Wealth from Wisdom

Retirement Risks: Looking at the Hurdles in Retirement Beyond Your Investment Portfolio

September 14, 2019
Wealth from Wisdom
Retirement Risks: Looking at the Hurdles in Retirement Beyond Your Investment Portfolio
Chapters
Wealth from Wisdom
Retirement Risks: Looking at the Hurdles in Retirement Beyond Your Investment Portfolio
Sep 14, 2019
Carson Wealth
In this episode of Wealth From Wisdom, Paul West and Erin Wood discuss the retirement risks outside of your investment portfolio, and how you can set yourself up to not only meet your retirement income needs, but also to protect yourself, your family and your legacy.
Show Notes Transcript

Risk in financial planning is a common topic. Are you a conservative or growth-centric investor? Stocks or bonds? What are the Federal Interest Rates doing? But there are plenty of other risks in retirement outside of investments. 

From tax efficiency to long-term care insurance, dealing with unexpected health concerns, the death of a loved one, or needing to supplement your retirement income – you need to be prepared. 

In this episode of Wealth From Wisdom, Paul West and Erin Wood discuss the retirement risks outside of your investment portfolio, and how you can set yourself up to not only meet your retirement income needs, but also to protect yourself, your family and your legacy. 



Speaker 1:
0:00
Okay, and here's the legal Mumbo jumbo. The opinions voiced in wealth from wisdom with Ron Carson or 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 into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CDW m l LLC, an SEC registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 you've worked hard and saved for retirement. 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 adviser 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've saved for retirement. Welcome to wealth from wisdom with Carson wealth, we talk about risk
Speaker 3:
1:14
and financial planning all the time. And some of the ways that we think about it is, are you conservative? Are you moderate? Are you, are you really a growth centric investor? And a lot of times people think about it in a very simple way. Should I pick stocks or should I pick bonds? Unfortunately, really life isn't that simple. It's not just about your asset allocation. And even though like we as professional money managers and planners and really guide your guides through all of our financial lives for our families, we do follow the markets with an eye towards what we call risk. But there are plenty of other risks in retirement. People usually think of risk of how much did the market go up or how much it go down. But there's a lot of other risks. So tax risk, I still yet have not found someone who loves to pay taxes and that's probably not gonna happen, but there's many other risks.
Speaker 3:
2:04
And on today's show, I'm joined today by Aaron Wood, our VP of planning here at the Carson Group. So welcome back to the show, Aaron. Thanks for having me. As always. Yeah, glad to have you here. So when we talk about risks like tax efficiency for people, uh, we'll talk about maybe about some longterm care today. Um, uh, unexpected health concerns happen, uh, the death of a loved one. Uh, or needing to maybe figure out ways to supplement your retirement income. You have to be prepared of what's gonna Happen. And today we're going to talk about those risks that happen outside of your investment portfolio. Um, really how you can set yourself up to not only meet your retirement income needs, but also to protect yourself, your family, and your legacy. I like to share is, is, um, it's s we've talked about a phrase here. Um, it's not always the bus you're looking for that hits you.
Speaker 3:
2:54
It's some other one that attacks you and happens. And you don't know what's going to transpire. And I know on last week's show, I shared my story of having water in my basement and the challenges that encountered with that. I'm an unintended risk, but it becomes a financial risk and or if you remember if you listen to the show, but if you didn't, um, I had put an addendum into my property and casualty policy on my homeowners insurance that minor had denim. That was whatever. I can't remember. 50, $52 a year just saved me thousands and thousands of dollars. But if I wouldn't have protected myself against that risk, I would have been out of pocket that much more. And there's many of those things that can happen to you in retirement. And Aaron, I would say one of those is longterm care. And that's one of the ones that people love to, uh, avoid conversations about avoiding ignore.
Speaker 3:
3:47
Yeah. Yeah. Even though the stats are how many of us are most likely going to be in there, I mean, is it above or below 50% it is above. Yeah. So this is above then why are we ignoring it? Well, I think it's a couple of things. One, none of us want to talk about deteriorating health and life are to the point when we can't do the things that we can do today. And so going to a facility or a retirement community isn't always about needing someone to help you. Um, you know, make food. Uh, but there's a lot of other pieces like who's going to mow your lawn? Who's gonna Change Your Light Bulb? What happens when you can't reach stuff on the top shelf anymore? Do you really want yourself or grandma at 90 years old climbing a ladder in the pantry to get something down?
Speaker 3:
4:28
So there's a lot of reasons that people should be considering it, but that conversation is, is a hard one because it really is us admitting we can't necessarily do all the things we used to be able to do. Yeah. So what are you doing in that situation? Do you hire a handy person who can come and you pay them an hourly fee to take care of? The odds are, and probably not most of us. What is it? If they're your parents, you're the one going over there doing it and you're committing time and we see it all day long. I hear it in conversations is, oh, I've got to go help mom. I've got to go help dad are going to go help do this. I got to help do that. And those things just keep adding up. But it's so simple to me. Like right now if I put a $20 bill on the table and I said, you had a better than 50% chance to for you to keep it.
