Wealth from Wisdom

Busting Common Myths About Planning And Investing For Retirement

August 10, 2019
Wealth from Wisdom
Busting Common Myths About Planning And Investing For Retirement
Chapters
Wealth from Wisdom
Busting Common Myths About Planning And Investing For Retirement
Aug 10, 2019
Carson Wealth
We bust the most common myths about planning and investing for retirement on this episode of Wealth From Wisdom.
Show Notes Transcript

If you Google “investing for retirement” you’ll get 211 MILLION results. There are 211 MILLION different articles, blogs, and videos about investing for retirement. And there are probably 211 MILLION DIFFERENT OPINIONS about what you should, and shouldn’t do. Unfortunately, much of this advice is dated, misleading, or just flat out wrong. We bust the most common myths about planning and investing for retirement on this episode of Wealth From Wisdom.



Speaker 1:
0:00
OK. And here's the legal mumbo jumbo. The opinions voiced in Wolfram wisdom with broadcast over general information only are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged and may not be invested directly. Investing involves risk including possible loss of principal. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offer their CW an LLC and SBC registered investment advisor.
Speaker 2:
0:29
The stock market hit another all time record as much as 10 billion dollars in Social Security benefits go unclaimed every single year the Federal Reserve announced that they will raise interest rates by two hundred and see the skyrocketing cost of health care and retirement could now run three hundred fifty thousand awards hard and save for retirement.
Speaker 3:
0:46
That's great but it's what you do with that money that really matters. Welcome to wealth from wisdom with Carson wealth Carson wealth is a Barron's Hall of Fame advisor and recognized by Forbes Magazine as one of America's top wealth advisors and they're right here in Omaha. This is where you can count on straightforward and objective advice that can help you make the most out of every dollar you save for retirement. Welcome to wealth from wisdom. With Carson wealth.
Speaker 4:
1:12
What do you think is the biggest wild card with planning for retirement. I'll tell you what it is. It's longevity. It's how long you're actually going to live. But the sad part is no one actually knows the answer to that question right. And chances are you're going to live a lot longer than you think. And this plays a huge role in your financial game plan because the last thing you want is to end up being flat broke in the final stage of your life and just full of energy.
Speaker 5:
1:40
Hey I'm Paul West welcome to with wealth from wisdom. If I can say that today I promise I wasn't drinking before we came on air today. My co-host today is Aaron Wood. Can you at least a test for me for that. Aaron I will attest. All right. Thank you I appreciate it. Hey you know we've talked about longevity before but I mean I think for today's show we get some really good stories for you on how to help you interpret and understand this and the more stories you hear I think people understand the better. I would agree. Like all things in life remember it was a game in grade school they played the telephone game when you said a story to the person to your left and they told it to the next person they laughed. And the next person that it's terrible. By the time you get to the end yeah it's like you're telling a story about John and Susie and it ends up being a story about Aaron and Paul completely different names things happen.
Speaker 6:
2:26
But the more times you hear something the more likely you are you're actually to understand it interpret it and remember it had seen something recently that was talking just about things like how do we remember things and they were showing a paragraph of words and if you just read it you only remembered like seven percent of it. But then if you read it and had a story to go with it. And if there was a pitcher to go with it and all the things that we do on that tactical learning how to actually get us to remember a higher percentages. So repeating is absolutely necessary and the more vivid the story and the more we can understand and our brain will last longer.
Speaker 5:
3:01
I mean we've all read books right. We've read a page and are like What in the world to read. Have you ever reread a book. Not really. So you're halfway through that you read it. No I don't. I've got like I probably said I've gone a lot more to podcasts for my learning and also do more on audio books or also I do I watch more visual presentations and I think I've shared this on the show. We've had you know a friend of the firm present at one of our conferences. Her name is Mira will check. Very famous TED talk she does. She's a data expert artificial intelligence and she's smartest person I've ever met. She is uber smart. If you can use that phrase in that way without talking about Uber transportation. But she shared something I wanna share this with our listeners today. So you're listening to us you're hearing us soon in the future we actually have cameras in here so you'll be able to see us when you're watching the podcast or YouTube or other channels.
Speaker 4:
3:54
But what she shared was your brain processes visually eight megabytes per second but your ears your auditory only processes point eight so really ten times less than it makes sense because right you can all remember visually when you saw something that was impactful. You don't always remember what people said. I give an example sometimes you've been at church listening to a homily or a sermon and it gets done you're like What in the world did they just talk about because your brain just starts tuning out either a you're not interested or b there's now actually empirical and statistical evidence that shows it just can't process it is fast so when you're looking around at people it creates complexities. So this my retirement I mean this is actually one of the most important pillars out there is calculating and figuring out your long gravity because again we don't know not none of us have this crystal ball. I'm not sure I would want the crystal ball. I know there's. What would you call it biological tests and DNA tests you could do likewise when I and me is an example of one of those you can use. I'm not sure I haven't done it. Have you done one of those Erin.
