Financial Red Flags: Why These 4 Characteristics Signal It’s Not Time to Retire

Can I retire?

This is the most basic retirement question. Most people looking for this answer online are seeking confidence.

We address head-on the financial red flags of someone who should not retire.

Financial Red Flags: Why These 4 Characteristics Signal It’s Not Time to Retire


Full transcript:


Alex Okugawa & Anthony Saffer

Anthony Saffer 0:00
Can I retire? This is one of the most basic questions. And when people go online to see if they should retire, they’re often looking for the positive reasons. Today, we’re going to flip that on its head, we’re going to look at the red flags of someone who should not retire.

Hey there. It’s Anthony and Alex with One Degree Advisors, and we help you gain confidence in your retirement. So, Alex, we are asking that question, can I retire? And oftentimes, we do want to look at the positive reasons of why someone didn’t retire. But we also want to look at those red flags, there are certain people that just shouldn’t retire. And the first red flag is credit card debt.

Alex Okugawa 0:38
Yeah, I mean, if you’re approaching retirement and you have credit card debt, that’s typically a sign someone is lacking self-control. When you’re working, and you have a working income, usually folks can dig themselves out of that credit card hole over time. When you enter into retirement, that means you’re not working anymore, you don’t have a working income anymore. So you’re typically relying upon fixed income sources, either things like social security, or a pension, maybe you have some rental income. But then you’re also typically relying on your portfolio to create income. So if you have credit card debt, before you even go into retirement, that is a massive red flag and that’s why you put that as number one, that’s really a sign that you should reconsider retirement.

Anthony Saffer 1:24
Now, the second red flag is auto loans, and it may not be quite as black and white.

Alex Okugawa 1:30
Yeah, and there are some circumstances when it could make sense to have an auto loan, and I can already hear people saying, well, you know, I got a 0% auto loan. I get it, you know, because you’ve worked out the math, and you said, if I can have a 0% auto loan, the arbitrage on that to keep the money invested, it makes sense. But nonetheless, you know, if you’re in your 50s, and you still are in a position where you have an auto loan, not by choice, that’s typically not a good sign, right. So it could mean that you’re living beyond your means, might be spending too much on a car, or honestly, you’re just you’re buying cars way too frequently. So again, you know, if you have these expenses come up while you’re working, you can work and pay off these loans over time, when you get into retirement, cars are so expensive, and they’ve only gotten more expensive lately. That is not an expense that you want to be having continually coming up and your financial plan every couple of years. That’s just a recipe for disaster.

Anthony Saffer 2:26
And car loan rates are much higher than they were I’m sure there are some good deals out there, here and there. But they’re much higher than they were all right, Red flag number three is a big mortgage.

Alex Okugawa 2:35
Now, I know this might be a controversy for some people, do I go into retirement with a mortgage or without a mortgage? Again, the truth is that there are some circumstances when it could make sense to have a mortgage. But the key is, I’d say for a big mortgage, you have a mortgage by choice. In other words, if you wanted to, you could pay off your mortgage right now before you enter into retirement or right as you get into it. In other words, you have options, where you don’t want to be is you have a mortgage because you’re forced to have a mortgage. In other words, I couldn’t pay all this off at one time. And Anthony, you can talk to this, you know, just guiding clients through different market cycles, especially the Great Recession of 08, eight folks that had a mortgage versus those that didn’t.

Anthony Saffer 3:27
Yeah, we just saw that when people had that large mortgage payment during a time of high stress, it really caused more anxiousness, versus people that had very low or manageable debt. So now it would be good for our viewers to comment on and what you think about having a mortgage when you go into retirement. Right. And Red Flag number four is having no clue what you spend.

Alex Okugawa 3:47
Yeah, it listen, personally, in my opinion, this doesn’t need to necessarily be some big formalized budget, but you do need to know what you’re spending and it needs to be accurate. Most people underestimate what they spend, start adding in things that are kind of the onesie twosie that really add up over time, holidays, birthday gifts, you know, car repairs, all this stuff that typically comes up throughout the year, you do not want to underestimate how much you’re going to spend in retirement. Because I’m gonna piggyback off of this, which is, what are you going to do with your time in retirement? So what if you don’t know what you spend and then you don’t know what you’re going to do in retirement? Again, that can be a recipe for disaster. When you’re working, you’re spending eight hours a day, let’s just say at the office. That’s time that you’re spending doing something in retirement, what are you going to do with those other eight hours? And typically, people fill that time with things that cost money, so usually not always, usually people end up spending more money than they think in retirement.

Anthony Saffer 4:49
Yeah, and that’s correct. Most people far underestimate what they actually need to live on. In fact, we recently just posted a video can I really retire in California with $2 million. Go ahead and view that that’ll help and also act as your checklist for retirement.

Once again, this is Anthony Saffer with One Degree Advisors, please leave a like and subscribe to our channel that helps reach more people to retire with confidence. And we have a free guide called Five Retirement Mistakes to Avoid, you can download that for free. It gets into five critical mistakes that we see retirees make it’s best if you go ahead and avoid them. We’ll leave a link in the show notes. You can download that for free today.

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