Making Retierment Simple

This episode simplifies retirement planning, emphasizing the importance of guaranteed income, risk management, and long-term care planning. Expert insights guide listeners through strategies to secure financial stability.

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SPEAKER_02 0:00

Welcome to the Heart of Your Money with Joe Yakovich, president and founder of JML Financial Group. We hope today's show can help you on the road to your financial wellness. Now, here's Joe Yakovich and the Heart of Your Money.

SPEAKER_00 0:14

Joe, do you think retirement's gotten more complicated than it used to be?

SPEAKER_01 0:18

Well, I think it has, but I make it simple. It really has, because now you're taking that responsibility of a pension and you're asking the consumer, the person that works for the company, to fend for themselves, to be able to put those things together and make sure they're doing all the things that I do every day on how to put together the right portfolio, preparing them for earlier in your career and then later in your career. But again, i you have to understand something going in there's retirement. Everyone's different, you know, and and pensions are like a dinosaur, it's just a dying breed. And what you need to understand, retirement does not have to be complicated. You know, that it's thrown out there with everybody's uh putting money away and different portfolios and different stocks and when to sell them and when to buy them and all these things. It's it's great, but when you're going into retirement, that's a different ball game. You have to be prepared for that. And it's not simple as you may think. Remember, you're taking an asset and you're turning it into an income. It's a paradigm shift. I mean, it's really to us, this is what I said before, you know, you got to cover your basic expenses. And why? Because longevity risk, you have deflation risk, you got market risk, you got withdrawal rate risk. I mean, these are some of the risk issues they're all faced with. And then the rest of the money, now think about it, you're taking whatever that dollar amount is, you're taking a portion of that, and you're saying to me, I'm going to get you a guaranteed income that you'll never have to worry. So your lifestyle changes. You don't have to concern yourself about the market all the time or what interest rates are doing or what uh taxes are doing. If you're doing it the right way with us at JML Financial Group, you will clearly see transparency. You will see my message is clear. We want to make sure that you're happy and you're getting exactly what you want. And if you want more, we'll make that arrangement with you in terms of how we're able to peel off more money towards you or towards the situation. But again, these are factors. And you have to understand the rest of the money we're gonna put into a portfolio to fight inflation. You can own stocks, you can own bonds, you can own commodities. But again, we need to know 20 to 30 to 40 percent of your money has to be guaranteed where you never have to worry about a dime and a worry about anything. The other thing you need to start considering and start to worry about is this long-term care issue. Because no retirement plan is complete without a plan for long-term care, Sari. It's just longevity is upon us. With AI, people are living a lot longer, never expecting it. I'm gonna give you a little statistic, not a lot, but I'm gonna give you a little one. If you have a husband and wife over the age of 65, hear me out, one of the spouses will make it to life expectancy. The other one will make it into their 90s. So the question becomes what's the most efficient way, based on what I just said, sort of pass the wealth onto your spouse. And if you want to pass the wealth onto your children, we'll give you the ideal situation, the optimal situation. But you know, our theory is real simple. You're safe with us. And you're safe with us because of the purpose. I don't need to take more risk than going into retirement. See, where people don't I think the biggest misconception, they think risk going to retirement, they need to continuously have that. And they see the market going up and down, but you're well aware, volatility can kill income planning if you do not design a couple of those vehicles perfectly for your situation because everyone's different, every situation's different. But again, you know, you see with the boomers, you know, we're talking about 78 million of us in America, everyone's starting to retire. So the question becomes how do you do this without running out of money, with paying the least amount of taxes, and not be a burden on your family? And we see that all the time. People become a burden on their family because now something happens to you know, one of the spouses, they have to maybe bring in a uh one of the children, and more more than likely is the of the daughter of the of one of the spouses or both of them. So again, it becomes an issue to take that person out of the workforce and so forth. So it disrupts the whole environment in the family situation, and and one or two might live in another state. So it becomes really apparent when you're going into retirement, we are looking at those type of issues. We've seen them before, we address them right up front. We have a plan of action, that's why we use the master plan purposely to have people see this. And because of life expectancies being so much longer, do you really think they really think about this? You think the government is going to take care of us?

