Episode 58: Am I Ready to Retire?
Segment 1 (Show Open):
HELLO Lower Alabama! Hello Gulf Coast! Welcome in. Welcome to Coasting in Retirement! That’s. Right. Thanks for joining us today, we have another great show coming your way! Josh Null here, I’m joined by co-host and show sponsor Jay Stubbs with Providence Partners. Jay, how you doing buddy?
Listeners: Jay and I are here to discuss financial topics relevant to those of you in or near retirement, living your best life along our part of the Gulf Coast. Here’s what we’ve got in store for you today: First segment – deep dive on our topic of the day. 2nd segment - at about 30 minutes past the hour - “Headlines of the Week”. Then at roughly 50 minutes past the hour, stick around for our 3rd segment, we call it” Josh’s Crystal Ball and Big Mouth”. So buckle up, we’ve got a lot to get to!
Quick background on me for those new to the show. Again, my name is Josh Null, I am a fee-based financial advisor, I hold my FINRA Series 65 securities license, and I am the owner of Gulf Coast Financial Advisors, we are an independent investment management and financial planning firm with offices in Fairhope, Orange Beach, and Mobile! You can find more information on me and the team at Gulf Coast Financial Advisors by visiting our website gulfcoastfa.com, or feel free to give us a call at 251-327-2124. If you missed that contact info, get a pen and pad ready because we will repeat our contact info several times throughout the show!
Alright, let’s get to our show. Jay, as financial advisors, would you agree that one of our most important jobs is to help our clients make the transition from working to retirement? And of course the biggest competent of that is if a client is financially able to retire. Our role is to use math, our various financial planning tools and our experience to help clients put all of the pieces of the puzzle together to figure out if they can retire, and if so, what retirement looks like financially. So listeners today Jay and I are going to discuss this very important question that many of you probably have asked: How Do I Know When I Am Financially Ready to Retire?
Let’s have a back and forth conversation using this outline as our framework:
The "Magic Number" Myth vs. Reality:
Debunking rules of thumb (e.g., 25x expenses, $1M).
Key Indicators of Financial Readiness:
Covering Expenses: Can your guaranteed income (Social Security, pension) plus safe withdrawal rates from investments cover your desired retirement expenses? Distinguish between essential and discretionary spending.
Debt Elimination: The impact of carrying mortgage, credit card, or other significant debt into retirement.
Healthcare Preparedness: Have you planned for out-of-pocket medical costs and potentially long-term care? (Connects to previous episode).
Emergency Fund/Cash Reserves: Having easily accessible funds for unexpected expenses.
Inflation Planning: How will inflation impact your purchasing power over a 20-30+ year retirement?
Market Volatility & Withdrawal Strategy: Have you considered how market downturns could affect your withdrawal strategy? The "safe withdrawal rate" concept.
Beyond the Numbers - Lifestyle & Non-Financial Readiness:
What will you do in retirement? (Hobbies, volunteering, travel).
Social connections and well-being.
Staying active and engaged.
The Role of a Financial Advisor and assembling your Financial Team (FA, attorney, CPA, ins agent, etc): How an advisor can work with your other financial professionals to assess readiness, run projections, and build a sustainable income plan.
Listeners, if you’ve liked what you’ve heard so far and want to start the conversation about your own retirement goals and dreams, we encourage you to reach out to us. You can call us at 251-327-2124, or find us on our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. We have several meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, or a 30 minute zoom, or a 1 hour in-person meeting at any of our 3 office locations. You can find GCFA offices in downtown Fairhope, or Orange Beach just down the road from the Wharf, or in Mobile off Dauphin St and I-65. Reach out to us - we would love to meet you!
Alright folks, coming up next - There’s always a lot going on in the world! Particularly the world of finance, investments and money. Every week we scour the internet for financial articles that have important information for those of you in or near retirement. Join us after the break to hear Jay and I discuss this week’s relevant headlines in our “News Headlines of the Week” segment. Stay tuned!
Segment 2 - News of the Week:
“Welcome back to Coasting in Retirement, your host Josh Null here! As we discussed before the break, every week we scour the internet for financial articles that pertain to those of you in or near retirement. Our job is to help you all understand how these headlines impact you, especially when it comes to your money! Note – if you want to read our referenced articles yourself, we also include the links in our show transcript, which you can find on our website gulfcoastfa.com under the podcast tab. Alright Jay, without further adieu, let’s get at with the Headlines of the Week:
1. Alright Jay, first up is a recent article from CBS News titled “Americans are filing for Social Security at record rates amid fears about its future”. This article states that the amount of people filing for social security increased by 17% this past May compared to May 2024, and that projections are an overall increase of 15% for 2025 compared to 2024. Outside of the speculation about retirees claiming benefits b/c of long term valid fears, the article also points to a couple of different reasons for the dramatic increase in filings, including the Baby Boomer generation hitting what is called the "peak 65," the Social Security Fairness Act, and recent mailers the agency sent to spouses and surviving spouses alerting them that they could receive a higher benefit if they use their own record to claim benefits. (Social Security allows people to receive payments based on their spouse's earnings starting at age 62.) But it also lists the downside to filing early, particularly the average of 30% in benefits a retiree leaves on the table if they file at age 62 instead of age 67. Social Security is a major topic is every retirement conversation I have, so let’s discuss this, including the action that our team can take to help pre-retirees make the best decision for their situation.
