Welcome to WNTU and happy Monday!

First things first: Several of you have emailed or DM'd with questions about how you can support and share your appreciation for all the content I'm sharing through WNTU, so I finally put together a "Support" page on my website. Feel free to donate or buy me a coffee or two. I'm also working on paid virtual courses and e-guides to help get you through things like a cancer diagnosis, chemotherapy, radiation, the impact of caregiving on marriage, career, friendship, etc. So many plans with so little time! This is a labor of love and I genuinely appreciate your support. Thank you, thank you and thank you again!

Now, on to today's topic: Retirement. Yep, that's nebulous idea of life after years of work.

Does the thought of planning for retirement make you feel excited and confident... or anxious and overwhelmed? Be honest. If you're like most people, it's probably the latter. An April 2024 CNBC and SurveyMonkey poll found that 53% of Americans surveyed feel they are behind on retirement planning and savings.

Raise your hand if you've ever had one of these thoughts:

"I'll never be able to retire at this rate."

"I don't want to work forever, but I also don't want to live on ramen noodles when I'm 70."

"I'll start saving more... next year." (Spoiler alert: Next year never comes)

"401k, IRA, Roth, rollover... it's like alphabet soup and makes my head spin!"

Sound familiar? We know we should be saving and investing for our future, but it's hard to know if we're doing enough or making the right moves. The good news is, you're not alone AND it's never too late to get on track. In this week's episode, I sit down with Chantel Bonneau Stewart, Wealth Management Advisor at WiseFit Financial, to demystify retirement planning and share truths that may open your eyes and change your mindset.

Chantel has been obsessed with personal finance since she was a kid (no joke; she was treasurer of her 3rd grade class) and has spent her career helping people just like you and me create financial freedom and security. She's seen it all and explains things in a way where everyone can understand (unlike a lot of financial advisors).

Here are the top insights that will shift your retirement mindset and set you up for success:

💸 Retirement Looks Different for Everyone

👶 Start Saving and Investing as Early as Possible

⛔ Common Retirement Mistakes To Avoid

💰 Create Tax Diversification with Your Retirement Accounts

🤑 Your Spending in Retirement May Surprise You

I hope these insights from Chantel inspire you to take control of your financial future, no matter your age or retirement horizon.

As always, if you love what you're reading, share WNTU with a friend.

Guest Spotlight: Chantel Bonneau Stewart

Wealth Management Advisor, WiseFit Financial

Retirement Looks Different for Everyone

Baby boomers, on the other hand, are redefining retirement as we know it. Many are working longer, either by choice or necessity, and are more likely to transition gradually into retirement through part-time work or encore careers.

For younger generations like millennials and Gen Z, the path to retirement looks even more different. With the decline of pensions, the future of Social Security uncertain, and longer life expectancies, traditional retirement may not be realistic or even desirable. Instead, the focus is on achieving financial independence - the freedom to work (or not work) on your own terms.

This could mean:

💰 Building a career that aligns with your passions and values, so you never really "retire"

💰 Creating multiple streams of income, such as side hustles or rental properties

💰 Prioritizing experiences and flexibility over a set retirement date

💰 Pursuing "mini-retirements" throughout your working years

The key is having the financial resources to design the lifestyle you want, whether that's traveling the world, starting a business, or volunteering for causes you care about. so ask yourself, what does your ideal "retirement" look like? What steps can you take today to start making that vision a reality?

Start Saving and Investing as Early as Possible

"If anyone is listening to this, that is, you know, 20, 25, 30, 35...I've never had a client that said I should have not saved earlier, because it makes such a difference, you know, every hundred...This is simple math based on, you know, I think it's a 6% rate of return in a deferred account. Every hundred dollars you start saving at 25 years old, systematically, per month is worth a little over 200 grand by the time you're 65." - Chantel Bonneau

When it comes to saving for retirement, time is your greatest asset. Even small amounts invested consistently over a long period of time can grow exponentially thanks to compound interest - basically, earning returns on your returns.

Consider this: Let's say you start investing $100 per month at age 25 and earn a 6% average annual return. By age 65, you would have over $216,000. But if you waited until age 35 to start saving that same $100 per month, you'd only end up with about $100,000 by 65. That's a difference of over $116,000, just because you started 10 years earlier.

The lesson? Start saving and investing as early as possible, even if you can only afford a small amount. Twenty dollars makes a difference, truly. Make it automatic by setting up contributions from your paycheck or bank account so you don't have to think about it. And if your employer offers a 401(k) match, be sure to contribute enough to take full advantage of that "free money." #MaxItOut.

What if you're getting a later start? While you may need to save more each month to catch up, it's never too late to start. The most important thing is to take action and commit to making progress, no matter your age.

Surprising Stats: A survey conducted by GOBankingRates last year found that more than half of respondents have $10,000 or less saved up. Equally worrisome is the fact that almost one-quarter of Americans don't even know how much they have saved for retirement, according to new research from the TIAA Institute. Please don't be one of them! Even small steps like cutting back on subscriptions or dining out and redirecting that money to savings can add up over time.

Knowledge is power, so try this out: Do a "retirement savings audit." Log into all your investment accounts and add up how much you're currently contributing each month. Is it at least 10-15% of your income? If not, challenge yourself to increase your savings rate by 1% each quarter until you reach that target. Future you will be grateful!

