Will You Have Enough Income in Retirement?

4.17.26: Audio automatically transcribed by Sonix

4.17.26: this mp3 audio file was automatically transcribed by Sonix with the best speech-to-text algorithms. This transcript may contain errors.

Speaker 1:
Welcome back to the Federal Retirement Show. I'm your host, Val Majewski, with American Benefits Exchange. And as always, I really appreciate you taking the time out of your schedule to view our content. That's what it's here for. It's for you, the federal employee, that's looking for accurate information when it comes to your benefits and retirement situation. And today, like many of the episodes that we've had, it stems from a conversation that I've had with federal employees recently, and this has been a common conversation. So I said conversations plural, because this has been common with folks as they're nearing or entering retirement and they want to know, will I have enough income in retirement? And we've gone through this recently. We talked about the top ten mistakes made by federal employees during our recent series. We went over one of the mistakes was not saving or planning well enough for retirement. And then I've had a couple of conversations since then with federal employees just like you. And that's where this question came up. You know, will you have enough income in retirement? And we've talked before again, about saving and saving. But ultimately, when you convert that savings into lifetime income, are you going to have enough to live on? Are you going to have enough to pay your bills? Or are you going to have enough to survive, or you're going to have enough to live the retirement lifestyle that you want? And I cannot harp on this enough.

Speaker 1:
I don't think we can have enough episodes on this topic, because that's really what it's all about, what allows people to retire? It's going to be the the income that's coming in. Yeah. It's a situation you've got to be ready for. You've got to plan. There's other things. Maybe there's debts that you want to pay off, um, or enough money you want to save in your retirement plans or your TSB or what have you. But ultimately, when it comes to how do you survive in retirement? How do you live in retirement? How do you pay your bills? How do you have the lifestyle that you want. You have to have that money coming in. That mailbox money, that money that's hitting your bank account every month, your retirement paycheck. You have a paycheck while you're working, you make a salary. Maybe you you're in a position where you've got great locality pay while you're working. Maybe you're in a position where you work for an agency that pays you a bonus. You've been getting good step increases, pay increases, raises, promotions, all while you're working, which has made your lifestyle awesome. And you've done a great job of doing that. You've been able to survive and do all those things. But how do you survive and what do you need when you retire? You need a steady paycheck and that comes from your retirement income. So today we're going to talk about do you have enough or will you have enough income in retirement? So let's dive into today's content and talk about generating enough income in retirement.

Speaker 1:
So what do I mean by this? Why is income important? I'm talking about guaranteed income in retirement. Guaranteed income. What are your guaranteed income streams? We're going to talk about that here in a second. But the number one fear amongst those nearing or entering retirement is running out of money. Number one, fear is not having enough money in retirement. So if we're talking about not having enough money, it's not not having enough nest egg, not having enough balance in your TSP. It's not when you utilize that money or utilize all of your retirement income sources, it's not having enough money and running out of money in retirement, not having enough guaranteed lifetime income in retirement. Number two, fear is death. Number two, fear. So people are more afraid of dying than they are of running out of money or sorry, more afraid of running out of money in retirement than they are dying in retirement. Why? Because when you when you're dead, you don't need income anymore. So if you want to live a long time in retirement, you're going to have to have the money that's going to get you there. You're going to have to have the income streams that are going to add up to the number you need on a monthly basis every single month for the rest of your retirement.

Speaker 1:
And if you retire at age 60 and you live to 90, that's 30 years. So if you're not planning for guaranteed lifetime income in retirement, that money can run out. You're like, well, I've got enough for ten years. So I hope, I don't know, you want to live longer in retirement. You want to make sure that that money is going to be there every month and nothing's going to fall off, nothing's going to drop off. You're going to have plenty of income. Now, how do you get to that point? Take advantage of the time value of money all the time that you have while you're working. So if you're a young person listening to this episode today and you just got hired and this is day one of your federal employment, congratulations. I'm glad you found the federal retirement show, but take advantage of all that time that you have to save properly for retirement. And we'll get to the end of talking to an expert to ensure that's the case, that you're saving enough so that when you convert that to income in retirement, you're going to have enough. Do you have enough or will you have enough guaranteed income? That's the thing. Are you saving enough? But ultimately, will you have enough guaranteed lifetime income when you do retire? And that's that retirement paycheck, that money that's coming every month. It will not stop until something happens to you, until you pass.

