Crucial Steps to Take When Retiring

I recently attended a webinar about preparation for retirement. The speaker was nationally renowned retirement planning expert Dr. Wade Pfau, author of Retirement Planning Guidebook. Below are six of my key take-aways from his presentation:

Know Your Style- Your retirement income style describes your retirement income preferences. According to Dr. Pfau’s RISA® tool, Probability-Based vs. Safety-First indicates whether someone is more comfortable relying on market growth potential or on contractual guarantees (e.g., pension, annuity). Optionality vs. Commitment indicates whether someone values flexibility to adjust their plan or prefers to commit to a structured, potentially irrevocable, retirement income strategy.

 

Inventory Your Assets- To see where you stand, create a master inventory of assets and debts, including account numbers, account values, ownership details (e.g., individual or joint tenancy with right of survivorship), beneficiary designations, and probate status. Calculate net worth by subtracting the value of debts from assets and update it annually. Request in-force illustrations of the cash value of whole life insurance policies.

 

Establish Decision-Making Authority- An advance directive is a legal document outlining your healthcare wishes if you cannot speak for yourself. A living Will is a written statement detailing which medical treatments you consent to or refuse (such as ventilation, artificial nutrition, or CPR) in end-of-life scenarios. A financial durable power of attorney is a legal document that allows you to appoint a trusted person or organization to manage your financial affairs.

 

Create an Estate Plan- Write and periodically review and/or update a will that designates to whom your assets will go. Be sure that there are no conflicts between provisions in your will and asset ownership titles, which have priority. The four essential estate planning documents are generally considered to be a last will and testament (will), a durable power of attorney (for finances), a healthcare power of attorney (or proxy), and a living will. Some people also use trusts.

 

Study Social Security Claiming Options- Higher earners in a couple may consider delaying Social Security benefits up to age 70 for a higher future benefit for both themselves and their lower-earning spouse (survivor benefits). Delayed retirement credits of 8% a year are available between full retirement age and age 70. It is smart to verify your Social Security covered earnings annually by setting up an account at https://www.ssa.gov/myaccount/.

 

Plan Ahead for Spending Shocks- Some of the most common spending shocks that older adults face are sequence of returns risk, inflation, long-term care expenses, death of a spouse, family responsibilities, frailty in later life, cognitive decline, and forced early retirement. About half of retirees do not pick their retirement date- it is forced upon them.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

The webinar ended by describing 4 Ls of retirement: Longevity, Lifestyle, Legacy, and Liquidity.

Financial Planning Strategies with the Number 250

 

The numbers “2,” “5,” and “0” are hot this year as we celebrate our country’s founding 250 years ago in 1776. Upcoming events celebrating the big “250” got me thinking…why not “double dip”:  celebrate America’s birthday in 2026 and improve our personal finances at the same time? 

A bit far-fetched? Maybe. But consider the following examples that include the number 250 or variants of it:

Small Savings- Save 25 cents a day and you’ll have $91.25 at year’s end. This is a great goal for children, perhaps with parental matching or a year-end “top off” to $100. Of course, higher amounts of coin can also be saved such as 50 cents per day ($182.50 at year end).

 

Higher Savings- Save $2.50 a day and you’ll have $912.50 at year’s end, plus interest. Some people use change jars or piggy banks for daily savings. Save $250 per month and you’ll have $3,000 at year’s end, plus interest.

 

Increased Retirement Savings- Consider increasing your contribution to a tax-deferred retirement plan by 2% or 5%. The easiest time to do this is when you get a salary increase or when a household expense, like child care or tuition or a car loan, ends.

 

Save Your Tax Refund- The average income tax refund in 2025 was $2,942 but let’s use $2,500 as an example. It’s close enough and fits the theme. If you save $2,500 a year for 10 years and earn 7% interest, you’ll have over $34,000 in 2036.

 

Invest Automatically- Sign up for a mutual fund automatic investment plan and authorize the mutual fund to debit your bank account monthly by $25, $50, or $250 to purchase shares. You can also do this with over a thousand publicly traded companies that sell stock directly to investors. 

 

Slash Your Debt- Pay more than the minimum due on credit cards…in multiples of “2,” “5,” and “0,” of course. For example, pay $25 more or $250 more than you are currently paying to dig out of debt. The avalanche method prioritizes paying off debts with the highest interest rates first, regardless of the balance. The snowball method prioritizes paying off debts with the smallest balances first, regardless of the interest rates.