Retirement Mistakes To Avoid

While retirement planning can feel overwhelming, there are some common pitfalls that can derail your progress. Here are the top mistakes Chantel sees in her work with clients:

1. Contributing to the wrong retirement accounts.

"So an example is you were, let's say someone was a really smart 23 year old, and they opened a Roth IRA. Love it. Love, right. They're trying to do the right thing... And then fast forward, life is busy. A couple kids later, minivan in the driveway, and the family is making above a certain amount of money that disallows the Roth. And you're still making that Roth contribution, and no one's gonna stop you. But if you ever get audited, you're gonna find yourself in trouble." - Chantel Bonneau

It's great to be proactive about saving for retirement, but make sure you're contributing to the right types of accounts based on your income and tax situation. For example, if your income exceeds certain limits, you may not be eligible to contribute to a Roth IRA. If you have a 401(k) with an employer match, prioritize getting that full match before saving in other accounts.

2. Making investment decisions based on headlines or emotions.

"[Some] people will build an investment strategy based off of an article, or, you know, they'll listen to, you know, a news station in the morning or something like that. You have to remember, I love a good news outlet, but they make money via ratings, viewership. So it's their job to be a little more exciting than I get to be." - Chantel

It's tempting to make changes to your investment portfolio based on the latest market news or "hot stock tips." But letting emotions drive your decisions is a surefire way to sabotage your returns. Instead, work with a financial advisor to create a diversified, risk-appropriate investment strategy aligned with your long-term goals. Then stick with it, even when markets get volatile.

3. Not updating beneficiary designations.

"This is so small, but I catch it more than I can even believe: People not updating beneficiaries on accounts. And it's still your, like, little brother or your ex-wife." - Chantel

One simple but often overlooked detail is keeping your beneficiary designations up to date on your retirement accounts and insurance policies. That ex-spouse you haven't thought about in years? They could be inheriting your 401(k) if you don't update your forms. Be sure to review and update your beneficiaries regularly, especially after major life events like marriage, divorce, or the birth of a child.

4. Being so afraid to spend in retirement that you sacrifice your lifestyle.

"[Some retirees] feel like they can't [spend] because it's a different feeling that's hard to conceptualize when you are earning income. This moment where all of a sudden there's no going back. Like, you're never going to earn another dollar, and it messes with you. Every dollar you spend... is gone forever." - Chantel

After decades of diligently saving and investing, it can be hard to flip the switch and start spending down your nest egg. But as Chantel points out, retirement is not just about accumulating wealth - it's about using that wealth to live the life you want. While it's important to be smart about withdrawals, don't let fear keep you from enjoying the fruits of your labor. Work with an advisor to create a sustainable withdrawal strategy that balances your needs and wants.

What Is Tax Diversification & Why It's Critical

Here's a quick breakdown:

💰 Pre-tax accounts (like traditional 401(k)s and IRAs): You get a tax deduction on contributions, but pay taxes on withdrawals in retirement.

💰 Roth accounts (like Roth 401(k)s and Roth IRAs): You pay taxes upfront, but get tax-free withdrawals in retirement.

💰 Taxable accounts (like brokerage accounts): You pay taxes on investment gains and dividends, but have more flexibility.

By having a mix of these accounts, you can pull from different "buckets" in retirement based on your tax situation and income needs. For example, in a year with higher expenses (like big medical bills or a dream vacation), you may want to pull more from your Roth accounts to avoid bumping up your tax bracket. In a lower-income year, you could take more from your pre-tax accounts.

Plus, tax diversification can provide a hedge against future tax rate changes. While we can't predict what the tax code will look like decades from now, having options gives you more control and flexibility.

Pro Tip: If your employer offers both a traditional and Roth 401(k), consider splitting your contributions between the two. You could also look into converting some of your pre-tax savings into Roth accounts over time, known as a "Roth conversion ladder." A financial advisor can help you weigh the pros and cons for your situation.

Your Spending In Retirement May Surprise You

"What so many people forget is the factor of you finally have time... Is that when you're going to want to stop traveling, you might have increased medical costs. Even if your house is paid off, guess what? Things break." - Chantel Bonneau

Quick, what's the first thing that comes to mind when you think about retirement? Is it lazy days on the beach sipping piña coladas? Endless rounds of golf? Finally having time to catch up on all those books and shows you've been meaning to get to?

While retirement certainly brings more freedom and flexibility, the reality of spending in retirement is often quite different than what people expect. In fact, many retirees find that their expenses are higher than they anticipated, especially in the early years.

Think about this:

✈️ With more free time, you may be tempted to indulge in hobbies, travel, or other "bucket list" experiences that come with a price tag.

🚑 Healthcare costs tend to rise as we age, even with Medicare coverage. Out-of-pocket costs like premiums, deductibles, and prescription drugs can add up quickly.

🏡 Even if your mortgage is paid off, you'll still have ongoing expenses like property taxes, insurance, maintenance, and repairs. (Surprise! That 20-year-old roof won't last forever.)

🧒🏽 If you want to help support children or grandchildren (like contributing to college funds or helping with a down payment), that can put added strain on your retirement budget.

So how much should you plan to spend in retirement? A common rule of thumb is to estimate needing about 80% of your pre-retirement income, but this can vary widely depending on your lifestyle and goals. Some experts suggest breaking retirement into phases, with higher spending in the "go-go" early years, tapering off in the "slow-go" middle years, and potentially rising again in the "no-go" later years due to increased medical needs.

The key is to create a realistic retirement budget that accounts for both your essential expenses (like housing, food, and healthcare) and your discretionary "wants." Be honest about the kind of lifestyle you want to live, and don't forget to budget for the unexpected, like home repairs or a down market.

Pro Tip: Consider "practicing" living on your retirement budget before you actually retire. Try living on 80% of your current income and see how it feels. This can help you identify areas where you may need to cut back or adjust your expectations, while there's still time to course-correct.

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