Wealth from Wisdom

How the Holidays Can Affect Your Retirement

December 01, 2018
Wealth from Wisdom
How the Holidays Can Affect Your Retirement
Chapters
Wealth from Wisdom
How the Holidays Can Affect Your Retirement
Dec 01, 2018
Carson Wealth
Show Notes Transcript

The average person spends $1000 on Christmas presents. Don’t let holiday deals trick you into going overboard when it comes to shopping. On this episode, Paul is joined by special guest Erin Wood, Vice President of Wealth Planning for Carson Wealth. Tune in to hear the 4 critical factors you should keep in mind when buying gifts.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and welfare 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. I 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 and SEC registered investment advisor
Speaker 2:
0:30
Doug market hit another old 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 the skyrocketing cost of healthcare and retirement could now run 350,000 planning for retirement today is a whole new ball game. It's loaded with challenges, obstacles, the trap doors that you can do this and we can be your guide. Welcome to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Straightforward and objective advice and how you could make your money go further in retirement. And now here's your host run cars. Then they say timing is everything. And that's especially true when planning for your retirement, getting ready for the holidays, all of those funds,
Speaker 3:
1:14
things that are happening. And I'm just talking about simple time sensitive dates, you know, Christmas, thanksgiving, Hanukkah. I'm actually thinking about your retirement when you file for Medicare and avoiding those mistakes. When do you take your required minimum distributions? Avoiding those errors that happen and how do you control all of these factors is really how you figure out if you're going to succeed or fail in your retirement. Hey, welcome to wealth and wisdom on Paul West and I have a coast today. Her name is Erin would. She's our director of financial planning. Aaron, welcome to the show today. Thanks for having Paul. Yeah, I'm super excited to have you on the show. Um, first time with us and you've got a lot of insight to share with our listeners. So looking forward to do it and a, I'm sure you've got some great stories to share with us as well today.
Speaker 3:
1:58
I will come up with something. All right, good. Well, I like to hear that we'll have some good banter back and forth. Um, Aaron is a very valued member of the team and I think, you know, we spend a lot of time talking about the markets. We spent a lot of time on the show talking about those critical things. And I think Aaron, you're gonna be able to put your lens on this for our listeners today about the value of an overall financial plan, the value of a game plan, how maybe our behavior influences our decision and, and what we do. Impulses. And you and I were just talking about cyber Monday just happened. What did people do or not do on that day? It, by the way, it's just amazing to me. So I think everyone has their work email that they all use and our listeners also, many of them have our personal email and the person emails what they use to sign up for Amazon and Macy's.
Speaker 3:
2:45
And you just keep going down the list of different places. It was so funny to me. I don't know about you, but when I checked my Monday morning, I had to have, I can't count on the birds of emails and the best deal. And now look at Amazon now it's not just cyber Monday, it's cyber week. Yes. With their deals of the day rolling out. And you know, the average person spends $1,000 over the holiday season and Christmas presents and it's so easy now person or per family, per family, um, $1,000. And so you think about, you know, all of these emails and, uh, the apps we have on our phone, they've made it so easy to tell us every deal that behaviorally we don't want to miss the deal. And so we're buying gifts at lightening speed. And I'm sure none of us can remember what we received last year.
Speaker 3:
3:33
That's due to Fomo, fear of missing out. Is it because no one wants to miss out or we've talked about it before. It's easier now, but it's still not perfect. And the best typical example of this is buying a car. You go buy a car and you're like, I did go straight to the best deal possible and you drive out, you drive around a lot and as soon as you pull off the property you're like you second guess yourself and you have a buyer's remorse for a moment. Cause did you get the best deal when the reality is is okay maybe you could have got an extra $100 or $500 or $1,000 would it have really changed your decision? No, because you already did it. You know the irony of this is my mom just bought a new car like a week ago and she was texting me from the dealership, all of these questions and telling me, you know, here's what they're doing and they're throwing in this and I'm getting this.
Speaker 3:
4:21
And then she left and she called me and she said I fell sick. I said, mom, why do you fell sick? And she said, I don't know if I did the right thing. And they said, well do you like the car? Do you love the car? Is it the car you want it? Because that hundred dollars really isn't going to make a big difference if it's what you wanted. Um, ultimately, of course she's fine, but she did exactly that within minutes calling me, telling me she felt terrible that she bought those car. Yeah, it's going to happen to people. I mean I think it's just one of the behavioral pieces. So let's talk about today's show. Our theme is thinking about these four critical factors that really have a profound impact on your retirement and the timing of them. So I look at buying a car. Is the timing because your other car was in a wreck or because it just, you know what, it's on his last wheels in it.
