Can You Really Retire? 4 Warning Signs You’re Not Ready

In this episode of Your Retirement Guide, George Jameson, CFP® and founder of Capital Wealth Group,  flips the script and shares four key warning signs that you may not be ready to retire. If you're wondering “Can I really retire?”—this episode is a must-listen. Don’t miss these critical red flags that could signal it’s time to reassess your retirement readiness. 

 Welcome to "The Retirement Guide" Podcast! I'm your host George Jameson, owner of Capital Wealth Group, a Fee Only Advisory firm. Whether you’re nearing retirement or already retired, Join me each week as we explore the world of retirement planning and equip you with the knowledge and tools you need for a successful retirement.

Thank you for tuning in to this episode of The Retirement Guide. If you enjoyed this episode, please subscribe & leave a review. If you'd like a free 30-minute retirement review, visit our website at www.capitalwealthplan.com to schedule.

This is for education only.It is not tax, legal, or investment advice. Before  acting on any information consult your tax, legal, or investment advisor.

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Transcript

George Jameson: 0:18

Welcome back to Your Retirement Guide podcast. I'm George Jameson, certified financial planner and founder of Capital Wealth Group. Many of us in our fifties and sixties want to know when we can retire. Today's episode sort of flips the script instead of asking, can I retire? Let's ask what habits and behaviors trip up those who shouldn't retire, at least not yet. Here's the truth. You can have a hefty nest egg and still struggle if certain financial behaviors aren't in check. In this episode, we'll explore four common red flags I see in clients who aren't quite ready to retire, number one, credit card balances. You might be thinking, I pay my minimum payment each month. How bad can it be? But constantly carrying a credit card balance signals a behavior that clashes with the retirees mindset. In retirement, every dollar counts. You are living off a fixed income and high interest debt can erode your purchasing power faster than inflation. If you walk into retirement carrying large credit card debts, that behavior needs to be in the rear view mirror. Now don't get me wrong, I recommend using credit cards, especially over debit cards due to security and fraud protection, but you definitely don't want to carry a balance and you wanna pay them off in full each month. So if this is you, one action step can be, make sure you pay off all credit card balances before setting your retirement date. If you're not there yet, consider a debt snowball. And absolutely pay off those credit card debts before retirement. And number two, having a car or truck loan in retirement. Now, I'm not totally against financing a car after all. I prefer credit card for purchases too, for the fraud protection. But rolling a car loan into retirement, to me, that's a red flag. I've seen clients in their late fifties still making. 500 to over a thousand dollars monthly auto payments, and it raises questions. Are you buying too expensive cars? Are you not keeping vehicles long enough or are you just comfortable carrying debt because your portfolio covers it? Even a 0% auto loan can backfire. Sure, your money might be earning seven or 8% in the market, but that comes with market risk. A car depreciates the moment you drive it off the lot so in retirement, your goal should be no debt, so pay off that loan before retirement and then going forward. There's nothing wrong with buying a reliable, used three to 5-year-old vehicle outright. So what's the action item? Plan to own your vehicles debt-free by your retirement date. Extend the life of your cars by taking care of them. Try to reduce turnover and reallocate that monthly payment toward living expenses or travel or whatever hobbies you enjoy doing. And now number three, mortgages. Ah, this is a big one. Your home I'd estimate about 30% of the people I talk to still have a mortgage at retirement now first having a low rate mortgage. Can make sense if you currently have a two and a half percent mortgage rate and you can get four or 5% in some type of guaranteed investment that arbitrage can work. But here's the catch. When you stop earning a paycheck, you're relying on distributions from your portfolio to make the mortgage payment, and that mortgage payment becomes a non-negotiable expense. When I review cash flows, I ask, can you write a check today to pay off the mortgage? If the answer is yes, but I don't want to because my payment is low and have a very low interest rate. In this case, it may be okay to carry a mortgage in retirement. However, I prefer clients go into retirement mortgage free. It's often more of a mindset and gives you peace of mind. It's mentally freeing and simplifies your budget. No lender to contact, no escrow to track just you and your retirement income. So what's the action item here? If your mortgage rate is above 3.5%, consider paying it off before retirement. If it's below 3.5%, it's okay to carry a mortgage. And then number four, not having a budget. Perhaps the most surprising is a lack of a budget going into retirement. You would think someone with a seven figure portfolio would have every dollar tracked, but so many people tell me, I'm not sure what I spend. I guess it could be around 6,000, 7,000, 8,000 a month. Not really sure that vague, somewhere between attitude may be okay for some, but in retirement, strongly suggest getting a more precise figure. In retirement, your cashflow flips. There's no more saving for retirement. Now you're spending, and more importantly, you have more time to spend it between hobbies, travel, kids, grandkids, and so on. So if you don't plan, you could overshoot. I challenge clients to build a budget spreadsheet. Categorizing current expenses then adjust for retirement changes before they retire. Here's what typically drops 401k. Contributions obviously go away. Payroll taxes, drop kids' tuition, but what often rises is healthcare cost, home maintenance, cost, and then all those leisure and travel activities. So what's the action step or action item here? Draft a detailed annual budget before we retire. You can also practice living off that budget to make sure it's realistic and then revisit it quarterly or twice a year, at least during the first two years of retirement to capture your real spending patterns and then adjust accordingly. So there you have it. Four behaviors that signal you may not be ready for retirement, which include large credit card balances, auto loans, possibly mortgage debt, depending on your situation, and then not having a budget. If any of these resonate, don't panic. Recognizing the issue is the first step toward fixing it. And before we close, I want to hear from you. Are there any other red flags you've encountered? Drop a comment on our website@capitalwealthplan.com or send me an email atGeorge@capitalwealthplan.com. And if you found this episode helpful, share it with someone who's asking, can I retire? I'm George Jameson with Capital Wealth Group. Hope you have a great day and see you next time.