Dream Big, Plan Smart in Retirement
When it comes to building a financially secure life, dreaming big is great—but only if your plans are grounded in reality. This week, Ric Edelman tackled some of the most practical and personal financial questions, starting with a look at modern parenting costs. Hiring a nanny may sound luxurious, but for families with two or more preschool-aged children, the costs can actually be comparable to daycare. Ric and Anderson Wozny explained that full-time nannies typically earn $15–$20 an hour, which translates to $41,600 annually. But when you add in employment taxes, health insurance, and other benefits, families can expect to pay $50,000–$70,000. Elizabeth Kline clarified that nannies focus on child-related tasks—not housekeeping—and that legally hiring one requires handling taxes properly. Using a reputable agency can simplify the process, although the placement fee is usually 20–30% of the nanny’s annual salary.
Shifting gears, Ric warned against over-reliance on Social Security for retirement income. A couple retiring in 2010 would have received a maximum of just $28,000 annually. That sobering figure underscores the need for personal savings, smart investing, and careful planning to maintain a comfortable lifestyle in retirement. Ric also fielded a question from Chuck in Centreville about handling inherited IRAs. Chuck wanted to transfer stocks in-kind rather than liquidate them to meet required minimum distributions (RMDs). Ric confirmed this is possible if the accounts are with the same brokerage, but taxes must still be paid based on the stock’s value at the time of transfer. Holding those shares for more than a year qualifies them for long-term capital gains treatment down the line.
Next up: private equity funds. Ric explained these high-risk investments pool money to fund private companies, often in industries like biotech or technology. They’re generally reserved for accredited investors with $1 million or more to invest. Ric strongly advised retail investors to focus on building a solid foundation of safer investments before considering private equity. Jumping into speculative assets too early is like building your financial pyramid upside down—it just doesn’t hold up.
To help parents set expectations, Ric brought in Ken Kendrick, owner of the Arizona Diamondbacks. Kendrick offered a reality check: the odds of a Little Leaguer making it to Major League Baseball are 1 in 300,000. Even those who do make it rarely earn big money, especially in the minor leagues. While it’s good to support your kids’ dreams, Kendrick emphasized preparing them for reality—most will become fans, not pros. That said, MLB teams now offer financial counseling to help players manage their money wisely.
Ric also shared tips for first-time homebuyers. He advised only buying a home if you plan to keep it for at least 7–10 years. Why? Because between down payments, property taxes, maintenance, and repairs, the short-term costs can outweigh the benefits if you sell too soon. Buyers should think ahead about how their home fits into their future—marriage, children, job changes—not just their present. He pointed viewers to a ten-question quiz on his website to assess homeownership readiness.
On the investment front, Ric debunked the myth that gold is a hedge against inflation, a weakening dollar, or rising taxes. While gold can be part of a diversified portfolio, he cautioned against viewing it as a financial safety net. It’s speculative and volatile—often misunderstood and overhyped.
Ric closed the show with a reminder that dreams are essential. They motivate us to work, save, and plan. But dreams should also be realistic. Whether you’re aiming to own a Ferrari, send your kids to college, or retire comfortably at 60, success starts with honest financial planning and a willingness to adapt as life unfolds.
All information provided is for educational purposes only and does not constitute investment, legal or tax advice; an offer to buy or sell any security or insurance product; or an endorsement of any third party or such third party’s views. The information contained herein has been obtained from sources we believe to be reliable but is not guaranteed as to its accuracy or completeness. Whenever there are hyperlinks to third-party content, this information is intended to provide additional perspective and should not be construed as an endorsement of any services, products, guidance, individuals or points of view outside Edelman Financial Engines. All examples are hypothetical and for illustrative purposes only. Please contact us for more complete information based on your personal circumstances and to obtain personal individual investment advice.
Neither Edelman Financial Engines nor its affiliates offer tax or legal advice. Interested parties are strongly encouraged to seek advice from qualified tax and/or legal experts regarding the best options for your particular circumstances.