Speaker 3:
5:07
It's not going to make it any further. Um, you know, I'm going through a life event. I've got 15 year olds, twins that are in become 16. So cars are certainly number one on their wish list at the moment. Um, or is it just behavioral like you like to get new cars and that's just what you personally like to do. And so your timing of that is important. I think we're going to talk about today, Erin, is the timing on a lot of different things you do. So let's talk about this first point, which is when it just went with the question mark, when do you pull the trigger? When is the right time for you in deciding? I actually say when you retire is going to be the hardest decision you're gonna make. And you may think it's easy, but here's why it's not.
Speaker 3:
5:48
And I'd love your insight on this is because of, you know, when you pull the trigger, you've been used to your entire life. And I remember when I first started working in many people did is they actually got a paycheck, you know, actual physical check on your desk. And if it wasn't there at the same time every week you got nervous or worried about it was, and you then drove to the bank and waited in the line on that Friday afternoon with 500 other people. Yes. And you deposited that check and you've been doing that in your whole life. It just, the world has changed. Instead of it, check on your desk, you get a notification that the check is, you know, your money's been automatically deposited into your bank account, then you probably, and at least we do here at the Carson Group, I've got to go online to look at my pay stub so I don't even, you know, get it directly more I, it's my responsibility as the employee or what we like to call stakeholder that has to go do that.
Speaker 3:
6:42
So now you're ready to retire and there's no paycheck coming in anymore. So the greatest fear you and I see is what, where's the money coming from? And I, and where's my money coming from? My retirement. And I would say, well, I have enough because what we, we, we've heard this and you, and I've seen multiple studies on this. So here's the question I'll pose to you here. And this is a trick question. So hope you're ready for it. I love these on the show by the way, is all right. Are People more afraid of dying or running out of money? Oh, I must say running out of money. All right. You didn't miss it. So rarely, it wasn't that tricky thing about that. So I'm not afraid of dying in Lima. Loved ones. I'm more concerned is I don't want to be 80 years old full of vigor and life and broke.
Speaker 3:
7:30
Yes. So what are those things we have to do when we're getting ready to retire? So one is we have to plan for how do we manage our investments in our risk. And so I actually look at like what's been going on in the market the last two months. We actually have had volatility back and I think it's brought out some fear from people. But I hope our listeners understand what we're going through here in 2018 is historically normal. It is. You know, I had someone explained to me one time visually to think about the market like a Yoyo. And on a day to day basis it goes up and down just like a Yo Yo. And that can be, if you're only looking at that very narrow frame can be, you know, something doesn't make you feel great. But then they said, you know, think about it as if you're using the Yoyo as walking up the side of a mountain, the day to day volatility really doesn't matter because in the long, tall, as long as you are diversified and you're in the right risk for you and your goals, eventually you're going to get there.
Speaker 3:
8:31
If you just keep walking up the mountain and hopefully your pupil you were walking with aren't carrying scissors to cut the strength, that's he's my peer. Yeah, it would. Um, could you act? Can you actually do use a yoga? What do you call it? Spin it? No, I cannot, no, you can't walk the dog or do any other magic yo yo tricks. No, I don't think I was ever very good at that. All right. So, um, anyways, I digress. But as I think about, um, the Yoyo analogy is a great one because things are going to go up and down. But why say we're historically normal and listeners, I really want you to understand this. So a good barometer, and by the way, if you have an iPhone or any other device and you go and you look at stocks on your phone, click the red button and please change it off of points, down or up.
Speaker 3:
9:19
I don't care if the dow is up 172 points. What I care is the equivalent at that point in time is that means it's up 0.7% so that worrying about points up or down, that's your relevant. What is relevant is the percentage. That's what's a more important number. The media. So whatever TV outlet you're watching, MSNBC, CNBC, Fox, whatever, they of course want to sell. You advertising it and they want you to not be outsider. They want you to be watching them. So of course they say, oh, the Dow plummets 400 points. Well, in reality, how much is that? That's not that much in the whole scheme of where its basis is today. So that's one thing I want you to think about. But to historically, there are 50 trading days a year where the market moves up by more than 1% or down by more than 1% per year.
Speaker 3:
10:12
So, you know, but by the time we're on the show here, I think we're at 55 or 56. I may be off a day here, um, days this year in 2018 that we've had that movement. However, historically, Aaron, the averages 50 days per year. So we're, we're slightly above historical norms but not really out of, uh, you know, a while standard deviation from it. But what happened is, is 2017 and I've talked about this on the show several times was boring. And we had, yeah, we had very few of those. So we all have revisionist history years. I'll explain it simpler. We all have short term memory. It really think about it like you remember the last place you ate, went to dinner. If you think about food, if you think about vacations, what do you think about the last one you took? You think about who you've met recently for the last people and you think about life's experiences.
