talk about what their next receptacles for funding should be or at least what they should be thinking about if they are fully funding the kind of basics where should they go next if they still have additional funds to save. Yeah well there's only so many options so that's the starting place but I mean typically and there's always gonna be an exception to this but typically when I'm kind of ordering my the accounts and the way that I'd want to approach them I'm usually looking at my tax free accounts first especially ones like the HSA if you are able you know if you are in a high deductible health plan that is compatible with an HSA and you can be contributing and investing in that because we get that tax deduction going in and we get the growth is not taxed as it's growing and the distributions are also not taxed as long as we use them for qualified medical expenses in retirement so that is a wonderful retirement savings vehicle so that one I like people to use looking at Roth IRAs or Roth contributions and I will throw this in just I have a lot of people that come to me this group probably is maybe isn't in this category but I have a lot of people who don't realize that they can do either Roth 401K contributions if they're a high income earner that there is no income limit on choosing to do Roth 401K or Roth 403B contributions rather than pre-tax so that may be something that makes sense for even a peak accumulator who may be in a higher tax bracket I'll talk about that in a second or they may not realize that they can do the back door or two-step Roth contributions by funding non-adoptable IRAs and converting to Roth or they may say, well, I think I could do that but I have a $500,000 IRA somewhere or even $100,000 IRA and so can I still do that? And there are some steps that they could potentially take to start employing that strategy as well so anytime we can get tax-free growth I am pro doing that then pre-tax retirement accounts for some people that's the only option or it's an additional option maybe on top of a 401K or 403B they have access to another type of retirement plan a lot of academic medicine there's multiple pre-tax accounts that get built up over a long period of time and then the accounts to be looking at next are really an after-tax investment account so it's not bad we get taxed because we make money on our investments but there's no special tax advantages to that we're gonna be taxed on our investment income we're gonna be taxed on gains when we sell in our after-tax investment account but a lot of high income earners really to hit the right kind of a balance between living expenses and savings to support the lifestyle that they are living now into retirement it actually requires contributions to long-term investment accounts on top of what they're able to put into their regular retirement accounts through work or even those plus IRAs or Roth IRAs and then I'll go ahead and add here too there's a feature that has been becoming more and more prevalent and it is worthwhile to look at to see if you have especially in that stage of life and really once you have the cash flow to be saving more on into your pre-retirement years when you're getting a lot closer would be after-tax contributions to your 401k at work so that's something to take a look at your summary plan description or whoever you're talking to about this see if that is an option because this is a new concept to a lot of people the idea is that if you actually have a provision in your retirement plan where you are able to make after-tax retirement plan contributions you could still be making your we'll go with someone over 50 your $26,000 those contributions in pre-tax or Roth to the plan your employer can also be making a contribution to the plan but if that you know if those two contributions combined don't get you up to the maximum that's $64,500 if you're over age 50 then you are actually if you have an after-tax contribution provision you can actually put in additional contributions they may have other caps as a part of your plan description but theoretically you may be able to put in the gap up to that maximum amount so that is a place where you could put a lot more money and when this becomes especially valuable to you is when your plan also has an in-plan Roth conversion feature where you are actually able to put these after-tax contributions into the 401k and then convert them to Roth so they can grow tax-free if there is no Roth conversion feature as a part of that if you can't convert your after-tax contributions then what happens is if I put in $10,000 as an after-tax contribution this year and then that $10,000 grows to $50,000 by the time I retire and I'm now rolling over my 401k at retirement I haven't converted anything I just made after-tax contributions of $10,000 that grew to 50 that $10,000 in contribution I will be able to roll into a Roth IRA the $40,000 of growth I will roll into my pre-tax IRA because I still need to be taxed on that the growth on the after-tax contributions the automatic way for that to work is that it is tax-deferred if your plan has this in-plan Roth conversion feature and you could convert your after-tax contributions immediately to Roth so I put in that $10,000 this year and immediately convert it to the Roth bucket in my 401k and now that $10,000 grew to $50,000 at retirement I can roll the whole $50,000 into my Roth IRA so you start that tax-free growth sooner if you're able to make that conversion Sorry, I went on a little bit about that That's super helpful and I agree it's there's a lot of confusion people get that mixed up with a Roth 401k contribution it's different but you say you're seeing more of it in terms of your client's plans or their 401k plans are including more of this feature? I am, I am seeing it more and more I mean, even 10 years ago to be honest, I'm not sure exactly when it came out but I was not seeing this regularly 10 years ago and today people who work for larger companies or publicly traded