Speaker 3:
5:14
If you and I were trying to make a wager on it and you had a statistically a much better chance, you'd feel good all day long. But why? When we're looking at longterm care to people immediately feel like they shouldn't prepare for it even though statistically speaking you need to, you have to. And I think historically there were a lot of stories of people who had bought long term care and then they didn't use it. And so there is that fear from a lot of people that they've heard this story that, you know, grandma had aid or my uncle had it and it went wasted. There's been a lot of changes over the last decade or more of those types of policies. And that's not the case anymore. Most of the policies have in home health care in them. So just like you were talking to before, you know, paying someone to come and do some of these things for you in your house.
Speaker 3:
6:01
You don't have to go to a facility right away. And so having someone come in and help with bathing or hoe making food or taking some medications and you know, they're there during the day and they leave, uh, that, that's a fantastic thing to have access to that wasn't historically there. And then, you know, the other flip side of it is anytime you ask someone their thoughts on longterm care, they either have a negative story of what they've seen happen or they've had the story where someone didn't use it and whatever, they know that's what they apply to all situations. Or The opposite is, is um, they did use it and how wonderful it was for them. So I would tell you that most people have been impacted by this become believers and those that haven't been, just assume, hey, if it hasn't happened to me yet, it probably won't.
Speaker 3:
6:46
And I know you love to study behavioral finance and you study behavioral finance as you think about it. This is just, this is a typical avoider mentality, right? For those of us as human beating beans, we avoid talking about things that are either scary or that we don't want to happen instead of just having a hard conversation. I think about this in all elements. Life, business, family, personal, we've all had that one thing like it's bottled up and you know, you need to talk to your kids or your spouse or your, that conversation you want to have with your leader. I like the word boss. So your leader at the office, but it's just you let it bubble, you let it continue to draw out, but you don't actually say it. But then when you have that conversation, you feel so good. I remember this sense of relief comes out of your body.
Speaker 3:
7:39
I'll tell you with this, when, when we think about longterm care, so start the conversation. It doesn't mean you have to do it. Um, I, I look at it with a little bit of a different Lens and I know I do for a lot of different things. I'll, well from wisdom here, but when I look at it, Aaron, I'm sitting there saying, okay, I, I like to look at this as okay a play field and I as the coach, I'm going to make a lot of decisions. And so one of the decisions I want to make is, all right, I'm Paul West, I'm 80 years old and I'm in now a assisted living facility or a longterm care facility B for whatever reason, whether it's I have, um, dementia or whether I'm just not physically able, whatever those things are. Um, I don't want to put where I go and how I do it.
Speaker 3:
8:26
I don't want to put that stress on my three children. I don't want to put that stress on my spouse. And we have seen that so many times. You know, one of my favorite questions to ask someone who can afford their longterm care is how much do your children get along and see things exactly the same way. And I've yet to have one client ever tell me that their kids think the same way. It's usually, no, they're very different. And now the friction you caused between your children is just multiplied by the stress of one child wants to put you in this facility and another one wants you closer to them and another one wants you to stay home and it causes so much fighting. They do, it's, and it just, it causes unnecessary need then. So I'm going to throw another word in here.
Speaker 3:
9:08
Life Insurance. So many of you feel like, hey, we don't need life insurance or yes we do. And I think that's the beauty. So I'm gonna use a phrase with you, it's called hybrid. So there's a new type of longterm care that combines life insurance with longterm care. So you don't use it or lose it. And here, here's how it works in a very simple matter. If I make payments in, and by the way, I can put all my money in upfront or I can spread it out over 10 years or spread out over my lifetime. Um, I can put inflation adjustments in there, but I put my money in and if I use it and I get benefits, then great. Yup. It did what it's supposed to do, took care of longterm care. But if I didn't use it, then it pays out to my beneficiaries in the terms of life insurance or they get tax free income out of this policy, uh, that they didn't lose.
Speaker 3:
10:02
And so I think that gets rid of so many fears or concerns for people. And I, I don't know why many more people don't take advantage of that because then if they wanted to pass money to their kids anyways, here's a great way to do it. And those types of policies actually help people who've maybe had some health issues that they don't qualify for traditional longterm care. Many of them do qualify for the hybrid policies. Yeah. And that's the beauty of, uh, going in there together. Um, and for them to think about it. Um, and I just think one of the things I look at is, uh, I'm going gonna pick on, um, my gender here. So men especially, we have a mental bias of going to the doctor. I know I'd shocking, right? That's happening. I love how you and producer Jamie are both laughing about this one.
