TaylorMade Retirement with Taylor Demars, CFP®
Welcome to TaylorMade Retirement! Featuring Taylor Demars, a 3rd-generation financial advisor and CFP®, this podcast explores what it really takes to build a retirement that works- for your money and your life.
Each episode breaks down strategies, stories, and steps to help listeners approach retirement with clarity and confidence. From cutting taxes to avoiding common retirement traps, Taylor draws on decades of family expertise to make complex financial ideas easy to understand.
Because life should shape your money, not the other way around.
TaylorMade Retirement with Taylor Demars, CFP®
Retiring Early Isn't Always a Choice- Here's What the Data Shows
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Most people plan to retire around 65. New research shows most people actually retire around 62 and it's often not by choice. Today we're digging into why that gap exists and what it means for your plan.
Here’s what we discuss in today’s show:
⚠️ Early Retirement: Why plans may shift unexpectedly
📉 Market Risk: Protect against poor early returns
🧾 Tax Buckets: Coordinate taxable and retirement assets
🏥 Healthcare Costs: Plan for the pre-Medicare gap
💼 Part-Time Work: Reduce pressure on savings
🔎 Tax Strategy: Use lower-income years wisely
Episode Resource: Millions Are Retiring Earlier Than Planned. Do Advisors Need To Rethink Planning?
Resources:
Website: https://www.demarsfinancial.com/
Phone: (509) 536-9556
Schedule an introduction call with Taylor: https://bit.ly/demarspodcast
Check out Taylor's YouTube Channel: https://www.youtube.com/@TaylorMadeRetirement
Taylor's Newsletter: https://demars-financial-group.kit.com/827c64fe0e
Disclaimer: Since we don't know your specific situation, none of this information should be construed as tax, legal, financial, insurance, financial advice, or other advice and may be outdated or inaccurate. It is your responsibility to verify all information yourself. This content is prepared for entertainment purposes only. If you need advice, please contact a qualified CPA, attorney, insurance agent, financial advisor, or the appropriate professional for the subject you would like help with. Demars Financial Group, LLC or its members cannot be held liable for any use or misuse of this content. Advisory services offered through Demars Financial Group LLC, a Registered Investment Advisor. Demars Financial Group is not affiliated with LPL Financial.
Most Americans plan to retire around 65 years old. However, new research shows that most people actually retire around age 62, and it's not often by choice. So today we're digging into why that gap exists and what it might mean for your plan.
SPEAKER_00Welcome to Taylor Made Retirement, where we explore what it takes to build a retirement that works for your money and your life with third generation certified financial planner Taylor DeMars.
SPEAKER_01Welcome in once again to another edition of the podcast. This is Taylor Made Retirement with Taylor Demars, Certified Financial Planner, and myself, Mark Killing along for the ride, to lob the questions at you, Taylor, so that you can kind of talk to us about some of this stuff. And I want to give uh you and the folks a setup. I mean, I know you know the setup, but for the listeners out there a little bit of a setup, there were three studies uh that came out this uh this past year here from uh Allianz, EBRI, and the Society of Actuaries, which sounds like they are a lot of fun at parties.
unknownYeah.
SPEAKER_02Uh with a title like by the punch bowl for sure.
SPEAKER_01Yeah, exactly. But anyway, uh to your point with the intro, each one found the same basic thing from a different angle. Somewhere between 42% and 59% of retirees left the workforce sooner than they had planned, and by that three-year gap you alluded to there in the beginning. So I guess let's start there and just kind of say what's your kind of gut reaction to those studies and and what do you think?
SPEAKER_02I think zooming out, right? We have to kind of reject the premise, which is most people on average are thinking they're gonna retire at 65. And I think that most people do that, not because it's by design, unless you count the default for, hey, that's just when Medicare starts, which for me isn't really an intentional plan. It's just kind of going with the least path of resistance. So as so when when we do our planning, obviously we're trying to be intentional, but not even hold ourselves to a certain date. So I wouldn't be so surprised to say that, hey, a three-year gap is is a make or break to a plan. It's just a matter of, okay, well, how does that how does that affect, if at all, the plan you already have in place? Because we like to think of retirement not as uh a hard stop, but as a work optional lifestyle. Right. Many clients choose to work past a certain age that they could retire simply because they enjoy the job or they're trying to hit a certain milestone out of good faith. But it doesn't give me a, you know, set make my stomach sink just to hear somebody that they're suddenly having to retire three years earlier, if that makes sense.