Speaker 3:
11:07
So we're not relying on, on how many of you can go back to your memory banks and remember how you felt in 2008 it's a lot of what the market super hard to do and I mean that's 10 years ago now. So that feels like a lifetime. And why? I want people to realize that we're just in a normal situation, 55 days this year, 56 maybe now 50 is the historical norm and last year was less than 20 so we're just in a real normal world but, and we're going to keep talking about this and show. So the timing of when you retire, at some point there is going to be a market downturn and if you're getting ready to retire and you are not allocated correctly, going in retirement, you may be making the biggest mistake you could make of your retirement decision because you chose to retire.
Speaker 3:
11:52
And let's just say you had $2 million. Well, if you don't set that correctly and all of sudden you've got one to 1.2 million, you're retired. You don't have a lot of ways to make that up and that can cause a huge emotional pain for a lot of people here, Erin. Yes. Yeah, one huge, huge. I mean he, so he didn't think of that. You have a minor change in your age, the amount of assets, your risk tolerance, your longevity, you're going to make a big mistake. So here's something I want to throw it out to our listeners today. There is a thing, it's called a five step retirement action plan. This is where you can focus on those five big issues. So you can look at the timing of your retirement. If you want one of these from us, you can give us a call. (888) 419-8513 (888) 419-8513 if you're the type of person that wants to maximize your retirement and not have any retirement remorse, like buyer's remorse, give us a call. (888) 419-8513 you're listening.
Speaker 2:
12:48
Well from wisdom, trust, transparency, accountability. These are the values that drive Ron Carson and Carson. Well, you're listening to wealth from wisdom with bear and tall if fame advisor, Ron Carson, he's a published author and has been featured in Forbes, investment news, the Wall Street Journal, CNBC, and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson. Do you have an IRA or a 401k? I bet many of you do.
Speaker 3:
14:21
Do you know when you withdraw money from these accounts and retirement, you could get clobbered and taxes? Hey, by the way, your intellect electrode clobbered. That's a good word for our listeners and you're listening to welfare wisdom. I'm Paul West. Co was today's, Erin would vice president of financial planning here at the Carson Group. Aaron, glad to have you on the show and we're having fun too. They talk on about these critical pillars of retirement that really can have this profound impact on your life and when you should or shouldn't retire and when you're in retirement, what can happen? So coming up in the segment, we're going to keep talking about ways you could save yourself thousands and thousands of dollars in your retirement. Well, let's go to idea number two here and let's talk about life expectancy and longevity. Um, it's a fascinating topic, Erin, for us to have with people and I love to ask people when we're sitting here at the Carson group, you know, tell me how long you think you're going to live.
Speaker 3:
15:13
I know my husband and I, one of us is going to be over a hundred and that to me is frightening, frightening or exciting? Well, that depends what the advances in health care. I'm talking about, you know, retiring at 65 and now I'm talking 40 50 years of retirement. Um, half of your life in retirement is an interesting thing to think about and really decide, is that how I want to live the rest of my life? Or in that 40, 50 years, I don't see myself setting on the front porch in a rocking chair. So how do I make that an amazing 40, 50 years? And what are you doing? And so what are you doing to a, live your life, enjoy your money. But also I think you've helped sure this term with me, I think it's a great term, is avoid mental decay. It to still keep doing things.
Speaker 3:
16:01
They don't have to be physical, but what are the mental things you're doing? And I think there's a lot of studies that show, and it doesn't mean you have to be reading a book, you know, 12 hours a day or you need to be sitting on boards for your entire day or working a nine hour day. But there are key activities that they, they show that mental stimulation stimulation is one of the best things for you and your retirement. It absolutely is. There are studies out there that show, um, being active and involved in having a purpose in life, um, actually keeps the neurons in your brain connecting and still being active. And we need that. Uh, you know, the past retirement is not today's retirement. I made the joke about setting in the rocking chair. Um, but you know, decades ago that's what it was.
Speaker 3:
16:46
Seven retired and they had a hard life and they worked in the fields and that last five, 10 years of their life, they really did. They sat in the rocking chair and, uh, it was time to relax. In today's world, uh, you know, even 30 years of retirement is a long time to be looking at how do I want to enjoy those 30 years and make the best of them. Yeah, I mean it's all your own heart and desire. Uh, like I shared, my cousin is a triathlete and actually ran earlier this year in October it Kona. So the iron man, Kona is the most famous iron man triathlon, race in the world. You have to go through qualifying to get there. It's very challenging. And this prior, was it per weekend or two? Uh, I saw the replay was on NBC and so of course I was watching it to see it.
