Wealth from Wisdom

8 Blunders to Avoid in Retirement

October 19, 2019
Wealth from Wisdom
8 Blunders to Avoid in Retirement
Chapters
Wealth from Wisdom
8 Blunders to Avoid in Retirement
Oct 19, 2019
Carson Wealth

You’re about to approach one of the biggest milestones in your lifetime: retirement. For many retirees, this is a momentous event that gives you much needed time for family, relaxation and to enjoy hobbies. For others, this may create apprehension and fear. But, it doesn’t have to be that way. On this episode of Wealth From Wisdom, we’re going to show you how avoiding these common mistakes during retirement can put you on the right path to enjoying your second act.

Show Notes Transcript

You’re about to approach one of the biggest milestones in your lifetime: retirement. For many retirees, this is a momentous event that gives you much needed time for family, relaxation and to enjoy hobbies. For others, this may create apprehension and fear. But, it doesn’t have to be that way. On this episode of Wealth From Wisdom, we’re going to show you how avoiding these common mistakes during retirement can put you on the right path to enjoying your second act.

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 principal. No strategy assure success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CWM, LLC and sec registered investment advisor.
Speaker 2:
0:30
The stock market hit another all time records $10 billion in social security benefits go unclaimed every single year. The federal reserve announced that they will raise interest rates by 250,000 rocketing 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 advisor at 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, and you're about to, to
Speaker 3:
1:14
approach one of the biggest milestones in your lifetime. You wonder what that is. Don't you know it's not going to Chick-fil-A for the weekend or church or anything like that. We're talking about retirement and for many retirees, this is a momentous event that gives you much needed time for your family, relaxation, and even to enjoy some hobbies for others. Retirement is actually the opposite. It creates apprehension, it builds fear, it creates distrust, it creates anxiety. A wave of emotions that aren't positive are actually quite negative, but it really doesn't have to be that way. Hey everyone, I'm Paul West and today on wealth from wisdom my coast. Today's Jim Caldwell. Jim, glad to have you back on the show. Thanks, Paul. Yeah. Hey Jay, we're gonna talk about how you're going to avoid common mistakes, junior retirement that can really put you on the right path to enjoying your second act, right?
Speaker 3:
2:14
Not your first act. Maybe it's your third act, I'm not sure, uh, was first childhood. Second is you're an adult and you actually have to work for a living and do those fun things. But really your second act of adulthood is converting from all that hard work energy time. I think there's a phrase called blood, sweat and tears. Oh, great bravery. You ever used that one before? No, but I've listened to their music that was way before by Peter Paul and Mary. That's way back that you now go in the second act and it's time to move forward, but in a different way. Um, actually I think, uh, you know, I heard this the other day, there's a cool phrase is, is retirement really should be called your power years, power years? I've never heard that. Well, why is it powerful? You've got more control than ever before.
Speaker 3:
3:10
Okay. You can do what you want to do, obviously with under the means, both financial, physical, maybe even spiritual as well, emotional, uh, but it's it, the power of years in terms of you can control more of your own destiny than ever before. And so you need to make sure you, you take chances or not take chances, take the opportunities that are presented to themselves. So what we want to do today is talk about eight blunders to avoid in retirement. And when I think about that, I mean failing to make the right decisions can be catastrophic during your, your, your years. So let's talk about blunder number one. What rhymes with blender Jim thunder. I knew you're going to say that. I was just, that was instinctive there. I don't have any other good words. I just wondering to see what your guys said. All right, so blunder number one is failing to incorporate extra expenses into your financial plan. I'm going to say that again. Feeling to incorporate the extra expenses into your financial plan. So Jim, trivia question for you. Here we go. All right. If I retire, am I going to spend more or less than I did during my working career?
Speaker 4:
4:27
You've got to spend more and it's normally going to occur in your seventies because you're all excited. You just retired normally by then you want to travel, you want to see the grandkids, you want to do things that you couldn't do possibly when you were working. Right. Cause you didn't have the control. Like you were saying earlier, you get to A's though. You got to slow down here and say, whoops, I don't want to travel as much. I don't want to eat out every night. So I would say more spending, especially in the early years.
Speaker 3:
4:53
Yeah, for sure. So I mean, I agree with you. A couple of things happen is people think, all right, I retire. Let's just use an example. Let's say you spend $100,000 a year, you know, about $8,000 a month between a home. Uh, any other debt, payments, cars, going out to dinner, travel, uh, insurance, healthcare, all, all things. And people live like, Oh, who spends $8,000 a year? Actually most Americans somehow do that. Uh, but what I, what they do is they seem all right, well I'm retired, I'm not going to spend as much money. And one of the things we have to warn you about is you do, and it happens more frequently than you can imagine. Cause two things happen. Number one, what do you do when you're bored? I eat. You eat all right and drink.