Speaker 3:
10:48
But it's true. I mean there's, I mean I'm Reading Wall Street Journal Article Right here in front of me that completely validates and the, the big reason is, is I, the number one reason why they don't is I'm only gonna go if I'm extremely sick. And the word extremely minor or major extreme is on the, you know, on the pain scale you have at the hospital, it's 10 11 instead of the tank is, you know, it starts out with one is a happy face and by 10 somebody wet, bright red briner purple or blue crying. Yeah, it's like an 11 and Y it's just being selfish at the end of the day. I mean if you really think about it, uh, if they have family and family are their number one priority in life by not going, you're just saying, all right, well I know my family matters, but I'm not going to take that one extra step to help.
Speaker 3:
11:38
So a lot of times families don't buy this longterm care because you feel like you're going to self fund it. But really, I'm going to say it's the opposite. It's more about the ego and the relationship saying I'm better than this. I'm not going to get sick. I'm tough. And so they just avoid it overall. Yes. And let's face it, doing nothing is still a plan. It doesn't mean it's a good plan, but doing nothing is still a plan. And there's a lot of people who end up living with their children or their children or taking care of them. And that is not the result that they wanted. But the lack of planning has put them in this situation. And by not having this plan in place, it creates what I call opportunity or danger for them and a huge trap that they run out of money in their lifetime.
Speaker 3:
12:21
And this could be, you know, we talk about long term care, but it could be a market downturn, downturn or unexpected expenses. We actually created Aaron this step by step guide called three methods to not run out of your money. This is gonna help make sure it lasts throughout your lifetime. If you want, you can go to our website, Carson, wealth.com you can find our retirement white paper on there talking about three methods to not run out of your money. Or if you want me to email it to you, just shoot us a note. info@carsonwealth.com you're listening to wealth from wisdom.
Speaker 2:
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 wealth by calling (888) 419-8513 are you caring for an aging parent? Are you concerned about the skyrocketed cost of health care? And longterm care. Or do you have questions about how to best manage an inheritance? We can help call Carson wealth today at (888) 419-8513 and now back to wealth from wisdom with Carson wealth.
Speaker 3:
13:19
Welcome back to wealth from wisdom. This is Paul last, my cohost, today's Aaron Wood. And we're talking about these retirement risks beyond your actual investments, beyond the stock market, beyond stocks, beyond bonds. All of that noise you hear if you watch CNBC are, if you're getting Yahoo finance app or all of those things, they may provide you interesting information but as important, what we're sharing with you today is important because these are the retirement risks that could jump up and bite you in a segment. Number One, we talked about longterm care and we shared the statistic that more than 50% of you are going to need some form of it and the reality is that's going to happen. So you need to at least prepare for it. And Aaron, yes, you're correct. No decisions still is a decision. Yes it is. Um, but second is we need to help people prepare for, uh, and this is a tough topic, but we gotta talk about it is when somebody is not on this earth anymore and when it happens prematurely or unexpectedly, and there's really two types of, um, unexpected death, you know, to a loved one or to yourself.
Speaker 3:
14:23
So most people think about unexpected death and the only way to protect for it is life insurance. Uh, I'm going to say life insurance is a tool, but it is not the tool. And I think that's so important. And by the way, it doesn't mean you have to maximize your life insurance to prepare for this, but you need to do simple things. Number one, and I, and I can't share this enough, Aaron, and you know this, I mean in running financial planning here for group, when, when you have a married couple, what is most likely, um, the odds or what's most likely, where both couples share the exact same knowledge level of knowledge about their personal financial situation? The exact same, I'm going to say one out of a million. Okay. I think you're being a little exaggerating there. It's extremely rare. It really, I, I'd say less than 5% is probably fair.
Speaker 3:
15:21
You know, you typically have one who is the person who handles the cash flow and that person may in fact also be the person who handles the investments. Uh, but we also see frequently where one spouse handles all the investments and the savings and the other one is the one paying the bills on a monthly basis. But having both of them know both sides of the equation is really, really rare. It's not common at all. So I mean, I can't imagine, um, and I, I know where I sit in my chair, I probably know where you sit in your chair too, Aaron. Yes. Um, so I, I can't imagine with my knowledge just cause I'm the one that's more actively involved than if I didn't have all of my information shared in a digital vault. But also if I didn't have someone else who was my backup, who at minimum knew all of the stuff about us and what was important, I can't imagine that.
Speaker 3:
16:12
And I was like, so there's two scenarios so you could have unexpected death. I mean, I have a family coming in. Unfortunately this had one. And by the way, it's young, it's in their thirties, and it's no fun. Um, now granted they had some things in place, but oh my gosh, thank goodness they had at least a trusted professional light, Carson who could help them through this process. And I share this with people all the time, and I'm, and I'm very serious about this, is if you have an unexpected death, here's what's going to happen in your chain of events. One, you're going to call your family and friends immediately. Two, you're going to call your faith. Um, and then if you are the person who wasn't the one actively involved in your financial situation, you're gonna call your financial planner to say, what in the world do I do now?
