Content transcribed from podcast “Wealthworx Radio with Eric Kearney“, Episode 101 – Bad Advice for Retirees and Helping to Set the Record Straight (Listen to this and other episodes on Google Podcast)
Coming up on WealthWorx Radio. On today’s show, we’ve got several strategies that can help you reduce your taxes in retirement. That and more just ahead and now WealthWorx Radio with Eric Kearney.
Hey, welcome in everybody. This is WealthWorx Radio. I’m consumer advocate, Steve Setall, and joining me today as always, Eric Kearney. Eric is President of Retirement Wealth Advisors of Cape Coral, FL. He’s an author, he’s a fiduciary. Also alongside Eric is Joseph Lanza. Uh, Joseph is fiduciary with Eric in at Retirement Wealth Advisors. And, uh, hello Joseph.
How are you? I’m doing great, Steve. Happy to be here again. Yeah, and uh, Eric, always a pleasure. Always. Steve, good morning to you. So you got my, a. Yeah, reduce your taxes in retirement. And I mean, we talk enough about taxes in retirement, that, that is music to my ears. Okay. Uh, Eric, Joseph, sign me up. How do I do it exactly.
And you know, unfortunately this is one of those things where it gets to be, people kind of procrastinate and they put this off and they put this off, and all of a sudden it is now an issue. And this is the one thing about tax reduction strategies, is you really want to implement them early on. Before, you know, it becomes an issue and unfortunately, you know, look at how many times.
People wait until someone’s in hospice and then all of a sudden, I’m getting a phone call. Eric, we have to do estate planning. I’ve been telling you to do that for the past five and 10 years, you know? Exactly. You know, now all of a sudden I’m paying a ton of money in taxes. Now I want to, you know, implement tax strategies.
We’ve been talked about that for five or 10 years. You know, Roth conversions, Roth IRAs, and it’s just that, that, you know, nobody thinks of this because this is what we. We are forecasters, you know, just like meteorologists, take a look at the weather. We take a look at your finances and we’re looking way ahead to see what storms are going to come your way.
And a lot of times these people are headed for a highly taxable situation and that’s really what we’re trying to correct. How do we fix that? I mean, if you, if. You see a situation like that, are there things that you can do to sort of help alleviate that other than just say, you should have come here five years ago?
Yeah, there’s a lot of things and, and a lot of times, you know, it’s like financial triage. When that person comes through the front door, we have no idea what they need. And so what we’re doing is, is that we’re taking a look at their financial situation and we’re saying, okay, This is the most important thing that you really need to work on right now in order to be financially successful.
And if tax planning is one, it may be asset allocation, it may be reducing your fees, it may be getting you out of a variable annuity, whatever it may be. That financial triage really does kick in and we want to figure out how do we significantly put, try to put you in a better position. And a lot of times tax planning is one of those things because a lot of times people will come in here with set IRAs, simple IRAs four.
And congratulations, all of your money is in tax deferred accounts, but also you’re in a highly taxable situation. So you know, nobody said to you, oh, by the way, you’re headed towards a highly taxable situation in 10 years. And so a lot of times we’re showing them, look, let’s start to do Roth conversions.
Let’s start to do Roth IRAs. Let’s take a look at some other tax reduction strategies. And really what you’re trying to do is manage their actual tax bracket in. And that is no easy task sometimes and, and especially right now, I mean, people need to be aware of their tax situation because the, the tax rates now are as low as they’ve been and as low as they’re going to.
And that’s going to be going, you know, that’s going to be going away in a few years too. So, I mean, we do have some time to still take advantage of that. But, you know, there’s a lot of people now that are refocusing on their retirement. The problem is, is that they are able to sock a lot of money away. The problem is, is that a lot of that money is still tax deferred.
And so maybe, you know, even if you have a 401k, maybe you should be taking a look at that four. And seeing if the Roth option is available as well. Sure. Let’s talk about the Roth option. And, uh, so if we have a 401K at work, there is a possibility that the employer, that you know, that 401k could have a Roth option.
And if we don’t know, we need to be made aware of that. Yeah. A lot of times these companies don’t actually advertise that there is a Roth option for you and actually part of the Secure Act 2.0 is actually allowing corporations match to you to actually go in that Roth. That’s going to be changing because if it does go through, because as of right now only your contribution would be going into the Roth.
Right. And the reason why. This is so important is because with the Roth option instead of the regular 401k, a lot of people just think, well, I’m just putting as much as way as possible. They elect for, you know, let’s say their high income earner. They’re just electing for the complete total match and as much as they can do, and this really only makes sense for people that are very high net worth.
Earners, meaning that they need that deduction year to year. If you’re not in that case, then the Roth is most likely going to be the better option for you. Because, like you just said, Steve, if taxes are going to be going up, which almost everybody is in agreement that they are, then why not pay the lower tax rate now right on the money that you’re earning.
That way in the future when taxes are, who knows how? All that money is tax free to you. It makes a lot more sense. It’s kind of like the definition of tax planning. You’re taking advantage of what’s currently going on, right? We still have probably three to four years of these current tax brackets. That’s a lot of time for you to do Roth conversions or even contribute a lot to your Roth, especially a Roth 401k in order to get that tax plan done.
So, but let me ask you this, Joseph, uh, Roth is not necessarily the answer for everyone, is it? No. A lot of times if you’re doing, you know, let’s say you don’t have a Roth 401K option, and you’re a high net worth. Then, you know, you can’t necessarily contribute to that Roth because there’s income options or income allowance on there.
