Wealth from Wisdom

7 Retirement Blindspots

November 17, 2018
Wealth from Wisdom
7 Retirement Blindspots
Chapters
Wealth from Wisdom
7 Retirement Blindspots
Nov 17, 2018
Carson Wealth
Show Notes Transcript

The very last thing you need in retirement is an unexpected financial surprise. On this episode of Wealth From Wisdom, Paul and Jim discuss the most common retirement blind spots, and how you could be avoiding them.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and well from 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 assures success or protects from loss. Past performance is no guarantee of future results. Advisory Services offered through Cwm LLC, an SCC registered investment advisor,
Speaker 2:
0:31
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 205 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, and 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, Ron Carson. The very last thing you're going to need in retirement is an unexpected financial surprise because if you get sucker punched with the huge expense at this stage of the game, it could be way too late in that game, which is your, your game
Speaker 3:
1:21
to actually recover front. Hey, welcome to wealth and wisdom. I'm Paul West and enjoying my cohost Jim Caldwell. Jim, welcome to the show today. Thanks Paul. Hey, glad to have you. And today we're going to pull back the curtain on the most common retirement blind spots that really could and shouldn't by the way, but may needlessly costs you a small fortune. And what is it gonna take for you to retire successfully? And let's also talk about Jim, maybe all those things that people need to know and watch out for, but ultimately get in their way of success. He, on today's show, we're going to share seven and the most common retirement blind spots and the ones that ways you really knew avoid it. So for example, how do you retire in a bear market? Yeah, I mean it sounds weird to say, but right now if you retire, there's a good likelihood you may retire in a bear market.
Speaker 3:
2:13
And what should you do about it too? Why has claiming social security more complicated? You think? Is it really as simple as, hey, let's go stand in line of sole security office, check off a few dots and checkboxes on a form and submit and a way we go, well guess what, that's not the way it is either. So with that being said, we need to look at all those things to happen. And Jim, I'm thinking about these are we like to call blind spots. That is, you know, things that we can't miss. And so where's one of the most common blind spots we possibly have a rear view mirrors in our car. You got it in our car and I think I've shared, I've got twin 15 year olds right now and teaching them how to drive a car. Uh, how's that going? Oh, it's a lot of fun.
Speaker 3:
2:56
It's entertaining and very different. You teaching a boy and a girl. Uh, but what also is interesting about it is teaching one a blind spot is, and it's actually, it's a tough concept cause they're like, well dad, there's mirrors. There are mirrors. The mirrors help you then the mirror's can't possibly get every single spot. And a little bit like your financial life is, you got blind spots out there. We all do. It just depends on where you're pointing your mirrors. We don't have a 360 degree view. We certainly don't have a hologram view of being able to see multidimensional. And so as we're talking on today's show, we want to help you get rid of those blind spots. Are there blind spots though that you know, for me are very annoying, are people who have preconceived notions. And Jim, you know, before we get into some of the content I want to cover today, I can't believe this story.
Speaker 3:
3:53
I have to share this story that happened locally. I mean this is part of wealth and wisdom. We are truth and you know, givers and true through Seevers. But imagine this, a fellow colleague of ours was recently, um, here in the city of Omaha. And it was interesting is, is they ran into an individual who introduced themselves and said he was a financial planner and he looked right at her and said, oh, well are you a stay at home wife? And she looked right at him and said, no, I'm actually a financial planner. Also, you imagine that his mouth dropped. Think of this blind spot this person had. He assumed first because she was a female, that she may be stayed at home and second didn't even consider what her working career was. Can you imagine his face? You know, talk about foot in mouth, but it's disappointing to hear.
Speaker 3:
4:48
And the better part was she said was how confident that he was that he was a financial planner. And so she actually said, well, I'm a financial planner. And by the way, I work for one of the largest registered investment advisory firms in the country and I'm very confident in what we do here. So you're going to love this gym. So not only did he have a blind spot and a preconceived notion, not only did he save as a financial planner, he didn't have a CFP, no credentials, no credentials, and better yet she went and looked him up online. Of course she had to, she was irked. That's a nice way of putting it. Well, we are on the radio here, so also she went and looked and by the way you can do this, there's this website you can go is called Finra broker check fin ra broker check.