Speaker 3:
17:01
Yeah, but most common question we get from the widows who were not the ones involved, do I have the cash flow? Am I going to be okay? Can I go to the grocery store? Do I have to move? I mean it really is those baseline of, they have no idea where they're at and is everything going to be okay? Yeah, it's um, [inaudible] I couldn't imagine putting someone in that situation that not, I mean then what are they gonna do? They gonna dig through your phone and begin to look for where's documents, where's folders? Uh, they need to call your attorney. They needed to call your financial person. They need to call your insurance person. They, uh, you know, is that your CPA, it just creates a domino of the facts. But why you maybe had the opportunity to take care of this in your lifetime.
Speaker 3:
17:49
But again, going to call the, the ego beating against someone's chest is like, oh, this is never going to happen to me. So I want to show you some statistics here. And this actually came out, um, from the CDC. So the Center for Disease Control. So if we looked at the year 2017, if we looked at what percentage of total deaths in the world, so the number one leading cause of death, you know, pretty normal for people to guess, which is heart disease. So that's the number one leading cause. Number two is cancer. So first is 23% second is 21.3% third unintentional injuries or accidents. So 6% of all deaths or in the year 2017 169,936 people died this way. That's a lot of people. It is. Well, if you shouldn't population all the same, right amongst, uh, 50 states, which is not, we know it's not. So you're talking at least 3000 per state per year.
Speaker 3:
18:49
And these are the things that people aren't thinking about. I mean, it's, the thing's completely off your radar. You know, everyone knows you can get a car accident. Uh, you know, people have fear of swimming with sharks or going out in a plane crash. Uh, but a lot of these accidents are the things that are happening to us every day that you just don't think about. Someone falls off a ladder. Um, as you know, my husband is a paramedic, so I hear these more than the average person, but the number of people who fall off that roofs or fall off ladders really blows me away as I'd never would have occurred that this could be such a high risk. Yeah, no, I mean it's crazy to think it's that amount. Um, and you're right, his Po thing is not going to happen to them, but car accidents of course do happen.
Speaker 3:
19:32
Um, and you know, farming accidents happen. A lot of these things do. Uh, and I just, if I, if we can get something across on wealth from wisdom, and I know thank you all for your feedback. It's good on these topics because sometimes we feel like, hey, we don't want to be morbid on the show. We're not trying to be, we're just trying to be educational in nature. So we got feedback. This is actually a great topic because this inspired people to do something and inspire a lot of people. And again, this is disturbing to me, so I'm sure this with you, how many of you out there don't have a will? A lot. I'm going to go, I go silent after I asked that question because I can tell immediately if somebody does or doesn't, because if they don't, they start to squirm. They seriously, because they feel bad.
Speaker 3:
20:17
They know they need to do something simple. I mean, again, if you're a homeowner for you not to buy homeowners insurance, how big of a mistake is that? No. Yeah, it's a big one. Yeah. Significant. I can't think of any homeowner that doesn't have homeowners insurance, right? Why? Because they want to protect their investment. All right? So if I'm a farmer, what do I buy? Crop Insurance, right? Why I gotta protect my investment [inaudible] but I'm not going to go get a will to protect all of my investments from going into probate or to not flow properly to my family that I got [inaudible]. We've talked about this before, especially with the amounts of second marriages and step children. This is even more important than I think it's ever been because that is not what people realize is that, you know, oh, I'm just going to leave it to my spouse.
Speaker 3:
21:05
But if you have children from a first marriage and you leave it all to your spouse and your spouse just says, leave to my children, well that's not your children. That's their children. And so, you know, these wills now are more important than ever with the number of second marriages and blended families. There's nothing worse than having your family go to court and fight over something because you didn't think through what was going to happen. And for a lot of people, um, you know that if you're, especially if you have a mortgage, your homeowners insurance comes out of your payment. So you're paying, you're the, what's that list? The phrase PD payments. Interest taxes and insurance, right? But, uh, when you're looking at your own life and doing your will or trust people, don't set it up that way cause it's not being automatically deducted.
Speaker 3:
21:50
So they hate the feeling of having to pay an attorney to do these types of things that it's such a, it just for me it's a pillar. It's one of the pillars of financial success. And I mean, Aaron, this happens to me all the time. People come in here and they don't have a will or trust and it just is life. It happens. So I can introduce them to some great estate planning attorneys here in the Omaha area or nationally if we need to as well. And they're like, well, how much is this going to cost me? How much is this? I mean, and they get so, so much venom, uh, tied in. And by the way, I'm not going to go introduce them to someone who's going to charge them the maximum money.