Speaker 3:
17:30
I could see my family member on the show, but they showed, they had the oldest finisher of the race ever. And if I remember right, he was either 83 or 84 years old. That's amazing. So think about what is it, a two mile swim or something like that. A hundred mile bike ride and then a full marathon running race and somebody in their eighties completed it. Not only completed it but it had to qualify and complete and an amount of time that many people in their twenties, thirties, and forties couldn't accomplish it. And that's, you know, the part about healthcare that is so exciting is that when we look at the advancements, people are able to do that and do exciting things. I know I've told you before, my husband's grandfather, I just turned 99 and he just stopped driving, uh, a year ago. Um, voluntarily just said, you know, I've never been in an accident.
Speaker 3:
18:19
I've never had a ticket. Um, I think now is a good time to stop and 99 lives on his own, has a wonderful life. Um, same kind of thing. Didn't stop working. They'll tell he was 90, that family business, he kept himself involved going every day, even if it was just to have conversations and get out. So here, here's fascinates. So he's most likely going to hit age a hundred yes. So let's go back to 1990 so gosh, that's almost 30 years ago. It feels weird saying that to be, and I'm sure many of your listeners out there, but there's approximately 125,000 people that were 100 or older. Now we fast forward to 2015 so 25 years later, there's four times that amount. So there was half a million centenarians and they're projecting, I think about this. So we went for x from there. So if we go for x again over the next, what, 25 years you would expect that would go to 2 million?
Speaker 3:
19:17
Well, they're actually predicting double that 3.7 million people will be a hundred or older and the year 2050 and I think that's an underestimate. Just based on, you know, you go listen to singularity university, these other things, the pace that health care is progressing and longevity is progressing, I think is going to move even faster than that. I'm with agreement. I don't know how we slowed down this amount of longevity that's going on right now. It seems foolish to me that my daughter who is quite young, um, is not going to live, honestly knows 125 it just doesn't seem like she would have a life expectancy shorter than that with all the advancements. Yeah. I love this. The other day I was having lunch earlier this week and this individual is having lunch with, I didn't know very well so I asked them, I said, how old are you?
Speaker 3:
20:11
And she said 55 years old and then she found out un UN sparked by me asking the couch. He said, I'm 55 and I just realized I hit the halfway point in my life. I'm going to live to 110 I just believe it in my heart and my mind and she also mentioned health care and longevity and all of those things. It was funny is like then take what you do for a living, Erin is you run a financial plan. Most people had you run it in the past age 90 or 95 or a hundred well that, that, that keeps being extended out further. So now I think it's very common to run him out to 110 plus. I think it's really smart to do that. And the other thing, you know, 15 years ago, people would argue with me when I tried to make them run it out to a 90 even, uh, and I would ask them how long their grandparents loved or how long their parents lived.
Speaker 3:
21:01
Uh, and it was frequently that they would pick the number of whatever was their grandparents or whatever was their parents and they just wiped away any bit of that advancement and healthcare. Uh, you know, and I remember being little and taking my Flintstone vitamin. I can't tell you that my parents remember being little and taking vitamins. We just start from birth now and it grows everything out because of it. Yeah, absolutely. So let's talk about longevity and what's one of the biggest thing that helps us in our retirement is Medicare. So Medicare, um, many people are listening to say, oh, it's boring. I don't want to talk about it. I don't have any control. And you think it's pretty straightforward? The reality is it's not. And if you make a mistake here, Aaron, I, this is one of those things that just drives me bonkers.
Speaker 3:
21:53
It's a costly one. Yeah. Well, and it's just why do people make the mistake? I'm not trying to be brash. It's just laziness. They ignore it. They let it slip down their priority list. They let themselves become too darn busy. I, you know, I hate that word by the way. So it was like, if, by the way, Aaron knows this, we've worked together now for several months and my least favorite word in the vocabulary in English language is busy because when I asked Aaron, Oh, how you doing? And if you're responded busy, unlike well busy doing what? Are you good busy, are you bad busy? And the reality is, is if something good comes across your plate, people aren't busy. What they do is they re prioritize what they're looking for, what they're doing. Case in point, if you had the opportunity to go to the crate and Gonzaga game and you had all these other things going on and all of a sudden somebody came to you with two tickets to go to the game and you had the number one ranked team in the country coming in, all of a sudden, I bet you reprioritize your life if you are fan and want to go to the game.
Speaker 3:
22:57
Well it's fun. Yeah. And so that's why I say is it good busy or bad busy. And I think this is where, and I believe this is you have to be in control of your life and make the right decisions. This don't let social media control of your life. Don't get sucked in the habit of staring at Twitter or social media or um, Facebook or just, I can go down the list of all of them and I look about the same thing as don't automatically assume medicare happens in enrolling in it is voluntary. But if you don't sign up by this appropriate time, you can have some serious ramifications of, you know, late penalties and making costs you 10% that's a big number and those penalties are forever. Once it hits your skin or your Medicare B, you're going to pay that penalty for the rest of your life.
