Retirement Confidence for Women: What’s ‘Enough’ to Retire Well? | Office Hours

All right. Welcome to Retirement Confidence for women. No budgeting required. I am Sheri Finkel Murphy. I am a certified financial planner professional and Nancy has invited me to speak with her today. I am the founder of Madrina Molly Financial Wisdom for women of a certain agency. I sold my financial planning practice a year and a half ago and so I do not have clients anymore. But as we indicated, I have failed to retire. And what I am is on a mission to ensure that women in our cohort lose their fear of financial education. And let's say we make up the slack when it comes to financial planning because we are the ones who are going the distance. I happen to do a couple of other things. Self directed accounts. I am a Sherpa for both advisors and do it yourselfers because that's something they tend not to involve themselves in. And I am a relatively new Bolden model, educator and affiliate. And I'm having a really good time teaching people in the cohort how to own their assumptions. And that's the key today. Nancy, over to you.

Hi everybody. My name is Nancy Gates and I lead the services team here at Bolden. I am Bolden's lead financial wellness educator and I also lead the coach team and a number of other endeavors here. Really my goal as a member of the Bolden team is to support, educate and empower you to take control of your finances. Please reach out via email via the planner chat. You have any questions for me or the team. Always here and happy to engage with you in these live events, coach sessions, as well as answer any questions you might have about using our platform.

So I, I need you to pull out your phones. This is a QR code. If you've never used it, you use your camera and you aim it at the QR code and it will resolve to a URL. And I'd like you to answer the question, when you think about retirement, what word comes to mind? And let's see if we can get some answers in there. Let me know if you have any trouble as well. Opportunity. I like that. Hesitation. I'm going to want to know if that's hesitation to retire or not retire me.

Time.

Love, love, love. Travel. The go go Years. Uncertainty. Future. Health. Big one. Freedom. So we're getting a word cloud here. Apparently more than one of you has chosen freedom. Go ahead and answer more than once if you like. Are we good with that? So we associate retirement with me. Time, money, travel. What's retirement? Hesitation. Future, uncertainty, Opportunity, health, happiness, and mostly freedom. We got one more typing. What's Coming in there. We'll see. All right, multiple choice coming up. QR code again, which question is most important to you? How much can I spend monthly in retirement? Will I have enough to live to 100? When can I retire? This seems to be a big one. And when can I claim my Social Security benefit? Tell us what you're thinking. Okay. How much can I spend a month in retirement? Fantastic. That tells us what we need to know. One more free form entry. How will you find the answers to these questions? How much can I spend in retirement? And do I have enough to live to 100? Good answer. Of course. Your advisor. Spreadsheet. Good. All right. YouTube podcasts. A beautiful thing. So, yes, AI, we're going to start to see a. I. I'm. I'm reluctant to say AI in the open forum because I wouldn't want to feed all of my personal data to ChatGPT, but I might feed it to the Bolden AI analysis of expected spending. Good job, everybody. Well done. Well done. Understanding a better personal withdrawal strategy. I talk about that all the time with my membership. So we know we want freedom in retirement. We know that we want to know how much we can spend monthly in retirement. That's our biggie. And we're going to find out using both tools and financial advisors. And as a former wealth manager, I have to tell you that most of my relationships begin with a box of tissues. A box of tissues. Because women, even women with a lot of money and the ability to make a lot of money, come to me ready to be made wrong. Shame, lack of education. They're so ready to be told, you're not doing this right. There's a better way to do it. And I think that's unfair and really not accurate. Most of the women I have met in my career do things mostly right. And you need the strength of your convictions to get over the hump and move forward into your last decade or two of work and into your third quarter. Now, of course, if you ask a man how much he needs to retire successfully or what he wants to spend a month in retirement, he's going to give you a number. He's going to say, I need $2 million. And you say, well, where did that $2 million come from? And they'll say, I don't know. It sounds good. And if you ask a woman what she needs, she will tell you she needs enough. And I say, enough to do what? And then I get to some details about enough to live my life in this particular style, enough to take care of My parents and my children maybe enough to leave something behind. And so for the, for their children or other beneficiaries. So there's a different answer to the question. And I would like for you to know how you know when you have enough. And that's part of the answer to that. How much can I spend in retirement? Modeling takes the guesswork out of this. And the good news is that it doesn't require a knowledge of investments. I know a lot of women the impediment. And I'm not infantilizing anybody. This is legit. Like lawyers and doctors saying I should be able to figure this out, but I can't. And I say it's not your knowledge area. It's okay. So this has nothing to do with being smart or not smart. You don't need to know about investments. You don't need to be good at math. This, this modeling process removes the excuse for coming in is a hot mess. And we want to make it easy for you. So if you're here thinking that we're going to do a deep dive into some of the very cool features of bolden, especially you boldeneers, we're not doing that today. We're talking about how to greatly simplify this process. And as I said earlier before we began, since we care about role modeling for our sons and our daughters, that this would make a great tool to master even the basics of so that you can promptly pass it on. Okay, so a bolded model will tell you based on your current assumptions. So you make the assumptions. Do I have enough assets and income to last to the end of my plan? Which is a nice way of saying till the day I pass or what will my legacy be? Is there a way to improve the outcome without spending less? Many advisors say the answer is spend less. And I want to do everything possible to explore every other alternative before we say spend less. And what would your retirement look like if you changed your employment? Maybe you left your employment earlier but had a side business that you grew over time. I love using the Etsy shop as an example. Maybe if you changed your savings rate, save more, save less. Maybe if you claimed your Social Security at a different age. Maybe if you did some Roth conversions to change the tax treatment of your savings so that you go into retirement with more tax free money. All of those things and more are levers that you can pull. And what's cool is you don't have to understand a whole lot about it. Most of it can be solved pretty simply by just changing some dates. Let's talk about Faith at 50. Okay, so Faith, our girl is 50 years old. She is a divorced mom of a college student and she pays some of her child's tuition still, she's not done yet. And the father of her child pays the rest. She does not budget, but she saves into her 401k through her employer. She spends whatever remains. So that means that what's automatically taken out of her paycheck is gone. She gets her paycheck, she pays the monthly bills, she pays her son's tuition, and there's nothing left. She owns a home in Tennessee with a mortgage. We think the mortgage will be paid off. At age 68, she has $600,000 in total savings. Divided between her 401k and her Roth 401k, she has a $50,000 cash buffer. Her current net worth is $793,000. And when we plugged in these numbers, her chance of not running out of money is 64%. And that's just a guideline, but she has a 64%, so better than half chance of being successful to age 100. And with that, I'm going to stop sharing and Nancy's going to start sharing and we're going to pass the baton.