Speaker 7:
5:05
I have not done one of those. I've thought about doing them but then there's not always what if I learned something I don't want to know or something I can't do anything about anyway. Then you just know something bad for no reason.
Speaker 5:
5:16
Yeah. So there's there's two sides to this coin that's for sure. The people that are all for it and say hey for hour long gravity purpose I'd love to get a DNA prediction. Again it's a prediction. It doesn't mean it's accurate about likelihood for developing cancer dementia things and you know there's part of me Erin that I would like to know that because would I live differently now when I potentially go on more trips or take kids or whatever it may be. So there's other part of me knowing that if I did get the results back and it's some less than favorable or less than ideal. Would it change my attitude and perception on life so dramatically. It's a tough one.
Speaker 7:
5:57
It is it's incredibly tough and you know we've talked about longevity in my family and your families before and my family has a tremendous long Lynch and longevity but I've seen it happen in very different ways. And so I think that's a big part of me I had one grandmother who had Alzheimer's and so she started off with Sundowner is where she was mine all day and then at night didn't know where she was. And then I had another grandmother who was completely mentally fine but physically she fell apart she had osteoporosis real bad had bones birds and you know those are two different examples of what I saw one gun mentally and one gun physically and and both of them are things that I'm not sure I can necessarily control.
Speaker 4:
6:41
No you can't. I mean let's let's look at some of the statistics here because we look at overall. So there's a phrase we like to use is called a centenarian. That means you're a hundred years old not us in Turin but a centenarian. That means somebody is actually reached their hundred a birthday and right now they're predicting there's only three point seven million of them by 2050. That's a lot that is a lot. Yeah I mean imagine that. I think for all of us by the way here's a trivia question for you. I love doing these here on the show. I know I can't help myself. So how old do you think the oldest person in the world is right now. One hundred and twelve close. Oh higher hundred sixteen now could change day by day here. But that's I don't think that's gonna become.
Speaker 4:
7:25
Abnormal. I think dad's just gonna continue change. So how old do you think the oldest verified person is according the Guinness Book of World Records. Oh I have no idea. Well it's got to be great one hundred and sixteen. Yeah. Let's go 120 close one twenty two. So somebody lived a hundred twenty two. They passed away in nineteen ninety seven. So that was twenty two years ago. You got to imagine there's plenty of people on that pace today that could absolutely get there. I'll give you this number. So if you're a sixty five year old man you have a forty one percent chance of living to age 85. And if you're a 65 year old woman you have a fifty three percent chance of living to age 85. Wow a 12 percent difference which talks about genetics or maybe you as females make smarter choices than we do as males better genetics.
Speaker 4:
8:14
Yeah better Gen-X All right. You're being kind to all of us there. Where's the real Erin what do we hear back here plays but I mean think about that you actually if you're 65 you have a 20 percent chance of living to age 90 or a one in three chance if you're female of women age 90. So how many are you listening to your sixty five years old if you're a female. One in three chance you're gonna live to age 90 or more. And I gotta believe that number is just gonna continue to go up and up and up yeah.
Speaker 8:
8:42
And look at the medical advances I'm actually surprised that no one has beat that Guinness World Records since 97. Just just the amount of medical innovations we've had in that time. The screenings are better. I mean look at the difference probably from when your kids were little to mind. Did you have well baby checks like every month every three months like these are all things now included in our insurance and so you're catching these whether it's the testing the problems that you might have. The vitamins I mean all the things that have just changed so much in that 20 year time period. I'm actually surprised at 97.
Speaker 4:
9:17
Yeah I am too. I mean I think if you look at your own families. I mean it's interesting people would say and we do this all the time so we truly can see this. People are more fearful of running out of money on their life than they are dying. I know it sounds strange but it's true. It is. Nobody wants to be 90 years old full of life and with no money. No. No. That that that's a nightmare scenario. So you have to make adjustments and what you do. So one of the things we have people predict is the following. There's really four big factors you're looking at in your retirement.
Speaker 5:
9:52
So one's longevity to his taxes and your impact. Three is your investment decisions. Before is in nation and I know this a boring word but it's the reality. I can't tell you how many people walk in the door here Aaron or send us a statement and they do what I call is a very flat line assumption. So if I'm gonna drive from Omaha Nebraska to downtown Kansas City I'm gonna figure out OK how long does it take to get there. And the average speed so call it seventy five miles per hour. 3 slow random. Yeah I'm gonna slow that down. You got it. Yeah. Well there's some construction.
Speaker 4:
10:32
S but it's gonna take me three hours to get there. Door to door right. But the reality is is if you set your crews are you ever at seventy five the entire time. No no. You still go up and down hills. Yeah you go up and down hills people in front of you there's people in front. There's construction weather. Mm hmm. And things happen. So it's a start and stop. It ultimately gets you to the end game but if you watched it it would be really interesting if you charted like it and showed it on a graph how your speed actually adjusts even though you averaged seventy five miles per hour. It's going to show you a very different thing. The problem is when people look at their retirements they assume it's just a perfect straight line. Wouldn't that be awesome. Yeah but that's so far from the truth.