 

This 250^th anniversary thing is catching, isn’t it?

 

In honor of America’s milestone birthday, I’m issuing all of my Money Talk blog readers a challenge: take one or more actions that are relevant to your life to improve your finances in 2026 in honor of our county’s 250^th anniversary.

 

I’ve given you six ideas that include the numbers “2,” “5,” and “0” to get started. There are also others including the $2,500 Savings Challenge, the Rule of 25, and the 50/25/25 budget rule.

 

Happy 250^th America! As we celebrate our country’s independence throughout 2026, let’s also work to improve our own individual financial independence. You can do it! One small step at a time.

 

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Financial Highlights of 2025

 

My one-person company, Money Talk (read: me), may be the only entity in the U.S. that does a generally focused “deep dive” annual summary of personal finance research, events, and trends. I recently presented a webinar for the Association for Financial Counseling and Planning Education (AFCPE).

Why look back on the past year? For context and insights about how to manage money during the year ahead. Below are ten data points that caught my attention during 2025:

Affordability Crisis- This was a key theme throughout the year as prices for many consumer “basics” rose faster than household incomes. Examples include food, utilities, property insurance, new and used vehicles, and housing.

Inflation Trends- The Consumer Price Index (CPI) announced in January was 3.0%. It decreased for three months (February-April) and then increased for five months (May- September). The CPI for the change in prices from November 2024 to November 2025, announced in December, was 2.7%.

Interest Rates- The Federal Reserve Open Market Committee (FOMC) held interest rates steady for the 5^th consecutive time in July at a range from 4.25 to 4.5%. This was followed by three quarter point decreases in September, October, and December to a range from 3.50% to 3.75%.

Credit and Debt- Outstanding credit card balances increased to an all-time high and there was a record-high percentage of credit cardholders making minimum payments. Another first was credit cards with rewards payable in bitcoin.

Vehicle Purchases- By Q2, seven-year car loans comprised 21.6% of new vehicle financing and six-year loans, the most common loan type, 36.15%. For the first time ever, the average price of a new vehicle topped $50,000.

Homeownership- Mortgage interest rates decreased slowly from over 7% in January to about 6.2% in November. Home prices hit a record high in June and started to decline. A typical first time home buyer is 40 years old and there was an upsurge in the use of adjustable rate mortgages.

Stock Investing- The closing price of the Dow Jones Industrial Average (DJIA) on 12/31/24 was $42,544.22. This was followed by a market correction during the winter months and numerous fresh highs, especially in November and December after interest rate cuts. Closing DJIA on 12/31/25: 48,063.29.

Income Taxes- The IRS ended its experimental Direct file program as well as the ability to buy paper-I-bonds with a tax refund. The OBBBA mega bill made tax rates and tax brackets from the 2017 Tax Cuts and Jobs Act permanent and introduced several “limited time offers” through 2028.

K-Shaped Economy- Wealthy Americans boosted the economy. The top 10% of U.S. earners accounted for almost half of all spending while low- and moderate-income households struggled to make ends meet. Shopping at thrift stores increased as did smaller package sizes of food and other items.

Legislative Changes- Two impactful new laws were the Social Security Fairness Act, which repealed the Windfall Elimination Provision and Government Pension Offset. Another was OBBBA. 2025 also ended with 30 states mandating a personal finance course for high school graduation.

For additional information about 2025 events, click here for the slide deck for my recent webinar.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

 

 

Fourth Quarter Webinar Summary: My Key Takeaways

 

We are at the end of 2025 and it’s time for my fourth quarter summary of takeaways from webinars that I recently attended. Below are seven nuggets that stood out to me as I reviewed notes taken in my personal learning journal:

 

Budgeting for Happiness- The more money and time (e.g., commuting) that people spend on cars, the lower their life satisfaction, unless the money and time are spent on road trips with family or friends. High housing costs and car payments decrease happiness and leave less room for savings and shared experiences. Too much “stuff” can drag people down emotionally.