SPEAKER_00 5:24

I don't think that.

SPEAKER_01 5:25

I don't think so too. And you see what has been happening even with the retirement age. It used to be 62, they moved at 65, they're talking it now at 67, you know, and these are things that we need to address going into retirement.

SPEAKER_00 5:38

And you know what I was thinking about, Joe, when you were talking about the 401ks, I did the math the other day because the 401ks I think came out in the 80s, is when they were first an option when the pensions started going away. And I was like, that was about 40 years ago, 46 years ago now. So these boomers that you're talking about are retiring today, are the people that kind of got caught up in that transition. They didn't know at that time that the 401k was going to be so different from the pension. They didn't know how to play that game.

SPEAKER_01 6:08

And that's where I learned my uh my skills in that those eras. Yeah. So you can see that I saw that up close and personal, and now I'm seeing the monies of the 401ks, and we're investing big time dollars for our clients. But again, how much guaranteed income do you have and do you need? And this is all PhD scientific economics. We're talking about between 20 and 40 percent of your retirement portfolios, and if you want to have an really a lifetime income included in your overall plan, you know, it can give you a adequate income for the rest of your life, but these are facts, you know, and facts beat opinions 100% of the time. You know, everyone thinks retirement is so complicated, but it really is simple, and and we make it as simple as possible. It just needs to be changed from our clients, from the mentality and a pile of money they live off of. They need to change that mindset and the paradigm shift. It's not about assets, it's about income and cash flow going into retirement.

SPEAKER_00 7:14

And you mentioned not running out of money being the main goal that you have for clients. And there are several things that are at risk to you running out of money, things that are working against you. What would you say is the biggest risk multiplier, the thing we need to look out for the most, Joe, in retirement?

SPEAKER_01 7:32

I I think it's a a multi situation that we're dealing with. We're dealing with longevity, and people need to face the fact that they could live into their 90s and they never think about it. Depends on their health, and because of AI and and medicine, it could be a lot longer. You know, we touched on Social Security and when they should take it, you know, sooner or later. And we incorporate that in our conversation because there's four points, and if people really understand this, our stand to lose or gain $182,000 plus, depending on their when they take Social Security. And it's this fact, this is not opinions, and as much as you think, we still believe that households, if married and have a spouse, the breadwinner should at least take their Social Security 70 to collect and be patient with the plan 70 to adjust for inflation. So starting at 70 is 76% higher than starting at 62. And the reason I say that to you because the breadwinner, it will go to your spouse. So if you die, I mean, let's face it, you'll be in heaven playing pickleball or golf, and you won't be kicking yourself for missing out on heaven because heaven is heaven. And if you make it to 90 plus and more and more are doing just that, 70% higher Social Security benefit maybe makes the difference between an eating steak and lobster versus having some oatmeal every day. So for me, I want people to understand all the little things that I talk to people about and why I do these things. It's not about, you know, the crossover point or the break-even point. It has nothing to do with that. We've been told that, we've been force fed that. You know, we have to look at a situation. Everyone stands on their own situation, their own plot of land. We got to find out, okay, are you in good health? Are you in bad health? And what type of uh what type of uh Social Security number are we looking at? To incorporate when we will start to receive dollars from our assets to convert those into income. So we play that game. We want the the money to continue to grow, but we also, in the same breath, knew do we convert some of those things into Roth? And we big-time believers of Roth IRA conversions. We believe that's the number one priority because we don't know what taxes will be. We know taxes today, but we don't know what taxes will be in the next five or ten years from now when we're all going to retire. And if we all believe what's happening in front of us with Medicare and the debt that we're dealing with right now and the continuous deficit that we're faced with, and wars we haven't paid for, just to name a few, you better be prepared for a good income and a good lifestyle. We don't want to not spend any money and just spend a little bit. So when that person passes, all that money was either going to go to the nursing homes and or their children. So there is a design way that we do what we do. And we truly believe that. And I can prove it to people. This is not opinionated, this is PhD, scientific people that I work with and I speak with, and I uh kind of in my world, I read their material almost weekly. If you maximize, now think about what I'm saying. Your expected age of life, what matters is a catastrophic longevity. We could live a long time, and you can't ignore longevity risk anymore than you can ignore catastrophic homeowners or any other type of catastrophic risk. So your financial plan must incorporate living to the maximum age, and the plan you provide is the right way to do this without running out of money before you run out of blood. And one adjustment we make is spending profiles. You spend more when you're younger. When I say younger, from 70 to 80 to 85. From 85 on, then your spending habits become a little less. I have a 97-year-old mother-in-law, and we're always talking about, you know, how she's feeling, and she gets around, no, she doesn't drive, but she gets around pretty pretty good. And we purchased uh about, I don't know, maybe 10, 12 years ago, an inflated index annuity for her. And she gets an income every single year. Because she has a chunk of money instead of putting in the CDs, we talked to her about this, and she gets a nice little income because of her age when she purchased it. I think she was about 85. So she gets a nice income from this lump sum for her. And she's 97 and still getting it. So for us, we want to make sure for the people that are living in their 80s and 90s, even though they start this in their 60s, we want to make sure that the dollars that they're giving or getting from the investments are something they cannot worry about every time they see the market go up or down, or interest rates go up or down, or inflation or taxes being talked about, or different politicians saying one thing and another one saying another. You know, it's confusing and it's upsetting when you see it out there. And we, in terms of my firm, we're focused on making sure that again, as I said before, you're safe with us. We want to make sure we're giving you guaranteed vehicles and making sure anything over and above them what you want every single month is invested prudently in the market. And we don't care where you invest it. We want to make sure you still contain that dollar amount for growth potential.