Speaker 1:
But in retirement, we go back to the number one fear is running out of money or not having enough money in retirement. And how do we solve that problem? How do we take care of that fear? We alleviate that pain point you 100% make sure that you're going to have enough guaranteed lifetime income in retirement. Once you satisfy that need, the rest is gravy. The rest is bonus money. There's a person out there, an expert in retirement calls that the play check in retirement, where the retirement income is the paycheck. We want to 100% is that answer. I ask a question a lot of times when I'm giving a presentation in front of federal employees. Just did it this past week. Are you 100% sure you're going to have a great retirement, or do you have some doubt. I want your answer to be 100%. Head shaking in the room. Yes, I'm 100% sure I can guarantee it. I plan properly, I've done it. The next slide in my presentation is. I do not want you to have or live a. I hope so retirement. It's not I hope so when I ask that question about are you 100% sure, I hope so, I hope I'm going to have a great retirement. No, because that that is hope is not a strategy. Hope is not a plan. But taking the time that you have as a federal government employee to plan properly.

Speaker 1:
That's a strategy. Doing something about it, putting an initiative, putting a plan in place, putting a, an overall financial strategy or concept of that is a plan and sticking to it, being diligent and dedicated. It takes an effort. It doesn't happen by by magic, by happenstance. You have to take the time to plan and execute that plan. So I said, number one fear, again, I'm going to reiterate, is living without money, running out of money, or not having enough guaranteed lifetime income. And just to show you, this is not my opinion, there's a there's so many articles out there that talk about it. And we've talked about this before. I'm bringing this back to the federal retirement show, because there's an article in Forbes that said almost half of American households, half will run short of money and retire if they stop working at age 65. At some point, you want to stop and stop working every time. And sometimes when I do these benefit reviews and I go through the numbers, the expectation that they had of what they're going to make in retirement is not there. I can't make something out of nothing. So when I run through the reports and I show you the number one or the number of income that you're going to have, the amount of income that you're going to have in retirement. I've gotten this answer. Well, I can't live on that.

Speaker 1:
That's not going to be enough. What do I do? You can either lessen your lifestyle or you're going to be forced to continue to work. And that's why it says, if you want to stop working at some point, if you want to stop working at 65, or if you do stop working at 65, there's a chance that 50% of you are going to not have enough money in retirement. So I would want you to be at the 100% sure you're gonna have a great retirement with the amount of money that you need to make. So let's not be one of those statistics. Let's be one of the people that planned properly and is never going to run out of money because you've set it in place. You've planned from day one. Morningstar projects 45% of Americans won't be able to cover their projected retirement spending. That is with the part that we're talking about, about having enough income in retirement to pay your bills, to live your lifestyle. Then the additional money, the bonus money, the gravy is going to be there if you over planned, that's a great problem to have a great situation to be in. There was an article by Allianz Life, who's a worldwide insurance company. Nearly two thirds of Americans harboring a great fear of running out of money other than dying. Right. So if I said the number one fear of retirees is death, uh, sorry.

Speaker 1:
It's not death. I gotta go. The number one fear for retirees is not death. Not dying too soon. It's outliving their money, not having enough money in retirement. Key concerns. Right. Why people would run out of money if they didn't prepare properly. Inflation. Your dollar is not going as far. Social security uncertainty. Are you going to be getting less money in the future? You know future taxes. Which way are taxes going up in retirement or in the future? Up, down or staying the same? Most people I talked to will say taxes are going to be going up. I don't have a crystal ball. I don't know when or what will happen. I have not heard a single federal employee in any of the presentations that I've given, that I've given those three choices, say they think taxes are going down. So if taxes go up in the future, your bottom line, your take home is going to go with it a little bit. So understand these are concerns. Are you preparing well enough? Are you over preparing for the what ifs. And that way you can ensure still, even if these things happen, even if inflation occurs, even if your Social Security isn't as much as you thought. Even if taxes take a little too much of your retirement pay from you, you're going to be fine because you've over prepared and you're going to have enough guaranteed lifetime income to take you through that.