Speaker 4:
11:15
And I think a little bit what you're seeing here in the last couple weeks in the market is the sense of I might call it normal sees coming back. The market cannot keep going up every single day. It's just not possible. And we've been living in this world of. Too many ups and not enough nouns and so we talked about this earlier this week with all of our portfolio managers our Chief Investment Officer that everybody's time horizon shrunk like they're just expecting to make more money a lot faster and a lot sooner yet they're going to live a lot longer. So isn't it there's an old analogy about the tortoise and the hare. Yes. Yeah. So everybody's just become hares recently. They just know I mean recently over the last several years. Everybody wants to run as fast they can make as much money as they can but they still want to get to the finish line and now just throw in a little market volatility or like the last couple of weeks. Being that tortoise isn't such a bad thing.
Speaker 7:
12:12
No well we look at you know we talk about it all the time with recency bias and people forget the last time we had a big correction and now we're looking at these times where we need we need to be cautious that we've had a good run.
Speaker 9:
12:24
Yeah we have. I mean it goes quickly. And I will tell you I mean what doesn't change even in the market goes down as your need for income. And most people don't actually look at income from an overall standpoint.
Speaker 10:
12:35
So if you want to help on income and just understanding all the different pieces of it 8 8 8 4 1 9 8 5 13 that's 8 8 8 4 1 9 eighty five thirteen our advisors stand by to talk to you.
Speaker 5:
12:46
We'll be back in a moment on wealth from wisdom.
Speaker 3:
12:49
Do you own an annuity inflated fees and commissions could be costing you an arm and a leg. Get straightforward and objective advice from Carson Wells by calling 8 8 8 4 1 9 eighty five. Thirteen are you caring for an aging parent. Are you concerned about the skyrocketing cost of health care and long term care or do you have questions about how to best manage an inheritance. We can help call. CARSON Well today at 8 8 8 4 1 9 85 13 and now back to wealth from wisdom. With Carson wealth.
Speaker 5:
13:19
The great news is you could live a lot longer than you actually think. And the key is though you're gonna have to figure out how you're gonna pay for it. Hey welcome back to all the wisdom. I'm Paul asked today I'm joined by Aaron Wood from our planet department. Aaron welcome back to the show. Thanks for having me. Yeah. Glad to have you. I know you've been out and about. I think you did a little summer trip recently. We did.
Speaker 7:
13:38
How many cities nine days of no matting. So we pretty much hit nine cities that we saw through eight cities we stayed at. But nine or ten cities overall.
Speaker 5:
13:46
Wow that's a lot. What were they all preplanned like now you're going.
Speaker 11:
13:49
It was nomadic. We had no plans. So we got up and left and had no idea where we were going each day and the next day we decided where we're heading next in our adventure total we did about 13 hundred miles.
Speaker 5:
14:00
Now you're a brilliant planner and so you do wonderful job. And so now me hearing that story from you wonders how I how well how but why.
Speaker 8:
14:09
So I've had a lot of people really fascinated about this and this is the second year we've done this with our kids we own a motor home. So I do take a little bit of you know we have our beds our clothes our food they really you have Maslow's basic necessities. Worst case scenario we don't find a campground to stay and we can stay in a Wal-Mart parking lot. I read that we're not going to be out homeless. Let's face it everything we need is there. But the idea of waking up and the spontaneity. What do we want to do. Who do we want to see. It's fun.
Speaker 11:
14:40
And we've experienced so many things we wouldn't have found otherwise. The kids look forward to it. So it's been great. And next year we've headed south east and now we've headed northeast and I'm sure we'll head north or Southwest next year.
Speaker 5:
14:54
There's time. So I think I think it's interesting. So a lot of people when you go on your trips especially those of you that live you know work lives where they're complicated or there's a lot going on and if you do a lot of planning it takes a lot for me not to say the dreaded b word but it's like you got all these priorities so sometimes it's just nice not to have to worry about making all those decisions right away.
Speaker 6:
15:16
And we really unplugged from technology. I can't say that that was completely intentional but we headed pretty far north where we didn't necessarily have cell service.
Speaker 11:
15:25
So we went quite a few days with very little to no cell service whatsoever. But how did it make you feel. It was great. You know we connect with the kids during this trip in a way that I don't think we do any other time. They turn you old probably thought he was dying when you realized his phone didn't work. But he spends a lot of time talking to us and getting a 13 year old to sit down and actually talk or go on a hike or a bike ride is priceless.
Speaker 5:
15:49
Yeah well I think I shared with you two. I was gone shortly thereafter and we went off to a state park here and we stay there and. I'm telling you like it's so fun. I call it the required Americana vacation is what I call it. Listen if you haven't taken your families on these you don't have to take exotic vacations so you can go do simple things and you know we're based here in the Midwest of course. This is awesome state parks and things you can do. I couldn't agree with you more. We went on a couple hikes where we were and just the whole the conversation that ensues with no phone and every answer was a question was why are we gonna take pictures we're on the phone we're going to take pictures in like an equal live well and the pictures still work just the cell service doesn't mean not.