Speaker 3:
23:47
Yeah, and should the meat, they shouldn't make you wait. We're like, you know that chain that goes around your, your foot with a, with a big ball behind it back in the medieval days just to say, Hey, you look at this person, this person didn't find that's right because I think actually even though it's sick by saying, hey, that is, I think other people would learn so much because visually do you think, Aaron, if somebody makes this mistake, they're ever going to tell someone they made this mistake? No. They might tell their best friend if their best friend hadn't filed yet just to make sure they make a better decision. But most people are not too quick to brag about their mistakes. I would say really good people, people that are honest and truth givers and truth receivers, which sheer with others the mistake they made. But I think most people, and this is why behavioral finance is so important, would be embarrassed a grade.
Speaker 3:
24:37
And so when we're embarrassed, we don't like to share or anything, we don't like to tell anybody about it. We've all had that picture taken where our eyes aren't the way we want them or we don't want them to be and delete, delete. Yeah. I think it's funny now we all have, you know, our, our cameras on our phones. And so instead of like, oh the steak one nice picture, I would just press it a hundred times and I'll choose the best one. And how long do we sit? And they're actually looking at the picture to figure out what the best on is. And yet we don't even spend enough time on figuring out, okay, did we file correctly or Medicare or social security and do we have all of those pieces moving correctly. And I think, Aaron, that's why you and your team, you know, have this strong belief is that if your advisor is not giving you advice on financial planning, including social security and Medicare and taxes and all of those things, then how do they truly have their best, your best interest in heart?
Speaker 3:
25:35
And I know, I know we talked about on the show all the time, the ability to have a fiduciary, but I mean there's a reason why there's registered investment advisory firms that they put your interest over theirs. They have both a legal and I would say more importantly, an ethical obligation to their clients to do so. And by the way, that's what we, at Carson Group, we've been ranked in Barron's hall of fame. We're on continuously on the Barron's list. We're continuously on the Forbes list. We get accolades because people realize being transparent and explaining to them what it looks like. If you want a complimentary second opinion from those type of people. (888) 419-8513 if you're the kind of person that wants to make the most out of every dollar you've earned in your life and in your retirement, give us a call. (888) 419-8513 that's (888) 419-8513
Speaker 2:
26:25
you're listening to welcome wisdom. He sees good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Barron's hall of Fame Advisor
Speaker 3:
26:34
Rod Carson.
Speaker 2:
27:33
He's a published author and has been featured in Forbes Investment News, the Wall Street Journal, CNBC and more. Now back to wealth from wisdom with Barron's hall of Fame Advisor, Ron Carson, a, believe it or not. Actually, it sounds like Ripley's that when you claim your social security, yeah, the
Speaker 3:
27:49
benefits that this will be one of the most important financial decisions you're ever going to make. This decision cannot be taken lightly for many of you listeners is and people around the world. This is the foundation of your financial game plan and it impacts so much. It's not just social security as your taxes is your Medicare, all of these things. And if you just play a lot as a fair, I have a behavior, you're going to be making some serious mistakes. Hey, speaking of Erin, this is Erin would cohost today of our wealth and wisdom show vice president financial planning. Aaron, glad to have you on the show. I enjoyed talking with you today about really these critical factors you facing retirement. We spent some time talking about longevity. We spent some time talking about Medicare and now what I'd love to transition to is taxes.
Speaker 3:
28:35
And I think there's just that, that word alone, I felt like a little pain in my side. I think everyone does. I mean, one of the most common quotes that people know is the one from Ben Franklin. The only thing certain in life is death and taxes. But you know, he kind of stopped. He didn't talk about the uncertain part of, um, how much and when. Yeah, I think you're right. And I think, um, you know, we've done several tax workshops in the area, um, lately and you know, if you want the information we've provided there, I'd be happy to send it to you. Uh, if you want to email us info@carsonwealth.com, I'd be happy to share that with you. And I mean, we, these things have been standing room only because people want to know how to pay less in taxes. That's just, that's a constant that's out there.
Speaker 3:
29:20
And so in retirement, it's probably the thing people don't realize is you have more control than you ever did before. Now there's some key ages you need to be concerned about. So 59 and a half of course as a key age because of then you can actually start taking money out of your retirement account without the 10% penalty. And then of course, 70 and a half a key age, um, because then you get the dreaded required minimum distribution that happen. So let's talk about that. So how do you sequence what you do and make the right decisions here on paying taxes? You know, not only until you get to retirement really once you make your decision to retire post retirement as well. I think tax projections or one of the biggest things that a financial planner should be doing with you. And if you're working with someone who's not looking at your tax projections, they're doing you a big disservice because having that ability to look at where is all your income coming from, what are the different types of taxes that that income is, and then helping you make the right decisions of um, what age be claiming social security forecasting those RMDs.