Speaker 1:
Now, what are your guaranteed lifetime income sources? What makes up your lifetime income as a federal retiree? First of all, it's your fers, right? Your pension. This is simple enough that you have a three part plan. First one is your fers your pension. You get credit for the time that you have. It's based on your high three. We've gone through that calculation at time of times. If you don't know that calculation, go back to our previous episodes. You can see how the Fers pension is calculated. Number two, Social Security. Now, what you're going to get from Social Security depends upon the age at which you take it. But you're eligible to have Social Security at age 62. And the longest. You should wait. Most people shouldn't wait any longer than that. The max benefit you're going to get is at age 70, and a lot of folks are going to have a a full retirement age in Social Security between age 66 and 67. But just understand this is part two, and number three is going to be TSP, your thrift savings plan. This is where you decide how much money you want to put aside the investment strategies that you have within TSP. And then in the end, you can convert a portion or all of that to a guaranteed lifetime income stream, just like your pension and Social Security to 100% ensure you're going to have enough in retirement.

Speaker 1:
Maybe that's not even enough. Maybe you run the projections and you're like, I need more than that. What do I do? You're going to have to save more. You're gonna have to plan properly. You have to talk to somebody to ensure that you're set up. This is very simple because how much are you going to need in retirement? Do you need 100% replacement of income, meaning the money you were making before you left service? You need to make 100% of that. Maybe you're in the Lucky's that you don't need as much. You need 90%, 80% or less. I don't know, but that's where you need to plan. Have an idea. Have a concept. Do not just hope that it works out. Hope is not a strategy. It's not a solution for you. So to know properly, if you're on the right track, you need to answer these questions. Now, how do you ensure, how do you ensure you'll have enough and not run out? You've got to get a benefits review done. You've got to get a checkup of your situation. You got to take a deeper dive. And when we do that, my goal, if it's if it's running a report with me or one of our experts across the country, you want to see the numbers in black and white, and maybe you're clapping your hands. Maybe you've got a thumbs up, maybe you're smiling, you're like, man, I'm on track. This is great.

Speaker 1:
But what if you're not? What if you've got some time left and you're like, I'm not on the right track. This is not where I want to be. You can change that. You can alter what's going to happen. You can decide to save more. You can create a plan. You can make the adjustments that are necessary to end up where you want to be. I'll use a baseball analogy that's early on in the season. What if players right now are hitting below the Mendoza line? They're hitting under 200. For those baseball fans out there, this is not a good place to be. As a former baseball player, I did not want to see a 100 at the start of my average. But what if you did something like. And now you've been doing it for a little bit, and I'm in this situation. I'm not where I want to be. I need to make an adjustment. I need to talk to a coach. I need to consult with somebody to get back on track. What's going wrong? How can I fix this? What can I do? What extra work can be done to get back on track and into a positive scenario where I want to be hit my goals. It's the same with your situation. If you're not where you want to be. First of all, you may not even know. And that's a big thing that we say with federal employees.

Speaker 1:
You don't know what you don't know. So if we can change that, we can do a review. You can get all of your questions answered. Have a very good understanding of your benefits situation, your retirement situation. Then you can see am I on the right track? If not, you can make the adjustment. You've talked to an expert. What do I do? Create a plan. Put it into action. Be diligent and obedient and dedicated to that plan so that in the end, you'll end up where you want to be. You'll hit your goals. And if you are on the right track, you'll get a thumbs up, a pat on the back, and we'll tell you to go on your way. And we'll see you next year as we do another checkup and just ensure that you're still on the right path. You don't have to be redirected. That's what we do. That's why we help better employees like you, because we want to make sure 100% that you are set up properly. But the answer to that question are you 100% sure you're going to have a great retirement? Or do you have some doubt? I want that answer to be yes. I'm 100% sure I've taken care of it. It is a guarantee when I retire, I'm set up properly. Awesome. But not everybody is that lucky, unfortunately. So we want to have you be at 100% and 100% sure you're going to have the retirement you want.