Speaker 3:
22:29
We are a a top ranked firm by Barron's where a top rank from by Forbes. I'm pretty concerned about our reputation and always doing as a fiduciary what is best for our client. But then I'm only going to give you advice on something that's in your best interest. So if my advice is you need to go in the fixed fee is $1,800 or whatever, 20 or 2100, whatever the number is, I'm trying to help you do something that is mission critical for your financial plan. A, I'm not doing something to try to put more money in the attorney's pocket. I'm trying to do what you can hear in my voice is protecting you from creating a legacy that is accurate, but more importantly, makes your family feel better. Right? I mean, at the end of the day, I was actually reading Aaron this weekend, a linkedin article. I like to read Linkedin a lot.
Speaker 3:
23:18
Um, and actually one of our colleagues, a Joe [inaudible] from marketing, you know, reshared a story, uh, about on this individual. And the title was, um, three months ago I sold my business and three weeks ago I lost my son. And it was really, it was about all of those what ifs. What if I had a few more minutes? What if I had some more time? Um, what if I would've done something differently? Uh, and the remorse and all of those things. And for me, you know, I had tears coming into my eyes listening to, and we're not listening, but while really I was reading it, but I could hear the story, I could feel it on the story being told and I can't imagine, you know, um, what that family's going through and certainly thoughts and prayers for anyone who's, you know, had to deal with that type of struggle.
Speaker 3:
24:07
But I couldn't imagine that then saying, oh my gosh, financially we're in trouble. Or, um, structurally we are in trouble or I don't know where to go or what I need to do. And if you want help on just how to think through this, cause there are some moving complexities here or you just want advice on what, what's the average cost to play for a will or a trust, you can send us a note info@carsonwealth.com or it's pretty easy since most of you love to Google stuff, just Google Carson wealth, go to our website. You can click on connect with an advisor and we'll help connect with you and share ideas and information that can be impactful for you. And your life. I'm not going to tell you these consultations are complimentary, so they're going to help ensure you're on the right pathway because as you've heard from Aaron and I, if the number three leading cause of death is unexpected, so again, 169,936 people in 2017 died due to an accident or unintentional injury. Don't let, if this ever happens to your family, you're not being protected. Hey, you're listening to wealth from wisdom and we'll be back in a moment talking about
Speaker 2:
25:12
risks outside of your investments. Any major decision in life is worth getting a second opinion and financial planning is no exception. Let's talk about how you could make your money go further in retirement than you ever thought possible. Call Carson wealth. Just schedule your free initial analysis now at (888) 419-8513 did 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 (888) 419-8513 and now back to wealth from wisdom with Carson wealth.
Speaker 3:
25:46
Hey, welcome back to wealth and wisdom. This is Paul West cohost. Today is Aaron Wood here. And we've been talking about uh, what we like to call retirement risks beyond your investments. Uh, it's not again, all about the ups and downs in the markets. The excitement of the new high on the s and p or the fear that comes across you when the market's down 2% in one day. Those are blips to me is those are just very short term thinking as you look at the long run. So today we're talking about things you can avoid. And by the way, I've shared this on a prior segment, but we have actually a guide called three methods to not run out of money. You can go to our website, Carson, wealth.com and download that for free. But we also like to share what are these retirement risks. So first we talked about longterm care.
Speaker 3:
26:29
Second, we turn talked about unexpected deaths. And third, we want to talk about tax efficiency. So yeah, we've moved from exciting topic death now to taxes. So we go together in taxes. The only two guarantees, hey do obviously a very famous quote there. Uh, but when we think about tax efficiency, uh, and we've got through these challenging topics, let's talk about what it does and what I can do. And I for tax efficiency, um, it's one of those things that like if you just save a little bit, the behavioral change is you just feel great, right? You, you feel so good, everybody hates taxes. So anytime you can save it, get more money back, find a way to pay in less, everyone's in a good mood for those things. Yeah. It's kind of like when you found money somehow where something happened in life that was just a little bit better than expected and you felt so good.
Speaker 3:
27:26
Um, but the biggest mistakes people actually make in their retirement are taxes. So, uh, I have an article here, um, that shares the most common tax filing errors. And I don't know this. Aaron, do you, uh, let's just think approximately how many people do you think file taxes on their own use? Like some form of online tax prep software? I would think a lot. And honestly with the new tax laws, I would imagine that number is going to go up even more. I have no idea at the percentages, but I'm going to guess it's more than, you know, it's going to be a big number. Yeah, I w I would um, say I would, gosh, I don't know. I'll have to Google it here. I would, I would say it's gotta be somewhere around 50%. Okay. I'm going even maybe higher than that. Okay. Well you will find out at some point in the show, maybe our producer will help us get that.
