Reliable Wealth Financial Hour Podcast
When you're ready to retire, there are decisions to make that will impact the rest of your life. Father and son team, Bob and Cole Falter and the Reliable Wealth Financial Group share retirement income strategies and tips for navigating your retirement journey.
For additional information and important disclosures please visit www.rwfhour.com
Reliable Wealth Financial Hour Podcast
Does your retirement financial plan cover all the bases?
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Do you have a number in mind for retirement? A savings number? On the Reliable Wealth Financial Hour podcast, Bob and Cole Falter discuss the importance of avoiding comparisons and finding your personal number.
Plus, Bob and Cole explain how a financial advisor may be able to help you plan for healthcare and taxes.
This is the Reliable Wealth Financial Hour with Robert and Cole Falter, their family, and they're a team helping you navigate your retirement journey. Over the next hour, tips to optimize your savings.
SPEAKER_02What if that savings is in risky investments and the market crashes? Right. That's a huge thing to think now instead of dollar cost averaging your dollar loss averaging.
SPEAKER_06Strategies to protect what you've earned. Is that gonna last you all the way through retirement? And ideas to help keep your retirement assets on track. So let's get started. Here are Robert and Cole Falter and the Reliable Wealth Financial Hour.
SPEAKER_07Hello and welcome back to the Reliable Wealth Financial Hour. I'm Cheryl White, and today we are tackling one of the biggest questions facing anyone planning for the golden years. How much money is enough for retirement? And maybe even more importantly, how do you make sure that the money you've saved actually lasts through retirement? Bob, those are a couple of big questions, aren't they?
SPEAKER_03They certainly are, Cheryl. Good morning to all our listeners. Thanks for tuning in to the Reliable Wealth Financial Hour. This is the show designed to talk about income. And we are talking about income today, aren't we, Cheryl?
SPEAKER_07We sure are.
SPEAKER_03Do you know, uh, Cheryl, you want to hear something really kind of funny? And our listeners probably want to understand this too, but we had a lady that called from the radio show, and one of her first questions was not about her income. It was not about how much money it takes to retire. She wanted to know how those chickens are doing at Cole's house.
SPEAKER_07We haven't talked about that for a while.
SPEAKER_03Well, tell our listeners, just give them an update on the sad, sad chicken story. They're now nuggets, aren't they?
SPEAKER_00Uh they're not nuggets. No. They were donated to someone that wanted chickens. And even though we thought we wanted chickens, when it started getting cold and we found out that they're probably going to lose their feathers, and it takes a lot of insulating the coop and other things that I didn't really feel like doing, they were donated quickly.
SPEAKER_03The question remains: how many chickens does it take to get the eggs to be able to retire comfortably? That's what we're talking about this morning. That's what we're going to talk about. How many eggs can you get from your chickens? If you give your chickens away to your kids and they get your retirement income. So these are some really good questions. The two top questions that retirees all want to know. How much is enough? Do I have enough in my account? And not only do I have enough, but how am I going to make this last? That's right. We see a lot of people living into their 90s now, don't we, Cole? Mm-hmm. You know, and because of that, you need to make sure that your money lasts all the way through. That's right. So there are some cases we'll talk about. And you know, it's not just about the money though, Cheryl. It's not just about the money that you save, but it's about what you do with that savings and how do you set it up correctly.
SPEAKER_07Yes, good point. And it all kind of goes back to the chicken story, really, because you have to decide is this what I really want? Or is this what I think I want in retirement? And so you really kind of have to focus in on what's really important to you in retirement. And we'll talk about that more later because there are decisions that are emotional, and then there are decisions that are financial. So let's start with financial.
SPEAKER_03Okay.
SPEAKER_07Bob and Cole, there are some surveys out that suggest many Americans believe they'll need over two million dollars for a comfortable retirement. It's just over two, two point one.
SPEAKER_03Just over two, two point one. Right. Okay.
SPEAKER_07But are you surprised by that number?
SPEAKER_03No, because when you read the report, and that is a report coming from a billionaire, Larry Fink, who's the head of BlackRock, he says that he thinks it's going to take two to two point one because we're going to get to this rule in a second, but he is your normal average stock broker, and he is an investment fund hedge fund director. So he understands, but they're still going by that old four percent rule that you could draw out four percent every year to cover your needs, your wants, and your wishes. You know, that four percent rule, I can tell you, I have run some statistics. Uh, I'm just gonna take a minute, uh, take an aside here for for Cole and Cheryl. You know, we have this new AI product, right? And AI really helps us out. I ran some things through Chat GPT. Everybody out there listening know what chat GPT is. I asked it specifically questions Does the 4% rule last? I gave it scenarios. I have a million dollars, I take four percent out, I'm gonna live 30 years. Will it make it? It just doesn't work. Wow. Because it has to factor in history, the history of the market, and when the market drops and it's ups and its downs. And so you can't go by a one size fits all. Everybody's different, is what I'm saying. So, Cheryl, in our first meeting when we meet with a client, one thing that we definitely do is we sit down and we talk about their needs, their wants, and their wishes. You see yourself retiring. We met with several people in Charlottesville this last week, a couple people here in our Harrisonburg office. We probably had eight or ten appointments this week in our offices, as well as a couple of Zooms. So, you know, we have an office in Charlottesville, Harrisonburg, and Winchester. And if you're in this area and you'd like to sit down and get a second opinion, we'll be happy to do it for you. But when we sit down with them for the first time and they come into the office, it's a get-to-know you meeting. And they want a second opinion. They want to know, will my money last? That's the question almost everybody asks. But then we come back and say, Well, what are your needs and what are your wants in retirement? If you just want to live a very simple life, you could almost get by with Social Security if you're set up right, don't you think? Mm-hmm. I had a lady in my office last night till six o'clock at night. We sat here and talked about her retirement. She is just living on Social Security. Now that's not all she has. She has a lot of other monies put away, some in indexed annuities, some in Charles Schwab, some set up for income. She's all set up at two or three other places, but she's paid off everything, no credit card debt, and her social security of twenty three hundred, twenty four hundred a month is more than enough for her to live on. So she's done pretty well, don't you think, Cheryl?