Speaker 4:
16:36
But I don't want them look in and we'll have a good time and all of those things. But the power the things that came out of it is not what you want do next in life. There's so much I would call it futuristic thinking and it really fits into the theme of today's show talking about longevity is having conversations with your kids and making sure you talk through longevity and making sure you help them think through all the things in life and I know.
Speaker 5:
17:02
There's you when you watch the news the news of course all they want to do is pay for ads and subscriptions. Right. So they're going to always share bad stories and a lot of times in the news there's financial stories out there about kids and also any good stories you've heard of recently between maybe some celebrities that I've had challenges.
Speaker 8:
17:22
Yes. So I just brought this one in today for us to talk about Elizabeth Hurley's son it was Elizabeth Hurley. She is a model. I'm an actress. You might say to say if you don't know who Elizabeth Hurley is we're she and her son Damien is 17 and his son or his father comes from a very wealthy family. The grandfather passed away and what ended up happening is Damien has never really had a relationship with a grandfather but his trust say that the trust is for the grandchildren. So now it ended up in the court system of who is a grandchild. And part of the family was trying to say Damien is not a grandchild. Damien ended up winning because by blood he is a grandchild. So it brings up a good question about longevity and our trust documents and will documents and in the day of stepchildren and blended families in a lot of children out of wedlock being much more clear about who is included and who is excluded is going to continue to happen saying if you're a grand kid seems pretty black and white to me.
Speaker 5:
18:25
Yes it should be. And I think that's what the courts say.
Speaker 8:
18:28
Well the court did side with that but the family's perspective is you never even met each other. Yeah. So I can see it from both sides. I mean according to the court system. Yeah. It's very black and white. And Damien won but according to the person who set up that trust they're gone. But I'm not sure they would feel the same way.
Speaker 4:
18:49
Yeah and I would say Erin I mean this is a good lesson for all of you and it doesn't have to be a famous story like Hurley but it does need to be about your family. So there's a lot of people that structure their wills and trust in what they do is they set it up for bloodline meaning that if money transfers the goes to my daughter but it can't go if she's divorced to a son in law. Correct. So. Or if it goes to a grand kid and go to the grand kid who's of blood but not the grand kids spouse. Correct. So it does.
Speaker 5:
19:21
It doesn't matter what dollar amount but it just share with you that is a technique people can use that maybe prevent some of this from generic language or I can only imagine how much money the Hurley family spent in court there.
Speaker 11:
19:33
Oh exactly. But let's let's bring it back to more normal day conversations. My family is a blended family. So if I use that same technique that said I wanted to go to my children. Well according to the court I have one child according to my house. That's not how we work. But you know those are things in blended families we really have to consider if there is a second marriage or a child that is only a one of the spouses it becomes a big part of making sure that those documents really say and do what you're intending them to do.
Speaker 4:
20:06
Yeah. And so when we look at longevity and this is mistakes people make and that's why we're sharing it with you today on wealth from wisdom is you have to keep looking at these documents frequently. I know we don't like paying attorneys sorry attorneys all listening. I use a lot. We help but everyone hates the feeling of the meter running for the mistakes can be catastrophic. What happens. Tax law change so that has some impact but also family situations change. You just mentioned years years changed and so therefore you've got to make adjustments to documents. The last thing you want to do and I've been in these scenarios and situations here is you know you're 85 years old you're potentially losing your capacity to think and now it's too late. You can't make adjustments. So now you're appointing a power of attorney. And I see this all the time I'm dealing with a family right now.
Speaker 4:
20:56
I think dealing with. I'm trying to help them but I'm dealing with the situation that's presented itself is the siblings are fighting over who is going to be the power of attorney over mom or dad and they have a complete difference in opinion. Oh yes. On what Mom and Dad and whether or not they should be an assisted living care facility. And by the way they have a complete socioeconomic difference just between the brother and sister. So it's created a sibling rivalry to all get out. That use the parents. Like for me like I just I'd be so upset if I passed away and I was looking down from above and saw my children fighting over are the state or whatever we have because I actually had control over that I had the ability to protect them from that but I didn't do it correctly.
Speaker 6:
21:40
And I've seen this happen frequently where you know that the time has come for the long term care facility and the parents do have the money to pay for it. They didn't buy long term care insurance. They didn't tell their kids what they wanted. And now the time has come and you have a difference in opinion of should mom or dad come and live with us or should we put him in a facility in a big part. Unfortunately is how's that going to affect my inheritance and how is brother and sister going to feel about this and it does its causes this fighting that the parents never wanted. And it's so much simpler to set up yourself and say here's what I want and here's how it's gonna be done.