Speaker 3:
28:13
Well, there's data's statistic amount of people that surprised me that find that they owe money. And this one was something behaviorally that I just, I couldn't believe people were doing, they were using, you know, like the TurboTax or the H and r block and they were putting all their tax information in and then when they found out they were owing money, they weren't actually hitting the file. They were just backing out, hitting the x close. No, no. Figuring out what they were going to pay. They just avoided it completely. And that is even scarier to me. So, um, here's, here's the great story. So what do you think the most common tax filing errors are? Incorrect social security number [inaudible].
Speaker 3:
28:53
Um, filing status errors. So choosing the wrong number of dependents or people there. Um, simple math mistakes, uh, having an error when you do it on own on your own, and figuring out what's a tax credit or what is a tax deduction. Um, people not actually hitting the file button or not putting it in the right pin number. Um, all of those are silly, right? Those should be so simple because those are straightforward. But people make these mistakes all the time. So if you're making those simple mistakes and our proofs are just said, 33% of people, uh, do it all on their own completely is you're probably missing out. So when you do those tax prep softwares, and I know they're on their marketing efforts, they say we help you think of other things to do. The reality is when you're using the software, it's atypical.
Speaker 3:
29:41
Yeah. It's eight o'clock at night. You're typing all your information in, you're tired and you're trying to get it done as fast as you humanly can because you want to hit the button at the end that says calculate to see if you get a tax refund or if you, oh yep. If it said to you on the side, hey, your adjusted gross income is too high to make a deductible contribution, but are you getting advice? Should you make a non deductible IRA contribution anyways because you have money set aside and you should let it grow tax deferred. Who's giving you that advice? Not the software. Yeah, that is definitely not advice. That is a, hey, there might be something you should think about, but then you need someone who's an expert in that to be able to tell you whether it makes sense for your situation or not.
Speaker 3:
30:27
Yup. I'm a big, big thing we see and, and you know this Aaron. So after age 59 and a half, it's a kind of key number. So I talked about a few key numbers. So 59 and a half you can begin to take money out of your retirement plan accounts. So that's great. So, um, but by age 70 and a half, you're forced via the dreaded RMD or required minimum distribution, which may be getting pushed back to 72. Yes, we shall see. We'll see what happens with legislation on that. Um, and really it's only gonna Affect people, uh, who are between that 70 and a half and 72. The rest of us, it'll just all move to 72 at least under current proposed legislation. So w w when we call the years 59 and a half to seven and a half. So that 11 year range, you actually have more control of your taxes then most likely any other time in your entire life.
Speaker 3:
31:21
Oh, I absolutely agree with that. Yeah, but so if you're, if you're sitting, I know we have a lot of listeners that if you're sitting between 59 and a half and a 70 and a half, your tax planning is mission critical for you at this point to think through all of these things you can do. Like for example, when do I take social security? When do I not, should I take RMD, should I not and should I use IRAs or not? Should I use deductible IRA nondeductible should I use Roth IRAs? When can I start pulling out of it? Oh, I just got tired of saying all of those. I'm not because of the weekend, but I got tired from it. Think about all of those complexities that you have in place. And most people just, you know, I'm acting like I'm typing right now. They just type their numbers in in a way they go well.
Speaker 3:
32:06
And understanding how all of those different combinations not only fit together and how they have applied to your situation historically, you now have to understand all the laws and rules that are coming at you in the next five, 10 15 years. And most people only know what's happening to them right now. So to being able to connect all those dots to all those different pieces we've talked about that before. You can Google anything, but it will give you an answer about that specific question, not the big umbrella that you should be asking. Yeah. So here's another one. And we're getting this a lot because of the tax and job act of what we call bundled years. So people, a lot of people are saying, Hey, I'm going to bundle all my charitable and other items in one year and then do nothing the next year and then bundle it again in the next year.
Speaker 3:
32:50
Yes. So, um, I guess first, why are people doing that? Do you want to explain to people why they're doing that? Sure. So what has happened is now with the new tax laws, most people don't have enough to itemize their deductions. So most everyone is doing the standard deductions. But if you have large charitable contributions that you're doing, you can get yourself in a position where if you bundle one, two or three years of contributions into all one year, you can use something like a donor advice fund so that you don't have to distribute those funds. You just have to contribute them and then you can contribute them all in one year. Now you've put yourself in a situation where you can itemize those deductions and take advantage of the charitable contribution. Yeah. So I'm trying to think through and helping share with people, like how much charitable donations to make it worthwhile for them to bundle.
Speaker 3:
33:38
And I know it's going to depend on everybody's individual situation. Yeah, it is. So, you know, taking into account, do they still have mortgage interest that they can deduct that number a, you have to get over the 24,000 for the married individuals. And so it really depends on what your other, uh, contributions are or other deductions in, in many areas. Lots of our individuals who are retired also have healthcare, uh, deductions that they, they might be able to take. And so really there, there's a long list of deductions we'd want to look at to see which ones those clients are eligible for. Um, but getting over it, you know, that 24,000 for a couple is really the goal. Yeah. So again, so you may say, all right, well if you're, if you're donating $6,000 or $10,000 for the year and you've already paid off your home, you're probably not getting any benefit by bundling.