SPEAKER_07You know, it does come down to how you live and what you're going to need to maintain your lifestyle.
SPEAKER_03Right. Then that's more important than looking at a report and saying, Oh my gosh, I've only got eight hundred thousand. Larry Fink says I'm going to need two point one million dollars to retire. Not if it's set up correctly, because if you can take a million dollars or a half a million dollars, and I'll just give you an easy example. If you had a million dollars in the bank, Cheryl, that'd be great if you did. Would be. But if you put it in a C D down at the bank and got two percent on it, how much income is that gonna drive a year? It's gonna drive twenty thousand dollars, two percent. Maybe you get three, thirty thousand. Can you comfortably live on thirty thousand of interest and dividends? What if you only had a half a million dollars, but you could get six or seven percent interest on it? Six percent or seven percent of half a million dollars is thirty-five to forty-five thousand. I'd go for the forty-five thousand, wouldn't you?
SPEAKER_07That's really not a difficult choice.
SPEAKER_03No, it's just bank numbers and it's just plain easy math. It's not even you know, trigonometry. Um so all you have to do is sit down and figure out, but what they're saying in most cases, and what most stockbrokers say to retirees when they come in and see we're not your average stockbroker. We focus on income, we're fixed income specialists, and we work with investments that are bond and bond-like instruments that give you they focus on interest and dividends. We have a slogan that we use, uh, or I should say a formula. TR equals I plus G. Can you explain that to our clients, Cole? What does TR equals I plus G mean?
SPEAKER_00Yeah. So the formula is total return equals income plus growth. The idea is at the end of the year, when you see that number, that total return number, it consists of two things. It consists of income from interest and dividends, and it consists of a growth or loss of your capital, capital appreciation or depreciation. And ideally you'd like to see a growth, but some years it's a loss. Right. And so what we talk about, why we refer to this equation, is if you want your retirement to be completely stress-free, take your income from the I and don't touch the G. Right. That way we know that income can consistently come in. We're not touching the principal, and we're not hoping that we get a growth year so that you can take income this year. Yeah, that's not how our business model works.
SPEAKER_03That's not how our business model works.
SPEAKER_07Yeah, hoping is not a plan, is it?
SPEAKER_03No, no, no. Let's say, Cheryl, we're taking a trip to come up and see you soon, or at least we're coming to Minneapolis, okay? For a training meeting. Yeah, in a couple weeks. And what if we all got on the plane and the pilot said to us, Good morning, ladies and gentlemen. This is a captain of Flight XYZ, and there is an 86% probability that we will make it today. Now, you just fastened in your seatbelt and you're sitting there saying, a probability that we will make it? That's 15% chance that this play. My seatbelt will be unfastened, I'd be the next one off. Okay, we don't want an 85% probability. But that's what they're saying with this 4% rule. There's a chance that if you just take 4%, don't worry about the market. That doesn't work. ChatGPT AI even says it doesn't work. So you can't just let your stockbroker tell you, just take income from your portfolio. Because when you're selling shares of a mutual fund or your 401k, and that market starts down like it did in 2000 or it did in 07, now you're cannibalizing your chickens. You're having a big barbecue. And that's the last thing you want to do is cut up that retirement plan. You want to take it from the eggs, like Cole did. They didn't ever lay any eggs at your coop, did they? They laid two. They laid two. Okay. All right. I didn't eat them. And he didn't need them. So they only laid two. And he said, I don't like this strategy. I'm moving out of this strategy and moving to another. So now. All right. I like that idea, Cole.
SPEAKER_07Let me give the phone number if someone would like to reach out to you. You mentioned, Bob, a moment ago that you would do a complimentary review if someone does currently have a retirement plan. And I'll bet there are some folks saying, yeah, I'd love to take advantage of that. So here's the number to call the Reliable Wealth team. It's 540-441-1481. 540-441-1481. Ask about the Reliable Wealth Retirement Income Map. It's a complimentary review of your current portfolio. You can reach out to at rwfhour.com. So the next question I have for you, Bob and Cole, is could life savings be at risk because of a few mistakes that are possible when you're going through retirement? In fact, according to an article published in Moneywise, millionaires have made these kinds of mistakes in some cases. And retirement savings can be drained. So one of them is not planning for cognitive decline. Have you seen that happen? That people just keep saying, Oh, I'll I'll deal with that later, or that'll never happen to me.
SPEAKER_00Yeah, unfortunately, yes. And we see it happening more and more. Clients, parents are going through some of this stuff. Some of our clients are going through this stuff, some of our older clients, to where cognitive decline becomes a serious factor on how you live your life and how your retirement continues. And so if you haven't properly planned for that, right, it can affect the entire retirement picture. And so one of the first things we do in meeting number two actually is we dive into life insurance and long-term care. Right. And we identify where you're at today. You need dementia care, you need assisted living care, whether that's at home or in a facility, and you haven't properly planned for that in your retirement picture, then the money typically comes from those retirement accounts that you've saved up 40 years for. And with the price of nursing care nowadays, it can end pretty quickly a very good retirement plan in a few years. Because a nursing home, average cost of nursing home nowadays is between what, seven and ten thousand a month? For just a regular nursing care. That's not talking memory care. Right. If you need Alzheimer's or dementia, it could be ten, twelve thousand, fifteen thousand a month. Right. And that's in Virginia. You know, if if our listeners are in other states, you'll have to check with your state prices because in Alaska it's like $23,000 a month.