 

A Fulfilling Retirement- Three key factors in a fulfilling retirement are money, relationships, and health. All three require investments of time and/or money. Guaranteed income sources (Social Security, pension, annuity) provide peace of mind. Retirees without them tend to spend less and feel more stress about managing, and not running out of, money during their lifetime.

 

Financial Contentment- Three predictors of financial contentment are how much money you have, your “reference class” (who you compare yourself to), and generosity to others. The happiest group by wealth is people with $5 million to $10 million of assets. Why? They have significant wealth but not the stress of ultra-wealthy people where money complicates things.

 

Content Creator Income- AI is having a major impact on personal finance content creators. Some sites that people used to write for dropped their freelancers. In addition, search engines like Google push AI generated content to the top and many users no longer look for articles anymore. This decreases revenue derived from sponsored links when few people click on them.

 

Retiree Tips- Take care of your physical body. Nothing will impact your retirement quality more. Retirees can be happy at all asset levels. People are happier spending non-portfolio assets than taking withdrawals from invested assets so “practice” income withdrawals before retirement. A smaller gift made to children earlier in life is often more impactful than a big gift later.

 

Other Useful Tips- Make a “stop doing list” (i.e., things that you want to do less of). Stay away from any investment that you do not understand (e.g., crypto, AI) and cannot explain simply to others. Do Roth conversions in stages: take a tax hit a little at a time or you will have a big tax hit later. Choose a target date fund for ten years after you retire if you want to be less conservative.

 

Miscellaneous Insights- Current workers age 63 and older need to be aware of the two-year lookback period for the IRMAA surcharge for Medicare premiums. Money left in health savings accounts to non-spouses is subject to ordinary income tax within one year of the account owner’s death. Thirty states now have financial education mandates. Good retirement savers can be bad spenders as they try to avoid running out of money without leaving “too much on the table.”

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.

Generative AI: What a Difference Two Years Has Made!

ChatGPT, a generative artificial intelligence (AI) platform, was launched in November 2022 and had one million users in one week and 100 million in 2 months. It was the fastest tech platform ever to reach 100 million users and, by February 2023, I was hooked. Today, about 1 in 5 workers are using ChatGPT for their work, myself included.

 

A lot has happened with generative AI in the three years since its launch, so I thought I’d share some personal Barbservations:

AI Use is Not New- Even before ChatGPT came on the scene, I had used AI in the following ways: Microsoft Word and cell phone texting that anticipated (sometimes incorrectly) the next word that I would use in a sentence, pop-up ads based on online searches, shopping suggestions based on past purchases, and Alexa and other virtual assistants.

 

It Makes Suggestions- In 2023, I told ChatGPT the output that I wanted via a detailed prompt. It then did what I asked, but no more. I was done. Today, like an overly ambitious student trying to get an “A” from a professor, it asks me if it can do more for me such as creating a checklist or PDF documents.

 

AI Output Pops Up Automatically- Three years ago, I had to seek out a generative AI content by proactively logging in to ChatGPT. Today, if I use the search engine Google, content from their AI platform, Gemini, generally pops up first to answer my question, along with the information sources that were used to generate the AI answer.

 

Text to Graphics Capabilities- In its early years, ChatGPT could only be used for text prompts for text output. I tried to create images and got an error message. Today, you can give ChatGPT a text command to create a graphic image. My experience is that it takes a “conversation” with several rounds of prompts to get exactly what you want.

 

Hallucinations Still Occur- Hallucinations are authoritatively sounding AI-generated statements that are wrong. They were a problem in 2022 and continue today. Two prompts that frequently cause problems are math calculations and reference citations. Thus, AI-generated content must always be considered a “first draft” subject to review and revisions, if needed.

 

Content Controls- Since hallucinations are an issue, some organizations have created their own data sources, called large learning models, for AI to generate content from. LLMs are the underlying technology that powers generative AI applications that are trained on a massive amount of text to understand, generate, and process human language. I recently experimented with this and asked ChatGPT to create content only from my website and archived blog posts.

 

My best advice for using AI is to play around with it and have fun. It will probably surprise you and may help you accomplish everyday tasks such as planning a meal and trip planning.

This post provides general personal finance or consumer decision-making information and does not address all the variables that apply to an individual’s unique situation. It does not endorse specific products or services and should not be construed as legal or financial advice. If professional assistance is required, the services of a competent professional should be sought.