Speaker 4:
5:47
I liked that every once in a while. Yes, they go well together. Yeah. Yeah
Speaker 3:
5:50
they do. Uh, so you eat, you drink, you wander. Uh, you just start going and you start wandering aimlessly. So I call it when I'm bored. And by the way, um, you know, we talked about this in our family. When you're bored, what do you do? You go to the cupboard and you just start looking at food for no reason. And then you start eating something. And I actually see everybody here in our recording studio as grinning cause they've all walked in that process. Those of you dry. Remember we, when your kitchen, you're like, why the heck did I just eat that peanut butter sandwich? Or all of those wheat thins or all those Oreos because you're bored and boredom causes you to do things just to feel like you want to do things. And so in retirement you have more free time potentially at your disposal in the past.
Speaker 3:
6:37
So part of boredom means, Oh, let's go to the mall, or let's go to the store, let's go to the hardware store and just look around. Let's go, uh, to village points. The name of a mall here in Omaha. And the next thing you know, you just bought something that you probably really didn't need. It looked cool. It was more of a want versus a need. Using that old phrase of needs versus wants. It's definitely a want there. And then you just spend it and you're like all sudden at the end of the month, you're like, how in the world did that happen? What we want to caution you, this is why it's blender number one is if you don't budget for that ahead of time, I mean equally, you could discover a new hobby, man, you know, it's hot right now. Jim. People love to do pickleball. That's the new, have you played yet?
Speaker 3:
7:23
No, but we have a pickleball court where I live. Yeah. Well you're in definitely in the age demographic, so you're doing good there. But that hurt. But that's, no, I played too and I'm a little bit younger than you, Jim, but it's fun. It's, yeah, it's entertaining, but it's a new hobby that probably is a pretty inexpensive hobby, but other people pick up hobbies that are more expensive and so you need to incorporate these extra expenses. So too, I'm going to say three of the biggest things I want you to watch out for with blender number one is hobbies and what they could cost you to. You didn't factor in the rising cost of healthcare. You just assumed a stagnant number. I'm three travel. What we see is is people entering their power years start to travel more than before because they have the opportunity, and by the way, I encourage them to do it while you're healthy, do it while you've got an energy, take advantage.
Speaker 3:
8:17
You've worked hard, you've been stuck behind a desk or you've been out working in a field or you've been building roads, whatever you've been doing, enjoy it. I mean, take your chance to do that. So by budgeting for those three items and actually putting in a higher budget, you're going to make it a lot more sense for yourself and in your retirement. So second, a blunder we see all the time is people underestimate the cost of healthcare. I mean, Jim, it's amazing to me. I mean, I'm not gonna say they, they uh, miss by a small amount and it's often by a large margin, big number. Yeah. So I don't know about you. Um, I am not a Microsoft Excel expert or you know, not even clear you're going to second that one. Uh, but what I'll tell you is when you, a lot of people build budgets in Microsoft Excel or Google sheets or some other form of software, but what they do is they put in a number and they don't think about two things. One inflation that the us dollar today is going to be worth less than certainly down the road and or a dollar down the roads gonna be certainly less than it is today. And then second is they don't calculate rising costs. So healthcare, again, I can't fathom a day, at least in the next decade where the price of health care is going down. Can you, I don't see that ever happening. No. Right. Why?
Speaker 4:
9:48
Because I mean, I think it has to do with the fact that we're living longer, so you're going to need more healthcare so you're going to need different facilities and more medications and all that to keep it going.
Speaker 3:
10:00
Yeah. Well I agree. I mean at the end of the day, it's one of the most important things that we're doing. Um, and we are going to pay whatever we need to to get that point. And by the way, if we're living longer, then we're just, the necessity for more tests and more medications is going to just continue to increase all the time. But also you can have out of pocket expenses, unforeseen accidents. I see a lot more knee surgeries. Right. You just, by the way, I, you see a lot of this now. Um, my family included, there's people in their seventies doing full knee replacements. I mean, can you imagine 15 years ago, people in their seventies doing full knee replacements, artificial hips, yeah. Hips, are our elbows, shoulders, ways to improve? Well, what's gonna happen then? Costco up. But also Medicare premiums could rise. Prescription medications, um, longterm care. I mean, of course we don't predict longterm care going down. So I mean, think about that blender. I mean, look at all those things we just named Jim. That was a lot. That's tough. Yeah. So when, when you think about it, Jim, I mean, how much, when you go look at a client, you're doing a financial plan, how often do they even consider this?
Speaker 4:
11:17
It only comes up in the conversation if I bring it up, which is what we should be doing, is fiduciary, is okay looking out for their best interest. Right? So, um, but then when you bring it up, I mean, they, they get the deer in the headlights look because it's very difficult to put a number on that.
