Keen on Retirement: Engineering the Second Half of Your Life

By Bill Keen

As you approach retirement, questions begin to stack up that you may not have the answers for:
Do I have enough, or will I run out of money later in life? What will happen to my spouse if I die? How do I avoid costly mistakes and maximize my resources going forward?
More than anything, you want to know: Am I going to be OK?
These questions exist because preparing for retirement is not easy. You're not sure which advisors to trust, you worry about being sold a product for the wrong reasons, and above all, it's daunting to lay bare your financial secrets to another person.
In Keen on Retirement, Bill Keen shares insights from more than 15,000 client meetings across a thirty-year career to help you approach retirement with peace of mind. In addition to walking you through the steps of building a dynamic retirement financial plan, Bill tackles the psychological and emotional challenges associated with retirement. He offers guidance to disciplined savers who are anxious about becoming spenders and helps individuals and couples get clarity around what their life will look like in retirement.

• Language: English
• Publisher: BookBaby
• Release date: Oct 20, 2022
• ISBN: 9781544533872

Book preview

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Copyright © 2019, 2022 Bill Keen

All rights reserved.

Second Edition

ISBN: 978-1-5445-3387-2

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To all of the clients I’ve had the privilege of serving over the years. Thank you for demonstrating that through hard work, character, and responsibility, it is possible to start from nothing and build a fulfilling retirement for you and your families.

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Contents

Preface to the Second Edition

Introduction

Part One: Draw the Plan

1. Assess Your Assets

2. Retirement Accounts

3. Create a Spending Plan

4. Determine When to Retire

5. Plan for Social Security

6. Understanding Medicare and Healthcare Costs

7. Optimize Your Taxes

8. Preparing Your Will and Trust

Part Two: Build the Engine

9. Create the Engine of the Plan

10. Manage Market Psychology

11. Avoiding the Next Flash in the Pan

12. Prepare for Market Corrections

13. Pick a Financial Advisor

14. Unprecedented Times

Part Three: Enjoy the Best Half of Your Life

15. Stay Active

16. Tend to Your Marriage

Conclusion

Acknowledgments

About the Author

Preface to the Second Edition

A lot has happened since I first published Keen on Retirement in 2019. During the early days of the COVID pandemic, we experienced one of the sharpest market corrections in years, a downturn that was essentially a government-induced recession due to lockdowns and social distancing. For a while, large parts of the economy practically shut down, and the future seemed bleak.

Thankfully, the COVID correction didn’t last long, and the market quickly recovered. However, the pandemic raged on. At Keen Wealth Advisors, we guided many anxious clients through those months—now years—of hardship. Along the way, it occurred to me that there were some issues that ought to be addressed in my book, issues that were fresh on everyone’s mind.

To that end, I’ve added some new chapters and refreshed much content throughout this book in order to include some of the lessons we’ve learned in recent times. I also address recent changes to laws and regulations that might affect you, and I’ve included some additional content on Medicare, healthcare expenses, Social Security, and more.

My goal with this book was always to help arm you for success in the future. In particular, I want to provide a defense against some of the alarmist media that can cause people to make harmful decisions about their own long-term financial well-being. So much negative information gets thrown at us every day, it can make difficult times even scarier than they need to be. Whether on a global level or an individual level, through a pandemic or a personal tragedy, we need solid and rational advice if we’re going to continue working toward a stable and prosperous financial future.

I want to help you avoid making emotional mistakes by focusing on controlling only what you can control. Remember the serenity prayer?

God, grant me the serenity to accept the things I cannot change, courage to change the things I can, and wisdom to know the difference.

It’s a prayer that could apply to our financial planning. With the updated information provided in this second edition, you can avoid panic and gain clarity on dealing with the latest developments that impact your finances. Staying on plan and working toward your future goals requires up-to-date information and a smart strategy. I’ll give you both.

Introduction

You’ve worked a full-time job for thirty to forty years, and you’re used to getting a regular paycheck. At this point, you probably operate on professional autopilot. Much of your time is accounted for. You work at least forty hours a week—it’s your routine. You’ve grown used to it.

All of that is about to change. Retirement is approaching, and soon those regular paychecks will stop showing up in your mailbox or bank account. Your sense of financial security may well be challenged. The transition can be dramatic and, if you’re unprepared, extremely difficult.

Or maybe you’ve already retired, and you’re in the midst of making the adjustment to this new phase of your life. You’re looking for someone to help you on the journey.

The truth is most people start their retirement planning with little to no assets or investments. Throughout their careers, hopefully they’ve lived within their means, made prudent financial decisions, and tried to save. Now the reality is hitting them that they need to create a new source of income for their retirement years. It’s not enough to merely save and accumulate money; they have to become more thoughtful investors as they will soon be in the distribution phase of their investing lifetimes. They’re going to live off that money for the rest of their lives.

It can be difficult for people to wrap their minds around this change. This is why it’s so important to put a solid plan in place to successfully navigate the transition. There may be many ways to be successful, and you might be able to achieve it in some other way. The plan I share with you in this book has worked for my clients over the years.

Time Is Running Out

A good portion of the clients I’ve worked with have been career engineers. In fact, engineers or employees of engineering firms make up approximately 60 percent of all the clients at my firm, Keen Wealth Advisors. They come to us for advice because they are planners by nature. They understand that it takes years of thinking, planning, and preparing to even begin to get a big project off the ground.

They also have vast expertise in their fields, so they understand what it means to be specialists. They are fully aware that when it comes to retirement planning, they know what they don’t know, and they’re willing to seek advice.

As retirement approaches, they’ve begun to realize just how different life is going to be, and they have a limited amount of time to ensure that everything is lined up correctly to prepare for it. In fact, they only have one chance with the resources they have accumulated, so they can’t afford to make any major mistakes. Realizing this, they look for specialized help, so they can get it right.