So sometimes you have to do a backdoor Roth or Roth conversions in order to actually make that work for you. And those Roth conversions can be done over time, especially with the, from a tax standpoint. And, and as Eric just said, keeping us within a specific tax. Right. That’s the whole point of it is that’s why we we stretch those out over a long period of time is to keep you within those guidelines.
And we actually implement this into the financial plan and show people look at the difference if you do do a Roth conversion and if you don’t, so if you’re out there wondering, a lot of people have a majority of their retirement assets in an IRA or in a 401k. Come in and see what the difference will actually look like.
We can actually project what the difference can be. How much are you actually going to save in taxes? Is it worth it for you to pay those now in order to save in the future? Yeah. I always think it’s interesting when we write the income plan and we show what the Roth conversion strategy looks like, it literally shows.
Point blank how much you’re going to save in taxes over your lifetime. It’s mind blowing to me. So I mean, that, that’s one thing that, you know, if, if, if anybody, you know, wants to reduce their taxable situation, but a lot of these advisors out there, Steve, aren’t showing people this. That’s the crazy thing.
Like we’re actually showing, look, if you do a Roth conversion or if you do this or you do this, this is, this is what it looks like. And nobody’s doing that out there. So really, I, I, because they don’t know how they’re lazy. I don’t know. I really don’t know. I cannot figure. I thought what we did, everyone did, and they don’t.
And so it, it’s really frustrating. I mean, like I said, I mean, you know, even through this hurricane, this, this god darn hurricane this year and everything else, this has been a very difficult year for southwest Florida. No doubt about it. But, you know, we have been slammed. I mean, even after the hurricane, we had people coming in, they’re like, You know, my, my house is a wreck.
I, I told everybody a few weeks ago about the guy in the canoe, he literally was in a canoe, going to get gas, and then came back and drove over to our office. I mean, he, his, he’s like, my house is flooded, but I’ve got to take care of my finances. So, I mean, this year people are frustrated with the whole financial industry once again.
Sure. They’re just not being given what they. Well, I mean, again, there’s a certain amount of volatility and then, you know, the media adds that fear factor in there. So that sort of exits us on and, and we react perhaps, uh, not as we should. And what’s interesting this year about talk about the media, geez. I mean, everyone is terrified about a recession.
It’s like, how do we prepare? What do we do? It’s like we, we had a recession in 2020 and we whizzed right through it. It was not a big deal. And I mean, everybody, if you don’t think that you’re going to go through several recessions in your life, you’re completely wrong. But the thing is, is that we have been prepared for a recession and we know how to get through a recession.
So again, through. Financial planning and income planning. If you’re managing your own personal economy, don’t worry about the world’s economy or a simple recession. It’s not that big of a deal. Right. Ah, that’s well said, Eric. I like that. And, and because that’s so true. We, we, but that’s the important thing with working with someone like you and a group like you at retirement.
Wealth Independent. Your fiduciary, you’ve got a lot of experience. These are the kinds of things that, that people need to know and need to embrace because you’re there for us. You got my. And the thing is, is that once that infrastructure, that financial infrastructure is built for that new client, now all we have to do is build on top of that.
We already know what your goals, objectives, your timelines are, how you feel about money, your risk towards your asset allocation. We understand who you are as a person financially. Now we’re just building from that, and then every time a financial hurdle comes our way, we’re able to leap over that and get around it more than likely.
So the thing is, is that, again, we’re forecasting for 5, 10, 15, 20, 25, and 30 years where a lot of people are just trying to get through the week sometimes. So again, I think that that’s the difference between us and a lot of other advisors is we are a strategic planning.
So a, as we start to get through this, we were talking about Roth Roth conversions and if I don’t have something I can convert, can I just contribute to a Roth? Is there, is that an option for me? If you’re within the income limits, then yes, of course. And it’s kind of lazy not to. A lot of times Eric and I see a client come in and even if they’ve been working with another advisor for the past 10 years, they’re still within the income options of doing a Roth.
And they just have an IRA that they may or may not be contributing to. Okay. And you know, we start talking to them. Did your advisor ever mention a Roth? No. Well, I know it’s an option, but you know, Why didn’t they just set it up? Right? Right. Do the paper. The advisor should be doing the paperwork, setting up the Roth.
Hey, you can put up to 7,000 now it’s going to be 7,500 if you’re over 50 years old. And here’s what kills me about that. You, you see a lot of couples coming in with a very large joint account and no Roth money. And I’m like, why didn’t your advisor five years ago tell you to peel off the money from the joint account, move it into the Roth?
And they’re always like, I don’t know. You know, I mean, that is lost opportunity that your advisor did not provide you. And that, that like really irritates me because that’s five years of lost contributions into that Roth ira. So again, it’s, it’s taking a look at this and this is why we’re all hands on.
You’re meeting with a certified financial planner, you’re meeting with your portfolio manager all throughout the year. We’re giving you everything that you need. And there’s just a lot of people out there who don’t have that. Well, and again, I think that what, what you’re really pointing out here is the importance of having that conversation, getting that second opinion, and in fact, why don’t we do that right now?
Sounds good, Steve, whether you currently have an advisor or you’ve never worked with a financial professional before, we’re going to be taking the next 10 callers who are in need of that missing financial. We’re going to create and customize a full blown financial plan, review value to over a thousand dollars and give it away, absolutely complimentary, no obligation.
What this will consist of is simply taking the mystery outta financial planning by taking a look at what you’re currently doing and maybe just making some slight changes. Let’s map it all out. Your goals, income needs, expenses, tax strategies, and even transfers to generational wealth. We will get that plan built for you and see where it leads you.