Speaker 3:
11:32
Yeah, it is. I mean, it's, listen as you, just like, you're shooting a target out in the distance, but it's a moving, um, target out there. I mean, have you ever shot archery gym?
Speaker 4:
11:42
Yeah, I actually, I did took an arch archery course at Ohio state.
Speaker 3:
11:46
Yeah. Where the [inaudible] just want to make sure I heard what you said, but, uh, um, I didn't know his explains a lot about the football program. There's archery classes, but that's a whole, there all kinds of big guys in there with me. Um, so w here's what I would say is, but with archery, you're hitting a target with the target is there, it's standing. It's not moving with your healthcare, that target, it's moving. It's bouncing up and down. Um, for those of you that are hunters, uh, it's like having a strong wind, right? When you got a strong wind, you're gonna aim differently. You gotta aim to the left, the right, the up or down. Uh, those of you who have played tennis, you got a strong wind. Again, you've got to hit the ball a little bit differently. Those of you play golf. It's either a club up or a club down or hopefully not two clubs up or two clubs down and it creates complications. And if you're running into these blunders in your retirement, give us a call. (888) 419-8513 if you want a second opinion on if you're on the right track. Eight eight, eight four one nine 85, 13, we'll be back in a moment on 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 skyrocketing cost of healthcare 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
Hey, welcome back to wealth and wisdom. Paul West joined by Jim Caldwell. Hey, we're talking about the eight plunders today. In looking at your retirement and things, we want you to avoid blender. I wonder who thought of that word by the way. Gender. Yeah, he did Google that up. Yeah. Google that up to see where it came from. But blender means what problems, catastrophes, challenges and all these things can come up and bite you. And are there dangers out there? I use a golf analogy. If you're golfing, the dangers out there are, you can hit it in the rough. You can hit it behind a tree, you can hit it in a sand trap. You can in a water, you can hit it out of bounds. Uh, you can hit somebody. I don't know. I hope not. No. But those are all things that you gotta look out for.
Speaker 3:
14:08
And if you're a good player, you don't think about them as much because you've perfected your game. But if you're not, or you make a mistake, it can cause you to blunder on that hole. Get a bogey, double bogey or pickup, right? The dreaded a, put the ball in your pocket and go next to the X on your scorecard. But when, when we're looking at retirement, we don't have a chance to pick up and start over. We don't Nobel ball lignans Nope, no, no breakfast balls, nothing like that. It's only about looking out of what we can do. So let's get on to our next blender here. So blender number three and that is inadequately accounting for your taxes. So did you know that most forms of retirement income or taxable, let me say that again. Forms of your retirement income are taxable. What? I mean, retirement is not tax region. No, no. Unfortunately it's not a, and this is so many fronts. So how many of you listening have a pension or have a family member with a pension? Do you know a lot of pension income is taxable and you're like, Oh well my employer is going to be paying me this. Well guess what? If you haven't paid taxes on it yet, who's paying taxes? Now you are right. You are.
Speaker 4:
15:19
Or a 401k where you're putting money in, you know, with before tax dollars. So eventually when that comes out, the government's going to want their pound of your flesh. So I mean,
Speaker 3:
15:29
well it sounds a little tough but it's a little tough. But I mean that, well that's why your portion of the bank account are you their portion, their portion of your money. Okay, I'll go with that. You can use whatever you want. They want their share, they want to grab their share. So let me think about that. Social security can be taxable for you. Did you know that your interest, your dividends, your capital gains on your non retirement accounts. So here's something that's really interesting from Forbes. For those of you that read Forbes is a great publication. Some taxpayers age 70 and a half and over find themselves subject to a 55% increase in their marginal income tax rate just because of three things. One, social security to capital gains, but three, I call it the dreaded RMD. So what's an RMD gym required? Minimum distribution. Yeah. So when do you have to take it? You have to take it by the time you're 70 and a half. Yeah. So once you're seven and a half, I know it's a weird number, right?
Speaker 4:
16:26
Unless you're still working. And then four, if you're contributing to, let's say a 401k, then that chunk of money does not come into play when figuring your RM.
Speaker 3:
16:35
Yeah. Well, let's just assume I retired. I'm 68 years old. I started drawing social security benefits. I got some taxable accounts. I take some chips off the table every year. I now am 71 and I got an RMD all sudden. It's like the compounding effect, right? Taxes on top of taxes, on top of taxes. That's why I mean right now, for those of you, you know, raise your hand while if you're driving, please don't please keep your hands on the wheel. But if you're listening to us, how many of you want a 55% increase in your taxes? All right. I don't see anybody raising their hand on our studio heads. No. All right. How many you want? 25% increase. None. How many want? 5%? No, none. Nobody wants a tax increase. So there are techniques and methodologies you can follow. A one would be you knew better, properly budget for an increase in taxes.