Speaker 1:
So I hope you appreciated this episode. I hope you enjoyed the content here. Um, this is all stemming from conversations that I've had with federal employees just like you. And a lot of episodes that we've had are based on conversations and questions and situations. Because I figure if that helped the one person I was talking to at that time, then it's going to help other federal employees. There's a high, high chance that other federal employees out there are going through the exact same thing and can use this information. So if you've liked our content here, do all of the other episodes. We've got over 170 of them now, and you can go back and view every single one of them. And probably the questions that you have are going to be answered. If not, reach out to us. Let us know if there's a topic that I want to hear about that you guys aren't covered. Go to our website, Federal retirement show.com. Fill out the form. One of our experts. If it's not me personally, we'll be reaching out to go over your benefits and answer your question. Produce these reports for you so you can see exactly where you stand. And if you're heading in the right direction. So like I said before, we're very happy that you're here. Um, again, my name is Val Majewski with American Benefits Exchange. You've been watching the Federal Retirement Show, and I look forward to seeing you on a future episode.

Speaker 2:
You check your account balance and realize you have no idea where your last paycheck actually went. Bills are piling up. That nagging anxiety kicks in and you wonder, how did I even get here? If that hits too close to home, you're far from alone. And April just happens to be the one month of the year the entire country stops to do something about it. I'm Jim Perabo here for the Retirement Radio Network powered by Amaryllis.

Speaker 1:
Financial literacy is so important because it's what you're going to base the rest of your life on resource wise.

Speaker 2:
John Ford of CNBC, bringing up an obvious but important pointer about money and finances. April is National Financial Literacy Month. It started back in the early 2000, when Congress realized too many Americans were leaving school without the first clue about how to manage a paycheck, a credit card, or a financial future. Fast forward to 2026, and the problem hasn't gone away. In fact, nearly half of U.S. adults still give themselves a C-minus or worse, on money knowledge. And as CNBC's Bertha Coombs tells us, one of the best investments you can give yourself learning how to manage your money.

Speaker 3:
You know, we all work very hard for our money, and we should learn how to make our money work for us. And I think if you invest in knowing how to manage your money, that it will pay off as you get older, it'll pay off in your life.

Speaker 2:
It's about knowing enough to stop making the same expensive mistakes and finally starting to make decisions that move your financial life forward. So here are five quick financial wins you can achieve this month. Review one monthly bill and see if you can cut, renegotiate or cancel it. Follow that with pulling up your free credit report and spot any surprises. Next, set one small savings goal. Even 20 bucks a paycheck counts. Don't forget to learn just one new money concept, like how compound interest actually works for you instead of against you. And maybe the most powerful one. Sit down with your partner and or your kids and have one honest conversation about money. No judgment. Just a real talk. While Financial Literacy Month won't fix every financial bump in the road you may have, it can be the month you finally stop feeling helpless about money and start feeling in control. So pick one thing. Do it this week, because the best time to get smarter with your money was 20 years ago. The second best time right now in April for the retirement Radio network powered by Amora Life. I'm Jim.

Speaker 4:
Well, the cost of living these days is high. As you probably know, just about every time you step into the aisle of the grocery store or pull up to a gas pump these days. But it's, um, right now in the middle of America Saves week. And so what we're going to talk about today is how in the world you can actually prioritize saving when things are so expensive out there. And joining me now to talk more about that is Shikha Narula, who is the head of consumer deposit products transformation and rewards at Bank of America. Shikha, thanks so much. Nice to talk to you again.

Speaker 5:
Nice to talk to you again, Matt.

Speaker 4:
It really is kind of a tough thing for a lot of folks. I think to sort of wrap their head around these days is like, well, you know, everything's so expensive. I feel like as soon as the money comes in, it's got to go right back out the door. Um, I know you all do, uh, you know, surveys and ask folks kind of how they're feeling, get the, get the temperature of, of things as far as saving and spending go, uh, on a pretty regular basis here. What are the latest numbers show, first of all, about how people are feeling right now and kind of what they're prioritizing in their financial lives.

Speaker 6:
Yeah. So according to our Bank of America data, 52% of people are listing savings as their top priority. Um, yet, you know, 72% expect inflation or the high cost of living will impact their financing. So as consumers, um, you know, struggle with that, what I would say is automatic automating your savings can help. There are tools that do the work for you, whether it's Bank of America's Keep the Change program that automatically rounds your recent debit purchases up to the nearest dollar and transfers the change from your checking to savings. I think that's a great way to automate your savings. I think the other thing you can do is set up recurring automatic transfers from your checking to your savings account, so the money moves before you have a chance to spend it. So, you know, there are ways, um, consumers can help themselves by paying themselves first automatically.