Let’s get you reacquainted with your investments without any. In short, we’re going to take the guesswork outta financial planning. So for the next 10 callers, a full blown comprehensive plan review that is valued over a thousand dollars. We’ll be giving it to you complimentary with no obligation, and it’s just a phone call away, folks.
We are back on WealthWorx Radio. I’m consumer advocate. Steve Al. Eric Kearney is here. Joseph Lanza is here, and uh, again with retirement. And you have got to, you guys, are you, like you just said, Eric, you guys are staying really busy amidst all of the, the chaos truly that, that is in, in right. Within yards of your place.
Yeah, it is. It’s unbelievable. I mean, the, the waste trucks, the uh, what do you call it? These, these huge trucks are rolling around town, you know, it’s like, uh, they have the, the cranes on ’em and everything for the debris of the storm, cleaning up all the debris, the debris piles that are all over the place is unbelievable.
They have, fields, you know, with uh, wrecked boats in them all over the place. I think CTO had 6,000 in Q to pick up. Goodness. It’s just crazy. I, I, and from what I understand it, it’s, it’s, we’ve lost over 350,000 cars. Wow. and if, and, and, and so if you think, you know, well one house lost two cars, you know, I mean, that, that cuts it right in half.
Right? So I’m, cuz you know, household, so. But, yeah, I mean, it’s just insane. I mean, I, I just can’t, nobody can find cars right now, but I don’t know. It’s just, uh, you know, like I said, the, the aftermath of the storm is by far the worst of, of all, because I think it is starting to hit a lot of people emotionally and, and physically and so forth.
And, uh, it’s terrible. But, you know, like I said, I. We’ve made a lot of progress and, and things are, you know, looking up and, and they eventually will, but man, what a, what a storm. Yeah, absolutely. And, and so here we’re talking about baby boomers and there are a bunch of us, and again, you’re not trying to tell somebody how to spend their money.
But there are things that we should do that, uh, that that, that we can overdo and, and topping that list is, uh, the grandkids and being a little generous, a little too generous with the grandkids. But the grandkids, we love ’em. We got to do stuff. I know, I know, I know. And this is a case where they’re spending more.
Money on their kids and on their grandkids. And so they’re sacrificing their retirement because they want to spend, spend, spend. They want to love them, they want to see ’em. And I get it. But the bottom line is that if it’s going to affect your retirement plan, that’s not a good thing. So we just had a, A person come in a couple weeks ago and she was a young person, uh, well she was 60 years old, but still working, you know, and she’s like, I want to work another six to 70 years.
That’s great. And she goes, I just want to make sure my kids are taken care of. And so when we went through the financial planning process, she’s like, what about my kids? What are my about my kids? And I said, look, I said, here’s the thing. We need to take care of you. We need to take care of taxes, inflation, long-term care, any medical needs that you have, making sure that you’re okay.
Secondary will be your kids, and we will worry about that down the road, but right now we have to take care of you. And a lot of people don’t understand that because they’re, they’re very caring, they’re very giving, and they want to make sure we can still make that happen in the financial plan more than likely.
But now is not the time because you’re still going through the accumulation stage for your own self. So, like I said, It can be a goal or or objective, but a lot of times people have just got to get through there. And there’s a lot of times where I say, look, I understand that you want to spend money on the kids or grandkids.
Let’s see how this looks first. And they like that. So, Really does make a big difference. Well, and I think one of the other things, so grandkids, that’s one thing, but when your adult kids, uh, keep, uh, keep coming back with their handout, and, and it could be, you know, there could be a myriad of reasons why they need that money, and maybe they really do, but at the same time, it’s hurting your own retirement and yet can’t do that.
You can’t let that happen. Right. I, I always say, The reason that older men don’t live in their parents’ basements in Florida is because there aren’t any basements . But, uh, but yeah, I mean, it’s very true. I mean, you have a lot of people who are still helping their adult children and at, at some point you have to say, look, you know, you got to get on your own because I don’t have the money for that.
And so, I mean, we’ve seen several cases. Several years ago, everybody knows the story about how, a person came into me, sat down and I said, oh, what’s this $500 a month that’s going to my son’s ex-girlfriend, ? And I’m like, what? Wow. I go, how long have you been, you know, how long have they been broken up?
Oh, a couple years. But you know, she’s such a sweet girl and she needs the money. Well, this girl’s never going to say, Don’t keep sending me 500 a month, but I did . You know, I’m like, Hey, no kidding, you got two more months and then you’re cut off. So figure it out. You know? But like, I couldn’t believe it. Yeah.
Well, but again, I think, you know, I, I heard a story where, where, you know, a man was, uh, you know, in retirement and his son kept getting in trouble and he kept taking money from his retirement to bail him outta jail and to, I pay for attorneys. Yep. I believe it. Yeah. I mean it’s, and it’s like at some point you have to say no.
I mean, that’s tough financial love, but that’s what you have to do. And unfortunately, I will play the bad cop, you know, I’m going to be like, okay, we’re going to put an end to this, you know? And a lot of people say, I really appreciate you doing there, Eric. You know, well, I think you kind like it. I, I do kind like it because I’m just like, look, like, you know, you can’t do this, but to, to give credit to the children.
Sometimes the children assume that their parents, because they’re closer to retirement, have a lot of money. They always think, oh, if you’re retired, you must have a lot of money. Well, that’s not always the case, you know, but, but they will take, I mean, when, when, when they’re given something they will take, I mean, there’s no doubt about that.
Sure. uh, so I like this one too. Skipping senior discounts. I mean, it seems like a little thing, but it, but it can be, it can make a difference. I mean, yeah. I went to a movie last weekend and I took the senior discount. No problem. Yeah, I guess I’m kind of getting used to that now. I’m like, hell yeah. I’m going to get some money off.