Speaker 4:
22:16
Yeah. So Aaron and I are both certified financial planners are CFP for short. So we're held to a level of standard of providing advice and I think about long division and anything about long term care. So again I think with long term care people either love it or hate it. So there's not there's not a lot of middle ground. The people that love it just want the protection safety and security. Most of them have had some a life event happen. Yes that causes them to do it. The people that hate it either hate it because oh they're risk takers or a lot of them. Want to self insure. And I mean by that is take the risk and if it happens to them then they'll just pay money out of their IRA or taxable accounts that they have. But here's what I would say and I've seen a lot of families.
Speaker 4:
23:02
So or CFP These are jobs to put the numbers in front of you and tell you if you can afford it or not. Right. Right. But there's a lot of you that can afford it. So then it's to take the quantum number say you can afford. But then the qualitative numbers are not numbers but the scenario and your goal is to say why you should or shouldn't do it. Case in point I have a family we work with that they can't afford it. We've ran the numbers for them. And one of the things they don't want to have happen is the two children do debate about this or not and how whether or not and by the way what we see is is when people have to make their own decision on when to put mom and dad into an assisted facility if they wait too long hard. It's so hard to make that decision. You could because your personal our egos get in the way. No one's gonna take better care of mom and dad than me. Correct. I mean that's number one thing it happen. So imagine though this. They don't have the time. It leads to an insane amount of stress through the situation.
Speaker 6:
24:03
The sandwich generation taking care of kids and parents at the same time.
Speaker 9:
24:07
Yeah. Not easy but what if you can self insure but you decided to invest in long term care. You're actually from a qualitative measure doing one of the better things you can for your kids because you're taking this decision out of their hands.
Speaker 6:
24:20
It reduces stress off of everyone. You as the individual know what you want is going to be done. It takes its distressed off the kids so they're not fighting. And I always like to ask every single client when they say that their kids or the plan or they'll let their kids take care of this or make the decision. My very first question is how like are your children. Do they think the same way. And nine times out of ten we get the laugh and they know that they're not close at all.
Speaker 5:
24:46
I mean they don't approach it that way. They don't think that way. You know hey if you've had an insurance agent. I've talked with this in the show pitch you long term care insurance and I say pitch because that means they're trying to sell you something versus running through this analysis on what's right. If you want us help and a fiduciary opinion 8 8 8 4 1 9 85 13 8 8 8 4 1 9 8 5 13 again will give you a fiduciary no cost opinion on what somebody else has proposed to you on long term care and hey we'll be back in a moment on wealth from wisdom.
Speaker 12:
25:14
Any major decision in life is worth getting a second opinion. And financial planning is no exception.
Speaker 3:
25:20
Let's talk about how you could make your money go further in retirement than you ever thought possible. Call Carson wealth to schedule your free initial analysis now at 8 8 8 4 1 9 eighty five. 13.
Speaker 13:
25:33
Do you have a lot of assets but are short on cash. Learn how you can leverage your assets to free up cash with Carson wealth by calling 8 8 8 4 1 9 8 5 13. And now back to wealth from wisdom.
Speaker 5:
25:46
With Carson wealth he according to a new recently research featured in Bloomberg. Did you know that 96 percent of Americans lose an average of get ready. One hundred and eleven thousand dollars in Social Security benefits. Due to needless timing mistakes. Ninety six percent. So again if you're sitting there you're looking around and if you're not the smartest person in the room or better yet you're the majority of people in the room what happened. You're like that. You made a mistake. Who doesn't want an extra one hundred eleven thousand. I don't know about you Aaron. I do.
Speaker 7:
26:22
Yeah. That's a heck of a lot of money. Yeah. Ninety six percent. Ninety six percent. I've heard these statistics not quite framed that way. And that that hurts.
Speaker 9:
26:32
Yeah but you run the planning department here at Carson. I mean you see it all the time that people bring in their Social Security statements or they've already filed and they made a mistake because they listen to other people's advice and it just drives me crazy. I keep saying this all the time your personal financial situation is like your fingerprint. It's unique it's different. No one else has the code on how to crack it. Only you do. So why you would listen to non professionals or non fiduciary is to help give you advice is silly. It's just wrong.
Speaker 7:
27:04
Well and I don't even necessarily think that people are intentionally listening. I think sometimes it's the. I was talking to someone and someone retired and they filed their Social Security and so we just are hearing conversations because these are the people typically in our age group. And so we just listen to what someone else did and why. Oh well that's what someone else did. I will say most of the people who I see have made mistakes didn't go out and specifically look for advice they just did what someone else did.
Speaker 5:
27:30
Yeah no I think that's exactly what happened. I mean it's you know I should the story you that when you're looking for referrals so I want my basement remodeled and you know someone else on your street got their basement remodeled. What do you ask him. Who'd you use. Yeah. Did you like him. Yeah. And we used a one remodeling or whatever their name is and you know did you like him. Yep. Okay great. Was there no. Yeah. That's all the research people do. And I know if you're listening right now you're laughing because it's true. We should laugh at the truth that happen. But personally you need to be making these right decisions.
Speaker 9:
28:01
All the time on on who and what you work with.
