Income In Retirement

Brian Akers and Paul Franco from Akers Financial Group discuss strategies for creating income in retirement. They emphasize the importance of financial independence and planning for unexpected events like job loss. They highlight the need for a balanced approach to retirement income, including guaranteed sources like Social Security, pensions, and annuities. They stress the significance of tax planning, particularly Rothification, to minimize future tax liabilities. The conversation also covers the impact of income on Medicare premiums and the importance of a diversified portfolio to ensure longevity of retirement funds.

Transcript

Unknown: 0:00

The following is a pre recorded Show. Welcome to winning in retirement with your host Brian AKERS, Certified Financial Planner, professional and founder of AKERS Financial Group now helping you win in your retirement. Here's Brian AKERS, welcome

BRIAN AKERS: 0:16

to winning in retirement. I'm your host. Brian AKERS, president and founder of AKERS Financial Group. Here with me today is Paul Franco from AKERS Financial Group. We are financial advisors through AKERS Financial Group and through our RIA Arcadia as well. Paul Franco has been with AKERS Financial Group almost nine years now. How you doing today? Paul, I'm doing great. Brian. Good morning to you. I appreciate that. Good morning to everybody out there. So we have a show called winning in retirement. We want you to win throughout your retirement years by being prepared. And one of the things we wanted to do today was have a show called creating income in retirement. So the first thing is this, don't think this is just about retirement. It's about what we can do today to help our future self have the income we want, so that there will be a day when you can just retire or be financially independent, where you can retire

Paul Franco: 1:07

Exactly. Having that choice to be able to retire, that's a big part of what we do, right? Brian,

BRIAN AKERS: 1:12

that's the goal, is get them to financial independence and then guide them into retirement if we have that luxury of timing, right?

Paul Franco: 1:18

That's exactly right. Some people, some people come to us a little too late. Some people come to us right at the right time, but the best time to do is now.

BRIAN AKERS: 1:25

Or if they might not, might lose their job, or you laid off, and all sudden, we got to figure out, could they retire? Yeah, and that's all part of the planning concepts that we have to do. The hard part is that every situation we love to be able to go backwards in time and get everything right to where the way it should be, so you can retire easily. But that's not always the case. So when we do a show like this, it's called creating income in retirement, we're giving you advice, general advice, on what you should look into doing, and of course, call us so we can guide you through it.

Paul Franco: 1:55

Yeah, I was reading an interesting statistic where it's it's almost like almost half of people will retire before they want to, meaning it's either from a disability or a loss of job. And so the planning aspect of it is very critical, and that's really what we do. Brian, is to help plan for those worst case scenarios that you have the decision,

BRIAN AKERS: 2:14

yeah, I need people to be ready to retire before they think about retiring. The financial independence is where you work because you want to, because you choose to, and cause your money and everything's organized. So this show. The hardest part about this show is that I wrote certain outline for us, and it's gonna be hard to constrain ourselves into the quarters and get enough of it out. So we might have to go quickly on some topics. Sounds good. So what I want to do first is that when people retire, they have a general need for income. Do you Paul Franco, agree or disagree with that they need an income?

Paul Franco: 2:49

Yeah, they absolutely do need an income, and a lot of times it's sometimes more than what they think they need. You know, I hear that all the time. Brian, we have people come in and they're like, Well, I'm gonna live off of less. Well, do you really want to live off less? Are you going to take a big pay cut in retirement? That's a that's a very hard pill to swallow for some people, yeah.

BRIAN AKERS: 3:08

When someone says, Oh, we're not going to need much. We're gonna live on one pension or just as one of our social security checks bank the rest, I say, Well, are you going to eat? Are you going anywhere? What's going to retire? Going to look like for you?

Paul Franco: 3:19

Right? Yeah, it's a big deal. And the tough part is, for most people that don't keep a budget like a starting place is like, Okay, well, let's take a look at your paycheck after tax. After all the deductions, what are you living off of now?

BRIAN AKERS: 3:32

Yeah, so the net income that you bring home, if you make us guess, if you're okay, we would look at your net paycheck and see how you're doing with that, right, right? One of the things that when we're looking at new clients, would say, Well, damn, money in the bank. That means there's been extra from what's coming in, absolutely. So that's a way to see if things are all right. We also look at debt, credit card debt and other debt to see if you've been living beyond your means. Because sometimes, when you're working, that's the most money you're ever going to make. And then now you got to try to live off less somehow, right?

Paul Franco: 4:03

And that's, that's a big deal. I mean, you when you're coming from making a lot of income, and now you're saving all of it, or you're spending more of it, and you take a big pay cut, it is, it is hard to adapt to that. Brian, and that's I tell people, it takes six months to a year just to be get just to get used to retirement and get used to new flow of income.

BRIAN AKERS: 4:19

I use two years, two years, okay, two full years, because the idea is the flow of it. So usually when you retire, if you have a little bit of lump sum coming out, you might feel a little bit extra cash for a while, and then you pay your taxes, and then you got the flow of money, and then you realize there's no more coming. Yeah, there's no more bonuses coming. There's no more extra surprise hit money coming from you and from your job, then it sort of is what it is. And then you're like, all right, I need to dial up the monthly. So dial up the monthly, dialing up the monthly. So the idea of retirement is this, it's a cash flow battle. Cash Flow battle is this, you have money coming in and you have money going out. They need to match, or you have to have more coming in than coming out. Doesn't seem too hard, does it?

Paul Franco: 5:01

Paul, it doesn't. Yeah, it is. That is a basic math equation of, okay, what's the expenses? What's the income, the the million dollar question, Brian, is how to make that flow work? You know, it's almost like when you're in the working phase of life, you get into that routine, Brian, right, of just putting money into your 401, K, putting money into your retirement plan, and then that completely changes in retirement, right? It's like now you have to take the nest egg, you work so hard to build up and work out how the best way is to flow that income to retire, to fund your retirement, and now you're paying yourself from your investments, and that's a big deal.