Speaker 3:
17:28
And again, if you're using Microsoft Excel or some other form of simple worksheet, you're, you're making a mistake and you need to use complicated cashflow analysis done by really a certified financial professional. Because if you're doing it just via, again, a spreadsheet or purely via a CPA and don't, I'm not saying to be derogatory, but if they're not trained as a certified financial planner until look at all of the different elements, they could be missing something. I'm not saying they are, but they could be. And then who has to pay for that? You wear them. Yeah, you do. So I think it's so important to X S estimate your taxable income and make sure you have the correct amount of tax withholdings every single year. But also, here's how say is how many of you are actually proactive in your tax planning?
Speaker 4:
18:19
And we've talked about that before, right? Paul? Tax return is looking back. Tax planning is looking forward. Yeah.
Speaker 3:
18:26
Well I mean it doesn't matter what time of the year is when somebody goes in and gets their taxes ready to go, especially do it yourselfers um, you're using TurboTax or whoever you're using and you go, you get it done and you're like, Oh well I don't like this. I'll fix that for next year. And then next year you go, you go reenter thing and turbo tax cause it saved at least your name, your address and that type of information. So what do you do? Oh shoot, I didn't fix it again. And now you just let time happen. And that's a serious mistake where instead, I'm going to use the word proactive. Proactive is one of the support words are, are your professionals being proactive and helping you look through all those different items to help you be successful. So taxes was number three. So let's get into the fourth blunder.
Speaker 3:
19:17
We see people making their retirement and that is failing to adjust your financial plan when you change your actual date of retirement. So Jim, if people set a target of retiring at age 67 let's use that for example. And by the way, since the social security age, full retirement age, we'll be moving age 67 I think, let's just use that. That should probably be the standard age that the 65 is really bygones in my book. But so when people say they're going to retire at age 67, do people um, actually retire earlier or later? Do you see? So there's a number here. So if you look at it, it's greater. It's not, it's not a tie, not 50% earlier, 50% later, but there's actually empirical evidence via statistics that show one or the other. The people actually retire earlier or later than their projected retirement date.
Speaker 4:
20:13
I would say most people retire later. Yeah, because, well, they get closer to that date and they, they look, look at their different accounts or they look at if they have a wealth plan, okay. If they don't have a wealth plan, they're guessing. So now it's like there gets scared. It's like, do I really want to hang up my spurs and, and rely on what I have or I'll just work a couple more years and that should satisfy everything.
Speaker 3:
20:35
Well, Jim, I'm going to tell you you're wrong. Gosh, I've been wrong before. You have, but that's okay. You'll probably be wrong again. And I'm not doing this to prove you wrong here on purpose by any means. But what I want to is your answer there. There's what I would call this conventional thinking. So conventional thinking is that, Oh, I'll get to retirement that I'll retirement later if I want to or I'll get through retirement later cause I didn't quite make enough. Therefore I won't stay later. But what it shows us is the opposite. So here's what happens. Retirement is often a planned event, right? You choose planning event, age 67 that there's this funny little thing called life, not life, the board game or life cereal, just life over all here. Life fortunately, sometimes, but unfortunately as well has surprises for you. Most people like surprises, but surprises aren't always good.
Speaker 3:
21:29
So surprises that can happen to you are the following. What if you lose your job at age 64 what if you come down with a health issue? Tuft? What if, what if your spouse comes down with a health issue? What if all of a sudden you got to take care of your parents because they have nowhere to go and they don't have any money or they have dementia? What do you do then? So what happens is, is people actually retire earlier than expected than later because of surprises. Okay. So yeah, that makes sense. So I agree. But most of the think logically they're gonna work longer, but they end up because something in life doesn't go by their plan
Speaker 4:
22:12
and nobody has that crystal ball of any of the items that you just mentioned, Paul. Yeah. I mean it's not out there. You just, you just in your mind, it's like those situations are not going to happen to me.
Speaker 3:
22:22
Yeah. And a lot of them are health related. Like all of a sudden you're 64 years old and your spouse comes down with a health issue, or you do, or a loved one. You've got a choice. Take care of your family and retire early or keep working, but don't take care of your family. Well, when we know what 99% of people are gonna select, so if this happens, you need to adjust your plan. So for example, earlier in this segment I was talking about, now let's assume you spend $100,000 a year in living expenses, and that's what your financial plan was built on to when you're age 67 but all right, your spouse came down with an illness, you decided to retire at age 64 you gotta be comfortable. Instead of $8,000 a month, you can only now spend $5,000 a month or whatever your number is.