Speaker 5:
28:04
So you know as we look at making the right decision against longevity I'm going to tell you and we have appear he's on the show with us sometimes his name's Jimmy Hopkins know he's an adjunct professor here at Creighton University in Omaha formerly of the American College and he's helped share some stuff on the show and I want to talk to you about this which is those first couple years of retirement. So is it better to retire in a bull market or a bear market.
Speaker 8:
28:30
Oh oh like yeah you know I'm pulling money out of a bad market. That's terrible.
Speaker 4:
28:35
No. And we've been on a 10 year bull run. I'm actually more concerned about the next four years of our investors and clients especially those of you who are looking to retire now. So I led a workshop earlier this week I got asked to come speak about talking about preparing for retirement. So I did the following Aaron and I love that. So you put someone else on the spot outside. I put the whole room on the spot if that's helpful. Not just one individual person. And what I said was imagine as you have one million dollars and at the end of one year the value of your account is a at one point one million. All right. So don't do this yet but I want you to raise your hand. I want you to raise your right hand if you would say I'm up 10 percent.
Speaker 4:
29:18
I want you to raise your left hand if you're up one hundred thousand dollars. How everyone's doing. Left hand. No they did the right. Yeah. Up 10 percent. Oh yeah yeah. Yeah. So they said that not everyone. Most people did. I said OK now let's say instead of one million dollars at the end of one year you have nine hundred thousand dollars. So again I said raise your right hand if you're down 10 percent. Raise your left hand if you're down one hundred thousand dollars. So now what you think everybody does. Now they did the down on the left. Most people switched hands. So fascinating isn't that.
Speaker 7:
29:54
Well I also find it fascinating.
Speaker 11:
29:56
We've talked about how many people same dollar amount to one hundred thousand dollars same dollar amount but we've talked about the fact that people hate math. Most people have a disdain for math like we've talked about this before. But yet whenever it comes to positive returns we're always on the percentage whenever it comes to the negative we're always on the dollar. Yeah. How do we take something that we hate so much and we do it two different ways.
Speaker 4:
30:16
Yeah. So I said all of you you just switched in the matter of 30 seconds. Right. So if that happened to you how quickly you're going to make a switch to your ass allocation. So take what's been transpiring in the market over the last two weeks in some downturns. So now you're gonna start selling because you have fear or you see your account went down. No you shouldn't. The best investors. And I was listen to a podcast the other day and I can't recall who it was. OK. Now I do remember standard deviation so great Dr. Janet Crosby a friend of ours too. And he had a guest on the show talking about one of the major custodians went and looked at you know like actively managed do it yourself her accounts and they looked at orphaned account. And if I heard this story too that actually the orphan accounts those who they forgot they had them forgot how had actually did better. Yeah well I really just forgot they had an account had the best returns because they weren't making behavioral based mistakes. They were being smart about it and I they share this with you because sometimes we feel like we have to make moves to make moves to show people we're doing something or again we know and you know this from what you study Erin. Money is probably the most avoided topic in a marriage. Hello. Yes. Is it by it's by far right the most stress. Yeah. So as least talked about the most stressed. Yeah.
Speaker 7:
31:43
And if you have a negative conversation about money more than I think it's like once a week it through the roof your chances of divorce go up.
Speaker 4:
31:51
Interesting. So if that's the case so then imagine that if you have one of the two of you spouses likes to drive the wheel and make trades at Tedy Ameritrade fidelity wherever you're using. So you feel like your spouse maybe says at one time and. Well hey what's going on in our account. How are we doing. And you haven't made a trade in a while. What are you going to go do can make a trade. Yeah. Why.
Speaker 14:
32:15
Because you feel like you're not doing anything. Yes. And if you're listening to me I know this has happened to you. You've got to be smart about this because you're just doing it to do something and that is that's the worst thing to do.
Speaker 4:
32:28
You're actually I'd rather. And now listen the study actually showed that the orphan accounts were doing better. They are. So there's a reason why Vanguard's released a study it's called advisers Alpha and it showed that working with an adviser versus on your own you're performing two point nine two percent better net of fees because of helping you avoid mainly behavioral based mistakes. And
Speaker 6:
32:54
we you and I talked about this frequently it's that if I can help a client keep themselves from making a big mistake once or twice and they usually work together those big mistakes are huge rewards to them I think comes back to show that I mean almost 3 percent difference.
Speaker 11:
33:10
Just by saying Well think about what we're doing before we just make this big change.
Speaker 5:
33:14
All right. So here's another question for you as we get older do we get smarter or dumber dumber a word that just proves my own point there is our producers laughing at me.
Speaker 8:
33:23
But. Well I would say so here's a very behavioral finance thing to say.
Speaker 11:
33:28
The cognitive part of your brain doesn't stop growing until you're in your mid 20s which is the logic part of your brain. It's also the reason as we get older we quit taking as much risk as we do and were younger.