BRIAN AKERS: 5:36

Well, some people that are incredible savers, it's painful to use the money it is to go from reinvesting to have it go to their bank account. Then there's people that if they can't wait to use the money, that's what it's there for. And then some have us calculate what's the maximum withdrawal they can take every year, and then they live their life within that right? So everyone's a little different, but the idea of having a plan is what works. So creating income in your retirement is about you. It's about your timing, where you are now, and what do you want it to look like, and if you do something about it, the earlier you start, the less you have to save per month to reach the goal. Yeah, absolutely. I mean, if you wait till you're 60 years old, when we retire at 62 you have to save a lot of

Paul Franco: 6:17

money. I know. Yeah, it's, it's a it's almost like in planning, like you mentioned there the idea of, if you retire, even just from 60 or 65 just a five year difference, which is not much time, is a huge deal, meaning it gives you an extra five years of savings. But then there's that extra layer, like you talked about Social Security, all those other aspects that are after age 60 that we could tap into,

BRIAN AKERS: 6:41

yeah, when I think about income, you think about certain people, you know they have the income already now. Income might be a pension. It might be they did real well, and so they have good social security compared to others. They might have rental income or rental apartments that give them checks. They might have a flow already, so they already know what's going to be coming in automatically so they don't have a worry on the cash flow side. And then there's some others that have to create it, and that's more and more work for us, is when we have to create the income to give them that money so they know they're okay, yeah?

Paul Franco: 7:13

And create the income to last them a lifetime, not to last them 10 years, to last them the rest of their life.

BRIAN AKERS: 7:19

Yeah, the math of retirement is trying to live off what you make, off of the portfolios, and not eat the portfolio and make it disappear, especially in your 60s, as you can do mid 70s or later, you might be able to take a little bit more out than early on. But the problem is, is when we're healthy and ready to go, it's really pretty expensive the first few years. Isn't

Paul Franco: 7:39

that the case? It's so true. It's a matter of, you know, those first few years of retirement people think, well, I'm going to take big pay cut. Well, that's when people spend more. That's the right time to spend more. That's when you're enjoying your first few years in retirement, that go go phase of life. Brian, yeah, you like the Go Go name. I like that. I like that. I copied that from you.

BRIAN AKERS: 7:58

I stole that from somebody else, though. So the go, the Go. Go. Idea is you're going somewhere, right? And whatever your goals are, it could be in an RV it could be on a plane, it could be in a bus, could be in your backyard. And then there's also the fact that you're around your house more, and then all sudden, you start seeing the things that that you need to fix.

Paul Franco: 8:16

Yeah, I had a meeting just the other day with a client who now her situation's a little different as a federal government employee, but she's had some time off, and she's like, I and she's getting ready to retire next year. I'm thinking, you're getting a little bit of a sneak peek at what your retirement is going to look like. And she's like, Paul, I found myself busier now than I am when I'm working full time. There's so much to do

BRIAN AKERS: 8:38

absolutely and then some people are good at that, and they know how to motivate themselves. I like retiring to something. And then when you know that, you sort of know what your expenses will be, and then you sort of work within it. We try to build our clients portfolios for retirement in a way where we can turn things on based on what's going on. Then we always like to have a little bit extra to be able to send them for that surprise project or that. All right, we need to do this now so that there's money there too. The thing that I want to try to point out here in the first quarter is that when you're recreating income in your retirement, you have to create income in retirement. The income won't be there if you did not save that money. The reliance on it, on the government, reliance on the corporations to provide us guaranteed income. So security pensions, that is going down and going not going away totally, but there's a future out there where we might see cuts on Social Security, your pensions. We've seen a lot of them go away in the private sector. A lot of changes,

Paul Franco: 9:39

lot of changes. And so that means we have to plan ways like, like you said, Brian, if they ever reduce social security in any way, not take it away, but ever reduced it, how are we going to make up that difference? Are you going to take a 25% pay cut, or do we need to replace that from somewhere else?

BRIAN AKERS: 9:54

You have to have the savings if you retire on a Social Security only, retirement that you have. Their choices. And that's not what we want people to do. We want to have other choices. And the fact is, you have to start saving today. No matter what age you are, if you're not already saving, you need to start saving. Need to max your max, max, maximize your match at your work. If they offer, if they don't offer, you got to do a Roth. And then if you're not, if you're if you're already doing that, you might need to save more and more money in other ways and other types of investments.

Paul Franco: 10:24

Yeah, you're right. And I had another example of this Brian, where the savings of maxing out the 401, K wasn't enough. Yeah, maxing out wasn't enough. Maxing out Roth, maxing out for one case, was not going to be enough to give them income that they needed, that they wanted in retirement.

BRIAN AKERS: 10:39

Yeah, the higher the need, the regular plans will not fulfill the need, right? And some people are going so fast, doing so well in their career, they're think they're okay because they Max the 401 k plan, but they only put in 31,000 and that's not going to get them 300,000 a year retirement, exactly. They need to put save more, and they need to have the ways to save more. And that's a different radio show. Ways to save more. But when we're trying to create income, if there's nothing to choose from we can't just create income out nothing.

Paul Franco: 11:08

Yeah, we don't like to shoot from the hip, per se, right? Brian of just say, okay, whatever income is there and I retire, that's what we're going to use. We can plan this out years and years in advance, many, many, many years,

BRIAN AKERS: 11:20

many, many years. So the hard part is, the earlier that you start, the better, and then you truly, truly, actually save less money and can reach the same goal every year we wait. We got to save more and more and more because we don't have the advantage of time. All of that takes time for us to let the money grow, let the money compound, let the money work for ourselves. All part of the plan, right? Paul, that's exactly right. So when it comes to creating income in retirement, we believe that you need to be responsible for your situation. You need to know where you are. Need to know how you're projecting out. We do financial planning at AKERS Financial Group, and then we implement that plan. Now AKERS Financial Group, we're local. We're independent. We don't report to a big company on Wall Street. We report to you. We have offices in Lutherville and Forest Hill clients all around the mid Atlantic region, all around the country, and even a few around the world. It's so easy to begin winning in retirement, you just give us a call. Schedule your free meeting with one of our team of advisors. Call 830, 3w, I N, R e, t, I R, E, that's a three, three. Wind retire, and we'll give you a call back on Monday to schedule your free in person meeting. Go to AKERS financial group.com or call us at 833-946-7384, to start planning for your retirement now. Will it last a lifetime? Let's make sure it does. We will talk about this when we return.