Speaker 3:
30:33
Do we need to take, um, some non taxable income or, or different types of taxable income in those earlier years can be a big, big difference to what your taxes are going to look like and those later years of life. Yeah, they don't, I mean it's phenomenal to me, um, that we spend all this time researching, buying a car all this time. People, oh yeah. Well I liked, I like actually recertification. I think I almost get just as much enjoyment of prepping for it and dreaming about it and getting ready for it. Um, but yeah, I probably don't want to cost my dollar per hour. I spent prepping had many listeners do, but then we don't spend the time, we just go pull the trigger and like, oh my requirement of distribution has done is do let me just take it out of the account by then it's too late because you should've had a game plan set.
Speaker 3:
31:25
And it's fun for us. And Aaron, I think something to help people understand is when you work with a financial professional, um, many of you think their only job is to manage your investments. And by the way, if you work with someone like that, that just realize that's the only thing they do. Um, but that's just a one trick pony. I mean they just, you don't get much else from them. And I want to share this stat with everyone because this is just, it's downright infuriating to me actually. So I want to share this. This is from investment news. So variable annuity sales in 2018 are up 25% from this time a year ago. 25% that seems ridiculous. How is that even possible to go up? So don't get me wrong. I mean interest rates are increasing. So I mean I could put a financial planning hat on from understanding that and some sensitivity related to it.
Speaker 3:
32:19
Here's what it is, and this is certainly my opinion, but I think it's well substantiated. I've talked to other professionals like you about this, Aaron is the Department of Labor rule was going to go into effect. And in that rule was there was going to have to be clear disclosure by agents. I say agents, I don't say advisors by the way, selling variable annuities for commissions. And they're going to have to disclose what they were making to you and guess what happened? They're like, oh, this is a problem. And if this rule goes away, I'm not going to be able to make as much money and I'm gonna have to show a client what these annuities actually cost and therefore clients aren't going to buy them. So there was this fear and is the rule going to go away or not? So of course what happens, preloaded, preloaded, excelerator hit gas pedal down for the agent or I'm gonna use the word broker's best interest, not for the client.
Speaker 3:
33:19
And I cannot believe the story we heard this week Aaron, and I'm just going to share it here with our listeners is cause it just infuriates me. I don't understand a variable annuity can be a solution, but if it's up 25% that means people are selling you a product. No. The difference is this, a product or a solution. Listen carefully to what your financial planers telling you. Hey, I want to put you in the following variable annuity product versus if a financial planner says, you know, I've got a solution for you. It's a variable annuity and here's why and here's how it fits in with all your other options. Sounds a lot better than, hey, here's the product I think is best for you. If they use the word product, that's an immediate scare I would have if I'm a listener. So hope you understand that.
Speaker 3:
34:01
That's our job here on Wellframe wisdom. We want to educate our listeners on what's in their best interest. And here's another one, I can't believe this is, so this is a young professional in their 20s starting a Roth Ira and insurance agent put them in an annuity in their Roth, in their twenties and I mean if you just walk through the math, I mean first of all, I think they should be disbarred and not allowed to practice anymore. I mean, maybe there was a reason I haven't come do it yet. I don't know the specifics of the situation. But at the end of the day, somebody in their twenties buying an annuity for a Roth Ira, they want tax free later in life. There's not a lot of logical case studies that present that as a good solution for this individual person. Well, and I would be asking the question of them being young, you know what?
Speaker 3:
34:52
Even with a Roth, yes it's meant for retirement, but after the money's been in there for that five year period, you can always get back your money that you put in. Not your gains, but you could always get to that tax free. If you put it in an annuity, you're going to have a never ending surrender schedule every time you put money into it. Um, therefore you just took your benefit away. Yeah, reset button or I'm going to call it the negative reset button. They just keep opening the trapdoor. That's what happens is it's like they're sitting in a castle and somebody hits the the trap door and boom, they fall again and they fall into the pit of alligators and it's just, it's a problem. So yeah. I'm going to tell you this right now. Listeners, if you are being proposed an annuity police, take whatever you're getting and go to another financial planner and get a second opinion just to confirm what you're learning is correct.
Speaker 3:
35:40
I'm going to go back to the car analogy and I know financial planning and cars are different, but when you're giving it a car, you're investigating on the Internet, you're talking to friends, you're getting all these other opinions, yet I don't care if you like the person sitting across the table, that doesn't matter. You need to trust them. Yes. But you also need to trust yet verify. And so if they're saying, hey, this is what they do, and I would ask them the following question, how many of your clients have this? Cause if they say, oh almost everybody has it. Warning signs should be going off like crazy. Cause not everybody is the same. No one has the same financial situation is like your fingerprint and everybody's got an individual financial plan. So there's no way that an annuity can be a solution for everyone.