SPEAKER_03It's unbelievable. You know, and that was in that report you were referring to, Cheryl, that it said roughly 75% of seniors over the age of 50 told AARP, everybody knows who they are, people that track all the older people and offer them insurance, that they would prefer to age in place. And what does age in place mean? It means I want to do it in my home. I want somebody to come in and take care of me. That makes sense. What if you only have a long-term care plan that pays for a facility? Well, then you don't have a choice. You can't age in place, you gotta age in their place. Yeah. Okay. But 44% admitted a reluctant move may be an inevitable, you know? And Medicare, a lot of people think that Medicare is going to cover their long-term needs, their nursing needs, and it doesn't. Social Security doesn't. So there are products out there that you can look at andor consider that would help you pay a portion or all of your long-term care costs, aren't there, Cole?
SPEAKER_00Yeah, absolutely. You know, and that's where discussing products and plans that are specifically designed to protect against things like that is very important. Right. Because when you have insurance or an investment product that has long-term care benefits added on to it, if you need the care, whether that's at home or in a facility, that's designed to pay for that. And you're not tapping into all of your retirement savings and draining those accounts for this long-term care type needs. Right, exactly.
SPEAKER_03And it's funny because we've just seen several cases that have come into our office in the last year or two where the spouse said, I'm gonna have to transfer him or her to a memory care, and that memory care is gonna cost me over ten thousand dollars a month. The good news was in some of those cases, they had long-term care benefits set up. Those long-term care benefits weren't the typical health insurance type, they were the asset-based. So they got just a fixed number of cash, they had a pool of money to pull from, and they send you the cash to take care of whatever needs you have, whether it's building a ramp to get in and out of the house for the wheelchair, or it's more than that, and you need the nurse to come in and be there five days a week. It will pay you to have your care taken in place at home. You know, but a lot of retirees don't plan for long-term care, and that's probably one of the biggest mistakes they make, Cheryl.
SPEAKER_07What about overlooking slow leak spending habits?
SPEAKER_03Yes, overlooking slow leak spending habits can be devastating because those little slow leaks add up. And I guess what's the saying that little tiny leaks can sink a big ship? You know, if you've got half a million or 750,000 and you think you're good, and you think you're moving at 65 to 70 years old, and the only thing you have to take out is required minimum distributions, but then you don't track and do a budget to track all those expenses. There are things that can come out of your account that you're not even planning on. You know, it's just all kinds of things. So the one thing we do, and I will say that this is a regular part of our business model with our clients when they come in. We sit down and we review what it's going to take to set up the retirement income map. And in the retirement income map, Cheryl, we are tracking all those expenses. Part of it is a very comprehensive budget. You want to take a minute and just kind of go into that and what it all covers, Cole?
SPEAKER_00Sure. So this retirement income map, it really is one tool that encompasses all of the pieces of retirement. And it's really helpful in that way because you know, when you look at your retirement, it's not just about spending too much. It's not just about investment rate of returns. There's a lot of different things that incorporate a good retirement plan. And so when we look at this, this retirement income map takes all of that into mind. It looks at your income streams, it looks at you know survivor benefits for those income streams. That's an important piece that we like to talk about. It looks at your expenses. How much are you spending? In what areas are you spending? In what areas could we cut back spending? We do kind of a mini budget session. It also incorporates your assets. How are they invested? How risky are they? How much income are they producing? And then the final piece is really that long-term care and uh life insurance. There's a big tax section too. What we can do is now we can run different scenarios to stress test your current portfolio. And so let's say you are spending too much. Well, if we project that over the next 20 or 30 years with inflation rising at 3%, that might tap into retirement funds earlier than expected. That would be a red flag. It can really get into the details of where the red flags are and how to fix them early so that long term we have a plan that lasts the test of time.
SPEAKER_03Right. And one of the things that, and we're going to talk about this when we come back from this short break, Cheryl Cole kind of alluded to it, is that it's really important that you understand your taxes and how your money is invested. Because we're talking about three different tax buckets. And you may have heard this before on one of our shows, but we're going to dive into this in great detail in a minute. And then we're going to jump into taxable income, tax-deferred income, and how do you move everything to the tax-free? Doesn't tax-free sound great? Does sound good. Yeah, you got to have a strategic plan to get there, though.
SPEAKER_07That's right. So we'll talk about that in just a moment. But in this first segment, we talked about a general number for retirement and why that really doesn't work, because everyone's retirement is different. Right. And it all starts by Bob detailing needs, wants, wishes, savings, income in retirement. There are so many variables and so many aspects to the plan. If you would like to get started on your plan, the Reliable Wealth Retirement Income Map is complimentary. So call and talk with Bob at 540-441-1481. Now I said talk with Bob because that's your first point of contact. Bob is going to have a conversation with you at the very outset so you can talk about in generality some of these things and decide if you want to get into the details. So again, the number is 540-441-1481, or you can reach out to us at rwfhour.com. That's r-w-f-h-o-r.com.
SPEAKER_06Thank you for joining us this weekend for the Reliable Wealth Financial Hour with Bob Falter and Cole Falter. We receive many questions here on the show, but one we hear most often is, how much do I need to retire? Wondering the same thing? Reach out to the experienced fixed income professionals here at the Reliable Wealth Financial Group. Call 540-441-1481 or visit us online at rwfhour.com. If you have any questions about income retirement, just give us a call here at the Reliable Wealth Financial Hour with Bob and Cole Falter, 540-441-1481. That's 540-441-1481.