Speaker 5:
33:38
So the older you get the smarter you should get by taking less risk. Gotcha. So I don't know what the answer is the question I'll just I figured you would have it.
Speaker 14:
33:47
But I posed it to you because so I feel like I get street smart smarter right.
Speaker 4:
33:54
I learned from the world of hard knocks. I learned to avoid you know notice similar when the first time you ever touch the stove. Yeah. Ouch. That's hot. Mm hmm. You learn that in the real life. But then there's also there's just things you forget. I. I took you know many of us had to take a second language here at school and so I took one in high school and I can tell you I don't remember a lot of what I learned. I don't apply it. How many years of language did you for me too. Yeah. And I feel bad about that but it just I feel like I'm not getting any smarter in that realm. But I've learned other things in life that are more applicable. I've also just like you. I mean you're taking a program right now to improve yourself. Yes. So you're almost done.
Speaker 4:
34:37
I'm almost done. You can see the finish line. And me too and I've taken these programs because why I want to get better I believe in continuous learning. But there probably is some point in our longevity where we do start to slide and I think those of us that are in that sandwich generation or any other point we see our parents sliding and it stinks. It's no fun. But that's why we prepare now. I mean that's why we make those conscious decisions about not only long term care when they take their Social Security but where they live how they access. I mean being in the community where they can be around other people or they can get care if they needed it. Those are all things that didn't exist 20 30 years ago and now they're very prevalent for people. So I want to tell you all. You're not alone. If these things crossed your mind and you're thinking about it there's a reason why we're one of the most trusted financial organizations in the world because we help people think through not quantitative but these are very important life decisions. If you want help talking through this about how to be a better caregiver for your family.
Speaker 10:
35:39
8 8 8 4 1 9 8 5 13. That's 8 8 8 4 1 9 8 5 13.
Speaker 5:
35:46
Hey you're listening to wealth and wisdom.
Speaker 3:
35:48
Paul was joined by Aaron Wood and we'll be back in a moment. Have you ever wondered how do other people get away with paying your taxes than everyone else. Learn how you could save thousands of dollars in taxes by calling carson Well at 8 8 8 4 1 9 85 13.
Speaker 13:
36:04
Social Security Risk taxes and health care. This is where you can count on straightforward and objective advice on the biggest challenges with investing for retirement. And now back to wealth from wisdom with Carson wealth.
Speaker 4:
36:19
There's one thing that can solve a lot of problems especially when it comes to longevity. And do you know what that one thing is. It's income. It's your savings and your investments. They get generated income from all these different sources and you've got to be super smart about that but just realize that today's world is way more complex than ever before and you've got to do what's best for you. Hey welcome back to altruism on Paul last co-host today today's Aaron Wood. And today we're talking about those financial consequences that come with living longer and how you can actually pay for it. And coming up in this last segment we're going to really keep sharing those different ways other people are generating success of income in retirement and earn. I always look at there's two sides of the coin here. There's income and there's expenses right. And what you really need to look at everybody wants to know or am I just am I positive or a negative for the month and for the year. Yeah most who have budgets they don't know it down in the penny but they know I make more money or I spend more money.
Speaker 7:
37:18
People generally have a vague idea of where the money's going. They might not necessarily know what they're spending on restaurants or what they're spending on entertainment but they have a general idea of here's my my liabilities that are reoccurring and then they're able to say here's what I know my fixed income is coming in but it's that gray part that honestly tends to cause us the most issues we have.
Speaker 5:
37:41
Speaking of liabilities I owe you a big thank you Aaron. Oh so thank you didn't you do absolutely on air. Absolutely. So on to shows you've been my accountability partner. So yes you've asked me what have I done about my insurance. So I think I've shared many of our listeners No I have twin 16 year olds. I remarked that I had a two hundred and fifty two percent increase. The day I added them to my policy for auto. So what I did was I took the easy route. Aaron at first. So what did I do when I applied my insurance company actually is a really cool app on my phone to add them and then you pick and choose the discounts like safe driver. Good. Dude it's nice. It was really nice. It was easy to use right. Simple button. I didn't have to talk to another human being on a weekend.
Speaker 5:
38:34
So I did it at night. Right. Easy to do. So unfortunately several months went by and I got the feeling like did I really get the best deal or not. So I've recently been doing the research and then I called my existing company as well so I called and walked through with them and said Hey I'm just not sure I'm getting the best potential deal that I possibly could. They said Well thank you very much Mr. West. You've been a client of ours since 2003. We appreciate that. So let's run through this in some of these different is you know we bought a car. So now we have three cars four drivers etc but mainly for my kids to get the high school back and forth etc. They don't really care like who drives which car. So even though they maybe drive the lower cost car the lower value car doesn't really matter.
Speaker 5:
39:23
They hit on all of them. Yep. So we were talking through it and he said well you really have an older policy. Some of our rating systems have changed. It could be your benefit. Can you stay on the phone for a few more minutes to walk through. I'm like Well yeah absolutely. That's why I called you to walk through this and I use a national firm. I don't go to a local agent or go sit in their shop. You can if you want to but I'm just sharing what I did. Lo and behold we go through everything.
