Retirement Questions from Office Hours, Ep # 137 

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By Benjamin Brandt CFP®, RICP® and Benjamin Brandt CFP®. Discovered by Player FM and our community — copyright is owned by the publisher, not Player FM, and audio is streamed directly from their servers. Hit the Subscribe button to track updates in Player FM, or paste the feed URL into other podcast apps.

On this episode of Retirement Starts Today I want to share with you the retirement questions I received through my Friday Office Hours. Office Hours is an online space where I am available to answer any financial questions that come to mind. Over the past 2 weeks, we’ve had a great turn out with about 50 people joining each session. If you want to come to Office Hours make sure you are signed up for my Every Day is Saturday newsletter to get the invite. The next Office Hours session is on Friday, May 1 at 10:30 am CDT. Listen in to hear these retirement questions from my Office Hours session on April 24, 2020.

Outline of This Episode
  • [1:22] The solvency of the PBGC
  • [7:00] Do I still recommend delaying Social Security until age 70?
  • [15:34] How will the new money being pumped into the economy affect inflation?
  • [18:15] Tax diversification
  • [22:14] Should deflation be a worry?
What do I think about the solvency of the PBGC?

The PBGC or the Pension Benefit Guarantee Corporation is a private insurance company that insures pensions. This corporation is a safety net for private pension plans. Many people are choosing to cash out their pensions in favor of a lump sum. The lump-sum payments are artificially high right now due to low interest rates which and this fact has put extra stress on the PBGC. Whether or not the PBGC remains solvent should not affect your decision to take a lump sum or to keep your pension.

How you should decide whether to take a lump-sum payment or a pension

The solvency of the PBGC shouldn’t play much of a role in your decision to take a lump sum or an annuity, instead, you should first consider other factors. First, consider your lifestyle and then do the math, after you have done both of these things then you can factor in whether you think the PBGC will remain solvent. You should really think about how much flexibility you need with your money. If you need a lot of flexibility the lump sum is the right choice for you. But if you are risk-averse then the annuity is your best bet. You’ll also want to factor in your own longevity and how much you value simplicity. Next, you’ll want to factor in the math. Listen in to hear all the factors that you should consider when making this decision.

How will the new money being pumped into the economy affect inflation?

We have been printing money for years and that should have led to inflation but it hasn’t yet. This also should have led to high gold prices but that hasn’t happened either. None of the things are happening the way the textbooks told us they would. This may be due to technological advances leading to deflation or it could be because the dollar is the reserve currency of the world. Learn how to outgrow inflation by listening in.

A strategy for tax diversification

In an ideal world, you would start your retirement with 30% of your assets in a Roth IRA, 30% in tax-deferred accounts like IRAs, and the last 30% in a brokerage account. This would give you a lot of flexibility to live life how you really want. Unfortunately, most of us don’t have our assets perfectly distributed so we need to consider how we can diversify our assets before we reach age 72. It’s important to figure out what your RMD’s will be and planning your taxes. Find out about tax diversification and the answers to many other questions on this episode of Retirement Starts Today.

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