Perfect. Thank you so much. So. So one thing everyone wants to know about the software is that when we move into a new month, our projections change. So as we moved into June, Faith no longer has a chance of success of 64%. She now has a chance of success of 58% due to something changes as we moved into the next month. But the chance of success in the scenarios actually hasn't changed. And we'll go through through those a little bit. But we're going to start with just a brief introduction to this overview page, a couple of the high level features so that we understand the assumptions through which we're looking at Faith. We're looking at Faith's baseline plan. This is your nice clean plan where you're not going to be doing a lot of gyrations. And then we're looking at the plan through these lenses. We're forecasting future dollars. If you want to understand comprehensibly the purchasing power of something today, you might toggle back to today's dollars. But for the most part, we look at these financial plan projections in future dollars. And then our software has this unique ability to forecast your plan by applying optimistic average and pessimistic inflation and return assumptions, which we can look at but not now because we don't want to get Too into the weeds. Today, Faith is not a detailed budgeter. So we're looking at a retirement age of 65 in her baseline plan spending needs withdrawal strategy, which is the default and the basic budgeter scenario. Current net worth, as Sherry mentioned, $793,000. This includes savings, other assets, and home and real estate. And we're seeing a retirement chance of success of 58%. Sheri, do you want to speak a little bit to the chance of success? And you know, a lot of our users are kind of like, I didn't get an A. I don't have a 99% chance of success. Do you want to flush that out a little bit?