SPEAKER_07Retirement can seem so far away until it isn't. One question we're often asked is, when's the best time to take Social Security benefits? Well, there's a lot to consider before answering that question because when you claim your benefits may have a big impact on your financial future. For example, you could retire early at 62, but you'll see a reduction in your benefits for that. You could wait until your full retirement age, or you could max out your benefit amount by waiting until age 70. But is that the right choice for you? We understand it's a lot to take in. So we invite you to call the Reliable Wealth Financial Hour right now at 540-441-1481. Some of the Social Security decisions you make now could have far-reaching implications on your retirement income. So if you have questions about making Social Security decisions, call us now and start the conversation. 540-441-1481.
SPEAKER_06The Reliable Wealth Financial Hour is available anytime on our website, ReliableWealthfinancial.com.
SPEAKER_07Break, you mentioned taxes, and I think that is a huge topic in retirement, before too, but especially in retirement, which comes as a surprise to some people.
SPEAKER_03Yes, it certainly does, Cheryl. Met with a client down in Charlottesville this last week, and we've worked with him for, my goodness, 10 years or more. And this last year something changed, and unfortunately, his mom passed away. And he inherited the house and he sold the house. And he didn't realize the tax ramifications when he sold the house. And he said, Bob, I got clobbered, clobbered, clobbered with taxes. But if he had come in and sat down with us and said, Hey, here's the situation and here's what's changing, we could have eliminated most or all of that problem. But it was just uh whoops, I made a mistake and I'll pay the taxes now. I did get rid of the house and it's okay because I paid the taxes. But should I consider a Roth conversion? Well, uh, let's start with the three tax buckets. You know, and taxes can significantly deplete a Nestag. So how do you minimize your tax liability in retirement? Well, basically there are three buckets that you can put your money into. The first bucket is your standard brokerage account, which is taxable, right? Taxable money. You're taxed annually on the interest and dividends, right? Everybody understands that. What about the tax-deferred bucket? What are some items called that are in the tax-deferred bucket? Retirement plans. 401ks.
SPEAKER_00401ks, traditional IRAs, 403Bs. And when are they taxed?
SPEAKER_03When you take the money out. When you take the money out. And we call those accounts qualified accounts. So I've had a couple people that have come in for meetings, and when we use the word qualified, they're not quite sure what that means. That means it's tax deferred. And we're operating under a myth with tax deferred because we're saying when you retire in 10 years or 15 years, you'll probably be making less money. So because of that, you'll pay less in taxes. That's kind of the old adage that I used to try to tell clients back in the 70s and 80s when I was selling insurance. You're going to be on Social Security only, you won't have all this income. We often see clients that come in in their 70s and 80s and they're making well over $150,000 a year. They've set themselves up correctly so that tax-deferred bucket can really be a problem in your retirement. Yeah. It could because when you get to 73, we know one thing that happens, not only that you just want to retire at 67, but you have to take an RMD out. That's right. What if you have a million dollars in your 401k? It would be a great problem to have, but we have clients that we've talked to this last week that have two and three million dollars in their IRAs. Now you've got two problems going on at the same time. One is a ticking time bomb, the other is the fact that you do have to take a required minimum distribution and you have to pull out four percent of all the qualified accounts. And when you do that, that can add $40,000, $50,000, $60,000 of taxable income, which was the first bucket, to your income. And now you got to pay the taxes on that. And when you start doing that year after year, and what if you miss an RMD? Then you got to take two the next year. That's even more income. It's double. So we make sure we strategically plan for all those. But what we are showing our clients with several tools that we can use, we're trying to move money out of the taxable bracket, uh, the income bucket, out of the tax-deferred bucket and over to the tax-free bucket. And we can use a couple different tools to do that, can't we, Cole?
SPEAKER_00Yeah. Yeah, we can. The idea is taking it out of those taxable and tax-deferred plans early while you're making less income, so that later in retirement, if you set yourself up right and you make a lot more income, or later if tax brackets go up, that you're not paying higher amounts of tax on the same distributions that you take if you do that conversion early. If it goes from taxable to tax-free early, when you need it in retirement and you're taking that money out, it could be a tax-free income stream instead of a taxable income stream. Yeah, absolutely. That's the idea.
SPEAKER_03There are a lot of people, and you know, it's it's funny because right now, Cheryl, it's probably my phone because I look at certain things that are financial on my phone. So I get required minimum distributions, do a Roth conversion, do a Roth conversion. It's all the information that you're seeing on the internet now, it's all about Roth conversions. And I've had three people this last week say, Am I right for a Roth conversion? And when I sit down and I look at it, you have to have a tax problem to make a Roth conversion worthwhile. Right. Because you're setting yourself up to pay taxes. And if you don't have a problem with a huge IRA, or you don't have a problem like that I referred to with $2 million in an IRA, what happens if you pass away? You know, the Secure Act 201 said you pass that IRA on to your children, you've just handed them a 10-year time bomb that they have to drain that account. Yeah, it's now an inherited IRA, and they have to drain that account within 10 years. So now it becomes a tax problem that you had that you passed on to the next generation.
SPEAKER_00Yeah. And maybe it's not really a tax problem, you know. Like in some cases, it it definitely is. Okay, you pass away, this million dollar IRA goes to your children, they now have to take earned income every year on top of maybe a high paid salary. And so now they're paying even more tax on everything that they're earned had they not inherited that money. That could be a problem for sure. But sometimes it's preference. And sometimes clients just don't want to have to leave that tax burden on their kids. And so we have some clients that even though they do make good income, and it's not necessarily the most strategic play to take money and pay taxes now, they'd prefer to, because they know that they're never going to touch it, it's gonna go pass on to their kids, and they don't want their kids to have to pay taxes on that money when they inherit it. So, you know, whether or not it's a problem urgent situation that, you know, you could save a lot of money if we did this now, or it's just preference of, you know, I don't want to have to leave my family with so much tax payments that are now due that they weren't expecting. Either situation applies. And that's where, you know, if you call us and you come in and we take a look at your scenario, we can really tell you whether or not it's worth doing those conversions. Right.