Time is a priceless commodity, and, not to be morbid, there’s an end date for each of us. The years go by increasingly fast, so we shouldn’t wait to get our affairs in order. Beyond retirement, you want to ensure that your spouse or children are taken care of, that they won’t be taken advantage of by an unscrupulous advisor, broker, or salesperson—or even a scam artist or disingenuous future spouse—when you’re gone.

Trying to navigate all the complexities of tax law, estate planning, investment rules, and finances on your own, along with all the emotions involved, can become a full-time job, yet the whole point of retirement is to not have to work so hard anymore. You need to put a plan in place that allows you to delegate this work.

Avoiding Emotional Mistakes

When you’re first starting out in your career and trying to build wealth, it’s easy to make bad investment decisions, especially when you have a limited perspective on the markets and economy. Maybe you’ve learned some hard lessons along the way, but with retirement drawing near, you can no longer afford to make major mistakes.

The news media loves to announce that the world’s coming to an end anytime the market is off by a few points in a day. Investors who lack the training or coaching to put this volatility into perspective are prone to make emotional decisions about their investments that can prove to be catastrophic. The most common emotional mistake people make is to sell their investments at a bottom in the market. Another mistake is to over-invest in the latest fad.

Often, when the market goes through a correction and experiences a downturn, people feel scared and get out of the market entirely. Then they find themselves sitting out while the market rebounds by 30, 50, 100, 200 percent or much more. I’ve spoken to individuals who got out of the market in 2009 and never got back in. Meanwhile, the market rebounded by over 627 percent from March 2, 2009, through March 31, 2021.1

In fact, here’s some actual math: If you invested $200,000 in the S&P 500 at the beginning of 2009, you would have had about $1,368,244.50 at the beginning of 2022, assuming you reinvested all dividends. This is a return on investment of 584.12 percent, or 15.83 percent per year. In many cases, the individuals who got out of the market in early 2009 cost themselves seven figures. That’s the damage an emotional decision can make to your long-term financial well-being.

Other times, people see a news story promoting some stock or industry, and they believe the hype. They buy in heavily without understanding how the specific investment fits into their financial plan. It’s a spur-of-the-moment decision, and it can cost them a lot.

You can’t afford to make these kinds of mistakes at this stage in your life. You need someone who can see around the corners, helping you develop a disciplined process that will ideally help you take advantage of market volatility while keeping you smartly allocated.

You’re going to be somewhere financially during your journey in retirement. The question is, will your journey be with discernment and intentionality, or will it be random?

Putting a Plan in Place

When we talk about making a financial plan, we’re talking about creating a living, breathing roadmap that deals with every component of your retirement, taking into account all spending needs, rules and regulations, Social Security, wills and trusts, healthcare, and taxes.

The engine to that plan is the investments you make in accordance with your individual considerations, bearing in mind what those investments need to produce for you and your family in the form of income and growth over time—coupled with your tolerance for risk and volatility.

Rough times are inevitable, and there will be turbulence along the way. You will deal with illness, market corrections and disturbances, possibly job loss or other unfortunate events. As they say, when it rains, it pours, so you need a plan that will help you weather these challenges. You don’t want to find yourself scrambling or responding emotionally. With a plan in place, you can sit back calmly and say, Here are the things I’ve already committed myself to, and here are the goals I know I want to achieve. I don’t have to let this current problem derail my thinking. My advisory team has my plan and is looking out for me.

We see so much anxiety in people as retirement approaches—a fear of uncertainty, a concern about the unknown—but once clients have a plan in place, it’s amazing the difference it makes. Six months to a year after retirement, when they’ve successfully navigated the transition and realize the plan is working, they seem ten years younger.

They find themselves sleeping better at night, feeling healthier and happier than they have in a while. Often, they describe the retirement years as the best part of life. They have wisdom and experience from their decades in a successful career. Not only can they appreciate everything they’ve been through, but they can relax and look ahead to rewarding years made possible by a life of discipline and persistence. They have the capital, resources, and financial security to pursue the passions, health, hobbies, and family time they’ve always dreamed of.

As their financial advisor, seeing clients enjoy a successful retirement is one of the most rewarding parts of my professional life.

Common Dangers and Opportunities

In thirty years of professional experience, I’ve conducted over fifteen thousand private meetings with clients. I’ve seen the planning and investment strategies that work, the most common dangers people face, and the opportunities that exist in their lives and in the markets. I’ve observed the recurring themes and the mistakes people make.

In this book, I want to clearly and succinctly describe the things I’ve seen working for people over the years, as well as the dangers that can derail your retirement plans.

When I first started in this industry, many people still depended on their pensions to see them through retirement, but even then, the paradigm had begun to change. Today, very few people have pensions or any other monthly income stream they can depend on. Though most people will receive Social Security, rarely is it enough to cover everything they need. Retirement planning and long-term security can simply no longer be entrusted to the government or corporate employers. More than ever, the responsibility lies with the individual to plan and prepare.

I believe it’s a good idea to have a financial advisor you trust and respect who can hold you accountable. A good advisor will help you clarify what you want your retirement life to look like in all aspects, and they will help you get there. They will guide you in developing your budget, show you how to pay the least amount of legally required taxes, and provide accountability to keep you on track.

Unfortunately, all advisors are not equal, and some simply don’t have the experience to deal with every individual situation. Others lack introspection or might have ulterior motives. That’s why it’s so important to find a team with experience, depth, and the credentials that you can trust.

Make the Most of Your Retirement

Individuals tend to fall into one of two categories. First, there are those who take responsibility for their future. Then, there are those who, either consciously or unconsciously, believe that someone else will take care of them, but we’ve found that, in this day and