Yes. So, you know, it's as good an example to know that month to month, that chance of success changed by as much as 10%. Because this success analysis, sometimes called a Monte Carlo projection, is a randomization of available data. And of course, financial data in the market at large changes month to month and balances change month to month. And so if you run a Monte Carlo analysis, it's never going to be the same twice. There is a mathematical calculation based on, I'm going to say the word standard deviation based on some heavy duty statistics based on heavy duty statistics that will tell you if you are in the range, low, medium, high of meeting your goals. And there's probably a great argument among the big brain folk about how high the percentage needs to be to feel good. We've agreed, Nancy and I, and of course, we know more than all of the other big brains we have agreed to that we want a chance of success of somewhere from 80% to 90%. Maybe high 70 is good enough. Let's say 75 to 90%. And that's perfect. Now, why don't we want 99% chance of success? Because we don't want you to pull into age 95 with a zillion dollars still in your bank account, and you will have flat retirement because you didn't spend enough. So, in fact, perfection would be 90%. And we think that anywhere between 75 and 90% is pretty darn good. So I don't want you to think that our girl Faith, who's 50, is a lost cause, because she's not. She only needs to do a little tweaking to get to where she's going.

And.

And that's what we want to show you. Back to you, Nancy.

Perfect. Thank you. So to go over a little bit of the setup, we do see that she has these retirement accounts. We discussed the 401K and the Roth 401K. And she's got her contributions going into her Roth 401K and she has a nice employer match as well as her $50,000 in safe money. And then as we discussed, her property in Tennessee, her work income and her projected Social Security benefit here. And then we've got the recurring expenses. We'd like to phase these expenses for different phases of time. And here, as we mentioned, Faith is paying tuition for a number of years, which is constraining her spending through December 2027. The software is going to bring in any medical expense estimates for her, especially those Medicare and long term care estimates that Bolden does for you, so you don't have to do them yourself. So there's just a high level view of what's been populated here in P. Faith's baseline plan. And so we've come up with a couple of different scenarios to use those levers, as Sherry mentioned, to see how we could improve this chance of success. Again, we're not going for 99. Any financial plan is subject to a whole range of assumptions and is always going to need flexibility. So the lower that chance of success, the higher your need for flexibility is going to be. We've got four alternate scenarios for you today. Scenario one results in a chance of success. There's our 75 results in a chance of success of 75%. She saves more money. So we have increased contributions in this scenario as well as. So unfortunately, in order to do this, she does forego a little lifestyle spending, but it does give her a nice boost in that chance of success. Scenario two, she continues to save more. So we're building on scenario one. Here we have that higher level of contributions. She delays her retirement age in this scenario. Her retirement age, which is the stop age for her income, is 67 instead of 65. This brings her to a chance of success of 87%. She's delaying not just her work income end year, she's also delaying her Social Security benefit to age 67, giving her her full retirement age benefit, as opposed to the other scenario where she was taking it early and experiencing a reduction from her full retirement age.

Now in this just stop here because it's a checkpoint. If this were my plan, if I were faith at 50, I would want to look at it both ways. In other words, I'd want to look at saving more and retiring early, but I'd also want to look at saving less and retiring at 67 or the combination of both. And I get the opportunity to game that and say, gee, what what suits me? I am a fan of retiring later and spending more in your 50s. By the way, I am a big fan of getting that bucket list started in your 50s.

We've got a question about the low chance of success and the 4 million at retirement in the baseline and we'll get to that after all of the four scenarios. Most likely that's because it's including the property value. So the net worth is including that trapped home equity. But we can look at that once we get through the four scenarios. No responses here about getting through those bucket lists in our 50s. I think. What's your term you like to use, Sherry Sandwich generation. We have a lot of people managing dependents and aging aging parents at the same time and maybe not a lot of breathing room if not financially, but certainly time constraints.

Well, so as an aside, I'm a big fan of taking some time for a big vacation in your 50s because now when you're 65, you could have parents in their age of frailty. They could be living at home in their 80s. And so you won't be able to gallivant around the world. So I think gallivant early and there you have it.