companies, I see it quite often and some of those plans even have a feature where you can automatically have the after-tax contributions convert to Roth so those who are designing those plans and administering them absolutely understand the strategies that the participants are seeking to employ by using them so that can be a really great bucket to use because if all other things equal if we had no, in your 401k you still can't access the funds extremely easily if you need them for other stuff but all of those things equal I would rather see clients put contributions in the after-tax bucket in their 401k especially if they can convert it to Roth than to take those same dollars and invest them in a brokerage account you notice the normal after-tax brokerage account whether it'll be taxed on dividends every year and capital gains eventually. Right, so kind of moving on because I would like to touch on people who are getting ready to retire and retired so starting out with the getting ready to retire conversation I think we could do this whole session about this topic but if I'm at that life stage what are the kind of the key things that should be on someone's dashboard that are on your dashboard as you help clients figure out are they ready to retire? What's retirement gonna look like? Can you talk us through that? Sure, I mean I think it's a good time to be taking stock of what are all the pieces that are out there it is not uncommon for people who've been working and saving a long time to have a lot of different accounts in different places or be vaguely aware of old pensions that they may have had contributed for them but haven't really pulled all the pieces together so just at a very basic level it's what do you have that's out there? So truly you may have thought that's a small account or that's not that important but let's take stock of everything that is going to contribute to your retirement lifestyle so all of the liquid assets that you have and everything that would make up your normal network statement but especially going there and pulling in well what other do I have any pensions that are out there? What are my social security benefits going to look like? And thinking about on the pension side are those social security statements that I've been getting do they actually reflect what I'm actually going to receive? Because if you have been participating in employment that's not covered by social security you may be still you maybe were covered by social security in previous employment and so you still have a nice statement that's for social security showing $1,500 or something but that's not actually what you're going to receive if you have a government pension that will reduce that either through the windfall elimination provision or the government pension offset so those are things to take stock of or to be aware of. Also how are you going to get health insurance? So even if you're over age 65 when you retire do you have any kind of a retiree medical benefit? Some companies still have those especially if you have had any kind of company pension you may be eligible for something like that. I have also seen other companies out there who have some kind of a stipend for retirees that just helps to kind of offset some of those costs for medical insurance and retirement or at least pre 65. So are there any kind of retiree related benefits that you are eligible for and that you would be tapping into? And then if you are going to be retiring before Medicare age, what are we going to do? Well, again, what are we going to do for health insurance? Will we go on to the exchange? What is the gap? Maybe you end up on Cobra and that takes you bridges the gap between employment and 65 if you're already in your 60s a little ways. So getting an idea of what are those different pieces is going to be really valuable to you. Absolutely the biggest driver in kind of what is the impact on long-term planning? Are your living expenses? And I will also throw out there there certainly are people who track their living expenses and that's either enjoyable to them or just a fun quirk maybe their staff doesn't always appreciate but some people are tracking their living expenses. I would say the majority of people are not in any detailed way tracking their living expenses but you've always, again, lived within your means been intentional maybe with your saving and then with your spending but now we're getting to a stage where you may be drawing down your assets. Maybe you're in a position where you don't have to do that but most people are going to be drawing from their assets in some way. And so how do we work through a few years of expenses or just trying to get a really good idea of what those are and how we're expecting them to change? I'm not, I don't make my clients try to predict the future. I don't predict the future either really but I think there's some key things just as an example I mean sometimes people are coming to me and they're expecting to retire and they're planning to move their game plan as they are going to buy a house in Florida or somewhere else in a more Southern states and their living expenses will likely change substantially. And we need to think through what the implications are of that and for many people that, well, I'll say this on the housing side, for many people that may be decreased housing expenses for a lot of people, one of the things they wanna do in retirement is travel or they have a hobby that they really wanna spend a lot more time investing in. So we need to think through those things to account for especially maybe in the earlier years of retirement maybe some housing expenses decreased if you did decide to downsize. But on the other hand, we have some other activities that you're gonna bring into your life that may have a cost associated with them. So getting a good handle on those living expenses starting out is a good starting place too in those couple of years before retirement and when I'm working with clients