Speaker 3:
5:35
And she went and looked. So not only this, he say he's a financial planner, but all he has is his series six license, which means all they can sell is annuities and mutual funds. He can't even sell your stocks bonds or provide financial planning advice. Dad was sandy as a financial planner. Definitely not a fiduciary. Yeah, good point. Great Point there Jim. I mean he can't be a fiduciary the way he is behaving. And two, he had seven disclosures on this FINRA broker check website of potential customer complaints or concerns. Wow. Yeah. So what does this prove to me about blind spots? Imagine that wasn't someone who is smart, like our team member. Imagine that was you listening public who doesn't know a lot about investments or financial advice and you've probably blindly trust your financial advisor, financial planner or whatever they call themselves. But here was someone that was representing themselves that they were a financial planner, when in fact they're not even credentialed to be one. In fact, they can even offer you advice on everything because they're not structured that way. And then, you know, to add insult to injury, they have all of these disclosures saying how there's potentially trouble with existing clients. But imagine who you don't understand how all those things work and you proceed on, well that that's a recipe for disaster,
Speaker 4:
6:58
Jim. Well, I mean, but it happens all the time, Paul. And we see it all the time and we read articles about it all the time. And you know, it's just something that we worked extremely hard to educate people about the industry of what's going on here with wealth from wisdom. So here's an example of a, of a great opportunity. People sit back and be more aware of what's out there.
Speaker 3:
7:17
Yeah, absolutely. And I would have loved, by the way, to have a video camera, a fly on the wall that would have been fun. This person's face when they said, oh, do you stay at home? Uh, no. Uh, yeah, actually I'm in the same profession. Completely different level of talent. Um, but I think about, it's like somebody walking up, um, you know, let's use an example. So maybe we've talked about on the show Peyton manning and somebody not realizing who Peyton manning is and basically saying to him, oh, hey, I'm a great quarterback. What do you do? They not, not having a clue what Peyton manning did, right? Yes. Not realizing that hall of fame quarterback one of the best of all time. That was the same type of thing that happened here. So people make mistakes and have blind spots on face value. So Jimmy, we should talk about one of these. And what's one you and I see frequently is people who take their social security benefits at face value. So here's a good statistic for you. You know, I love statistics, numbers, statistics and storytelling. And they all balance each other out. The statistics validate the storytelling. Gotcha. So there are 2,728 rules in the social security handbook. Have you read all those gym?
Speaker 4:
8:29
No, I'm on number five.
Speaker 3:
8:31
Wow, you're, you're, is that page five or page 500 exactly. Sure. There's hundreds of thousands of rules about those 27 28 rules. So I mean, think about this. I mean that's what an operating system is way. How in the world are you going to spend your time figuring this out? So you really have a couple of pathways here. One is you say screw it and you don't want to deal with it. So what do you do? You go in and you file and you just make your decision. You charge hat on, you know, what blind spot did you make the right decision or not? And if I was in your shoes, I'd always be second guessing myself. What's one of those famous phrases? Like when you buy a car and you pull off the lot, and what's one of those feelings people get? Did I make the right decision?
Speaker 3:
9:16
They have buyer's remorse. Did I buy the right car? Am I sure this is the one I wanted? Did I pay pay the right amount? Did I overpay? It's my wife or as my husband going to like it. But I've never heard anybody say, oh, I think I really underpaid now that they do when they brag and tell the stories. But that's no different than the people who brag and tell you how much money they win in Vegas. Well, they usually don't tell you how much money they lost other times that they went out there. So here's, here's another fascinating statistic for us. Forbes magazine, pretty popular magazine that's out there, they reported that as much as 10 billion with a B in social security benefits that goes unclaimed every single year. $10 billion. I mean, I just, it's crazy to me that people are letting this happen, which also then, you know, what happens is, is people don't realize that by taking social security that up to 85% of their benefits can be taxable.
Speaker 3:
10:17
That's a big number, Jim. And I'm sure you've seen people come in here all the time, surprised when that tax hit happens. Well, and not just with, with the taxes, which we've talked about a number of times is also is how you're taking the benefits. So, you know, people sit around at work, they're having lunch or whatever, hey, what are you going to do for social security? Well, I'm gonna do this, I'm going to do that. And I mean, it's not a cookie cutter. It's not the same for everybody. And with, you know, what, 2,700 and some rules, I mean that, that pretty well, I said 27 28 to be exact, that's, it's impossible. And so many people miss out. I mean, we had a situation where a household was considering taking social security and we were able to make some suggestions where by taking a restricted application, we're getting a little technical here, but by giving them a strategy to solve their situation, they were able to pick up 32% more in benefits.