I hear this a lot in my circle for sure. Scenario three, we're building on one and two. So she's saving more but she is retiring earlier to care for her mother. She's claiming Social Security at 64. Her mother passes sadly when she's 66. So she's very grateful that she did take that time to spend with her mom and support her mom and she receives a small inheritance or she receives an inheritance of $200,000. May not be small to many of us. And this is where Sher's favorite strategy of the Etsy shop comes into play. So she's a little short here on funding and you know, living the life she's dreaming of. So she starts her own Etsy shop. We've added this in the passive income section. Anything added here, this is appropriate for self employment income or rental income. Anything added in this section is subject to state and federal income taxes. So she's going to run her little Etsy shop to fund her lifestyle at until age 70. So she's retiring early but she's still got some nice income coming in through age 70 from something she enjoys doing. Our chance of Success here is 71%. Finally in scenario four, we've got a hard to tell retirement chance of success here. This is because this is the only scenario where we haven't selected the based on spending needs Withdrawal strategy. We've selected the max spending withdrawal strategy. In this scenario, she wants to leave a legacy, so she selected a legacy goal of $100,000. That's $28,600 in today's dollars, $100,000 at the end of her lifespan. When we select the max spend withdrawal strategy, we have this orange bar appear in our withdrawals chart. This is how much more she could spend a year. And basically, as coach Mike Richardson says, write her last check to the undertaker. When you select max spend, it will spend down to zero, or your legacy goal, if you have one. And we see here we've got. She's actually a little short of that legacy goal.

So I'd like to ask you to talk because I actually think it's more meaningful about the income score just a little bit and what that can tell you because I think that's a very useful metric. After I'm busy looking at what I can spend each month, I'm going to.

Go to the overview to begin that conversation. The income score is based on this metric at the bottom of your overview page, which is our retirement cash flow chart. The green bar represents your average income in retirement. It starts at retirement date in your profile, and it goes through the longevity age of the last to pass or the survivor in the plan if you have a partner. The orange bar is the average expenses from retirement age through longevity age. So this can be a little confusing because it's like, well, my Social Security benefit is supposed to be $4,000. Why am I seeing, you know, 2.8 6,000 here? That's because it's averaged over that time. You may be 50 now and you're not claiming it until age 62, 64, 67. The green bar, the average income in retirement also does something interesting based around a rule of thumb withdrawal strategy you might have heard about. And that's the fixed percentage 4% rule. How that works is the year of retirement. We assess your portfolio value and we model withdrawals moving forward from your portfolio based upon that initial savings balance. Increasing by inflation. 4%. Sorry, increasing by inflation every year. So let's say you have a million dollars the first year. We take out $40,000 to fund expenses and then, et cetera, moving forward, growing at the general inflation rate in your plan. Of course, it's also going to include all required minimum distributions. So that's how we compute your average income in retirement and your average expenses in retirement. And the intention here is to give you a sense of how often, on average, your income covers your Expenses in retirement. You know, retirement is the kind of reversal of what we're doing all our life. We're earning and we're saving, and then we get to the top of that mountain and we have to come down and all of those nice savings that we've got, we have to start taking those savings to fund our lifestyle. Of course, that's why we saved that money in the first place. Returning to money flows, we can see the income score. The income score is the average income divided by the average expenses. And a score over 80 means you are in good shape. So 80% of the time your income covers the expenses. Again, like with the Monte Carlo chance of success, we're not always going to need that A in the course. Right.

I feel that that is an incredibly useful metric and I'm delighted that our group on the call here wanted to know how much they can spend in retirement. But because that's the score that I would look at, I would not look at a dollar value in future because it can be overwhelming to see lots of zeros and go, wow, am I going to be rich when I retire? It's very hard to get a feel. And I know that in general, we talk about the sexy stuff like net worth. Oh, I'm going to have a net worth of X. But the meaningful number is that income score in retirement. Will you be able to live the same lifestyle? And because we don't like to give back lifestyle, if we're living on 10, $12,000 a month or $25,000 a month or $6,000 a month, we want to keep that up. And I find that there are a lot of people, we'll call them the millionaires next door, who because of their two social securities and pensions and maybe an income annuity, they have magnificent income scores, but they may not show. And they will have corresponding high Monte Carlo scores, but they may not show a zillion dollars in assets. And that's okay because the goal is sleeping at night and being able to change your assumptions in order to change the outcome of the plan. Hopefully I'm making sense there.

I like these two questions in the Q and A. And I think that scenario four might not even be the right. The best place to leverage that income score because we're on the max spend. So I'm going to return to the baseline.

Okay.