Right. Yeah. You know, so I’m, I’m not quite there yet, but only a couple more years. Yeah. a couple more years I’m there and I’m like, and I, and I, well I still am bothered by getting a a R P stuff in the mail. Oh, I know. You know, but it’s like, yeah, that starts early. Yeah, it does start early. Yeah. They, they want to get you hooked on it, right?
Yeah. So it’s like, yeah, A A R P is cool, but, uh, yeah, I mean, I, I would take the discounts. I mean, why not? I mean, not, these are expensive enough anyways, so I would definitely, uh, do that. All right then. Uh, so I like this one too, but the, the, the, the bullet points says blindly paying for life insurance. What does that mean?
And I love this one too, and Joseph can talk a little bit about this too, but there’s a lot of times somebody will come in with a life policy and. Look, are you going to be around for another five years? Oh yeah. You know, more than likely then why are you paying a ridiculous amount of money on this? So there’s a lot of people that have life insurance policies that are never going to go into fruition more than likely, and especially these term policies.
So, I would say, I mean, we put ’em in the financial plan. Maybe you need ’em, maybe you don’t. But a lot of times we have people get rid of ’em. And remember, that’s money that you could end up putting into a Roth IRA or something else that’s going to benefit you more down the road. And it’s really actually a calculation that we do.
And it’s, it’s basic math. When you start thinking about it, it’s. If you were to something were to happen to you today, tomorrow, you know, whenever that is. What are you, what is your spouse missing out on financially speaking now that you’re gone, right? Is it, is it a pension that she’s relying on? Is that what we have to replace?
Is it your social security that we may have to replace or can we prove to you that in the financial plan, if something does happen to you at the assets that you leave behind for him or. Is actually perfectly fine in their financial plan. So why are you spending such an exorbitant amount of money on life insurance?
Right. Especially like Eric, especially that term. We working with a lot of people who come in and they’re spending, you know, 500 to a thousand dollars a month on term insurance that’s ending in three years, and we’re like, Well, why are you paying this? Right? You know, you have plenty of assets. There’s no reason to pay this.
This could go somewhere else. So really you need to sit down and figure out is that insurance actually necessary for you? Well, and that’s, I mean, again, obviously that’s the discussion. And when, you know, when someone’s younger, they want to have life insurance because if something should happen to them, or him or her, whatever, they’re going to be covered, right?
And their kids will be covered and all of that. But as you get older, that that, that term insurance or that kind of life insurance becomes less important. And there may be other ways, like you said, to spend that. Yeah, if you were the breadwinner and you needed insurance, you know, if you’re in your thirties or forties and you’re the breadwinner for your family of a wife and kids, and your wife isn’t working, then obviously it makes sense, right?
Because now they’re going to have such a huge loss of income for think about how many years up until your retirement. But now let’s say you’re 60, 65 and you’ve amassed a large retirement for yourself, that your spouse is going to inherit your children or adults. Now they’re making their own. Well, what do you, what is your family going to miss out on financially if you’re already retired and all your assets, you know, they’re the beneficiaries for that.
What are they missing out on? You’ve already amassed that wealth in assets that can be transferred to them. Sure. And, and, and again, the other thing that I’ve learned in, in talking with you guys is that life insurance is not what it was even 10 years ago. It’s a whole different ballgame. Yeah, there’s actually, life insurance now that actually have like, impairment riders.
So if you’re looking for like an impairment rider when you cannot perform two out of the six activities of daily living, they’re actually involved in that. So it’s kind of like a life policy, but it kind of changes as your life changes as well. So there’s a lot of really cool things to that. I think in there.
And as we look at the, uh, the various things that we think baby boomers might be doing, this one too, especially as you get a little bit older, giving to every charity because boy, you get to a certain age and you get, you just are invaded with everybody who wants your money. So I had to put a pen in my mailbox about three months ago.
A pen, because a pen. And the reason why is because I would bring all this mail in and half of it would be to my mother, because my mom lived with me for about three months before she ended up moving into her own place down here. . She gets more mail from Charit. Organizations than I’ve ever seen in my life.
So I just put return to send because I don’t even know how to stop it, and it is mountains and mountains of mail. Finally, I am getting to the end of it, but even yesterday I got three pieces of mail, you know, from her and they’re all begging for money, and I’m like, oh my God, this has got to stop. So I had to keep a pen in there so I can just write return to sender.
That way I’m not going back in the house and then walking back to the mailbox. I mean, it’s insane. Yeah. . And here’s the other thing. During the storm I gave, I gave some money to the Humane Society. I love giving to the Humane Society. Sure. And as I was writing the check, I said to the guy, I’m like, you’re not going to put me on a list, are you?
He goes, no, we don’t do that. Well, I hope not. You know, and, and that’s the annoying thing, is that when you give money to charity, the other way that they make money is by selling your name to other people. That’s why all of a sudden, they all know that you’re such this charitable person. it can be a good thing.
I mean, but you really have to wonder, you know, how you’re giving money to this charity and a lot of times we donate, uh, dog and cat food to the Humane Society. This case, I just knew that, you know, the place had, had gotten hurt. So we, we just wrote ’em a check. But, yeah, I mean, it’s a great thing to do that.
Yeah, but you know, uh, you got to be careful too. You got to be careful. 807 7 9 1 9 4 2. In fact, Wolf this, this one, this, uh, segment went very quickly as well. Let’s go ahead and, uh, wind. Whether you currently have an advisor or you’ve never worked with a financial professional before, we’re going to be taking the next 10 callers who are in need of that missing financial plan.