Unknown: 12:47

You're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again, here's Brian AKERS. Welcome

BRIAN AKERS: 13:03

back to winning in retirement. This is quarter number two. I'm Brian AKERS financial advisor from AKERS Financial Group. I'm president and founder. And then today we brought in Paul Franco. Paul Franco, good morning. Paul Good morning. Brian Ray, percent quarter always mean. First Quarter was tough one. We're trying to build out this income, creating income for clients. And we got

Paul Franco: 13:21

going, this is such an interesting show to do. As far as flow goes, you know, it's, it's, but we're doing our best, right?

BRIAN AKERS: 13:27

Yeah, flow, flow is the key of the first quarter. Does your flow work for you when it comes to retirement, or will that flow work? The cash flow was the key thing we taught in the first quarter. Second quarter is this, will it last a lifetime? Better yet? Will it last your lifetime? Yep. Now, do you know anything about the lifetime life expectancy statistics and an analysis of life expectancies?

Paul Franco: 13:53

Paul, I know version, so I'm interested to hear yours. Give

BRIAN AKERS: 13:57

your version, and then I'll add, I'll add a little my version to it,

Paul Franco: 14:00

pepper, salt and pepper. We'll go with that. Yeah. Well, the life expectancy, unless it's changed since I last read it was that a couple, a couple, a married couple, age 65 now it's a happy, healthy couple. I think that's very important

BRIAN AKERS: 14:16

to note. You added happy to that. I think you should. I know it said healthy. How they measure that? I'm not sure, right? I'm not sure if it said happy, said healthy, but the

Paul Franco: 14:25

statistics are that there's the you have a 50% likelihood that at least one of you is going to live to 90 Wow. So, so that's a, so, that's the, that's the those, that's the statistics. It's just you have that one of you, there's a 50% chance that one of you is going to make it to age 90. Mm, 90, and that's for 65 year old. That's 25 years, 25 years of income. That's a big deal.

BRIAN AKERS: 14:48

Yeah. So when we look at the life expectancies, there's a lot of stats out there. So life expectancy, if you go from birth to death, life expectancy, numbers are lower when you think about it, you've made. To 65, or 60, how much more time do you have? And will Your Money Last that whole period of time? And that's really one of the big key parts of financial planning, is, no matter how you build your portfolio, you got to manage your cash flow or your cash withdrawals with the idea of money needs to last a lifetime.

Paul Franco: 15:19

Yeah, it's it make planning a whole lot easier to sort of know what our time is. You know, in some ways now I would

BRIAN AKERS: 15:25

horrible. I would, I would, I would, that would be terrible if I knew exactly what day and that if I'm over. Yeah, that's true. It makes a little math. Might be nice for you financial planning people, I don't want to know that. Yeah,

Paul Franco: 15:38

it makes life planning a lot harder, right? That's true. The hope for tomorrow

BRIAN AKERS: 15:42

is a great motivator for it, no matter what age you are, yeah, the hardest part is you get older, you realize there is an ending date, and you want to enjoy your money that you have, and you want to balance it and make sure you have money. And so sometimes, as planners, we got to be that people person that's saying, yes, you have enough, or, Hey, you don't have enough for that. Like, so when some people come in with some ideas, have you ever had anybody call with an idea that you had to say no to?

Paul Franco: 16:09

Yeah, it does happen. And the tough part is, is that it's usually the situation where it's there, they're playing so much catch up, and it's and it's a bit we're very real, like real people. We want to give them realities and not fake information. And so I don't we're not in the business of telling people what they want to hear. We want to tell them what they have to hear. And so sometimes that can be hard. I had

BRIAN AKERS: 16:32

this one one client, even a client 25 years, but one year I had to say no to to the wife buying a family house that was out of state, so would have been a second home for them, but they were going to use it a lot, but she wanted to buy it because she didn't want that home to get out of the family's heritage, you know, because it's like an old farmhouse that was in the family for the last 100 and some years. But then the reality was, my question to her was, well, the money we have is enough for what you need, but it's enough to provide but there's not extra. What do you want to give up to have that priority? Do you want to give up something else, like a certain amount of vacations per year, a certain level of income per month, to be able to have that because there wasn't enough money to do everything that she likes to do. But so I had to say, I don't think you can afford that, that house, that Heritage House, let's call it, yeah. And so she does bring that up every once in a while. Some years, it's like, I'm glad I didn't buy it. And then one time it was it would have been nice. Yeah, I said lot of things are really nice. I wish we could go back and do things. But when it comes down to reality, you got to be sort of conservative on your retirement income planning, to make sure your money does last a lifetime. So conservative that we really like people to think about having some of your income guaranteed so that that money will last a lifetime, guaranteed by somebody, right? Yeah, yeah. It's

Paul Franco: 17:56

very important. The guarantee aspect of it, you know, because we hear so much Brian about this idea of ultimately taking a 4% withdrawal off your 401, K, 5% withdrawal. But that's non guaranteed income. It's not guaranteed income. It it's a systematic withdrawal that eventually can run out. And that's a that's a very hard thing. So we like to have streams of guaranteed income, guaranteed income that's going to last you the rest of your life and last the rest of your spouse's life as well. Yeah,

BRIAN AKERS: 18:25

so how do we do it? How do what do we do at AKERS financial year with our clients? What's like our standard ideas that we use to provide levels of income when needed?

