Planning Before, During and After Retirement

While there are certainly more than 5 myths, we wanted to share some insightful information relating to retirement and what we consider to be the top 5 myths surrounding retirement. Even if you are retired, we believe the information relating to debunking the myths is worth your read.


I will Die before I reach 90. According to LIMRA (research), 25 percent of 65-year-old men with average health will live to age 93, and a quarter of women in that category will live to 96. The report noted that underestimating longevity risk could pose a significant threat to retirees who plan to spend down their wealth over time, leaving less to their heirs and charitable causes. This is one of many reasons as to why KFM decided to expect their clients to live forever. While we know this is impossible, we do know that our clients are living well beyond their life expectancies. We also know nobody can predict their demise. If clients plan to live forever and spend their wealth accordingly, this should prolong the longevity of their wealth throughout their lifetime(s) while providing the opportunity to leave a legacy.

I will keep working and never retire. Retirement is not always a choice. LIMRA says that over half of retirees retired earlier than they planned. About 20 percent retire because of health problems, which are not always predictable. Additionally, 70 percent of workers expect to work in retirement or transition slowly, but just 16% of retirees reported they work. In 32 years of practice, we are yet to meet that person in the 16% that report they still work. All of our clients were diligent in planning for retirement and in fact, looked forward to retirement. Once in retirement, we continue to hear “I don’t know how I worked, because I’m busier now than I was when I was working.” Even though “60 is the new 40”, our clients would suggest retiring whenever you can.

A conservative portfolio is appropriate for me in retirement. For retirees facing 30-plus years of retirement, a no-risk portfolio of bonds and CDs is very risky, making it difficult to sustain income and fend off inflation. We cannot locate the origin, but years ago there was a generalized rule that when you retire, you subtract your age from 100 and that’s how much you should have invested in stocks. If you retire at 65, 35% should be in stocks and the remainder in bonds. While there is so much wrong with this rule, it does show the oversimplification of how to invest in retirement. If you were a retiree in 1981 retiring at age 65 when interest rates peaked, that strategy may have paid off for you. However, if you are retiring now with interest rates are historic lows, we know the formula is a recipe for disaster.

My taxes will be low in retirement. If retirees need as much income as they did during their working years to maintain their lifestyle, it is not credible to think that the tax burden will be less, particularly if the retiree needs to withdraw from retirement plan savings that are fully taxable at ordinary income rates. Top tax rates are now on the lower point in many decades. However, even with this most recent tax legislation with lower tax brackets, some of our clients have actually seen their tax liabilities rise. We know tax legislation will never be constant. Therefore, banking on what tax rates will be in the future is a “zero sum” game. When you are forecasting your retirement income needs, make sure you do make adjustments for non-recurring expenses which will disappear at retirement. Reducing your cash flow needs certainly can reduce your future tax liability.

I will remain healthy enough in retirement to make decisions myself. While good physical and mental health in retirement is the goal, retirees should plan for rising health-care costs and secure help from family members or an advisor to manage financial affairs in retirement. According to the Atlantic, 1 out of every 3 Americans at least age 85 has Alzheimer’s. While this is a daunting statistic, it makes sense to be prepared to have a family member or close personal friend be in a position to assist you in making financial decisions if ever needed. In most cases, this is usually the spouse. But with the growing population of elderly singles, it’s imperative to discuss your future health and memory with your family and financial advisor.

Your team of advisors at Kemp Financial Management have taken the time to get to know you, your health, your personal financial situation, your values, your family and your current desires and dreams. With each update meeting, it is imperative to share information back and forth as it relates to the plan established for your desires. Your team of advisors at KFM considers all of the above mentioned to guide you through all of life’s stages. Ultimately, it is our desire to make sure the variations and changes of life do not interfere with your current desires and dreams. Should you have any questions about any of the “myths” and the impacts on you, please feel free to set up your update meeting now by clicking here:

You can also find more detailed information in our book Ten Truths: How to Create Financial Independence.