SPEAKER_03And the way we do that is exactly what you would refer to in that first section, Cheryl. We put their information in that retirement income map. And there's a whole section in that retirement income map that focuses on taxes and how much you can save over your lifetime in taxes that can increase your legacy to your children. It's really amazing. That's a really an amazing tool. And so it's something that I think every one of our clients finds beneficial. Yeah.
SPEAKER_00And let me just real quick nerd out for a second because I get into the numbers a lot. There's a tool called the bracket tracker. Right. And this bracket tracker gives you exactly how much room you have in your tax bracket before you tap into the next tax bracket paying higher tax. Right. And so this tool is so useful because once we plug in all those income streams, it'll give you an overview of what your estimated taxable income is for the end of the year. You know, let's say you make $150,000 a year. Between your current number and the top of the bracket, we have $80,000 that we could convert before paying higher tax. Right. The idea is it gives us an exact number that we can aim for to avoid hitting a higher tax bracket so that when we're doing conversions, it's optimal.
SPEAKER_03Yeah. Hundreds of thousands of dollars that you're giving to the government if you keep doing what you're doing, and you could be keeping it in your pocket. Remember the old saying, it's not how much you make, it's how much you keep.
SPEAKER_00Right? Yeah, and that's the big thing where when we look at the lifetime taxable income, this is the total amount of taxes that you're paying over the lifetime of your plan. Right. When those RMDs start kicking in at 73, yes, doing a conversion prior to RMD age makes a huge difference.
SPEAKER_03Even doing a conversion while you're taking RMDs and getting rid of more, taking a little bit more. And then you can put that away, but then to increase your legacy. We have some clients that take their RMD. Let's just say that your RMD is $15,000 or $20,000. They take five or 10 of that and they spend it on a long-term care-based indexed plan. You know, a life insurance plan that increases their legacy by three or four hundred thousand dollars and it gives them long-term care. So you can use those RMDs and we show you all the different strategic moves. It's kind of like it reminds me of Cole is been working in my office now for almost 10 years, Cheryl. But way, way back when I was walking him to elementary school in the first and second grades, he was part of the chess club. And he became very, very good at chess. I think that's why he's good at the retirement income map. Because he looks ahead and he takes strategic moves and he could checkmate me in seven moves. I was just no competition at all because I got this seven-year-old that's just whipping my tail in chess. But he was really good because he was part of a chess club. But those are the moves you have to make in order to save money from going into the government and keeping it in your pocket or giving that money to your children tax-free. Those are all the things we're looking for. And if your advisor is not focusing on these with you, and if your advisor is only saying, Hey, you're you did really well in the market this last year, and uh, or he hasn't called you at all, but if he did and you went in for a meeting and he says, Let's move this and move this and let's change these around, but he hasn't focused on a strategic plan for Social Security, he hasn't focused on how to save you tax money, he hasn't focused on any of these other things we're talking about, increasing your legacy, your wills, your estate. Maybe you should consider a second look with a different advisor.
SPEAKER_07And here's the number to reach out to the Reliable Wealth Financial Team. It's 540-441-1481. 540-441-1481. You can also reach us at rwfhour.com. That's rwf.com. I know that Bob and Cole went over a lot in this segment. We did. Yeah, so if you need some clarification, if you'd like to talk about the impact or potential impact of taxes on your retirement savings, give Bob a call at 540-441-1481. If you have questions about the reliable retirement income map, you might want to give them a call, talk with Bob and Cole about what that income map covers and what you can expect to get out of that map. 540-441-1481. Cole, I want to ask you for a moment about the role of annuities when you're planning for retirement and when an annuity might be helpful and when an annuity might not be the right move.
SPEAKER_00Yeah, so you know, annuities are a great tool to use in your retirement plan. And if our listeners out there are unfamiliar with what an annuity is, think of Social Security. This is a system that's set up to where you pay in while you're working for the 40 years that you work, you pay into Social Security so that one day you can take a monthly check for the rest of your life as long as you live. That's an annuity. And so when we look at annuities, there are tons of different types of annuities. And that's where it gets confusing because our listeners they'll call in and they'll say, I love what you're talking about, I love the idea of fixed income and it's a consistent plan, but I don't want any annuities. And when they say that, oftentimes there's some education that needs to happen because some annuities work great, especially for retirees that are focused on fixed income or nursing care. And so when we look at annuities, the idea is you're taking a portion of your retirement plan and you're setting it up for income. Now, this income comes in for the rest of your life as long as you live, but it also provides nursing care. Do you want to talk a little bit about that?
SPEAKER_05Yeah.
SPEAKER_03Yeah. Because a lot of people that are listening this morning probably already have annuities and they haven't had them looked at in years. And this would be a great year, 2026, to sit down and say, you know what, I need to do an upgrade. I need to just have somebody look over this, see if it's working the way I want it to. We'll tell you some stories about clients that have come in and what we've seen with their old annuities.