Paul Franco: 18:34

Yeah, there's cores, core values and core principles we have where, I mean Social Security is one stream of income that's guaranteed that's going to last you the rest of your life. There's pension. So pensions can provide income that can last the rest of your life. We also use the concept of annuities, fixed index annuities that can provide guarantees inside of income to last you for the rest of your life, and even increasing income to combat combat inflation. And then we compare that with some level of non guaranteed income as needed when there's extra time of you know, if say, say vacations, there's other costs that happen throughout the year. For retirees, we might have our fixed costs covered by all the guaranteed streams of income, but then we still have it doesn't mean we take all the risk with the other money, right? Brian, we still have other aspects of money we're going to draw from for those additional costs, like vacations, those, those one off, like 10 to 20,000 a year costs that can happen.

BRIAN AKERS: 19:32

Yeah, it's a combination plan. And it's easier to plan when people have the assets built up so they can then use them over time. The hard part is that the guarantees, so guarantees are buying if they're through an insurance annuity, is guarantees are the only guarantees from the company, not from the government or anything like that, right? Yes, yes. And so a guarantee income would come off of things called income riders, what's called, which are charging fees for them. Yep. Now in. Income riders, can you try to explain

Paul Franco: 20:01

it? Sure? Sure. Yeah. The idea of income riders is that ultimately you pay could be a percent, could be a percent and a quarter you you pay a fee to have the ability to draw income for the rest of your life. Now, what happens is that when you pay for an income rider, you get to take income for the rest of your life, but there's still a cash value. There's still a death benefit if, God forbid, something happened to you and it doesn't pay out in full. Why you paid for the income rider is so that there still can be a death benefit. There still can be cash value you can draw from if necessary.

BRIAN AKERS: 20:36

Yeah. So one of the rules that have happened in the 401 KS is that the 401 k is basically, how do we put it nicely, a 401, K plan is out there, and they are adding in annuities as an option. And the annuity is an immediate annuity, and it's a payout that is going to be, how do I say over a lifetime? And it's like an immediate and that you put your money in, you can't get your money out.

Paul Franco: 21:04

Yeah, it's like a pension, right? It's like, it's almost like, when that money dries up, and ultimately it gives you income for the rest of your life. But if you pass away, if your spouse passes away, that money's gone. There's no death benefit. There's no cash value you can draw from. So, yes, while it might combat against longevity, that it still might not be the right answer. And so that's where the planning comes in, where we can sit down and say, Okay, well, how much income do you need? Is legacy a part of what you want to do is there more than enough money to last you the rest of your life? Well, then we don't need those, those immediate level annuities that you know you lose, you lose a lot of the benefits that that you wouldn't have to deal with unless you had an income rider. So

BRIAN AKERS: 21:44

yeah. So the idea is this is that if you need income and you have limited assets, the more guaranteed, the better. And the other concept we use is that if you have more assets, you can take more risk and get your income off of flow and off everything like that. But the reality is that when it comes to planning and planning out your money, a lot of people do lower their risk, and they use bonds. And by using bonds, what they have done is created a way to have lower risk. Bonds pay interest, but bonds have principal risk, especially bond funds, that's the main thing that has principal risk, individual bonds, if you hold them to maturity, you get your money back. So it's not a bad thing, but interest rates, if they're three, three and a half percent, and that's all you're getting, that's not even the 4% withdrawal, and there's no growth on it at all. So in Portfolio design, having some annuities, some the fixed on the fixed annuities, we're not a variable annuity fan, because that's the one that charges lots of fees. But generally, when we're building out an income plan, we use fixed annuities with a rider. The rider takes away from some of the return on it, but gives us the other thing, and that is longevity, a lifetime guarantee. The reality of retirement assets is that you have to take the money out. You can't just sit in there forever. So at 7375 now you got to turn things on. In some cases, people need to turn on right when they retire.

Paul Franco: 23:05

Yeah, I have a good story we can do in another quarter, maybe of that situation that I had. It's, you're exactly right. It's a matter of, those are the surprises, right? Brian, it's like, whoa. I built this up. I'm living off a Social Security and pension. I don't need to touch this money. Well, that's, that's the problem is that you do eventually have to have

BRIAN AKERS: 23:22

a new client, just for me with them yesterday. And the hard part is she knows that next year her withdrawal is like almost $100,000 or RMD, and she just doesn't want to talk about it. And like said, Well, let's take some out this year. Why I don't want to pay tax now, so I'm trying to levelize your taxes. That's a whole nother radio show about levelizing your taxes. But here creating income at retirement, you need to consider ways of getting lifetime guarantees, a lifetime income writer, once you get all the information, and a high quality, highly rated insurance company, you can see if it makes sense for you, and that's for a piece of things, do not try to build portfolios that are fixed with 100% of your money. We've seen that, and we've tried to have, we had to fix some of

Paul Franco: 24:05

that right? Sure did, yeah. And we've also seen Brian A lot of times. And this goes in a little deeper, so I won't, won't do it, but that idea of having, you know, overly, overly concentrated portfolios and in stocks and bonds and annuities, you don't want to do that. You want to have a diversified portfolio, even among asset

BRIAN AKERS: 24:23

classes. Yeah. So in retirement, we do have to change how we invest our money, because we're in distribution, set accumulation. We got to build it over time. So we're talking about all this. What we're really talking about is this is designing a financial plan, creating income for you, not for anybody else, not for family or friends, it's going to be different than everybody else, because you are different. We love doing this, because we get to figure out where you are now. We call that financial fingerprint. We take that information and we take out the assets, we look at the taxes, we do the planning, we look at things called Irma, all kinds of ideas, and we bring them into the effect. And. And say, This is how you can distribute your money, pay the least amount of tax and build this over time. That's what we love to do. The plan is for you, not about anybody else, just for you. So at AKERS Financial Group, we invite you to join us by giving us a call to have that free personal review and begin winning in retirement with us. So give us a call at 833 win retire and schedule that in person. Meeting that's 830 3w, I n, r, e, t, I R, E, and we'll call you back on Monday to schedule that meeting. Retirement income is taxable unless you do one thing, we will explain when we return

Unknown: 25:37

you're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS.