Speaker 3:
23:14
But that's a blender. So people think, Oh, I'm going to retire early, but I'm going to spend the same amount of money. I don't know about you, Jim, but that doesn't work. No, no. I mean, let's look, I mean, you can't go fast and go X amount of miles over the speed limit for a period of time without a couple of things happen. Getting pulled over, getting in an accident or causing a problem. And so the same thing happens with retirement and you can't extend the amount of time that you're in retirement with the same amount of money and results. What's that? What's that definition of insanity? Doing the same thing over and over again and getting the same result, right? So it's impossible. So all you can do is change your levers. So either have to get more money or spend less. It sounds pretty simple in theorem, right?
Speaker 3:
24:01
But so many people don't because, and you have to accept it. You had a health situation unforeseen. So guess what? You're not going to be able to spend as much. Let's be smart about it. Let's be careful about it. But we also have to be accepting of it. And one of the biggest things about retirement is being behaviourally smart. And I'll keep talking about that, is about our blunders. But I mean, are you behaviourally really smart? Are you behaved? Really thinking through that your cost of healthcare is going to go up or not budgeting correctly from your loved ones. I want you to know. Retirement doesn't have to be scary. If you actually talk with a financial planner to discuss your plan well, besides their valuable advice they're going to give you, and by the way, that you should be working with a fiduciary as well. They can serve as your accountability partner, somebody to hold you accountable and make sure you don't fall victim to these common retirement mistakes we keep seeing people make. If you want a second opinion and analysis, give us a call, (888) 419-8513 if you prefer email info@carsonwealth.com or you can go onto our website, hit the button, connect with an advisor. We'll be glad to help walk you through these blunders that we want you to avoid during your [inaudible].
Speaker 2:
25:14
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 eight, eight, eight four one nine 85, 13. Do you have a lot of assets but are short on cash? Learn how you could leverage your assets to free up cash with Carson wealth by calling. Eight eight eight eight four one nine 85, 13 and now back to wealth from wisdom with Carson wealth. Hey, welcome back to wealth and wisdom on Paul last co-host, today's Jim Caldwell,
Speaker 3:
25:51
Jim and chatting chat with you about your favorite word, blenders. Blenders. Yeah. Uh, you know, you had, you have blenders, right? And football. When you're a coach. Blenders I'm sure happen all the time. Uh, blenders happen in the yard. We make mistakes while mowing, uh, or taking care of it. Uh, blenders happen with our children all the time. They make mistakes. Uh, well, rock about today is how do you help avoid blenders in your retirement? How do you help make sure that you're on the right pathway? Um, Jimmy, have you ever been doing this? This has happened to me before. My brain starts going and it's just thinking you ever missed your exit when you're driving all the time and you're talking on the phone and you get distracted and next thing you know, Oh shoot, I should've gotten off back there. Yeah. All right. I've done it where I've left my house and I'm thinking a million miles an hour and I go right out of the neighborhood and I should've gone left.
Speaker 3:
26:42
And it doesn't happen all the time, but it does happen. Well, that's a blunder. That's a mistake. But those are hopefully very simple mistakes. I know I've missed those. You never know when you're, you know, you're in, you're out of town and you're traveling and you're not quite sure where you're going, but you miss the exit, so then you're like, you're crossing your fingers like, okay, please be like one mile away to the next intersection. You don't want to be that one where you're out in the middle of nowhere Nebraska and it's 14 miles to yeah,
Speaker 4:
27:10
and the say no. You turn,
Speaker 3:
27:12
yeah, don't turn it in the middle of the interstate. Yeah. I feel like most people would turn there, but it's those mistakes we want you to avoid in your retirement. So today we've been sharing eight of those and we're going to move on to number five. So here's number five, blunder during your retirement. And that is funding unbudgeted expenses for loved ones. So what I mean by that, sometimes for your family, life happens and something pops up and is unexpected. So it's not uncommon where you need to assist maybe your kid's education, maybe your grandkids, maybe you need to help with your parents. You thought they had more money than they did and now you need to help take care of them, whether it's at a assisted living facility somewhere else, maybe you just got passionate, you got to have that dream trip for your whole family, Disney world, Disney for you. Um, I don't know where for me yet, but I mean I've gone to a lot of fun places, but whether it's Europe or South America or visiting Macchu Picchu or whatever you want to do, uh, those things can happen. And these are high cost items. And Jim a blender we see is people don't budget for these, do they?
Speaker 4:
28:21
No, I mean, I, I think w what I've seen the most would be, Hey, I want to help my son or daughter out. You know, maybe they're going through hard times and they go through a divorce or maybe one of them loses a job or maybe they've just had some unforeseen expenses. And you start digging into your pocket to help them out because your heart tells you to do it right? And then all of a sudden you start thinking, shoot, that that's going to have an impact on my retirement years. But you still do it anyway because that's the way we're all wired. Right. You, you think I'm going to help them out and I'll worry about me later.