SPEAKER_00And I think when you know, when we look at annuities, we're not talking about replacing your investment portfolio. No. But using it as a tool in lieu of your investment portfolio, we're providing a more conservative product, insurance product, for the purpose of income. Right. And so when when you look at our business model, it really some annuities fit perfectly. Because the idea is we want to make sure that your money never runs out, that your income never runs out. You know, check that box. We want to make sure that we're covering long-term care needs. Hopefully, you don't need it, but if you do, you have the protection there just in case. Check that box. We're also talking about, you know, tax deferral. Annuities are great plans to defer taxes in those taxable accounts. Right, right. So that's another pro. We also talk about you know passing a balance on to your beneficiaries. In the state of Virginia, most annuity companies have what's called spousal continuation. This is where your annuity product, let's say, you know, you have an income coming in of $10,000 a year. If something happens to you, that $10,000 a year income stream will come in for your entire life, but also the income stream will pass to your surviving spouse for the rest of her life. Check that box. You know, so annuities can be fantastic tools when planning for retirement income. But not everyone is a good candidate for an annuity.
SPEAKER_03And here's kind of just for our listeners out there, we don't want you to think that we're your average Joe insurance salesman that only sells annuity products. Okay? Because Joe, the average insurance salesman, will guide you and steer you toward the annuity. That's not what we do. What we do is sit down in that second or third meeting when you've become a client, then we do the educational 101 tutorial where we show you everything in the aggressive box, how it works, what it does, everything in the moderate box with corporate bonds, preferred stocks, and then everything in the conservative box. And that covers using the annuity as an asset class. Then after we've covered everything and you understand how it works, then we let you choose which works best for you. Should you keep a little money in the stock market in aggressive stuff right now if you're feeling frisky? Or should you move it all to conservative? We met a client not too long ago that has all of their money in CDs. And they're saying, you know what? My CDs don't have any nursing care. My CDs won't last as long as I do or longer. If I start taking the interest and I take some principle to pay the bills with inflation, my CDs are going to run out. Well, an annuity might be right for you. So we show you the benefits of putting it in the moderate box or putting it in the conservative box, and then you decide. And that's part of our meeting where we help educate you. So that's the plan of the second or third meeting after we get to know each other. We'll show you what are the best choices, and we invest your way as opposed to trying to show you uh, you know, even though you're 80 years old, I think you should be 80-20 in the stock market, which is what we see a lot of advisors doing out there. The first question you should always ask: are you a fiduciary? Are you making decisions in my best interest or your best interest? And we're focused on your financial future, not our financial future.
SPEAKER_07Cole, you mentioned the state of Virginia a moment ago. You were talking about uh what was it, uh, spousal benefits?
SPEAKER_00Spousal continuation.
SPEAKER_07Spousal continuation. So does it matter if you secured an annuity in another state, but you've now moved to the gorgeous Shenandoah Valley, and you're concerned about that annuity. Is there a difference state to state?
SPEAKER_00That's a great question. I think to answer that properly, I would say we'd have to check with the specifics of your state. You know, we can get licensed in all 50 states, and when we do that, it comes with a couple things. You know, certain annuity products and plans are available in certain states that aren't in others. But also with spousal continuation, I know that in Virginia, that applies. If something happens to you, you turn on that income, that income lasts for your life and for the rest of your surviving spouse's life. But I don't know that that applies for all states. So I think that if this is of interest to you and you're like, you know what, income for the rest of both of our lives sounds like something that we need to learn more about. Give us a call, and depending on where you're at, we can research the specifics of how that plan will work for you.
SPEAKER_07Okay, let me give the number so that if anyone is interested in having you take a look at an annuity they currently have. Or in some cases, I'm guessing people have more than one. So 540-441-1481 is the number. That's how you can reach out to the reliable wealth team, Bob and Cole Falter. 540-441-1481. Or of course, you can reach out at rwfhour.com. That's rwf.com.
SPEAKER_06What's your definition of risk? Now that can be a difficult question to answer, especially when it comes to your retirement savings. Here at Reliable Wealth Financial Group, we understand the risk may look different when retirement is in the picture. If you're concerned that your money may not last through retirement, call us here at the Reliable Wealth Financial Hour and let's talk about your financial situation and retirement goals. Give us a call at 540-441-1481. Or visit us online at rwfhour.com. Retirement can seem so far away until it isn't. One question we're often asked is when is the best time to take Social Security benefits? There's a lot to consider before answering that question because when you claim your benefits may have a big impact on your financial future. For example, you could retire early at 62, but you'll see a reduction in your benefits for that. You could wait until your full retirement age, or you could max out your benefit amount by waiting until age 70. But is that the right choice for you? We understand that that's a lot to take in. So we invite you to call the Reliable Wealth Financial Hour right now at 540-441-1481. Some of the Social Security decisions you make now could have far-reaching implications on your retirement income. So if you have questions about your Social Security decisions, call us now, 540-441-1481. That's 540-441-1481. The signpost ahead, your retirement. And reliable wealth management can be the key to helping you unlock the door to a confident retirement. Now, back to the Reliable Wealth Financial Hour, and Robert Falter is welcoming.
SPEAKER_07What do you think is the number one risk?
SPEAKER_03One of the number one risks of your well-funded retirement plan is the sequence of returns risk. All right, let's define sequence of returns. It's not just how much your portfolio earns overall, but when those returns occur. If you have a few major market downturns right at the beginning of the retirement plan, when you turn 68 and you retire, when you're heavily reliant on withdrawals, you can permanently damage the longevity of the portfolio. What do we mean by that? Let me give you an example of that, okay? And we're talking about the bucket strategy that we discussed that helps mitigate this, you know, by ensuring that you don't sell depressed assets. Let me go into a little more detail or maybe a lot more detail here. First of all, if your account is the normal one that we see coming in from any of those big companies, they set them up in mutual funds. The mutual funds, let's say, are 100 cents on a dollar. Okay? You're working and the market's going up and you're doing great, and you look at your accounts and you say, Man, I am making money this year. 2026 is going to be a great year. I'm planning on retiring next year. That's a great thought. Now, put a pin in that. Let me just tell you about a couple that we met. 2006-07, Ruth and Tom started meeting with their financial advisor. And Tom said, I want to retire in 2007. Well, Tom passed away. Over that period of 2007 to 2010, three, four years. Ruth had drawn out 40,000 a year herself, but the market had taken a bunch. And that's why we showed her how she could take the balance, set it up. For income for interest and dividends. She was in the accumulation strategy, but she had moved to the distribution phase of life, still using accumulation practices.