And now we have an income score of 102, which makes more sense to me than the previous one. And we've got the income and expenses are actually neck and neck here because we're not using that max spend withdrawal strategy. So I think this is a really great representation of what you just mentioned. The question was, you know, I'm ending up with. Actually we're ending up with 24 million. Let's put this in today's dollars. 6.74 million. How can this be? How can I have 6.74 million at longevity age and a chance of success of 58%? That's because that 58% is based upon liquid savings only. And a large portion of the net worth here at longevity age is the real estate at 975,000 in today's dollars. So Teresa says, what about a downsize at 62.64 and let's try that. I'm in my view only mode, so I can make changes without significant consequences here. Unfortunately, you don't try this at home. We are going to downsize at 62 or 64. So let's relocate at 62. Maybe we do a little geo arbitrage. Oh, she's already in Tennessee so she has no state taxes. So we can't take advantage of geo arbitrage here. We're going to deposit the proceeds in the cash savings account. She'll get about. I'm so bad at doing Math on the fly. 550 here. So maybe we buy something for 350 and we bank the difference. That's maybe a little high. I don't know. Let's go down and try this one. Select Tennessee Press, save, return to the overview and see it made things worse.

And I think that's because her cash savings is not going to grow as well as her brokerage savings will. So you deposited the extra 2,200 thousand to cash. Let's send it to brokerage. There we go.

73. There we go.

So Teresa, the answer to your question is absolutely. There are plenty of people who tend to downsize from the big house. My experience, again, not liking to give back lifestyle is the condo. And the renovation of the condo may cost every bit as much. It may be a net, net downsize. And we're trying not to give back lifestyle. Of course you do. You. What we're trying to establish here is that you can control your assumptions to get to the finish line. And I think that's what's important. Let's talk a little bit about what we learned and that is that based on current assumptions, we know that our girl Faith can get to the finish line. We can think of two or three different ways to improve her getting to the finish line. And we know how much she can spend monthly without running out of money. And as you can see that she could rerun that plan monthly if she wanted to. I don't necessarily think it's a healthy thing to stare at these plans. I run my own personal plan once a year, maybe twice a year and I see what has changed the model. Whoops. The model is going to let you correct course and it's going to let you change your income duration. It's going to let you change the type of income. It will let you change your savings rate. Maybe your numbers are so good you can reduce your savings rate. There's that take a vacation in your 50s, change when you collect Social Security, change your asset tax treatment. The good news? The model is not a budget. I always think a budget is somehow doing penance. There is a detailed budgeting capability built in but when we built Faith we just slapped it in there. It was a no brainer and we still got really good answers. So we did not tell her to spend less and I wanted to make that point. Having said that, it's your turn. So here's a QR code that you can use to get you to the software. There is a free version that you can use. It will tell you when it's time to go to the upgrade to the paid version. See where you stand. See where you stand. Can't hurt, right? Knowing is better than not knowing and we would want you to sleep well at night and to have more women doing financial planning. If you're looking for us you can find us@nancy gatesolden and sherrydrinamali.com and as I indicated I'm a Bolden affiliate. I also have a membership community for women who do not have their own certified financial planner relationship and just want some questions answered. Any other questions?

We do have another question about the high dollar values at longevity age and a lot of that is going to be based upon the assumptions. I'd have to look again at the asset allocation model that we used. I think we used moderate perhaps and then we'll also be relying upon a particular housing appreciation rate. So to learn more about the assumptions I highly recommend many of you have already been well this link was in the classroom but it was also in a lot of our social media. If you want to go to the classroom link in the bottom left hand menu of the software. Tomorrow it's probably moving to the top right corner of the software. But that's how we roll here at Bolden. I would highly recommend utilizing our resources attending our Live events and viewing our pre recorded events to learn more about the software and what you're seeing reflected back to you not just in my demo plan today, but in your own plan. Because there are some very important base assumptions again that we're forecasting in that optimistic, pessimistic, average possibility. So in this plan, you know, if we toggled over to the pessimistic forecast, we'd have high inflation, we would have low rates of return, et cetera and we would not end up with 20 plus million dollars for sure.

Right, But Sula not. I know that. I mean this is what I said, that these numbers seem completely bizarre. Faith is 50, she has three quarters of a million. If money doubles every 10 years, she has five doublings. So she's going to go to 1.5 million to 3 million, to 6 million, to 12 million, to 24 million. If you know, if there is a parody of income coming in and expenses going out. And that's why these plans tend to change over time. By the way, a Monte Carlo projection, any plan, when I work with clients, I assume it has a 10 year value. So I don't think it's fair. And sometimes there's, you know, some devoted Bolden users who were 30 years old and I'm thinking, well, doing what you're doing, you're going to retire early. But, but you really need to rerun the plan every once in a while because things change. And I think that what I would want again is not for you to have perfection or certainty, but for you to sleep at night to know that you're on the right track.