Speaker 3:
28:53
Yeah, that's exactly right. And I'm not saying it's a bad thing, but it's something that, uh, if you just plan for, so I'm going to tell you like when we do a lot of financial plans here at the Carson group, um, for those of you that are aware of us, uh, thanks to Barron's and Forbes and inks, 5,000 and others, we're a nationally acclaimed firm. When the business, we don't charge commissions to manage your accounts. We're actually in the business of providing advice for a fee where a fiduciary, uh, and one of the things I put in all the time, especially in a first meeting with the new family gym, is I put a button on our, what we call our decision center, and we help them think about life's tradeoff decisions. If I do X means Y if I do, Z means a, those types of things.
Speaker 3:
29:36
But one of them I always put on there as travel. Two reasons why I do that. One, it tells me how they feel, it tells me what's important to them. It gives me an insight into their psyche and thought process of what's important to them. And I'm not meaning travel has to be important, but who they include, how often, most frequently. But it also the reason why I put it in there as I'm able to share that we need a special line item in your financial plan for unexpected expenses and travel can often be one of them because if you know this and know that you can have longterm repercussions of by not having budgeted for just things that pop up. Right. By the way, look at, you know, think about your car. I mean, none of us want to say hit none. Very few people want to deal with, Oh check engine light came on for me.
Speaker 3:
30:28
That's like a big, I don't know enough about cars and maintenance and that. Do you Jim? Oh zero. All right. So while I might be zero plus 0.00001 but it's, I just, I just go to somebody I trust that I always say to them, if it was your car, would you do this? Yeah. If they say yes, okay, good. Do it. Yeah. Um, but it's an interesting predicament they're in because they obviously want to keep all of you happy but they like to make money as well. So it's challenging or interesting whichever word you want to use. But if you put your line item in your overall budget and you look at your financial plan planning for these things and having to inside of there is one of the smartest things to do. So at worst case you don't spend it and is there and the maximum case you had it set aside and I talk about all the time, uh, how many of you, you know, have enough an emergency fund so that if you really needed a, do you have three to six months and often if you have two working family members, kind of the standard is is you have three months set aside cause you got two people working and you got two people bringing in income.
Speaker 3:
31:36
And if you only have one person bringing in income, then it's often six months. And if you have zero, it's six months plus. So you need enough of that. But what if, Oh my gosh, my air conditioner went out. Irreplaceable. Are you prepared for that? Can you handle that change that's five, six, seven, 8,000 or more depending on what you do. Uh, your car goes out, what happens? Um, some type of accident sometimes of things. So we want you to think about your loved ones and are you budgeting correctly? So let's move on to the next blunder. You know, American, a blender is a stupid or careless mistake that you make related to your retirement blunder. Sounds nicer than stupid, doesn't it? It's a glorified speed bump. How's that? It clarified speed. Speedball wow, I've never heard that collection of words. Isn't there a hat I've seen walking around that you can't fix stupid or that from a movie that I've seen that in you both.
Speaker 3:
32:31
Probably. Well, I'll tell you is you can fix blunders, but you got to hopefully minimize them. So the next thing we're going to share with you, number six is under estimating how long you live. We call it longevity. The human life expectancy keeps climbing and climbing and climbing. And since we don't know the date of our death, at least I don't. Jim, do you know when you're going to die? No, I haven't checked on it lately. No. Oh, where are you going to check? I want to know to call the big guy and see what he's thinking. All right, nice. Well, uh, you let me know what he says. Okay. I'll, I'll know. I'll know if you've got some special bottles of wine out that had the big days coming soon. Yeah. But we can't anticipate and I don't even know, Jim, if I'd want to know my date. That's, you know, we've talked about that on the show before with longevity. Um, we've talked about it with singularity. I'm not sure. I'd want to know because I think your whole life changes on how you're gonna [inaudible]
Speaker 4:
33:24
I don't want to know because if it's, if it's in the next couple of years, the closer you get to that, I mean, it's almost going to get a little depressing. I mean, it's Igle I have 30 more days to live. I don't want to know that either.
Speaker 3:
33:35
Yeah, I don't either. I want to now you may say, Hey, I do want to know there's people on the other camp met. Everyone's right to be, I do want to know, because if it is sooner than later, I want to live a life absolutely to the fullest. Up until that moment,
Speaker 4:
33:46
you know, to me, Paul and I, and I've had to experience this with my mother-in-law. To me it's, it's quality of life. You know, I don't really want to know when I'm going to die, but I certainly would like to have a say as to, okay, so what's point in my life now are maybe my screws going to come blows. Yeah. And I want to know that so I can somehow prepare for that and, and, and not have to deal with that. How people deal with that with me.