BRIAN AKERS: 25:52

Welcome back to winning in retirement. I'm the host. Brian AKERS. Here with me today is Paul Franco. We do invite you to our website, at AKERS financial group.com, that's a k, e, r, s, Financial Group, calm. You can go there. Hit our radio podcast. You can hear copies of this show. You can hear a lot of other shows, all different topics, anytime you like, right there through our website. All right. Paul Franco, welcome to third quarter, second half of the show. You ready to go?

Paul Franco: 26:16

Yeah, as you were saying that, it's, do you have, you have, do you have clients? Brian, I have this. I wonder, if you do where they'll just, kind of, they, they have us on as, like, background music, like back, you know what I mean? I hate to even say it. It's like we have ones that we have clients who are incredible. They listen to our show, they hear what we have to say. And then other ones are like, Yeah, I'm just, I'm working in the shop. I hear you guys in the background. That's, you know, ever you have anybody like that,

BRIAN AKERS: 26:40

yeah, I do. I do. I have lots of stories there, but mainly I found that when they go to the website, a lot of people are getting ready to retire, and they really want to learn the topics again, yeah, and then they come into the meeting. I got some questions for you. Add one guy, three pages of notes off of our radio shows. Yeah, that's pretty interesting. That's awesome. All right, so go and check our website out. I find it that good place for information. But the main thing we want you to understand is this, is that information is great. How you apply it to your life? Is what financial planning is about. AKERS Financial Group, we begin with financial planning. We are considered a fee and or commission, depending on what's best advisory and brokers, we will work with you and guide you from where you are and what you where you need to be, and we do this through retirement planning. So when we're talking about creating income in retirement, there's a lot of topics we got to cover now this this quarter, we're going to cover a tough one. Is a hard question, Paul, but is retirement income? Is it all tax free, or is it taxable when we retire? What happens? Yeah,

Paul Franco: 27:43

it is. It's usually taxable. And that's and all that money you deferred in taxes is coming due now that you're retired.

BRIAN AKERS: 27:50

Yeah. So if you pre tax everything, and that's your only savings, then every dime is taxable on the way out. What we do in the show is we talk about diversifying your money saving multiple ways, so that you have multiple choices when it comes to creating income. Yeah, now, so retirement income. Have you ever had anybody actually asked you that, hey, it's tax free, right? Paul, yeah.

Paul Franco: 28:13

And even more recently, the idea of, well, Social Security is tax free, right? Paul, Social Security is tax free. Well, maybe for some people, but not for all.

BRIAN AKERS: 28:22

Well, there was a promise in an election that so Security Tax Free, and that ended up on the one big, beautiful bill, right? Yep. And so I think the stats are, 86% of people will not pay tax on their social security on the federal Marylanders, we don't pay tax on Social Security as of right now. It's been going on that for a few years. The other weird thing would be, when we have the combination of all this is taxation on Social Security truly going to be there. Well, so security, with that credit, that's going to give us the credit. If you make under a certain level, higher income, you will pay some tax. So the idea is this, that's social security retirement income is retirement IRAs for one case, withdrawals, all of those pieces. And that's really other pieces that can be taxable, yeah,

Paul Franco: 29:09

and a lot of times it is. And there are certain states, right, Brian, where it's not taxable, but ultimately, in planning. I mean, I've had this example too. This was a recent one where they're, they're, they're actually not going to retire here in Maryland, but they're going to go retire to Tennessee. And Tennessee is a state income tax free state at the moment, and so the idea of doing filling up tax brackets, paying more tax, it's, well, you're actually going to pay less tax from moving down from Maryland to Tennessee in just a few years when you retire.

BRIAN AKERS: 29:37

Yeah, that's true on the income Tennessee makes their money off a sales tax. Yeah, they get you out other ways, right? Every state makes their money some way, and so you got to understand that, understanding your taxation now and in retirement is all very important, but that's a big expense in our retirement budget. We started out this show creating income and retirement show, and talked about cash flow being a key. And then the second part was about lifetime. Can sure this money lasts a lifetime, and then the idea of taxation, this leads us to one of our topics that we love, and that's rothification. Can you spell that? Paul, no,

Paul Franco: 30:14

wait, let me go slow. Sorry, Roth if vacation, yeah, I could spell it all right, good, my little my little brain. Cancer, you can

BRIAN AKERS: 30:21

help people with rothifying their life, right? Absolutely, absolutely. What's the what's a simple way of describing how to Roth things, how to turn them into a Roth?

Paul Franco: 30:29

Yeah, it's taking money that you are going to have to pay tax on later, paying the tax on it now by doing something called a Roth conversion, ideally, paying it at a lower tax rate, because taxes may go up, your income may go up, ultimately, and taking that money and now building it in something called a Roth Roth IRA, where it's now growing for you tax free. And that's the that's a core concept of what we like to do. We are believers that taxes will go up in the future, and because of that, ultimately, taking money, paying tax on it, now and never again can be a very good planning topic.

BRIAN AKERS: 31:07

Yeah. So if I was going to explain Roth, I would explain, if your money is pre tax, it's like in one of your pockets, and to get it tax free, the process of going from one pocket to the other, you got to pay tax. So that's called Roth conversions. One of the easier ways to build up a Roth over time is truly out of your pay, pay tax now, never again. And that might be out of your at your work, through work, through our jobs, they might actually offer you the ability to have a Roth 401, K, a Roth account where you can pay after tax. I find that to be a great long term plan, because when you get to retirement years and we say, hey, this money is taxable, but that other bucket of money, you've already paid the tax on it and in Roth, all the growth is growing tax free and comes out tax free when you need it. Yeah, it's a big deal. It's a big deal. So the idea of creating income in retirement that's that's going to be there for your cash flow, lifetime, guaranteed and tax free. You got to plan that early on, and you got to do it now. You got to go to work and change your from pre tax to Roth. Maybe you have some clients where we if they're doing 15% of pay to pre tax. We go 10 to pre pre tax, five the Roth, and the next year we flip it again, trying to get as much the Roth as possible. Yeah, if you're at a high income, if they allow you to keep going, there's a new rule next year where over a certain level of income you're you have to do a Roth. They won't let you pre tax anymore, which is not a terrible thing. I'm okay at a high tax bracket, rotifying everything so you never pay tax again. Yeah.