https://www.cbsnews.com/news/social-security-early-filing-2025-trump-musk-doge-cuts/
2. Next up is an organization that Jay is a few years too young to join but based on my recent birthday, won’t leave me alone with emails and marketing flyers: AARP. Their article is titled “6 Financial Mistakes You’ll Regret When You’re Older”. There’s some obvious points made, such as not saving enough for retirement and listening to bad financial advice, but I thought it was interesting that this article also claims that 3 of the biggest mistakes pre-retirees make are not participating in the stock market, claiming social security too early, and something in your wheelhouse Jay, ignoring long term care planning. This article also states you shouldn’t spoil your kids and grandkids but we’ll ignore that one for this discussion. What’s your thoughts?
https://www.aarp.org/money/retirement/financial-mistakes-retirement/
3. Our third article comes to us from a source I typically trust, Kiplinger. I picked this article because we’ve had a chance to discuss WHY it’s important to include long term care planning in your retirement plan, but we haven’t had a chance to discuss HOW that planning may work. Kiplinger has a recent article titled “How Long-Term Care Insurance Has Become More Flexible”. This article discusses the pros and cons of self-funding your long term care costs versus buying coverage, and goes briefly into the history of how LTC coverage options have evolved over the years, particularly the last 10-15 years. Now this is a subject that you could discuss with half your brains tied behind your back and blindfolded Jay, so let me simply ask you to walk our listeners thru the different options that folks have to protect themselves:
https://www.kiplinger.com/retirement/how-long-term-care-insurance-has-become-more-flexible
4. I’m going to zag a little for this last article. So far in this episode, our discussion has been around knowing if you’re financially ready to retire and protecting yourself against some of the mistakes that can destroy your wealth in retirement. But what if you’re a mature business owner with a successful small business that has a least 3 to 5 years until you retire, or more, and you have 2 problems: one, you’re getting killed on taxes every year because of your success, and two, you are concerned that don’t have enough money in retirement accounts to replace your current significant cash flow. Enter Cash Balance Plans. The Journal of Accountancy has an article titled “The rise of the cash balance pension plan” that goes into great detail about how these plans work. Jay, you and I both have first hand experience with these types of plans, so let’s discuss the basics for those of you out there that might be a fit:
https://www.journalofaccountancy.com/issues/2023/jan/rise-of-the-cash-balance-pension-plan/
Listeners, I hope you learned something from our discussion around these recent financial headlines, all of this matters to your money! Speaking of money, if you would like to start the conversation with us about your investments and retirement planning, I encourage you to pick up the phone and give us a call at 251-327-2124, or visit our website gulfcoastfa.com and click on the blue button in the upper right hand corner to set an introductory phone conversation, or a zoom, or, better yet, an in-person consultation at any of our 3 offices in downtown Fairhope, Orange Beach or Mobile.
Alright folks, coming up next: Josh’s Crystal Ball and Big Mouth. What have been some of my predictions? Have I been right? Was I ever wrong? How wrong? What do I think is going to affect investors in the near future, or maybe the distant future? We talk about all of these things and poke a little fun at my big mouth. Stay tuned!
Segment 3 – Josh’s Crystal Ball and Big Mouth:
Welcome back! Your host Josh Null here, alongside guest co-host Jay Stubbs of Providence Partners. So, I am opinionated, I have strong opinions at times, I would say a radio show host that isn’t probably wouldn’t be very interesting to listen to. And I am paid in my profession to offer professional guidance and opinions to my clients, otherwise what use am I? Just replace me with AI. I like making predictions, and while I usually proved right, there are times I swing and I miss. Want to hear me eat a little crow? Then let’s get at with Josh’s Crystal Ball and Big Mouth.