We’re going to create and customize a full blown financial plan, review value to over a thousand dollars and give it away, absolutely complimentary, no obligation. What this will consist of is simply taking the mystery outta financial planning by taking a look at what you’re currently doing and maybe just making some slight change.
Let’s map it all out. Your goals, income needs, expenses, tax strategies, and even transfers to generational wealth. We will get that plan built for you and see where it leads you. Let’s get you reacquainted with your investment without any obligation. In short, we’re going to take the guesswork out of financial planning.
Hey, we’re back on WealthWorx Radio. I’m consumer advocate, Steve Sidal. Eric Kearney is here. Joseph Lense is here having a great conversation. And so we want to pick it up kind of where we left off. And in terms of, you know, sort of maintaining control of, of your, of your money, obviously, but also, you know, some things are not as obvious as others.
And Eric, we were just talking about this, about maintaining a large home. And I understand, you know, it’s the family home. You’ve been there for 30, 40, 50 years and it’s hard to give up. It’s an emotional thing, but it, it needs to be a practical. Yeah, I mean, and, and a lot of people unfortunately wait way too long.
And, you know, it’s interesting because, you know, my, I, I, I just went through this with my parents, you know, my, my father got ill, my mom took care of him. I mean, it was the, the stereotypical retirement, I mean, he ended up passing away. Now she’s got this huge Colonial four bedroom home, you know, that they’ve been in, that they built in 1977.
She’s been in there forever. And now, I mean, that house, I mean, that house was taking over. I mean, everything was taking over. I mean, she just could not keep up with it. I’m like, mom, you got to get outta here. Oh yeah. Maybe next year. Maybe next year. No, she should have been out of there five years ago. You know?
And. Maintaining a large home is incredibly difficult. And the thing is, is that a lot of people say, well, you know, I, I can’t let people over to take care of this or take care of this. Why not? If you have the finances, hire a pool person, hire a lawn maintenance guy, hire, find a handyman, have them do things around the house.
Make it as easy as possible for you. , and a lot of these people have the money, but they just don’t think that they can tap into it. And we’re showing them, look, if you are going to stay here, You know, we need to keep this up because a lot of times you just start to let the house go and that’s not a good place to be.
So it is very difficult as we get older to maintain that large. And that’s where a change of living may be more, uh, easy on that person. Well, yeah. I mean the, the maintenance you’re right is, and the older you get, certainly I, I know I’m living proof, but the less I want to do . Well, yeah. And it, it’s just normal.
I mean, you know, we remember your body only has so much energy per day. Right? . And so that’s why when somebody says, I want to take a nap, it’s not a bad idea. I mean, if you know that you’re going to dinner in the movies tonight, maybe take a little bit of a nap if you’ve been going all day. So our bodies only have so much energy.
But what we also have to realize is that the older that we get, the less energy that we have. So we need to hire help, and there’s nothing wrong with that. But like I said, you want to make sure that you can afford it and you want to make sure that, that you maintain it. And then the other thing is, if you do want to move, include that in your financial plan.
What does this look like if I move? Because a lot of times we’ve talked about this many times, downsizing is sometimes not as inexpensive as you think. You’re not, sometimes you’re not saving a lot of money. So those are the things that we have to be concerned about. And then, you know, you talk about, Let’s talk travel, because that’s a big part of retirement.
We get to retirement, okay? I’m going to go everywhere and do everything and, and not give it a second thought. And boy, that can, that can blow a hole in your retirement plan. Well, this could be just like gifts or just like charity. And these are all different things that we factor into the financial plan beforehand.
Right. And a lot of people, when they hear the word budget, they think of handcuffs and that’s not what we’re trying to do, right? We’re just trying to put an estimate of how much do you normally spend on travel? How much are you going to be gifting your children, right? You have to come. , you have to come to your senses and say, okay, what can I set my price limit for?
What I want to give to my children? Is that even, uh, possible in my plan or grandchildren, even charity? All these things are factored in when people come. And they’re already gifting these things to their children charities, and they’re going, you know, traveling. These are all questions that we ask them.
Okay, that’s fine. We’re not going to yell at you for doing that. Right. It’s your money. Right? We’re not here to yell at you or put handcuffs on you. We just simply want to factor it into the plan to make sure it’s sustainable for you. moving forward. So, you know, spending big on travel, a lot of people say, well, you know, we don’t really travel that much.
Or, yeah, you could put a thousand or $2,000 in there for travel, and then they’re going to Europe every. And it’s like, okay, well it’s fine to do that. Like I said, it’s your money, but let’s factor that into the plan. Okay, let’s start thinking maybe $10,000 a year for one big trip. Let’s run that from now for the next 10 years, and then when you turn 70, let’s downsize it to just domestic travel, right?
Now we’ll put a limit of. $5,000. If you go over, okay, you go over, but we’re still planning for something in there and we’re seeing what that’s how that’s going to affect your plan. Where are we going to pull that money out of? These are all important things that we have to consider. 807 7 9 1 9 4 2 If you’d like to get in touch, so this on too.
So if I’m in my early fifties, do I need to think about social security and when to claim? So a lot of people actually start thinking about social security and say, you know, I can’t wait to turn 62. I’m just going to take it then. And it’s kind of a misconception that so many people are worried about social security going away completely.
And I can understand, you know, they see the deficit that the US government is in and all the debt that we’re in. However, what’s most likely and most, commonly going to going to happen. It’s going to be taxed at a higher rate, right? It’s not going to completely go away, so you’re still going to have options. Just because you turn 62 doesn’t mean that you should take it right away, especially.
in your later years of working, if those later years are higher income that you’re making than you know the highest income of your career, which for most people it is cuz they’re at the latest stage, stage of their career. Sure. Then a lot of times we need to start looking at, okay, well what does it look like at any age between 62 and 70?