Paul Franco: 32:45

Isn't it such a nice thing when, when we're able to have these income flows and clients ask for money, and we can send them money, and if they need, you know, if they need 8000 bucks, we can send them$8,000 we don't have to send them 10, take 20, 20% out for taxes, and then to give them eight, isn't it? Isn't that nice. It's to give them to have all that money be theirs is a wonderful thing. Yeah,

BRIAN AKERS: 33:07

when you have a Roth, there is no required minimum distribution. That means when you're 73 you don't have to take money out. They'll let it stay in there, and that can grow and become an asset for your family down the road, and they'll have 10 years to take it out tax free, so it's not a bad thing at all. Yeah, you pay tax now, though that's the that's the

Paul Franco: 33:25

pain. It is the pain. And I, my joke with clients is that you're gonna hate me now having to write this check out to the IRS and and most of them, they understand the concept. It's like, No, I understand that I'm gonna pay the tax now and never again. And I always You'll thank me later. You'll thank me later, when all that money grows for you? Tax

BRIAN AKERS: 33:41

free? Yeah, so the show might be creating income in retirement. You might say, I don't need that. I'm not retiring. The idea here is this, Hey, be ready to retire. Let's create that income in your own future, and let's make it tax free by deciding today to pay tax on the dollar to let that money grow. Maybe it becomes$3.05 bucks, you know, whatever you can add zeros to that example, if you

Paul Franco: 34:02

want, yeah, earlier you start add a few more zeros and all that money's tax free.

BRIAN AKERS: 34:06

And yeah, yeah. So retirement income is taxable in your retirement years. You just got to work with that system. You also have to work with other things that could take away from your from your overall cash flow that is drawing too much taxable income. It's something called Irma. Can you explain Irma to us in a 32nd version?

Paul Franco: 34:25

Oh, boy. Okay, let me try. Irma is where your income affects your Medicare Part B premium. If you make too much money, you will pay more Medicare premium than the basic level, which in 2025 is $185

BRIAN AKERS: 34:40

a month. This affects people that retire single or suddenly become a widow or widower greatly because they had good income. They're under the limits as a married couple, but then, because of having all the pre tax money Austin, they have to withdraws on a single person. All sudden, this kicks in, meaning your medic. Premium will be higher. Yep, this is called means testing, and someday this might be applied to social security. Also, I

Paul Franco: 35:06

think it will. Brian, you know, it's, I really think it will. There's some stuff that they have to change with Social Security to try to be able to pay out the full benefits that it promises people, right?

BRIAN AKERS: 35:17

Very true. So when we're talking about retirement, income is taxable. It means you file taxes. There are people that if you have only Social Security income, you could don't even have to file taxes. But if you have other income, interest, dividends, other money coming in, you got to then take that money and turn your taxes in. It might have to pay. Now, one of the concepts I just want to hit here at the end of this third quarter is this, on your tax return, you might be paying tax on interest and dividends already. One of the easiest things in retirement is instead of having that money reinvest it, you turn it on. Now, some of the mistakes we've found is people will be reinvesting, and then they're withdrawing from another account and paying more tax than they need to based on the whole way the flow works.

Paul Franco: 36:04

Yeah, that's exactly right. And dividends, interest, that flow, that flow is so important. Why pay double the tax taking it from a different source of money? You're exactly right. That's that's a that's the exact way in planning where we can say, okay, we're paying this amount of tax already. Let's use that for the income, and let that other money grow. For you,

BRIAN AKERS: 36:22

I've always done it that way. Sometimes the answer we get, and I'm like, well, we can pay less tax. Let's work on paying the lowest tax so that we can have other money save money, because one of the biggest expenses is going to be your taxes, and then insurance. That's why in cash flow planning for retirement, we want to look at the income, they also look at expenses. Ways to cut that, ways to lower the taxes over time, is a big deal, to save you money, to make this money last a lifetime, if

Paul Franco: 36:50

we can fill up your tax bracket, pay and then a lower tax rate and permanently keep lower taxes going forward for you and by paying the tax now, that can save people 1000s, 10s of 1000s of dollars in taxes over their lifetime, and to be able to show that wonderful thing,

BRIAN AKERS: 37:04

yeah, it's called maximizing your bracket, rather than just minimizing a lot of times with accountants and you just want to pay the least amount of tax, and you even make some short term decisions that kill you down the road, by getting a deduction today when you should have done a Roth today, because you got to Have a long term view of your retirement years, understanding that they're coming for the taxes on time They sure are. That's one of those things that are guaranteed. All right. So as we talk about this, we want you to think about retirement. You know, you think about what's your retirement is going to be like? What I've found is this that clients say to me, the best part of retirement is getting their time back, where you decide how to use your time before retirement, your time is tied up with other commitments, you know, mainly your job. A lot of that goes away in retirement, your time is now consumed by things that you want to do. It's so easy to begin winning in retirement. Go to our website at AKERS, financial group.com, scroll to the schedule meeting section and let us know you'd like to schedule your free consultation with one of our team of advisors. That's AKERS financial group.com, or you can call us at 833 when retire. That's 830 3w. I n, r, e, t, I R, E, we'll give you a call on Monday to schedule your free in person meeting. Are there any guarantees in retirement? Yes, and we will explain when we return,

Unknown: 38:21

you're listening to a pre recorded Show. Welcome back to winning in retirement. Call 833, win retire now to schedule a visit with Brian and his team and begin winning in retirement once again. Here's Brian AKERS indeed.