We look forward to seeing and talking to you soon!

Kemp Financial Management Update:

For the past 23 years, KFM has been “outsourcing” a significant portion of its business operations to an outside provider in San Jose, California. As our firm continues to grow (thank you for the many recommendations!), we have reevaluated our relationship with our provider and have come to conclude, it no longer makes economic sense to outsource our back office services.

Later this year, we will be recommending that your clients terminate our shared relationship with our back office provider and move the operations directly here into our offices in Fullerton, California. We hope to have this in effect as early as July 1, 2019 but certainly no later than September 30, 2019. We are more than excited about making this change.

Organizationally, Wyatt is currently overseeing this new directive. The firm has hired an additional staff person, Patrick Joyce, who will be joining the firm on May 6, 2019. We will also have some additional support over summer, which will put us in position to transition in July or September at the very latest.

We will not be able to effect this change without signatures from you. Consequently, you will be receiving documents to confirm and finalize this change. We are still working out the details of the timing of the paperwork, but we will be in contact with you in the upcoming weeks. If you have any questions, please feel free to reach out to Wyatt, Lissa or Rob.

Change of KFM Dress code: Goldman Sachs, the last holdout for wearing suits and ties to work, has recently unveiled their new dress code to “flexible”. While there was no clear definition as to what “flexible” means, their policy cited “the changing nature of workplaces generally favor a more casual environment”. At KFM, we have decided to “cut ties with the tie”. While we are not going as far as “flexible”, we are going to accept the more California tradition of “relaxed business attire” going forward.

KFM Client Survey: For those that participated (almost 50%), thank you for your valuable input to our Client Survey during the first quarter of 2019. We have just received the finalized report and will be reviewing the data to look for opportunities to improve our ongoing relationships with our clients.

Capital Markets Update: Last quarter we talked about how much positive economic news there was throughout 2018 and how it did not make sense to have a correction in the fourth quarter of 2018. While there is no way we would say “we were right”, there is no question the capital markets have improved throughout the first quarter of 2019 due to the continued economic prosperity.

Since the beginning of the year, the majority of the benchmark indices are at or near the relative highs established at the close of the third quarter 2018. While it’s too early in the story to write the end of the script, it does simply demonstrate how predicting the financial markets is predictably impossible. Nobody has the proverbial crystal ball and don’t let anybody tell you they do.

There may be only two data points that are relatively different than the end of last year. First, the Federal Reserve seems to be holding tight on future interest rate hikes.  Again, nobody knows what the Federal Reserve will do going forward, but that may be the spark that got the market moving positively earlier this year. While the Federal Reserve appears to have changed their stance and policy on interest rates, just like the stock market, predicting their next move is just as risky predicting tomorrows capital markets return.

Second, it appears the United States and China are close to finalizing a trade deal, or at least that is what the capital markets are trying to predict. Once again, predicting if or when a trade deal will be reached is risky business. Combined, both the Federal Reserve and strong trade dialogue has translated to improved capital markets both in the United States and abroad.

Even with the positive advance, the news media continues to debate. Has the longest bull market in history ended in 2018? Has a bear market started due to the correction in 2018? What will happen with Brexit? Is a recession looming due to the “yield curve”? Will Tom Brady retire? Nobody knows and it will be years away that historians will be able to explain what occurred in the last 6 months.

What we do believe is diversifying your portfolio to address longevity of life, the proper balance between stocks and bonds, and retiring successfully, while keeping taxes in check and being prepared for the future is prudent and time tested. If anything has changed in your health or financial situation, please inform your KFM team.

If you would like additional education during your next update meeting, we have updated our “Ten Truths” presentation to reflect the historical data through December 31, 2018. If you would enjoy a recap, please feel free to add that to your agenda when you schedule your next meeting.

Click here:

We can’t wait to see you and talk to you in the upcoming weeks and months. We look forward to catching up. Wishing you continued great health, happiness and success!