SPEAKER_02 13:14

Securities and investment advisory services offered through Integrity Alliance LLC member SIPC. Integrity Wealth is a marketing name for Integrity Alliance LLC and is not affiliated with Integrity Wealth. Joe Yakovich is an investment advisor representative and registered representative with Integrity Alliance LLC, a registered investment advisor and member SIPC. Integrity Wealth is a marketing name for Integrity Alliance LLC. Integrity Wealth is not an affiliated company. Opinions expressed on this program do not necessarily reflect those of Integrity Wealth. The topics discussed and opinions given are not intended to address the specific needs of any listener. JML Financial Group does not offer legal or tax advice. Listeners are encouraged to discuss their financial needs with the appropriate professional regarding your individual circumstance. Past performance is no guarantee of future results. Diversification does not guarantee a profit or protect against the loss in a declining market. It is a method used to help manage investment risk. Fixed annuities are long-term insurance contracts, and there is a surrender charge imposed generally during the first five to seven years that you own the annuity contract. Indexed annuities are insurance contracts that, depending on the contract, may offer a guaranteed annual interest rate and some participation if any of a stock market index. Such contracts have substantial variation in terms, cost of guarantees, and features, and make cap participation or returns in significant weights. Investors are cautioned to carefully review an indexed annuity for its features, cost, risks, and how the variables are calculated. Any guarantees offered are backed by the financial strength of the insurance company. Surrender charges apply if not held at the end of the term. Withdrawals are taxes, ordinary income and if taken prior to 59 and a half, a 10% federal tax penalty. Converting an employer plan account or traditional IRA to a Roth IRA is a taxable event. Increased taxable income from Roth IRA conversion may have several consequences, including what not limited to a need for additional tax withholding or estimated tax payments, the loss of certain tax deductions and credits, and higher taxes on Social Security benefits and higher Medicare premiums. Be sure to consult with a qualified tax advisor before making any decisions regarding your IRA. Rebalancing reallocating can entail transaction costs and tax consequences that should be considered when determining a rebalancing reallocation strategy.