SPEAKER_01Okay. Well, the research also found, Taylor, and of course I don't think this is groundbreaking by any stretch of the imagination, that higher earners are more likely to retire early by choice because uh they have the resources, right? Whereas lower earners are more likely to be forced out. And so obviously this kind of matches what we see typically. So, what I want to do with that information in mind is kind of set you up twofold here. So the first part, we'll start there. So you've got an existing client, you've been working with them, they've got a plan, they've got a strategy, all that good stuff. And they come to you or they call and they say, Hey, I need to come in for a review. Something's happened and we're gonna have to retire three years sooner. How do you guys then go about dissecting and kind of changing and evaluating what needs to change uh for that client's new situation?
SPEAKER_02Ooh, yeah. A couple things to unpack there. And I think the first thing that we start thinking about when someone's saying they have to retire three years earlier, right? It's not just three years earlier, it's it's three more years that's eating away at the resources they had for it. Yeah, it's it's eating at both ends of the snake, if you will, right? Yeah. So three years less of 401k matches, three years less of portfolio growth with three more years of withdrawals. And the biggest thing that I think we're trying to plan around is with more urgency is the sequence of returns risk, which in simple terms just means the order of the ups and downs of your growth or loss in your stock market portfolio, of your personal portfolio, matters greatly, right? So if you if you get your portfolio gets a gut punch, right, in the early, more fragile years of your retirement, it has a compound effect like a bull whip that can really bite you in the butt later on in retirement. So hearing that someone's retiring three years earlier adds urgency to say, hey, are we prepared? Right. And I like to liken it to, you know, I just uh took a couple business trips last week. And when you you take an approach in the airplane, right, you ideally the pilot's taking even a miles-long approach just to be able to touch the ground because they're coming down from 30,000 feet, right? Right. You don't want the the pilot to you know hover above JFK and say, we're here and shut off the engines, right? Unfortunately, too many clients that come across our desk are kind of like the ladder approach where they're saying, hey, they're their their portfolio has been set up for growth and accumulation, but that it's not ready for diversification, for preservation, for wealth de-accumulation. Does that make sense?
SPEAKER_01Yeah, yeah. No, for sure.
SPEAKER_02Yeah, so that's the first thing we're looking at. And I and I might also just push back a bit, if you don't mind, on the premise that the study showed, which is you know, higher earners are more likely to retire by choice. Uh a client that I just mostly recently met with, she's a she's a high-ranking executive at a very well-known bank. Let's just say that. And and she started her planning with us a few weeks ago. We were thinking of her planning next year, and out of the blue, she emailed me on Sunday and said, I just found out I'm getting laid off. So completely out of the blue. And and so maybe she's an exception to the rule, but I certainly don't feel that just because higher earners make more money mean that they can retire earlier because maybe to nobody's surprise, their lifestyles all f also inflate with with their their cash flow. So um, this is often where I see people confusing wealth and income. So someone earning a half million dollars but only needing to spend $100,000 a year can can easily adapt to a retirement timeline. But if they're earning a half million dollars, but they're spending $400,000 a year, right? That's a that's a whole different situation.
SPEAKER_01Indeed. Yeah. Well, and it's like I said, I wanted to set you up with that first scenario, Taylor, of what would happen with an existing person, right, that you've already been working with. So let's go to the opposite side for a second, because this is where it happens for most people, right? Something happens, some news comes in, whatever. They've maybe been on the fence about sitting down with a with a financial professional, they're getting close to that time when they really need to start getting serious, and now they've got this new news. So then how do you start from scratch? Somebody comes in and says, hi, uh, we're here for a consultation. We wanted to retire at 65, but we found out something's gonna happen and we got to retire three years early. I'm sure it's a lot of some of the things you just described, but when it's when it's from scratch, does that change your whole evaluation process or what does that look like for folks? Because I think this is where most people find themselves.