Speaker 4:
39:50
Same coverage same deductible everything. I saved almost three hundred dollars a month a month a month jeez. So even those super easy to do this on my app and through everything else by going out to the market and finding what comparables were and then calling and talking through this. And it wasn't like I said You better do this or else they just got repriced. And so my challenge in connection to all of you out there is go do this. Don't let anybody let you. No one wants to deal with it. So by the way of course I hang up and I had my auto in my home at the same Pollo same company. I said Hey now let's go look at my home policy.
Speaker 5:
40:34
So not only did we get the same liability coverages I also pay for that a water and sewer backup because I've always heard you should do that pay the extra whatever it is 50 60 dollars a year piece of jewelry on there that's it. But actually we insured it for a little bit more. Twelve hundred dollars less than my current policy. So I made over four thousand dollars this last weekend. Thanks to you Erin holding me accountable by the way per year. Yeah. So guess what that's gonna do go to my kids college fund help for our own personal retirement. All because I didn't let this drift down the road any further. That enough was enough. It was time to sit down and make that decision.
Speaker 7:
41:15
Well an insurance I know I've said this over and over again. It really needs to be reviewed every couple of years just for the reason that you said policies change. And that's not just you know our property and casualty but life insurance. It wasn't too many years ago. They changed the life expectancy charts and so life insurance got cheaper but the same thing every time they show up to a data study they change it. They expand them. They tend to be in our favor with insurance that it really does get cheaper. But the differences between company the company is usually very large and no company comes back to us and says Hey Paul you're such a great customer let's just go ahead and reduce your premium and give you a better deal. So you really do have to go out and do it yourself and ask them to review those policies.
Speaker 4:
42:04
Yeah you have to and if you don't and I certainly learn the lesson but it's also you and I have incorporated so insurance planning as part of financial planning overall. Absolutely. It has to be because one for longevity so people buy life insurance policies for several reasons. Legacy you want take care of your family too. You want to avoid any taxes that come due. Three peace of mind for a lot of people. And fourth you know when you talk about property and casualty so your homeowner is your life. You just mean that your life your cars etc. you do that. So you don't have these massive out-of-pocket expenses but people feel like once you buy it you don't have to worry about it again and I hope you all learn from my story and I'm very at least hopefully financially savvy here to look at all of these things and you know when I googled and done all these other things.
Speaker 4:
42:56
You're going to have a significant increase when you add two drivers to your thing. Yeah I give the insurance company credit. They didn't. Awesome job of making my life easy. But they didn't have a fiduciary obligation to give me the best quote possible. Now what do they do. They gave me a policy that was easily accessible when I use their app versus calling someone. So if you're listening view and you've used your app lately. Be careful. You better call someone. Talk through it or go see a local agent. Be smart about this because what I want to do is I mean if I'm going to live out my life for as long as I possibly can and certainly want to be financially strong capable this extra four thousand dollars could go a long way after that. That takes care of a lot of kids sports.
Speaker 4:
43:41
It does. I could do really cool things with it. You know for a lot of people and for those of you listening there's some dollar amount limit. So if those of you like to contribute to an IRA a some of you aren't able to contribute to a Roth IRA. So a technique we use is if you can't contribute to a Roth you can still make a non deductible contribution to an IRA. And what we see a lot of smart and savvy people do is make that contribution and then quickly thereafter convert it to a ROTH Yes pay any necessary taxes but should be minimal. Right. Because you haven't had them that long and didn't have many investment gains to go with it that you actually you're just back doing your way into a Roth. So guess what it's called a pact or a backdoor Roth.
Speaker 4:
44:29
It is a great technique to use if you want more information on that. I'm going to tell you Aaron and I do planning for people all across the country. It's one of the probably the most underutilized techniques. And it helps create tax free income for you for your retirement. So if your longevity is going to continue to go like we been talking about today show a back to a Roth is just one of those other tools in your tool belt. You should consider. Yes. I'm not saying it's right for you. Your situation depends your income. What you have your disposable money if you want help.
Speaker 10:
44:57
Talking through that 8 8 8 4 1 9 8 5 13 that's 8 8 8 4 1 9 8 5 13.
Speaker 4:
45:07
Erin thank you again. Thanks for hold me accountable on my insurance there. Thanks for coming to the show. We appreciate it. Listen talk about longevity. Hey you been listening to well from wisdom. And we look forward to having you all on again soon.
Speaker 15:
45:20
Thanks risk social security income taxes estate planning. Every week we talk about how to make your money go further in retirement. Right here on wealth from wisdom with there and told the same adviser Ron Carson OK.
Speaker 1:
45:34
And here's the legal mumbo jumbo the opinions voiced in Wolfram wisdom with Rod Carson. For general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you consult a qualified professional. All indices are unmanaged and may not be invested directly. Investing involves risk including possible loss of principal. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offer their CDW an LLC and SCC district investment advisor.
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