BRIAN AKERS: 38:37

Welcome back to winning in retirement on the radio show put on by AKERS Financial Group. Here with the pair, here with me today is Paul Franco, I'm Brian AKERS. We're both financial advisors at AKERS Financial Group, which means that we're here to advise people on retirement. We invite you to give us a call, check us out and come in for a free consultation about what's going on and see how we can be a good fit for you and your family. Our AKERS Financial Group is our company. Paul Franco is one of the advisors there. Paul, fourth quarter is always fun in games and sports, because that's winning time. It is. It's clutch time, it's winning time. Now, we do want to bring all of our talk to back together, but we got to talk about one thing first, and that is, are there any guarantees in retirement?

Paul Franco: 39:21

Yeah, there are some, there are guarantees. There's ways you can provide guarantees in retirement. Yes, okay,

BRIAN AKERS: 39:28

now the word, are there any guarantees in retirement? Guarantees is we don't have some guarantees, like, we don't How long have we retired? Right, right? We don't know. Basically, Will everything be paying us. Will Social Security keep paying us? I mean, we have a government guarantee that they're going to do it, but then they also are telling us for years that in 2034 they're going to lower the payment. Our companies are telling us, here's your pension with a caveat that says, subject to the pension benefit guarantee fund. Yeah. Yeah. So is there really a guarantee out there and what, and what kind of risk level might be associated with and with it, and how does it work?

Paul Franco: 40:07

Yeah, I think the guarantees you're talking about, too, is a lot of pushing that guarantee onto something, you know, it's pushing that guarantee in the pension to that pension Guarantee Corporation, or pushing the guarantee of the indexed annuity to the insurance company, right? So, so the guarantees are pushing the guarantees of your money in the bank is pushed to FDIC, you know, it's pushed to something. And so there are guarantees. And I think it's very important to understand that there's also guarantees that we're not talking about with that too, right? Brian, it's that idea of in life, there's guarantees. But yes, the guarantee, we push to something, and that's what I think we want to make people understand. We want to help people understand what that

BRIAN AKERS: 40:48

means well. So there's different types of retirees. Some of them might be not worried about it. Some people are more than worried about things such as the guarantees and the risk of life, and they might not want to invest money at all in retirement, it will take zero risk. Our answer is a balanced approach, a balanced approach of growth, growth that can keep up with inflation over time, so that your money will last a lifetime in balance with the withdrawals that you're taking and monitoring and tracking it the year after year. These guarantees, guarantees are coming from an air portfolio is from usually use of a fixed annuity company, so the risk level is based on the company's ratings, right? Paul,

Paul Franco: 41:29

that's exactly right. And so we only utilize companies that are a ratings or better. We don't utilize other companies, even though they may be able to provide a better benefit to our clients, as far as a little bit more income. But if we don't have certainty and confidence in that company being around for well after you and I will be around then, then that's that's something we don't want to do for our clients. Yeah.

BRIAN AKERS: 41:49

So let's cover a little bit about annuities. I believe annuities should be designed for growth or designed for income. Whenever you try to say they're both, it gets very confusing. So let's cover like two different cut types of income annuities. Let's say there the first one is has a chassis, or the basic policy is built around a fixed index annuity. So explain that real quickly.

Paul Franco: 42:12

Sure. So fixed indexed annuity would be that the growth, the growth is tied, I say tied, not invested. It's tied to the market. It could be the s p5 100. It could be some other index. And what happens is, let's use the S P for an example. If the s and p5 100 goes up 15% the cap, the limited on the growth might only be 10% okay, so you're limited on the upside. Now, when the market goes down, down down 1% down 10% down 20% the index, the fixed, indexed annuity, would give us no risk. There's no loss of principal risk. So we we pay for that, right? It's that idea of, well, our limited we're limited on our upside growth, but we have no downside risk, and that's how we like to use those on a protected portion of a portfolio.

BRIAN AKERS: 43:02

Yeah, so index annuities have growth designed that way. Even the income riders would have an investment that way. But then they add on to that policy a writer, the writer for a fee that comes out of the policy every year, pretty much a little bit every day, that writer gives you something, some companies will give you guaranteed income for life, for you, and even a joint choice, you and a spouse. You also can have it where it's a flat number, or it can escalate based on if the policy makes money, where it can escalate over time.

Paul Franco: 43:33

And that's how we like to use them. Right? Is that? That's the idea of, well, we're going to have inflation risk to the future, and so we want our income to escalate, at least to try to keep pace with inflation, because 1000 bucks a month now versus 20 years from now, is worth a whole lot less with inflation. Yeah.

BRIAN AKERS: 43:51

So these index annuities with income riders, there are some risks to it, and if you want liquidity to get all that money out, there will be an early withdrawal penalty. So you got to make sure you know what that cost is. You also have to know how long you're tied up an income annuity. Basically, you want it there for a lifetime, because you're taking that company's guarantee to pay you as long as you live. All very, very important. The thing when it comes down to index annuities with income riders with a fee, there are some other more complicated options out there, something called a roll up. Can you try to explain what a roll up is?

Paul Franco: 44:25

Yeah, there's a lot of people that talk about those. And the concept of roll up is that you may get a 8% roll up, a 9% roll up, what that is, and it's, I'm hearing roll up, and think for roll up. I don't know why I'm thinking that in my mind, but that roll up goes to a separate value, okay, an income account value. It is not an eight or 9% roll up to the cash value. You don't make 8% a year, correct? If somebody tells you you're making a guaranteed 8% per year on that money, that is not true. To take that. Eight or 9% roll up. It goes to a separate income account, value that's used to calculate your lifetime income. It's used to calculate

BRIAN AKERS: 45:09

it. And so we use a roll up if we know we don't need income for a while, for a long time, exactly. And so you can get those guarantees, and those guarantees, it's all about what guy or guarantee is going to fit this situation, if you need income right away, you don't want a roll up policy, right? And

Paul Franco: 45:24

what I love about the roll up is that ultimately, it will also tell us exactly how much income we're going to get after five years, after six years, after seven years. It tells us exactly what it's

BRIAN AKERS: 45:35

going to be. But most of the time, those are guaranteed payouts. They never go up after that. So it's just part of the answer. So when it comes to annuities, understanding them, understand that they're just a tool. They should never be the one thing you put all your money into. It should be part of a portfolio of different designs. In our portfolios, it takes the place of bond, the bond funds, especially, that's really the design that we try to use. So we're trying to talk about here is in retirement, we do need some guarantees. We need to know that checks going to show up. You know that checks going to show up no matter how long I live, is going to run out when I run out? Type thing is, it's not a bad idea.