who are making that transition, I do let them know we will get a better idea. Once you start actually drawing from your assets and you're making a game plan for that every year but then looking a number of years out it becomes very clear what you spend if you kind of set up a system to be drawing on your assets and then you encounter some surprises. So we will get that nailed down in the first couple of years of retirement but everyone, you know even if you're not working with an advisor that is something to work through in those years. That's a great help. My last question, I think it'll be the last question I wanna talk about for people who are already retired I wanna talk about an issue that I've run into a few times and I'm curious to know if it's something that you encounter in your practice underspending potentially relative to what someone could spend in retirement obviously setting a spending rate for retirement is a humongous topic. We could spend a whole session on that one too but how do people get comfortable with spending in retirement? And are some people in your experience underspending relative to what they could spend? Can you share some thoughts and experiences on that issue? Sure. Yes, the first thing is it is a huge transition. I going into retirement people who save well and have been good accumulators they've maybe even been paying down debt and they've been saving for a long time and now they have this nest egg for retirement and they've always lived within their means it can be a rude awakening even though they know this is what they're going to do to take the plunge and now instead of adding to our assets we are we're taking distributions periodically and I think especially in early years of retirement I also think this makes sense because the early years of retirement you have the longest time horizon which just kind of means the range of outcomes is wider but especially in those early retirement years there can be some hesitation with some people about spending. I think this is where kind of going through or working through having a financial plan potentially an advisor but it is really helpful to come alongside of you because one of the things that we've worked through is a lot of different stress depth. I mean, what is making you nervous about spending this money? You have saved it for this day, for this purpose a lot of people have a they really want to steward their resources well and they have and they still are in the retirement years and so one of the reasons why my clients have gone through this process with me is to be able to in these early years of retirement say, yes, your expenses are what they are or maybe are even higher than what they were five years ago but we have planned for that and we've planned for it in the portfolio too expecting that this day that we're in or in market highs is not going to be the day that we're in forever. And so I think there is some degree in which that can that my hope is that that provides my clients some peace of mind in that process but there is a sense in which sometimes my job is to be encouraging my client even to think about what it is that brings them joy because some of the people that end up being the most concerned or yeah, about spending I think in retirement have more than enough and I feel very confident to say that about their situation. It would be very difficult for them to spend down everything that they have accumulated over the course of their lifetimes thus far. So then, if that's the case maybe they don't have anything in mind yet but how can I come alongside of them to encourage them to think about what would bring them joy to spend money on? It's not true that everyone wants to go and travel around the world that's not what everyone's desire is but maybe that person would be really excited about paying for their grandchild education or some part of that. I have met a number of people where that isn't something they knew that they would be able to do but now they've seen that they actually have the flexibility in their retirement years to go back and really help their children by helping their grandchildren and so that's a neat opportunity or would it give them great joy to give to a local charity? Maybe they already volunteer with and they are just trying to help them to think through what is important to them and what would be worthwhile to be stretching themselves in, especially when we've gone through the process of stress testing in a lot of different ways, the portfolio but the long-term financial projections and we could say with again some degree of confidence that you could be spending more so what would excite you about that? But I think that's a great way to have another partner come alongside. I certainly, I love to see people who are in retirement who have gotten peace around that around taking money out of their retirement accounts and have just confidence because of the planning that they have already done and what they're still continuing to do. It's not even one of those annual decisions they're helping to pay for someone's at college education even. They're not locking themselves into doing something every single year so they still have flexibility to make different decisions in later retirement years. That's terrific and I think it's a good way to end on this idea of kind of bringing alignment with your money and sort of what gives you joy and what gives you meaning in your life. I think this audience really resonates with that topic. So Kiribati, thank you so much for taking time out of your schedule to be with us today. I always learned so much from talking to you. I wanna thank our audience for being here taking part of your Saturdays to be with us today. If you would like to make a tax deductible donation to fund further educational events like this one the website is bogelcenter.net and I will see you all in a month or so when we have our next Bogle Heads event and thank you all for joining us. Enjoy the rest of your weekends.