SPEAKER_02Yeah. I I I I I guess not knowing it's a specific person's situation, we'll just assume it is starting from scratch. Yeah. I think the first thing we're looking at is what's our ammo, right? What do we have to work with? And and and most of that for most people was inside of their retirement savings, their portfolio, which is breaking up, broken up into up to three tax buckets, right? Most people have most of the retirement savings in the tax deferred. That's their IRA, 401k, right? Those dollars that have not yet been taxed. Sometimes they'll have some brokerage funds, right, which are non-retirement funds. These are brokerage accounts, non-qualified money, right? So we'll see what's available there. That's usually the the most overlooked assets for early retirement. And maybe they also have tax-free, which is often Roth IRA, maybe some HSA. So again, the three buckets are tax-deferred, taxable, tax-free. And so we get the lay of the land of what they have and how we can create a tax-efficient income. Because the second thing people are most concerned about with a surprise retirement date is healthcare, right? So we're trying to figure out how can we afford reasonable healthcare costs, and that generally blends into saying, can we maybe get into some ACA healthcare subsidies, right? And be able to stand to a certain uh income limit. So designing an income for that is the next question we look at. And then the third thing we're talking about is well, if you aren't planning on retiring already, right? Uh maybe you don't want to try and you know get back out there and LinkedIn and try and put out job applications. Many times people overwhelmingly underestimate how powerful a part-time job can go for them, right? Okay. And and and so even earn a maybe they're making 200 plus grand, but even making $50,000 a year instead can cover a lot of the basics, your gas, groceries, utilities, right? And that can just is just the difference from zero dollars of income to fifty thousand dollars income can mean the world to your portfolio from not having to take on a hundred percent of the burden anymore, right?
SPEAKER_01Okay.
SPEAKER_02Obviously, this isn't specific financial advice, but I it does continue to surprise me that when someone has some sort of part-time income, right? Maybe they're consulting for their former firm, maybe they're pursuing a a passion over a paycheck, like I like to say. Maybe it's just some sort of job that obviously is not going to cover all their bills, but it's something that they can sincerely enjoy doing. And maybe they've they fantasize about doing but can never you know give themselves permission to do because, well, it doesn't pay the bills. So that's what the next thing that we start to look into is say, well, if if if if you're not opposed, then how can we make some side money to make the plan scoot along? Does that make sense?
SPEAKER_01Yeah. Yeah, definitely. And and so I think it's all about the dissection of of the analysis, or I guess really is maybe a better word, the analysis of what you've got and what you need it to do, right, and what you're trying to accomplish. Because then, you know, several uh uh to me, like the big piece that usually sticks out in any of these early retirement questions for whatever reason, Taylor, whether it's forced, whether it's choose to, whether it's uh you know, forced from the company or forced from your body, right? Whatever causes it to happen, is the medical side. And that can obviously really chew into some things too.
SPEAKER_02It can. It can. And and it doesn't, and there's always silver lining, right? Uh sometimes the opportunity for retirement, uh early retirement, you know, whether planned or unplanned, is the the tax opportunity, right? Um many times we talk about tax strategy as is as doing things such as uh rough conversions, uh maybe harvesting capital gains and losses, right? These things that become much more advantageous uh when our income is low on paper. So uh especially pre uh Social Security starting, especially pre-RMD is beginning, we've got this limited window of opportunity where we can capture and strike where the iron's hot to yeah, get some dollars in that tax-free bucket we mentioned earlier to help compound the benefit for the plan for the long term.
SPEAKER_01All right, Taylor. So anything else that kind of jumps out at you on this topic or on this uh you know, these different studies that they did uh as far as you know, how you just kind of see things in your practice or something that just resonated with you that you'd like to, you know, discuss?
SPEAKER_02Yeah, I I I guess I would just empathize if anyone's listening to this and they have gotten, you know, a surprise retirement date, whether it's by their own prerogative or or or someone else's, or if it's a three months or three years, I I wouldn't consider it an emergency, right? Um that's we we see these kind of situations across our desk all the time. And we like to believe, we can't promise, but we like to believe that with better planning unlocks better opportunities. So uh would encourage people to consider getting their own personalized retirement readiness roadmap to see if we can uh help their plan go further without working a day longer or saving a dollar more, as we like to say.
SPEAKER_01There you go. And you can do that by going to the website and clicking on the button could we be a fit at demarsfinancial.com. That's demarsfinancial.com, D E M A R S Financial.com. There's links in the show descriptions as well. And don't forget to check out uh Taylor's YouTube channel also. A lot of good tools, tips, and resources there in general at the website, uh, that being one of them. So go check that out as well. And with that, we'll see you next time here on the podcast. Thanks for hanging out with us. Subscribe to us on Apple or Spotify, and again, reach out to the team if you've got questions and concerns, uh, especially about early retirement, be it forced or not. We'll see you next time.