Paul Franco: 46:11

Yeah, it we need income to last us well into our 90s, and that's the reality,

BRIAN AKERS: 46:16

yeah. And with two spouses, you never know who's going to be the one and the one that served that survives, really needs to be taken care of and make sure there's money's there.

Paul Franco: 46:24

You're spot on, and exactly with that social security aspect of it, like you talked before, the idea of, well, what happens if one spouse passes away, and you're both throwing Social Security, you're going to lose the lower of the two benefits. So where's that money going to come

BRIAN AKERS: 46:38

from? And that's why creating an income plan, an income plan that's for all the good days and even some of the bad days. So worst case scenarios are survivorships, if someone passes away too early, or if you guys live too long. I mean, if you live a long, long time, will your money last? All part of financial planning. So creating income in retirement has been the name of our show, and throughout the show today, we started out with cash

Paul Franco: 47:00

flow, right? Paul, yes, yeah, cash flow is key. It's critical. We

BRIAN AKERS: 47:04

think that's the key thing to retirement. We'd love people to be out of debt if we have no bills, retirements pretty easy.

Paul Franco: 47:09

Yeah, when you have no bills, no monthly costs, you don't need any income, right? And that how that math lines up. That's the house

BRIAN AKERS: 47:16

is gonna cost you money. That's exactly because it costs money every time you start the car up, and if you go anywhere and go on a trip, it cost you money. And then if you want anybody to go with you, it costs you money. So there is a balancing of where you want to spend your money, and understanding what's what your goals are, and getting it all worked together. So we did talk about cash flow. That's a very important thing here at AKERS Financial Group, is getting people out of debt so that we can afford the cost of retirement. A lot of times that could be your health care, if you're blessed with a company that provides it, that's a really big deal, and hopefully that will be there long term. Just have to have investments, just in case it's not. Yeah. Then we talked about longevity, about the idea of there's two healthy couple, we think you said a healthy, happy, happy, happy. You said happy and healthy, happy, healthy. At 65 How long will they last? And the statistics show that, based on history, that 50% is a chance of one of those spouses lasting beyond age 90. So security and all is designed for like 81 ish for males, and like around 8384 for female, something like that. And so this is beyond that. Now obviously the longer we live, Social Security, if you wait longer, it would be more money. But we never know. The ideas that we talked about, from the cash flow to the guarantee to the taxation, where, if you're looking at your future and saying, hey, I'll pay tax now, never again, we'd love that idea. And then making some of this guaranteed, that guaranteed piece is for a part of it gives you some money to be that guaranteed, fixed money coming in every every month, so that you can know that's going to be there. You don't have to wait by the mailbox or wonder where it's coming or will it last. You don't want to ask that question, hey, will my money last?

Paul Franco: 48:53

Yeah, and that's you don't want to have when you have a market decline, or you have a large, prolonged market decline, you don't want to have to worry about whether you have to go back to go back to work or if your money is going to run out. You want to have some guarantees. You need to. You really should.

BRIAN AKERS: 49:07

If you think back in history, think about the 90s. There was a lot of technology came out in the late 90s, and the stock markets and NASDAQ's roared way up. And then the 2000 started. So 2002 1010 was a time period where the s, p5, 100 was negative for a decade, and through balance and diversification, you can build a portfolios that can allow for, if that's your retirement decade, for you to be okay, even in worst case scenario. And that's what you got to do when you're planning, is make this money last a lifetime, no matter what's thrown at us.

Paul Franco: 49:39

Exactly. Yeah, that's a perfect example. Yeah. Now when

BRIAN AKERS: 49:43

it comes to creating income in retirement, we always begin with a talk, right? You sit down and talk with your clients,

Paul Franco: 49:48

Paul, we do and we sit down and we just get to know you and see how we can help, see what you've done, what you've worked through, and what you've built up, and then how we can utilize that to give you income for the rest of your life.

BRIAN AKERS: 49:58

Yeah. So every situation is. Different, and that's why we invite you to come in, sit down with an advisor. Our team of advisors are going to listen to you, understand that we need to read a lot of paperwork, that you have to be able to come up with the right answer for you and your family, absolutely. All right, thanks. Thanks very much. Paul. Was good show today. Appreciate you talking about creating income retirement for everybody. Thank you, Brian. All right, and now we look forward to meeting with you. We want you to win in your retirement by taking this opportunity to begin planning with us at AKERS Financial Group to schedule your free meeting with one of our team of advisors. Go to our website at AKERS financial group.com scroll to the schedule a meeting section and let us know you'd like to schedule your free meeting right there. That's AKERS financial group.com or you can call us at 833 win retire. That's 830 3w, I n, r, e, t, I R, E, we'll give you a call on Monday to schedule a free in person meeting with one of our team of advisors. Start planning for your retirement now. Go to AKERS financial group.com or call us at 833-946-7384, thank you for listening. I'm Brian AKERS from AKERS Financial Group, and we want you to be winning in retirement. You've

Unknown: 51:06

been listening to winning in retirement with your host, Brian AKERS of AKERS Financial Group. AKERS Financial Group offers securities through arcados capital and SIPC and FINRA member firm. Advisory services are provided through arcadios wealth. AKERS Financial Group and arcadios do not share any common ownership, neither arcadios nor AKERS Financial Group provides tax or legal advice. Advice given on winning in retirement is general in nature, and one should seek further advice from their financial advisor, broker, attorney andor tax accountant before investing, be sure to read each prospectus carefully to understand all the risks associated with each investment. Examples and scenarios shared are meant to be for illustrative purposes only. Past performance is not indicative of future results.