Speaker 3:
11:09
Wow. That's a big number. And I forget the dollar amount, but it was greater than zero. Well, it's, it sounds like there's a lot greater than zero sounds is like a lot more than $10,000 as well. The other thing that people I think always need to realize is with social security, if you're not taking advantage of it, it's not like we're having drastic cost of living increases from the social security administration. So not only do you have to figure out when to time it, but also you have to realize that you could be losing the power of what you're purchasing. So again, according to investment news, uh, social security benefits have lost 34% of their buying power since 2000. So over 18 years, you basically get 66 cents on the dollar versus you got in the past because of what prices really cost in today's world versus what you're getting in real dollars and that plays a huge difference.
Speaker 3:
12:05
And Jim, I think one of the things that I would share with all of our listeners is is there's a simple thing you can do. It's called a five point social security analysis. All you need is your social security statement, so easy to get@ssa.gov and you can call us at (888) 419-8513 if you get us a copy of that, we'll run a free report for you or show you or if you prefer, you can send an email@infoatcarsonwealth.com and we'll send it over to you. Or if you prefer the phone, that's fine to eight eight eight four one nine 85 feet 13 really, if you think about this to him, the smartest investors, figuring out ways to avoid losing thousands of dollars in retirement, don't let that happen to you. (888) 419-8513 you're listening
Speaker 2:
12:47
to wealth from wisdom, trust, transparency, accountability. These are the values that drive Ron Carson, Carson. Well, you're listening to wealth from wisdom with bear and tall, the fame advisor, Ron Carson.
Speaker 3:
13:16
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. The very last thing you need when you're retired is this unexpected financial surprise because when you get sucker punched with a huge expense at that stage of the game of life, Hey, by the way, the game of life was a lot of fun, wasn't it? Jim? You play, yeah, yeah. Many years ago. And by the way, that's my cohost, Jim Caldwell. So welcome back. We're going to listen to well for wisdom and my name's Paul, west, Barron's advisor, and today we're really pulling back the curtain on seven retirement blind spots that can cost you a lot. Well, I call a small fortune. But you know, one of the things we're going to talk about in this segment besides what we did, we already was social security is taxes.
Speaker 3:
14:01
I mean Jim and taxes is one of those things. Um, you and I actually did two workshops here in the community last week. I'm surprised how many people will come out and listen to a tax workshop. But taxes is one of those things that I have yet to find a person that wants to pay more in taxes. One person that does workshops, yeah, that just doesn't happen. Why? Because we want to minimize it. And I thought there was a great quote from a while back, you know, early, you know, mid 20th century, sir, mid 19 hundreds. So this is what I think is really interesting, and I'm just paraphrasing here, this quote, you are not bound to choose the pattern that's going to best pay the treasury treasury. There's not even a patriotic duty to increase your one's own taxes. And so if you think that the whole system is set up in a way to help everyone really pay as little as possible, as long as they can.
Speaker 3:
15:00
And so when we think about taxes, and I can't believe that Jim, we talked about taxes in retirement and the biggest thing I would tell you is point number two here of retirement blind sides is how many people have a blind spot to taxes where they think it's only in the rear view mirror? Yeah, they think it's all about getting the data plugged in to quicken or intuit or um, h and r block or any other tax do it yourself. Preparation software. And you remember I was talking about this last week and I said, how would we be room? How good do you feel when you just get it done because you're done for the next year? I'm done. I don't have to worry about it. Wait until next year. And off I go. Yeah, I would, I tell everybody, mistake. Yeah, no, because all you're thinking about then is, oh, next February I'm going to get all my forms in the mail again.
Speaker 3:
15:46
I'm going to type all the numbers and again, I'm going to hit that magic button up the end that I get a refund or io and then I'm done. The reality is is that is a backwards way to look at this. You need to be forward looking. And if you don't, you're making a huge, huge mistake. And there's, there's many reasons behind this is, you know, one is, is you're reaching your retirement age. You actually have more control than you've ever had in your entire life. However, here, here's what happens is most people unfortunately leave all this unexpected value on their tables. So your cost and your kids, your husband, your wife, your grandkids, you're costing them money because you're not looking forward. So let's talk about that gym here for a little bit for people. And one is, you know, in this RMD world, so RMD stands for required minimum distributions at age 70 and a half.