Speaker 3:
36:27
It's just not possible in any good certified financial planner will help explain in a nudie could be a choice, but it's not the only choice that they offer. And by the way, again, get this in writing from them and we set it on the tongue all the time on this show is get in writing. How much are they making? They being the broker or the agent. And if they won't give it to you, don't walk out the door. Run and run quickly because guess what? Somebody is getting taken in a situation. It's not a win win. No. And those annuity contracts, many of them pay a very large upfront commission to the person selling them. Yeah. And so again, whose, whose interest is that? Yours or theirs. And I look at your life. You don't want, I mean an annuity to create additional taxes. Cause by the way you could be paying ordinary income later in life.
Speaker 3:
37:19
People forget about that. They think, oh annuities texted for all his tax free for my life. Not the case. But people don't understand. So actually if you want an analysis of what this looks like, I'd be happy. And our team would be, give us a call, be one of our first five callers and we'll help you give this free customized analysis of what you're being proposed. (888) 419-8513 that's (888) 419-8513 everybody wants to keep every nickel they earned. Don't let this happen to you. (888) 419-8513 hey, I'm Paul. Last with Aaron would, you're listening to wealth of wisdom and we'll be back in a moment.
Speaker 2:
37:56
How could you make your money go further in retirement, next unwell from wisdom with their ins hall of fame advisor, Ron Carson. Is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here and right now on wealth and wisdom with Barron's hall of Boom Advisor, Ron Carson. The stock market has been on this tear for the last time,
Speaker 3:
39:46
years. Yeah, and you certainly have felt recently though, there's some volatility, but really if you look at the whole scheme, so let's look at the last decade we've been on the longest bull market ride in history. I hate, well we know this, right? A rising tide floats all boats and at some point many of you have prolonged your retirement or prolonged selling, and if the stock market takes a turn for the worst, it could really have a huge devastating impact on your retirement. Hey, welcome back. This is well from wisdom. I'll Paul West coast today is Aaron Wood. And today we're helping you navigate these four critical pillars of retirement that really could help you have this profound impact on what's best for you. And we spend some time on the show, do they talk about longevity? We've been talking about taxes, we haven't talking about potentially some of the negative ramifications of annuities and make sure they're looked at.
Speaker 3:
40:38
So let's next talk about the market. Let's talk about risk you have in the market and returns and how you sequence them. And maybe that's just the market, just life overall. And Aaron, you're sharing with me during the break. Um, a great analogy. I love for you to share with our listeners today about how to think about these types of things. So I frequently, when we're talking about taxes, tell everyone to look at their investments and make sure they're correlating what tax bracket or tax pool they're going to be in. So there's three buckets. Um, we have the, uh, tax never, which is the one, of course everyone loves it has the Roth in it. It also horse, the HSA is in it, which I don't think people are taking advantage of enough right now. Uh, the Hsa if you have that at your work, should absolutely be something you're looking at and trying to get as much into as you possibly can.
Speaker 3:
41:30
Uh, we have the ones that are taxes, ordinary income, those, the ones everyone's most, uh, you know, frequently, uh, used to with getting their, their W2's. Um, but then we have the 401k is, and those are the, the tax later bucket. Ah, but that comes out, uh, as you know, um, uh, costly difference when you get to retirement. And so I always tell everyone to think of it like you're a farmer and, and the government did a genius thing when they dealt with, they made the 401k world or the qualified plan world cause they said, you know, we're going to give you a choice and we all love the choice, right? So we're going to give you the choice to pay taxes now or to pay taxes later. And we all said, oh, we would love to pay taxes later. And just imagine that you're the farmer and they said, okay, we're going to give you the choice to pay that on the seed or we're going to give you the choice to pay that on the harvest.
Speaker 3:
42:24
But you planted watermelons. So that harvest is Pumpkin Tba. We use pumpkin. Yeah. But regardless what that seed turns into is something way bigger than the seed. And it can be very costly for a lot of people. So as we're looking at their investments, we're not just looking at the returns. Um, we're looking at the sequence of what's in each tax bucket and how do we pull from those three different tax buckets to make everything work together in the most efficient and effective way. I love the analogy there because how many of you want to take the full risk of being taxed on the entire seed versus tax on the entire harvest and the right prudent thing would be to do, you would say a little bit about so that way, hey, if you have a bountiful harvest, you're okay pants, some taxes cause you're happy as you can be because it's bountiful.