Speaker 4:
Yeah, I love that, you know, automating things is so helpful. I know in my everyday life as well, just if I don't, if I don't see it happen, I don't have to think about it happening. It just kind of happens in the background. It's so, so helpful. And, you know, I mean, even if, you know, people are, are struggling today to, you know, just with high cost of living and inflation and, and all of that, um, they may think that, well, if I, if I prioritize saving, if I cut back on my spending, if I do all these things, it means that I can't, you know, have any fun in life. I can't, I can't have treat myself every once in a while. How can people sort of strike that balance?

Speaker 6:
Yeah, I think it's about cutting back, not completely cutting out. So nearly half of Americans say they tend to prioritize spending on day to day treats and experiences over saving for the future, according to our Bank of America data. So the desire for those small joys isn't going away. And that's okay. So instead of cutting them entirely, scale them back intentionally. Uh, maybe opt out, opt for lower cost version of something that you love. Or maybe it's a it's a latte out on Fridays instead of daily. Um, the other thing I would say is define what brings you joy. So start by reviewing your past spending to identify your joy spending categories. It could be, you know, maybe a specific hobby, it could be dinner with loved ones. Um, and then use the 50, 30, 20 budgeting framework. So 50% of your after tax income to cover your needs like rent, uh, put away 30% towards things that you want, including those joy spending categories, the dinner out with loved ones, maybe. Um, and then 20% needs to be directed towards spending. So as you're consciously directing, uh, that 30% towards things that bring you happiness, I think that will help balance things out, um, with long term savings goals.

Speaker 4:
Yeah, prioritizing there. And, you know, I mean, when people are thinking about saving, you know, maybe they're thinking about saving for, a big purchase or a big event or something like that. Or maybe they're thinking about just building up an emergency fund over a period of time. But if they're saving for something big like that, maybe, you know, emergency fund, which I know that a lot of folks say about six months of expenses is what should go into an emergency fund. So that's, that's a big goal to have, but also something like a, maybe buying a home or saving up for a wedding or whatever. How can they break those things down into maybe smaller, more achievable steps? So, so it doesn't seem so daunting.

Speaker 6:
Yeah. I think savings for those bigger moments or those bigger goals, it can feel a lot more manageable if you break it into smaller steps. So maybe split it. Maybe it's that down payment towards your home or that emergency fund, maybe split it out in 5 or 6 chunks, and then set milestones for each of those chunks. And as you hit those milestones, make it a point to celebrate. So that's one way you can try and stay on track. Give yourself a deadline. Set clear deadlines for both those milestones, as well as the overall goals, and maybe try and link each of these goals to a dedicated savings account. So that way you're keeping money separate from your checking, and that removes the temptation of spending it. And, you know, hopefully then you start to see that progress that you're making towards each one of those smaller chunks, and then make small adjustments which can add up along the way. So free up the extra cash for your goals by taking a look at some of the smaller, easier to overlook expenses. Like maybe you have subscriptions that you don't use anymore, or maybe you know you're using rideshare for short distances. Maybe if you were to scale back on some of that, it can help you redirect maybe even a small, modest amount each month towards those, those larger goals and see yourself make progress.

Speaker 4:
Yeah, those little things definitely do add up over time. That is for sure. Well, just about time to wrap things up here, but anything else you wanted to add, maybe where folks can learn more or get more information about America Saves Week or some some tips there where, um, you know, they can just learn more about what we've been talking about.

Speaker 6:
Absolutely. I think there's a number of digital tools that are out there. Bank of America customers can access Lifeplan, which is a great way for them, um, to, you know, look at the personalized, um, financial goals and track progress, uh, as part of America Saves week. Um, there's a lot of information that's out there. Consumers can go to America saves.org and learn more about America Saves week. Listeners can also visit Better Money habits.com to get more financial guidance and savings advice that we discussed today. Um, so those are some of the resources that I would point listeners to.

Speaker 4:
Very good. Chicken Narula is the head of consumer deposit products transformation and rewards at Bank of America. Shikha, thanks once again. Really do appreciate your time.

Speaker 6:
Absolutely. Thank you for having me.

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