So Jay…want to discuss the recent dust up between Musk and Trump? Lol. Assuming NO, so let’s pivot to another prediction. Let me set the stage first. On our last episode, my son Payton and I discussed the future of everything, including artificial intelligence, or AI for short. It was fascinating to get a younger generations opinion on AI. And I think it’s fair to say that both you and I have been open minded when it comes to using AI, particularly you around the written word, correct? So I think you’ll like this – I asked AI, specifically Google’s version called Gemini – to give me a financial prediction around long term care insurance. It came back with an answer within seconds, and I’ve got to say, it seems pretty rational. Gemini predicts that traditional long term care insurance will become a niche product serving mostly affluent individuals with uninsurable health risks while the middle class and upper middle class will overwhelmingly pick hybrid LTC policies for their coverage. What say you?
Prediction: "Over the next 5-10 years, the traditional stand-alone Long-Term Care (LTC) insurance market will continue to shrink, becoming a niche product primarily serving affluent individuals with significant uninsurable health risks, while hybrid life insurance or annuity policies with LTC riders will become the dominant solution for middle to upper-middle-class retirees seeking long-term care protection."
Reasoning and Underlying Assumptions:
1. Past Challenges of Traditional LTC:
Unstable Premiums: Many traditional LTC policies sold decades ago underestimated the cost of care and longevity, leading to significant, multiple premium increases for policyholders. This created public distrust and regulatory scrutiny.
"Use It or Lose It" Perception: Consumers disliked the idea of paying premiums for decades and potentially getting nothing back if they never needed care (or died before needing it).
Underwriting Strictness: Traditional LTC underwriting became very stringent due to past losses, making it difficult for many people to qualify.
Limited Insurer Participation: Many major insurers exited the stand-alone LTC market or severely curtailed their offerings due to profitability challenges.
2. Current Appeal and Growth of Hybrid Policies:
Guaranteed Premiums: Most hybrid policies come with guaranteed level premiums, addressing a major pain point of traditional policies.
"Return of Premium" Concept: If LTC benefits are not used, the policy pays out a death benefit (from the life insurance component) or has a cash value (from the annuity component). This overcomes the "use it or lose it" concern, making them more attractive to consumers.
Simpler Underwriting: While still requiring health underwriting, many hybrid policies have simpler or less rigorous underwriting processes compared to traditional LTC, especially for lower benefit amounts.
Tax Advantages: Both life insurance and annuities offer tax-deferred growth, and LTC benefits from these policies can often be received tax-free under current tax law.
Flexibility: Hybrids offer more flexibility in how benefits are used (home care, assisted living, nursing home) and often have options for a full return of premium if the policy is surrendered.
3. Future Drivers Supporting the Prediction:
Aging Demographics: The demand for long-term care will continue to grow as the Baby Boomer generation ages, creating a sustained need for solutions.
Government Role: Medicare's limitations for custodial care and Medicaid's "spend-down" requirements will remain, pushing individuals to self-fund or seek private insurance.
Consumer Preference: The preference for guaranteed premiums and the "use it or lose it" aversion will persist, making hybrids the preferred option.
Advisor Adoption: As hybrid products become more robust and standardized, financial advisors will become more comfortable recommending them as a core component of retirement planning.
Innovation in Hybrid Products: Insurers will continue to refine hybrid offerings, potentially adding more flexible benefit triggers or greater customization.
4. Why Traditional LTC Becomes Niche: It will likely remain for those who can't qualify for hybrid products due to specific health conditions or who need very high, specialized levels of traditional, pure long-term care coverage where the death benefit component is less important than maximizing LTC coverage per premium dollar.
Listeners, I hoped you enjoyed a little behind the scenes commentary on how Jay and I form our opinions, and that as fathers and husbands, we are human, and we do pay attention to broad world events. We invite you, one last time, if you would like to start the conversation about your own retirement plans and dreams, then give us a call at 251-327-2124, or visit our website gulfcoastfa.com. One our site, click on the blue button in the upper right-hand corner to set up a meeting on my calendar. We have several meeting choices for your convenience – it can be as simple as a 15-minute introductory phone call, a 30 minute zoom, or a 1 hour in-person meeting at any of our 3 office locations – downtown Fairhope, Orange Beach of Canal Rd, or Mobile near the intersection of Dauphin St and I-65. Reach out to us - we would love to meet you!
Folks, that is it for this week! I want to give a huge thank you to my guest co-host Jay Stubbs, thank you to our show sponsor, Jay’s business Providence Partners, thank you to our two radio stations, FM Talk 106.5 out of Mobile and WHEP 92.5 FM in Foley, many thanks to the provider of our show music, local band Sloth Racer, huge thank to the show producer, my son Payton Null, and as always my sincere appreciation for all of your out there that have been listening and joining us on this journey. We would love to be a part of your journey as well! Until we talk again, have a wonderful and productive week. This has been Coasting in Retirement with Josh Null!
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