Because especially if you have a high longevity in your family, then looking at those later stages of social security can actually be a lot. Beneficial to you and your family, so just don’t take it at 62 because you’re, you know, the earliest age you can take it. We have to factor in what those other stages are looking like and figure out those calculations of what’s more beneficial to you.
There’s a lot of decisions that have to happen and, and again, we’re kind of going from super serious to what doesn’t seem very serious, but it can be, and that’s driving two vehicles is the time to dump one. Yeah, I mean there’s a lot of people that take a look at that, you know, they’re like, do we really need this?
So, I mean, even if the car’s paid off, you know, you can sell one. And a lot of people are like, yeah, we just don’t need it anymore. So, and I know there’s also a lot of people that are excited about the self-driving vehicles as well. So I mean, that could be, you know, I think Cadillac is, right now, they’re at the front end of this, uh, for.
they have probably one of the, the most successful self-driving vehicles right now. but I think in another two to three years, and even in five years, that could become much more of a reality. So a lot of people would actually dump their two cars just to get a self-driving car. I know that for sure.
So do you think that’s going to have an impact on people giving up their licenses? If the car is self-driving? Yeah. I think they’re still going to have to have a license. Yeah. You know, but, it’s, I mean, everybody’s getting super excited about it, especially the nighttime driving, so we’ll see what happens.
Yeah. And, and so one other thing too, when talk about healthcare, we, we talk about it every week at some fashion and. It’s obviously high priced. It’s, and it’s never going to go down, I don’t think. And I do think that the, the older baby boomers I think have this mentality of, well, I can’t question my doctor.
And you could be tested for more things than you could imagine, because maybe you’re on Medicare and maybe they know they’re going to get paid. Right. And I think, you know, down here, concierge doctor service is a huge thing. It’s like they’re actually paying extra to have this concierge doctor service. But I, I, I see where a lot of people do trust their doctors.
You know, they, they, they feel like they’ve been with them a long time. but yeah, you, I mean, the other thing is you do have to be proactive with your health. I mean, no matter what your doctor tells, You know, you, you, you, you want to understand that you trust them. I mean, it’s no different with your money.
You know, your, your wealth and your health go hand in hand. And, uh, you want to make sure that you’re not getting any unnecessary things. But Sure, I do say this. I mean, I think a lot of the doctors and a lot of the, uh, healthcare experts around here are pretty damn good. I mean, we hear a lot of positive things about that.
Yeah. I’m always grateful to hear that too. Absolutely. 807 7 9 1 9 4 2. And, uh, so let’s talk as long we’re talking about healthcare, let’s talk about Medicare and, well, you know, I’m not, I’m 65, but I’m going to work until I’m 70. I don’t need to worry about Medicare until I’m done. Right. Yeah, not so much. I mean, not so much.
Yeah, not so much. So retirees who are turning 65 and have not yet tapped social Security have a seven month window to sign up, and if you don’t, you’re actually going to face a costly premium amount of 10% for each 12 month period that you waited. So, and that goes on forever. And that goes on forever.
That’s exactly right. Oh. And you’ll have, you’ll have to be stuck with it as long as you have Medicare. So the thing is, is that you do want to get signed up. You do want to know what your options are, even if you have an exterior, health plan. I mean, that’s only going to make it even better. But, uh, yeah, you do have to get signed up for it.
We actually have a Medicare specialist that we have access to, because like I said, I mean, Medicare’s a whole other ballgame when it comes to this. So we include that in the financial plan and, uh, give people their options. Sure. I mean, that’s what’s important I think too, because when, you know, especially right now we’re in in open enrollment for Medicare and it’s time for people to have that.
And so again, you know, I’m glad you’ve got the connection there to help folks really review that Medicare plan and make sure that it’s still the best one for. Yeah, it’s crazy how many moving parts there are to that. You know, there’s a lot of moving parts and it really depends on where you are in your life.
And if you have longevity and, and your spouse too, you really have to take into consideration your spouse. , there’s a lot of things with Social security, Medicare, and also withdrawals from your retirement income, that we want to consider. Sure. And, uh, you know, Joe Namath isn’t necessarily the right one to tell you which Medicare plan is best.
Oh, geez. Yeah. I mean, there’s so many, there’s so many, uh, has been celebrities, hoing, that stuff. It’s crazy. Yeah. Well, and again, not having that withdrawal plan, I, I didn’t mean to take away from that cuz that’s a serious issue. Yeah, so not having a withdrawal plan, I mean, how do you go through, through accumulation to dec accumulation and how are you going to safely make withdrawals?
And essentially you’re trying to give yourself a, uh, a paycheck the rest of your life. And this is where the income plan that we’re actually writing, and this gets intimidating for a lot of people, and you know, just saw a gentleman last week, he’s like, he’s looking at the income plan that we wrote him.
He’s like, I love this. Why didn’t I ever have this before? I’m like, I don’t know. I really can’t tell you. You know, like I said, I mean, I can’t speak for other advisors out there, but this is exactly what you need and what it really does is it holds us accountable to that client in their retirement.
Because people will say to me all the time, I don’t understand all these investments. That’s okay. Let me show you the income plan, because that’s the only thing you’re really going to care about. This is the rate of return you have to. This is where all of your income’s coming from, your social security inflated over time.