SPEAKER_00Yeah. So let's talk a little bit more about the specifics of that because it sounds crazy, but why does that happen? Right? So the idea is when you're at the top of the market, $100 per share, the market drops, $50 per share, I'm selling twice as much principal to get the same income.
SPEAKER_03Right. So basically that's what we call sequence of returns risk. And what it means we call taking income from a portfolio that's invested in the market. When you take income, which is what most stockbrokers and financial advisors do, they just sell shares of your investments. And when they sell 100 cents on a dollar, and let's say you needed $10,000, well, you got to take out a hundred shares. Now the market starts dropping, and you still need that same amount. The shares price went from $100 to $90,000 to $80,000 to $70,000 to $60, you're still taking income. You got to sell twice as many shares. We call it dollar loss averaging. The real term is reverse dollar cost averaging. You're doing the opposite of dollar cost averaging. Instead of putting money in, you're taking money out, and the market's taking money out. So it goes back to that 1970 wide world of sports. Do you want to see the thrill of victory in retirement or the agony of defeat? Because when the market starts dropping down, I can't tell you it's going to happen in 2026. But here's what I can tell you, and your stockbroker will have to agree. Over the next 25 to 35 years, while you're retired, do you think we're going to have another big market correction? So if you're set up for income and you've reduced your risk and you're taking interest and dividends, taking the eggs from the chickens, you'll be okay. But there are advisors out there that are still recommending investments in annuities that don't have a floor and they're in the stock market. Variable annuities. We don't sell that kind. Matter of fact, it's probably one of the worst products I've ever seen. There are three and four percent fees in there, too. But one of the biggest risks we see, Cheryl, is the sequence of returns. And so we help you understand how that works. And that's really why we specialize in the fixed income bucket, Cheryl.
SPEAKER_07Bob, I I think I know the answer to this question, but I'm going to ask it anyway. Is set it and forget it an option with reliable?
SPEAKER_03No, it's not an option with reliable, with reliable wealth financial. We are going to set it, but then we're going to adjust it. And we're very tactical and hands-on because we watch those accounts very, very closely to make sure that we can take advantage of the upside and make sure that we minimize the downside. And we talk to our clients every three to six months. We set up a review, we go over their accounts in Charles Schwab, we go over their annuities with them, we show them how and why, but what goes up must come down.
SPEAKER_00You know? I want to quickly reference an analogy to our listeners out there because I think that it kind of explains our business model well. You know, oftentimes in the office, we'll use the analogy of a rental house. Yes. And the idea is our business model is similar to that of a rental house in these ways. Whenever you're renting out a property and you find a tenant, and he or she or they are excited to come in and rent from you, they love the place, they're ready to move in with a new baby or whatever it might be. The contract is you're gonna live in this house for a period of time, and every month you'll send me the rent check. Well, if I owned a property and I was renting it out to a young couple, and they didn't pay their rent one month, I would question whether or not I made the right decision. Right. I'd say, you know what, it's one month. Are you gonna catch this up? You know, what's that look like? Is there a penalty involved, etc.? I'm every month actively tracking the details of when I'm gonna receive my income payment, my rent check. The same thing applies with what we do. When we're picking investments, they're like tenants in your property. And as they pay their income on a monthly basis or a quarterly basis or a semi-annual basis, we're tracking every income payment that comes in, just like that rent check that's coming in. If some month happens to where we expected our tenant to pay and they don't pay, or we expected the investment to pay and it didn't pay.
SPEAKER_03We're adjusting strategies, we're on it, like Donkey Kong. Yeah. And we know that happens, and we can move that investment out of their portfolio and put something else in that works better for them, right? And in order to do that, I do think that's an act of strategy. Yeah, absolutely. You can't just set it and forget it. Yeah, set it and forget it doesn't work, you know. It does for some people that use mutual funds, and that's why we often refer to it as the disease of ease, because they take mutual funds that cost a lot, but you don't see the cost because they're it's internal. But you're paying the broker that's handling them, you're paying the the guy that put them all in there, the fund manager. You won't see that, but they set it in the mutual fund and then they leave it alone for six months, eight months, a year. It follows the market like a cat follows a mouse. It's great when the market's doing what it is today and it's staying up. But when the market starts dropping over the next five to ten years, you'll see those mutual funds go with the market because that's just the way they're set up. They're set up in stocks and mutual funds.
SPEAKER_07Hey, I have one more question. I just thought of this. What do you think of the idea of paying off a mortgage right before or right after retirement?
SPEAKER_03In order to answer that question, Cheryl, we do not have to go to ChatGPT. Although Chat GPT will help us answer that question, what we do have to go to is the whiteboard. Because if you have a 3% mortgage, you know, paying off a 3% mortgage when you're making six and seven and eight percent on your investments, you're giving up one really good interest rate to pay off another one. Is that a benefit to you? But if you've got a six or seven or eight percent mortgage and you're only making three on your investments, but we still have to look at tax implications and we have to look at a lot of things before you take a lump sum, you're giving up the money that you're going to need for income down the road.
SPEAKER_07Makes sense to pay off a house.