Speaker 3:
34:09
Well, maybe there's things, I mean, there's a famous movie called the bucket list, right? Great. Yeah. Awesome movie. Yeah. So maybe it's, you know, that's the whole premise of that movie, right? Is, is your longevity now no longer if foggy, but clear, you live life a little bit differently. And I would say one of the things we see as most people underestimate their longevity and they say the following, Oh, well my family never lives that long. My family's passed away earlier. Or Oh, I'm not going to or are, you know, I've lived a tough life. That's just not going to happen. But really what we see is the biggest fear we see here. And I want to share this with you now. Listen carefully, everyone. The biggest fear we see in retirement planning is the fear of running out of money. Okay? Correct. So why would you underestimate how long you live?
Speaker 3:
34:58
I would rather overestimate. So if I think I'm only going to live to 85 I would rather say, Hey, let's plan that I'm going to live to age 100 because I'm then being conservative, making sure I don't run out of money in my lifetime. Okay. And if you haven't thought that way, your plan hasn't been looked at that way, feel free to give us a call. (888) 419-8513 that's (888) 419-8513 a. Even if you've run a plan and you want a second opinion on it, let us know. info@carsonwealth.com because we don't want you to make a careless mistake in your retirement or what'd you say? A glorified speed. Glorified speed. All right? In your retirement. That's Jim Caldwell quote, not mine, but Hey. Alright. Hey, you're listening. Well from us and we're going to back for a moment giving you the last two retirement plunders we want you to avoid during
Speaker 2:
35:49
your retirement. Have you ever wondered how do other people get away with paying fewer taxes than everyone else? Learn how you could save thousands of dollars in taxes by calling Carson wealth at (888) 419-8513 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. Hey, welcome back to wealth and wisdom. Paul West joined by Jim [inaudible]
Speaker 3:
36:21
Caldwell. Hey, we've been talking about those eight retirement blenders we want you to avoid. Uh, and you know, we just talked about longevity and living your life. We talked about that. A fun movie called the [inaudible]
Speaker 4:
36:32
bucket list. Bucket list. Yeah. Are there any of those things you wouldn't do? Gym, I'll guarantee you there is no way I would skydive you let us say the word guarantee. I, I will guarantee you that there's no way I don't like Heights. I can't get up real high. I don't like depths when I can't see. So skydiving, no way. You're not going to know. Nope. I would, I'd probably have a heart attack and die just looking down saying, Oh my gosh. Yeah, not doing it. Uh, I have not skydived uh, I, I would so it's not, I guess it's not a fear of mine. Um, I'm saying it now, so now I gotta make it happen. Right. I'm writing that one down. Yeah, you should. Well, I would say like all of us, uh, where was I at? Um, what's it called?
Speaker 3:
37:15
The Willis tower in Chicago. Uh, they have one of those areas where you can walk out over the ledge and it's glass so you can look straight down. I can't remember if it's somewhere between 105 and 120 stories. I can't remember exactly. I'm not gonna lie my hands. You get what? That sweat on your fingers and your Palm because you get nervous and anxiety and you get out there. I won't forget Jim. I did this a couple of years ago. We took our kids there and we went up to the top and we went there and they go out and I go, I'm like slowly just like sliding my feet, not lifting them off the ground. No way. My kids run up there and start just jumping up and down because they're fearless. Yeah. I mean they [inaudible] your 110 floors approximately above concrete and you're jumping up and down.
Speaker 4:
38:00
So, so wife Debbie loves roller coasters, so she's not afraid of Heights or any of that stuff. And she actually did that at our Excel conference and she said she even got a little queasy looking down there. Yeah. It's just
Speaker 3:
38:13
why don't you get out there? You're fine. You're like, your heart settles down and you're like, okay, I'm going to be all right. But a lot of people on their bucket list have fun things like that. Some of them are travel and uh, boy, I, I, I'm going to say I don't think you have a heart if you didn't tear up at the end when he got across off kissing the most beautiful girl in the world, when he got to kiss his granddaughter there at, that was a priceless moment in the movie. And I, I talk about it for retirement all the time. A lot of people talk about your financial health, but actually I would talk to you about your overall wealth. And what I mean by that is your, your emotional, your mental, your family, your spiritual. No one you lived a good life, no one, you had a legacy knowing those types of things.