Speaker 3:
34:26
But d are You doing it because you heard it on TV or radio or you googled some article? No, it's gotta be looked at. And Aaron into this, I ran into two DIY guys. So DIY is do it yourself, hers, and they are, um, button lane. And both of them I've asked, I said, well, how did you figure that out? They said, well, I just did the math. I said, okay, so you know how much approximately are you contributing? And they said, well, I'm not sure I want to tell you. I said, is it um, over or under 10,000? And they said under, and I said, well I can't say, I don't know how much your other statements are but you're probably don't need to be doing this. Uh, now others that have Ken, but again they may not, I may not make sense for them.
Speaker 3:
35:11
They may want to keep doing it every year because it may hurt their other deductions and adding them all together. And that's just one example. The other example of, you know, being smart about taxes in your retirement is RMDs, you know, can be a pain cause they can increase your taxes. But it also, there's cool techniques like qualified charitable distributions where you can get money out. Tax Free is such a simple way that if you want us to explain more, I won't go into detail on today's show. Just send us a note info@carsonwealth.com or if you want, just go to our website, connect with us, and we'll be happy to go through that. Hey, this is Paul Weston. You're listening to wealth from wisdom. Have you ever wondered how do other people get away with painting
Speaker 2:
35:53
fewer taxes than ever? When else, learn how you could save thousands of dollars in taxes by calling Carson wealth
Speaker 3:
35:59
at (888) 419-8513
Speaker 2:
36:03
social security risk, taxes, and healthcare. 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 3:
36:18
Hey, welcome back to wealth and wisdom. This is Paul West. Co-Host today, of course is Aaron Wood. Aaron, we've been talking about all these retirement risks that are really not investments but real retirement risks that really influence people's lives. And we just got done talking about taxes. But another big one is income in your retirement. I've shared this before, I'm gonna share it again. People are more afraid of running out of money in their life and they're actually dying. And I, I can't fathom this, Aaron. I mean, I feel fortunate that, um, I'm living a good life. I'm healthy, or at least I assume I'm healthy and I can't imagine just being 80 something full of life, but I don't have any money and I've got to go back and get a second job or I got to go borrow money from kids or I gotta go do all of these things.
Speaker 3:
37:07
Um, and if you just plan them out, they make so much sense. So let's talk about one of the biggest risks people make is they don't supply supplement their income and retirement. So ways to do this is, um, they assume social security will pay for everything. Yes, it does for some people, but not the majority of people. That's for sure or not. The majority of people that don't want it to, um, two is, oh, well my, my, uh, investment account will help pay for everything. Well, it's been now 11 years since our last bear market. So at some point that's going to happen again in it's gonna be hard. And so now all of a sudden, if you're taking money out of an account that's declined dramatically, you've got a problem. Double whammy. I like to say, yeah, it hits you a and B. The reality is right now, Aaron, people don't think about it because the market has been good.
Speaker 3:
38:03
The market's been, you know, we're close to a, again, all time highs and all of those things that are happening. So what can you do? Um, and we often recommend people taking on some other form of income and we actually see it as part time work in retirement. And you're like, well, Paul, I'm retired. Why would I want to go get part time work? Well, and I think there's a couple reasons and one of them is the need for income. The other one is the need or the want to have something to help fill your time. And most individuals who go into retirement, uh, are leaving a job that maybe is not their favorite. It's what they were really good at. It's what they did, but it's not where their desires and their wants really lied. And so now as we've seen people go into retirement, there's been a huge uptick, not only in people getting second jobs but starting new careers, uh, starting businesses and areas they really had a interest and a desire to be in.
Speaker 3:
38:56
Yeah, no, I, I think for a lot of people it is. It's, um, and again there's statistical evidence that shows people that are active in their retirement, not just both physically but mentally live longer because their brains working. It was being exercised every day for the last 40 plus years. And now it needs still some form of stimulation and exercise to have that happen. And I love what you just said and I'm gonna share this, uh, Kelsey Rui who's our VP of talent here at the Carson group. Um, she and some others, like we have this program now and it's called the second career program, or there's probably an official name launch relaunch. Thank you. I knew you would know it. So I've been doing a lot of interviews for it. It's fantastic. Isn't it cool though to watch people who were in other careers, they were teachers.
Speaker 3:
39:43
Um, I had uh, uh, ex-military just reach out to me personally last week that had a career but want a new one. And I love that they want to come into financial services and financial planning, but for a lot of people they're ready to move on to that. And I think is a cool thing for them to do. Uh, and a, it may be because they need the money, but B, the maybe something they enjoy. So we want people to, our recommendation is, is if you want to really be good about supplementing your income and retirement, find something you're passionate about cause then it's not you're working just for the money but you're working because you enjoy it as well. So I'm going to ask you, what is your ideal second job after you retire? Cause I know you love what you do, but I want to hear what you're going to do when you're like 70 or 80.