Here’s inflation. Uh, over time, here’s going to be your paycheck and you understand where your portfolio has to be in order for you to be successful. If there’s a long term care event, if there’s a healthcare, uh, event, we’ve included that in there as well. It’s like we’re giving that client everything that they need, but there’s so many people out there that don’t have that.
Right. And again, folks, if you don’t have that, then you need to make that call today. Set up a time to come on in and sit down with Eric and. Whether you currently have an advisor or you’ve never worked with a financial professional before, we’re going to be taking the next 10 callers who are in need of that missing financial plan.
We’re going to create and customize a full blown financial plan, review value to almost a thousand dollars, and give it away, absolutely complimentary, no obligation. What this will consist of is simply taking the mystery outta financial planning by taking a look at what you’re currently doing and maybe just making some slight change.
Let’s map it all out. Your goals, income needs, expenses, tax strategies, and even transfers or generational wealth. We will get that plan built for you and see where it leads you. Let’s get you reacquainted with your investments without any obligation. In short, we’re going to take the guesswork outta financial planning.
Next step on WealthWorx Radio. When we come back, it’s time to ask the advisor some interesting questions and solid answers. Stay tuned.
Hey, we are back on WealthWorks Radio at Segment four. That means we go to the mail bag and well, this case email. Uh, but think of it like a bag though, right? Don’t you think? Yeah, I think so. Yeah, sure. So, uh, anyway, yeah, this is Well, forks Radio. Eric’s here. Joseph’s here, and we’ve covered a lot of ground today and I do think that, uh, there are some, some pretty interesting questions here today.
They always are, but, Ralph has checked in from Marco Island and, uh, he says, uh, he’s. Are there any other benefits to contributing to a traditional IRA? Besides deductions? I don’t qualify for deductions. I would like to make a well-informed decision. I plan to retire in two years when I turn 67. So this is actually a prime example of doing a backdoor Roth or another word for like a Roth conversion.
You’re contributing to an ira, but it sounds like in his. His income is so high, or he’s a part of a work 401K plan and his income is high, that he doesn’t get a deduction for his IRA contribution. However he could put that money in and then turn around and actually convert that to a Roth backdoor wise.
And this is what a lot of high income folks do in order to still contribute to a Roth while having higher income. Okay. And that, and that makes sense. And so if Ralph. So there is, there are ways that he could, you know, still take advantage of the situation. He wants to save money. Correct. Right. And it’s like we talked about earlier in the show, Steve, where our current tax laws are very low.
So he should put that money in, convert it to the Roth, cuz in the future, and it sounds like he is in a high tax bracket or a high income bracket right now. But now in the future because he is contributing to this Roth, he can actually take advantage of this.
Alright, let’s, uh, so let me ask you this. So, I know we talked a while ago and maybe things have changed since the hurricane, but you were talking about really putting, implementing those classes again that you did and, and that you had sort of redone them. Is that still part of your plan? Yeah, so we’re still working on the, on the classes and those should be coming out shortly and we will start to do those.
We are pretty much just waiting for Covid to get over with. And now of course the hurricane has kind of put a little bit of a damper on things. We just want to make sure the community is ready to get out there and learn again. but we are working on those, updating those because there’s so much, so many new things that have come out.
Now we’re working on the Secure Act 2.0. , that changes a lot of things in retirement. So we want to make sure that, the booklet and the material that we’re reviewing with folks is, As updated as possible and as relevant as possible. Sure. So, Eric, have you heard anything about Secure Act 2.0? I, I try to keep tabs on it, but, and I just keep hearing that it looks like it’ll pass in December, but I don’t know.
Yeah. Yeah. So I mean, I’m hoping to have the full, you know, renovation of that, sometime in December, so we can actually do a good part of the show on that with that new one up. It’s going to be a lot of interesting things, and it’s not what you see, it’s actually what you don’t see. Just like secure act, uh, one.
So the, the, the bottom line is, is that people always understand the top three things about that, but a lot of times they’re putting things in there that people don’t quite understand. And that’s where we’re going to really want to break it down for people and say, okay. But what about this? So we’re excited to show you that as well.
All right. Uh, very well. Let’s see. Laurel has, uh, written us from Boca Grand. Uh, she says, I’m 57 years old with 285,000 in a brokerage account. About the same in my 401k. I’m currently maxing out the amount I can put in my employer’s retirement plan. However, with the market continuing to go down, I’m wondering if I should just keep more of it in cash.
I understand with the market down, I am essentially buying shares on sale, but if the price continues to fall, I won’t have that long to recoup the loss because of my age. What are your thoughts? Well, I mean, you know, she’s 57 years old. She could live another 40 years. Yeah. So, I mean, if people say, and I really don’t understand where, where people say, I really can’t, I don’t have the time to recoup the loss.
Well, you don’t know that. I mean, the bottom line is, is that you really have to take a look at the asset allocation that you. and does it have the ability to come back? I mean, and that’s where the alpha in your account is super important. And I don’t want to get too technical, but, uh, we’re teaching people asset allocation and whatever got you in the hole may not necessarily get you out of the hole.
And so we have to find out ways that. You know when the market comes back, are you going to come back with it? And a lot of times if you have a half a million dollar portfolio and you’re down 20%, you’re down to 400,000. If the market comes back 20%, your 400,000 is only worth 480,000. So, What that really means is if you’re down 20%, you have to come back up 25%.
So on this one, like I said, I would have Laurel do an income plan, do a financial plan, but also do a personal financial blueprint, which is what we offer every single week. It’s going to show you the strengths and the weaknesses about your portfolio, and more than likely, you’re going to know more about your portfolio than ever.