Karen says, should we be looking at the average assumption regularly? Because I tend to look at pessimistic. We recommend not being, not doubling down on your optimism. You know, our coaches report this regularly. Very low rates of return, very high inflation rates, toggling to pessimistic all the time. The problem with that approach is that you're turning a blind eye to potential tax risks and other risks in your plan. If you're minimizing your potential returns, then you're minimizing your potential RMDs. Then you're minimizing your potential taxes, you're minimizing your potential irmaa. So we always recommend being as you know, as true as you can in that average view, depending on the average view. And then we're toggling back and forth between the optimistic and pessimistic just to kind of test those waters, particular risks or what happens if I do better. It's Always fun to toggle with if you're using our detailed budgeter the like to spend budgeter with the optimistics and then the pessimistic with the must spend budgeter that you're beans and rice budget for example.

The history of the market would indicate that there's every reason to use average and optimistic. So we're being pessimistic by going to average to be perfectly honest.

And I think it's incredibly educational even if it is shocking to build out your own plan and say whoa, wait a minute, there's no way I'm ever going to have that much money, you know, or there's no way I'm never going, you know, like just give it a try because it's incredibly educational. We have so many of our users who you know, we call them our validators who come to our product who are like let me see, how am I doing? Am I going to be able to retire at 67? And they learn they can retire at 62 or 60 or 64. So it's, it's always worth, worth just trying the free product, getting the information in there. We call it that that see where you stand point. And then as Sheri said and we looked at today, there are all of these different levers you can pull. They're going to be different based on your specific circumstances but the product's very flexible. Even if it doesn't have your deferred comp plan or your particular type of annuity, whatever you've got going on, we always have ways to work around them as well.

Sure. And I work with members a lot to these Madrina Molly members to take their plans and and move assets into cash regularly just in time so that they can get a realistic feel for spend because the model is looking forward and people want answers for the next two years. And of course if you have a big windfall like I think somebody selling a business. Karen, are you selling a business? Good for you. That's a big deal to have a windfall and figure out where to put it. So big change.

Those are great points and you know our, our goal here at Bolden is to meet you where you're at so you can start with the free product, you can use the paid product, you can join the live events. I always say, you know, build your plan, take full advantage of all of the free resources like our webinar today who Sherry has graciously volunteered to to to join as well as take advantage of all our free resources. Get your plan figured out, talk to other Users, et cetera. And then we have the coaching service. So if you get to the point where you want validation and you're, you're happy to pay $250 for it just so that you have that sleep at night factor that you didn't, you know, fat finger something or mess something up or your contributions are actually being counted as you expect. Schedule that coach session. They'll walk you through your plan, check all your inputs with you, go over your goals and assumptions. They won't provide any specific advice, but they are steeped. They're product experts and they're steeped in domain knowledge. And then Bolden advisors, they'll start off by checking your plan and then they can give that investment advice. They can talk about whether you're moving to cash every month, how you're going to manage your withdrawals from which accounts, at what time. Maybe you're trying to come out with a Roth conversion strategy, et cetera. And it's always an out and back iterative process. Here's where I stand today. Let's look 10 years down the road, but then we're going to come back, right? Because the Roth conversion, we're looking at nine years from now. We're not pulling the cord on that today. What are we doing this year? What's going to be the impact of that downstream and then come back. So it's an iterative, constant process. And that's why you build a plan. You can keep coming back to the bold and platform, and as life evolves, you're going to continue adjusting, your plan is going to continue evolving. Or you can say, am I going to downsize in 10 years? What's that going to look like? All right. I think we are at time so, really so grateful for everyone for joining us today in this live event and all of our live events. We always appreciate your participation, your engagement. We really would not be here without our users and our Bolden community. So thank you everyone very much for joining us today. We look forward to seeing you again. Thank you, Sherry, very much. Hopefully we can do more of these and more collaboration.

It is great fun. Thank you for having me.

Of course. Of course. Have a wonderful day, everybody, and happy planning.