Speaker 3:
40:28
Um, well I don't know yet. So I, it's going to hit me. I'm a big believer in fate. So this is a is I've shared with you, this is my third place in my career, in my last place. So the Carson Tattoo is on and I just, I tell it all the day. I truly love what I do. Um, I was out, um, with some friends last week. We went on a golf event together and, and somebody said, oh, you're on another work trip palm Paul. And I said, that's truly how I feel though. Work and play are the same thing for me because I get a chance to meet and connect. And I would say Aaron, like my next career, which will be post retirement for home here is something where I can be passionate about what I do, passion and communicating with people. Uh, probably from some form of nonprofit involvement.
Speaker 3:
41:18
Um, I don't know what it is yet. I'm a big believer in fate and this a long, long time away for me. How about for you? So I, I'm with you. I don't exactly of course know what that's going to look like. I have a long time to go, but I, I know it will be something that has some type of physical activity re requirement to go with it. And so maybe I'll teach yoga or maybe, I don't know, I'll become a scuba instructor. I don't know. Uh, but something that's going to have some type of activity is really where my focus has been and I, I want, I think for everybody looking at it as like something that they're just enjoy where they wake up in the morning and like, Oh yeah, I'm looking forward to go doing that. I, I love, I'm just, I use golf as an analogy.
Speaker 3:
41:58
There's a lot of um, retired people doing part time income that work at golf courses. They're helping with the golf carts or they're the starter on the tee box. And I can just tell when I get up there how excited they are. Are they really enjoying this as a second career? Are they doing this because they have to and it's funny, he's like, you can just tell through all of it. And a lot of people decide, hey, I want additional income via rental properties. So I will tell you, this can be a technique that can work. But guess what? If you're not the type of person that was fixing your own problems at your own house, then what are you going to do at a rental property? I don't know if you saw this, I actually, uh, tweeted something about this the other day. You did.
Speaker 3:
42:40
I didn't see that there is a movement out there, the fire movement, so that financially independent retitle early, I've heard about that moment. One of their, their things is that you have to have a way to create income and income for them frequently is rental properties, which to me is if you're going to have a bunch of rental properties, that's not that you're retiring, that's a job. You have to go in and do the work. And My tweet made some comment about, you know, fixing someone else's toilet is not my idea of retirement. Uh, but for some people they like to do that handiwork. And for them real estate is probably a good investment. I use the word passionate, if they're passionate about it, if you're the type person, I think we all can look in our neighborhoods. Look at your own street you live on.
Speaker 3:
43:20
Are you the person who's giving others advice? Like they had a, a, a dent in their wall and how do you fix it real quick? Or they've got citing coming off. And are they trying to fix it on their own? Are they hiring someone? Um, I'm on the opposite. I just don't know enough and I'm not passionate, so I always call in experts to help there. So I've had actually quite a few people say to me, Paul, I'm surprised you don't own multiple properties for rental. I'm like, I just don't want to deal with it. I just, I'm not excited. I don't want to, their air conditioner went out. I got to go over there and look at it. I don't want to chase down rent, um, or those types of things. But it may be right for you. And, and so I certainly advocate for you as a fiduciary.
Speaker 3:
44:02
I work with many, many families that own multiple rental properties, both commercial real estate, um, you know, and of course if they're got all their tenants in place, uh, it can be a great, great retirement income piece. Also, many of them have a low tax basis on it, so they're then going to have to think about how do I transfer this? I don't really want to sell it cause I'm gonna have to pay a lot of taxes. So should I just transfer it to my family? And what do I think about at the end of the day is you've got to find your income that's best for you and what makes you happiest. Um, and by the way, sometimes money doesn't mean happiness. So you can find a job that makes you a lot more money. But if you're hitting the snooze button on your alarm cause you don't want to go, then we talk about true wealth all the time here.
Speaker 3:
44:50
All that money can't buy and death can't take away true wealth. You're not taking your money with you. It's going to stay here and go and transfer to whoever else. So why not be in a spot that makes you happy? Hey, I hope everybody's enjoyed our show today. Aaron, I want to say thank you again for joining me. We always appreciate having you on the show and hope everyone learned something today about there's a lot of risks outside of your investments. If you want more information info@carsonwealth.com or you just clicked on connect with us on the website, we'd be glad to talk to you and help you. Hey, have a great day. Everyone.
Speaker 4:
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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 Barron's hall of Fame Advisor Ron Carson.
Speaker 1:
45:34
Okay, and here's the legal Mumbo jumbo. The opinions voiced in wealth from wisdom with Rod Carson are for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consulted, qualified professional. All indices are unmanaged and may not be invested into directly. Investing involves risk including possible loss of principle. No strategy assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SEC registered investment advisor.
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