All right. Well, and again, that’s a good thing to know more about your portfolio. Yeah. And we always talk about portfolio recovery strategy. This is what we’re actually implementing. I mean, we’ve had the portfolio recovery strategy forever and now all of a sudden in this kind of market, this kind of a year, this kind of an economy, this kind of a stock market, this is where you want someone.
Who understands what a portfolio recovery strategy is, and this is one of our specialties, actually. Portfolio recovery strategy. That sounds like something we could all use about Dono Air. I think so. I mean, there’s a lot of people out there who have a lot more questions than answers on their portfolio, and the portfolio recovery strategy is a super powerful tool for that.
Sure. And this is something that you guys have developed and, and just probably your gut instinct tells you to do stuff. Yeah. And this has been going on since 2001. I mean, right after. Oh, okay. So this is not. No, no. Right after nine 11, I mean, we implemented this right away. I mean, I remember. we in, in during nine 11, we steered clear of large caps and they suffered for 10 years.
Yeah. So if you had a large cap portfolio from 2001 to 2011, large caps was known as the lost decade. So if you invested highly in large caps, you didn’t do so well, but then all of a sudden gold energy. Uh, real estate small caps actually thrived after 2001. So there’s, there’s a lot of things where you have to make sure that your portfolio’s being managed, monitored, and maintained on a regular basis, and you feel that your advisors actually paying attention.
Hugh says, my business has a simple IRA for employees who desire to take part. Unfortunately, our advisor has gone radio silent for the past eight months. The other advisors in the company have been little to no assistance in regard to his where.
I’m fairly old school and preferred doing business in person, and the account has $750,000 in it. Is it time to find a new advisor? I definitely think it’s time to get, uh, more opinions about your account. I mean, if your advisor has gone radio silent for the past eight months, when the market has been as volatile as it has been, I mean, what other sign do you need?
I mean, that, it’s just like that in 2020, right, Joey? Right. I mean, so many people were like, well, I don’t really know what’s going on and my advisor’s not reaching out to me and here’s my portfolio. We hear this all the time, and I mean, it’s, it’s such an overwhelming process. I mean, We put ourselves in those client shoes where we’re thinking about, okay, my Think about if your account was dropping drastically, and your advisors know where to be found.
They’re not answering their phone or they’re not even reaching out to you. They can’t answer your questions. Think about how stressful that is. So, I mean, that should be the number one red flag in my opinion with an advisor where you, you need to start asking yourself, okay, I need to talk to somebody else.
And when you’re going to find that new advisor, interview multiple advisors, right? Find the one that’s going to actually fit your needs best. Don’t pigeonhole yourself to one advisor, cuz then you could be making the same mistake that you did the first. You want to make sure you’re listening to all these different advisors, see what values they bring to the table, find out what you truly need, and then make your decision and go from there.
But definitely, I mean, communication is such a big part. We want all of our clients to know exactly what’s going on in their portfolio, how it’s getting done, how it’s affecting their financial plan. And I know for a fact if Eric and I didn’t communicate with our clients, then we wouldn’t have many. So it’s ridiculous when we, when we see questions like, And again, I mean, I just think that that checking in process and you know, your advisor right now ought to be reaching out to you, and I know that’s what you guys do, right?
Right. And I mean, not only that, but it’s, you know, what’s going on in the portfolio. Can they answer that question? Is your portfolio the exact same as it was eight months ago or a year ago? Is there any changes that were made? How’s my financial plan? Look, I mean, these are all questions that you could be asking your advisor, and if they can’t answer them, then it’s time to get a second.
Sylvia is in Alva and she says, I’m 53, and concerned I’m not diversified enough. I have both international and domestic stocks, but at the moment, that’s all should I look into real estate investments or precious metals.
Thanks. Appreciate your tips every week. Uh, great question. I mean, Sylvia, you’re 53 years old, understand that you are still in the, uh, critical accumulation stage. So, you know, precious metals and that I’m not really big on right now. I’ve never been a big gold bug at all. I think that there’s better alternatives out there.
but I mean, if, if you’re taking a look at the portfolio, domestic stocks right now are probably still one of the strongest, most attractive investments right now, especially. So many of them have such an attractive, uh, in, in investment price. International is kind of tough right now. I mean, you still have this raging, assault on Ukraine and that is wreaking havoc, uh, over in the west.
So international is something that we’ve been clearing and steering away from. But again, there’s a lot of things that you can be taking a look at with growth in income. to, to make that accumulation possible. So again, I would get a financial plan done, an income plan, and also an asset allocation done and see what that really looks like.
Sounds good. I mean, again, uh, boy, that, you know, these are the kinds of things that people, obviously we sort of screen these questions, but they’re, they’re similar to what a lot of people are asking, so it’s great to just sort of address all of that. Yeah, and I think a lot of people, you know, feel so overwhelmed and the crazy thing is, There’s not just one question.
You know, it’s always interesting. Somebody will call in after the TV show or the radio show. Oh, I just have one question about retirement. Are you kidding me? Like, one question about your retirement. That’s not going to work. I mean, there’s so many moving parts that just change all of the time. There’s going to be a lot more questions and that’s what the financial plan is going to help you answer.
Gentlemen, thank you very much, and everybody out there again, thank you for listening. We always love to hear your feedback. Remember, you only retire once. Let’s get it right the first time. Go Dolphins, have a great week and an even better retirement.
Eric Kearney is an investment advisor. Representative of Retirement Wealth Advisors incorporated an SCC registered investment advisor retirement wealth. Retirement Wealth Advisors and this station are not affiliated. Exposure to ideas and financial vehicles should not be considered investment advice or recommendation to buy or sell any of these financial vehicles.
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