Speaker 3:
43:14
But on vice versa, if you pay all the tax up front and it's a terrible year for wind or tornado or drought, whatever those things are, you're going to be kicking yourself that you didn't get taxed on the back end because there would have been and little to no taxes as standpoint and your investment account is and the different, that's why you need an Ira. That's why you need a Roth. That's where you need taxable accounts. And you may think, oh, taxable accounts aren't that beneficial cause I hate paying taxes. Let's now, let's fast forward here to 2018 here we are, we're in December. Um, we have a strong possibility that we're gonna have a down year for the first time in several years. Are you tax lost harvesting? Is Your advisor talking to you about that? It, no one likes to sell at a loss by the way.
Speaker 3:
44:02
However, I mean if you're in a high tax bracket, so you have a higher Agi, I mean we're talking whatever you want it to be. 200,000 plus here. It's not a bad decision to take some chips off the table. In terms of a tax perspective by selling something at a loss. And let me give you a great example and don't take my advice here and go implement it immediately is do yourself right and you do look at the whole picture. But why wouldn't you? If you owned the market, many of you own ETFs and if you owned spy, so you just want it to be on the market. But what if you bought it earlier this year and now it's at a loss? Why not sell it? But instead of having to pay the wash sale rules, and we're not going to get in that way too complicated for today's show, you know, talk to your planner or tax professional, but there's plenty of other comparable ETFs out there.
Speaker 3:
44:53
So why not take the loss and then by ivy or whatever specific ETF, other s and p 500 ETF that does the same thing, but you get the benefit of the loss, yet you still get the exact same exposure and correlation. People probably aren't thinking about that are there and I don't think they think about. And the other one that they should be looking at is if you have those losses, you probably have some gains in there as well. And so using those to offset each other and get your portfolio and the right balance is a great opportunity to take advantage of. Yeah, I mean, and the reality of this is for everyone is, is if you don't do this, it's going to be too late. I mean, you got to rebalance your portfolio. I hope, and I know we've talked about this, the prior segment, we're in a historically normal year for volatility.
Speaker 3:
45:39
This is not abnormal. We're right in line, just slightly above historical norms in terms of volatility. But at some point, I mean if we go back to the average stock market correction, so oh one oh eight etc. You lose 13.3% so right now take $1 million. Are you okay if you're sitting three months from now at 870,000 and how do you feel? So when you go to the hospital, they have that pain meter right from, you know, what is it a 10 on the far right? You're smiling, you're happy as you can be, and then the one you're purple and crying profusely. How does that make you feel? You go from million to eight 70, I know we don't like it, but at the end of the day, does it keep you up at night? Does it create fear? Does it make you want to sell? So I know that I have, um, a different view on some of the markets.
Speaker 3:
46:31
There's a lot of people, I actually see how we see these as opportunities, but working with clients, um, there is a lot of emotional fear and that, uh, you know, market going down for a lot of people is emotionally crippling, honestly. And so this is a perfect example of if that going down is making you uneasy, um, and you can't handle that, then you probably in the wrong asset allocation to begin with. Um, for me going down, I just look at it, it will go back out. Yeah. And by the way, so here's, here's the statistic, because I love these for our list or is there it is. So the typical bear market lasts 1.4 years. So basically a year and a half that they last. So you're getting an account using round numbers here it goes from a million to eight 70 and it sits at eight 70 for one and a half years.
Speaker 3:
47:20
Again, how much can you stomach? How much does that make you feel? How much does that let you sleep at night? Does it increase your food intake, your alcohol intake, any of the above? But if you have the right game plan in place, and this is my favorite, so you know, as we've been experiencing volatility, I've called several of my personal clients, Aaron, and they're like, Paul, why you calling me? I said, well I just want to just confirm that you're feeling okay. You know our thoughts and like Paul, I follow you. You allocated correctly, you've explained it to me, you've shown me I've got tax diversification. Like I can weather the storm. I've got a good foundation built, you know? So if I'm in Florida, I've got a great hurricane shelter built or whatever, that I'm going to be just fine. But if you don't feel that way, that is a problem.
Speaker 3:
48:05
And if you're not feeling a hundred percent confident, and by the way, if you can't explain how good your plan is to someone else that tells me alone, it's not that good. So if you'd like a second opinion from a fiduciary, (888) 419-8513 what you really learned in this one meeting and call could literally save you so much money in retirement and potentially help you get so much further down that pathway. (888) 419-8513 (888) 419-8513 hey Aaron, thanks so much for joining us on the show today. It's been a great time. Yeah, I've really enjoyed it. You've been listening to the welfare, wisdom radio network
Speaker 2:
48:47
risks, 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:
49:00
Okay. And here's the legal Mumbo jumbo. The opinions voiced and Wellframe wisdom with Rod 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. I may not be invested into directly. Investing involves risk, including possible loss of principle. No strategy assure success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SEC registered investment advisor.