Speaker 3:
39:00
And here's the thing is the people who have an awesome financial plan get this because they worry less. We actually talk about this in our value proposition. Presentation to clients is when we help look at all of the things in the picture and you have to worry less. You actually live a better life because you're not worried about those things. You're, you're really focused on all the things that are important. And some of the tactical things people worry about, which let's get into blender number seven. This one's completely tactical. Jim is relying solely on social security to cover your living expenses for many retirees. This is the majority. And I get that and I understand that, but you need to look at, are there other methodologies, whether it's a pension, your 401k contributions, your investment accounts or can lead. You just need to be working longer or more. Uh, and people don't think about, Hey, I'm going to live just on that because they may not be thinking about the tax ramifications that go along with that. So that's a problem area.
Speaker 4:
40:01
Well, w we see this all the time was when people come in and, and, and as you said, Paul, they say, would, do I have enough to retire? And if I do have enough to do, I have enough money to make it. And um, you know, from an income standpoint, and there are a lot of people out there that social security is pretty much what they're banking on. People are worried about will it be around in 10 years, 15 years, 20 years. So those are, those are tough, tough issues.
Speaker 3:
40:25
Yeah, no, they definitely are. Um, so let's move into the last blender we want to talk about today. Uh, and to me, probably one of the most important ones, which is forgetting about your RMDs. And so I know it sounds silly, but you, you can't forget this, like your IRA, you can't have it sit there forever. Here's why. You've put money in for your, for a long time or a short time and you haven't paid taxes. Well, guess what? The government doesn't want to wait until you're no longer on this great earth to actually get paid the taxes. They're due on that. So they created a system called required minimum distributions or RMD for short. That makes sure at age 70 and a half you start taking money out. But if you don't do this, if you make this mistake, I'm going to caution you.
Speaker 3:
41:14
This is a big blunder. And we see this happened with some perspective clients every year that come to us, Jim, that they didn't make an RMD selection. So then what happens? Your penalty can be up to 50%. So let's just say your RMD requires you to take out thousand dollars in the year. So up to 50% could be, you could have a $10,000 penalty. Imagine that. That's a lot of money. That's it. That's a, that that's more than a speed bump. Mistake. Jim. That's a crash. Yes. That one hurts a brick wall. Yeah, that's a, a vehicle. That's a nice family trip. Uh, think of how many times that is going out to dinner. All the groceries, car payments, gas for your car, rounds of golf, rounds of golf. All of those things that you enjoy are now gone because you made one of the biggest blenders you made, which was, didn't do it correctly, didn't think through your RMD or more, partly didn't think about taxes associated with your RMD, which again, is one of the most critical things you can do.
Speaker 3:
42:23
By the way, what I also love is we talk about blenders in retirement. One of the things I do enjoy is people spend more time, um, giving back. They, they, they help give more to charities. They donate more of their time to the church. Uh, they sit on boards, they do a lot of things that are helpful. And I think that's one of the best things I see that happen in retirement. But also because there are more, I'm gonna use the word philanthropic in nature here. Gym. Uh, they like to give money. I, I can't believe this happens all the time. Uh, and I share a story cause again, it happened recently. Somebody wanted to give money to their Alma mater, right? This happens all the time, whether it's their college high school or some school their kid or grandkid went to, I mean, did you know you can actually gift stock.
Speaker 3:
43:11
You don't have to um, give cash. But more importantly, if you have an IRA and you have to take an RMD, there is a technique called a QCD, which stands for a qualified charitable distribution. So when you're 70 and a half, so instead of paying money directly to your church or the charity or whatever you're giving it to, you can actually pull it directly out of your IRA and send it directly to the church, the school or another place. Why pay taxes when you don't have to? So if I need to send $10,000, I want to send $10,000 the university of Nebraska, that's where I graduated. Appreciate them. So I want to send it and I'm above 70 and a half. I send it directly out of my IRA. And if I had my RMD do and it was $10,000, guess what? I don't have to take it. Don't have to pay any taxes. And I had $10,000 go to the charity of my choice. Win, win, win. Right? We all win in that scenario. That is how you avoid blunders. But I see this happen all the time. People take their RMDs so that 10,000 than they pay 25% tax on it, so they only get 7,500 and then they write a $10,000 check. So they just actually took $2,500 out of their savings, put it in for the donation when didn't have to. Right. How does that make you feel?
Speaker 4:
44:35
It's not good. I mean, I think there's three areas that if our viewers or listeners had to really focus on RMD planning, very important tax planning, very, very important. And a beneficiary review, and we're not going to have time today to get into that portion, but maybe another segment. But that is pair of those three items right there need to be addressed and in a serious way.
Speaker 3:
44:57
Yeah, absolutely. They positively do. And so one of the things today is we hope everybody got something out of avoiding blunders. If any of these resonated with you or you want help? (888) 419-8513 don't be stagnant. Make a move. Help yourself avoid these (888) 419-8513 Hey, thanks for listening to wealth for wisdom
Speaker 2:
45:20
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 Ron 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. 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 of success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CWM, LLC and sec registered investment advisor.
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