SPEAKER_00Yeah. Well, and think about this too. You know, two thoughts. Number one, this income that you're using, especially in retirement, you know, maybe while you're working, it it makes more sense to allocate a little more towards paying off debt. But once you retire, this income, this lump sum that you've saved up that will produce income, this is 40 years of your life that you've spent generating this lump sum of cash to provide income so that you can live and enjoy retirement. Right. You're taking your time and putting it back into a property. Really, that's what it is. Yeah. And so when you look at that, you have to ask some questions. Number one, you know, if if I pass away, if me and my spouse pass away, where does the house go? Right. If I pass away and I know that Anna wants to live in the house, then maybe it makes sense for me to put more towards paying it off. But if I pass away and she knows I'm not gonna keep this house, I'm gonna sell it, I'm gonna move in with my mom, I'm gonna do this. Well, then why am I spending my life, my hard-earned lump sum, and pumping it into a property that is gonna be sold when I pass anyway?
SPEAKER_03And oftentimes you're giving up the needs and the wants. You want to take a trip to Greece, you want to take a trip to Rome. You're not doing that because you're putting more money into paying off a house that in fact, if something happened to the homeowner, the kids are not even gonna live in the house. The kids are gonna sell the house anyhow. So why are you putting all that money into the house? I agree with you 100%, Cole.
SPEAKER_00Yeah, so that's one consideration. But number two is you know, when you retire, you stopped working so that your capital will work for you. Right. And if you're putting it back into the equity of a home, your capital is not liquid and it's not working, and it's not working for you. So you have to really ask those questions when considering paying off a home early. I think, you know, mentally, psychologically, it feels great knowing that you're getting out of debt. There's a lot of value to that. It does. But at the same time, if you're in retirement and you need that capital working for you so that you can live, right? You know, you should question where it's going.
SPEAKER_03Yeah. So, Cheryl, we talked about a lot of stuff today. Let's kind of break it down and and maybe do three key steps that our listeners should consider this week. Okay. I mean, we talked in the very beginning about um your needs and your wants, and we do that in the first meeting by establishing goals. And where do you want to go? And how do you want your retirement to look? To our listener out there, what do you want your rich life to look like? Because you're moving into your rich life. You've set aside money and you've scrimped and saved every year for 40 years, and now you're ready to move to retirement. So let's talk about those goals, those needs, those wants. And then how do you optimize income? We talked about that. We don't put it in a plan that we just set and forget. We maximize our social security, we maximize our pension. We often have teachers that come in and say, How do I take this Plop one, Plop 2, Plop 3? What do I do with all this money that the state gives me? How do I set this up so I can get the maximum amount of income? And we do all that in a meeting. And then the most important part of the whole test or the meetings is we stress test your plan. And we show you that the plan that you have with XYZ company may have a little more risk in it than you think it does. And we can convert that and we move that to less risk and set it up for income that won't run out. So that's really to make sure that we can cover that lifespan of 75, 85, 95 years.
SPEAKER_07Sure, here is that number. It's 540-441-1481. And I also want to point out that if Bob and Cole review your current plan and they say, This is a great plan, they'll let you know that too.
SPEAKER_03Absolutely.
SPEAKER_07So here's the number: 540-441-1481. Be sure to ask about the Reliable Wealth Retirement Income Map. And that's your complimentary review of your current portfolio. Don't have a plan? Well, that's where you can talk about starting to set up your retirement plan. 540-441-1481 or reach out to us at rwfhour.com. That's rwf h-o-r.com.
SPEAKER_04What goes up must come down. Spinning wheel, got to go around. Talking about your tumbles, it's a crying sin. Let us spin the wheel spin. You got no money. You got no home. Spinning the wheel. Talking about your tumbles in the painted ponin, let us spin the wheel.
SPEAKER_06The Reliable Wealth Financial Hour is available anytime on our website, ReliableWealthfinancial.com.
SPEAKER_01Insurance products are offered through the insurance business of Reliable Wealth Financial LLC. Investment advisory services offered through Signal Advisors Wealth LLC. Signal Wealth, an SEC registered investment advisor. Reliable Wealth Financial and Signal Wealth are unaffiliated companies. Signal Wealth does not offer insurance products. Registration with the SDC does not imply a certain level of skill or training. The insurance products offered by Reliable Wealth Financial Group LLC are not subject to investment advisor requirements. Investing involves risk, including the potential loss of principal. No investment strategy can guarantee a profit or protect against loss. Insurance and annuity guarantees are backed by the financial strength and claims paying ability of the issuing company. Index Universal Life is an insurance product with the primary feature of a death benefit. Policy loans and withdrawals will reduce the available cash value and death benefit, and may cause the policy to lapse or affect guarantees against laps. Withdrawals in excess of premiums paid will be subject to ordinary income tax. Additional premium payments may be required to keep the policy in force. Fixed index annuities are long-term insurance contracts generally designed to provide retirement income. They offer the potential to participate in the stock market via credited interest linked to market industries. Withdrawals will reduce the contract value and the value of any potential protection benefits. Withdrawals taken within the contract withdrawal charge schedule will be subject to a withdrawal charge. All withdrawals are subject to ordinary income tax, and if taken prior to age 59 and a half, may be subject to a 10% federal additional tax. Past performance may not be used to predict or project future results. Neither the firm nor its agents or representatives are affiliated with or endorsed by any government agency and do not give tax, legal, or social security advice. Consumers are encouraged to consult the Social Security Administration via their local office or online at www.sa.gov and their tax advisor or attorney. This material is for informational purposes only and should not be construed as a recommendation or advice for your particular situation. Consult with qualified financial tax and legal professionals for guidance before making financial decisions.