Speaker 3:
16:49
You have to take this money. But there's some techniques we shared with people that they, the Jim, first of all the room this last week where people were attending this workshop, I think there was, what, 77 seven 78 people in attendance and I couldn't believe how many people won. Didn't realize the penalty that goes with not doing your RMD correctly, which, which makes sense, right? A penalty for making a mistake. The two we talked about a concept called a Qcd, a qualified charitable distribution. So did you know that when you're taking your RMD that if you're giving your money to a qualified charity, you can actually gift that tax free. So gym people are less just saying, what's all that Mumbo jumbo QCD stuff that Paul's talking about here. Let's talk about in real world terms, how many listeners, myself included, you go to a church or you go to a fundraiser or are you going to event and you want to give money?
Speaker 3:
17:49
It's in our human nature. And by the way, I think it's the Omaha. Midwest is some of the most philanthropic people out there. And I love, I love that about and I where we all live in the people. So now I'm retired and I want to give, just call it a simple number, $300 a month to my church. All right? So if I have to take an RMD of $20,000 a year, I take that out. I pay taxes, so I get net, whatever the number is, let's just call it a simple number, $15,000 all right? So that goes into my checking account at my bank, and then I write a check for $3,000 to my church total for the year. So how much is left in my checking account? Twelve thousand twelve thousand all right, Jim, man, nothing gets past you worked. We're keeping it really complex here or you're making the complex simple for us. But instead, what if you were able to just to say, hey, instead of taking out 20,000 I'm going to take out 17,000 get taxed on that and then send $3,000 without getting tax directly to the church. How's that make you feel?
Speaker 5:
19:02
Mm,
Speaker 3:
19:03
no, it was good. Not as good. Are you sure about that? Oh, I think you feel really good. Yeah. You messing with me? Yeah, I see you looking at like that. Yeah. No, I wouldn't think of again, so now I take 17,000 so I'm going to pay less tax on that. So my net is going to be higher and I don't have to.
Speaker 5:
19:22
Okay.
Speaker 3:
19:23
Pay Taxes on $3,000. It all adds up for folks and it was fun to watch everybody in the room and see how this happened. But if you don't think about that or you're not proactive, here's what I said, it's going to happen. You don't do it when you're 70 and a half. You don't do it when you're 71 and a half. You don't do what? You're 72 and a half and all of a sudden you hit the big eight number. You're 80 and a half and you still haven't done it. Why? Because we're, we're our people have routine. We keep doing the same thing over and over again. Uh, uh, I think there is a pretty famous quote. What's the definition of insanity? Doing the same thing over and over again. Getting the same result. Yeah. And expecting a different reason, different results. And I, I couldn't agree more.
Speaker 3:
20:06
And especially with taxes, Jim, people just don't think about those things. And what's fun to show people if you don't understand the phrase provisional income. And that's way too complex for today's show because it talks about 50% of social security benefits plus your IRA distributions, et Cetera, et cetera. Um, we can help you think through this. And Jim, what wasn't that fun that we were able to show that when two people took a $60,000 between social security and IRA distribution, but one of them got $60,000 of the 60,000 got 40,000 in social security and the other in 20,000 in Ira distributions and the other family took 40,000 and um, Ira distributions and only 20,000 social security. Look at this. One of them ended up essentially pain, 55% of taxable benefit and the other only paid 10. So think about that. It's planning. That's the whole key here, Paul, me, we've talked about it before on previous shows that you need to start planning in your fifties for your sixties so you know what you want to have in place.
Speaker 3:
21:21
Yes, that's a good point. When should people actually sit down, Jim? I mean, is there a specific age you recommend? Shoot, we've, we've had people come in and early fifties I mean earlier the better. What's your, I mean, you're not losing anything by coming in early. To me it gives you peace of mind that at least you've got an initial plan together. We can always tweak it down the road, but let's get something started. Yeah, I agree with you. I mean I think at any point, but if you're going to look for a definitive number and sometimes people want definitive advice is I would say 55 anything before that is even better. It's kind of like gravy. Okay. But 55 once you hit 55 because of two things, one, your ability to get retirement plan assets and to your ability. As we know, 59 and a half is a key age.
Speaker 3:
22:06
So if you're going to need five years to prepare for that, it's a great time to begin. That process is that age. Now that doesn't mean I'm past 55 or I'm past 59 and a half. I should stop looking forward the same way his, I'm not past 70 and if I get past 70 and a half, I should stop. Not at all. Um, because why? Well then once you're above 70 half, now what are you dealing with? Not just social security taxes. Now you're dealing with Medicare and medicare costs for part a, for part B, for part d. All of these things that begin to add up, and I can't believe how many people except just pain, what they're going to pay without actually planning for it. Well, the other thing is at 55 there are some occupations out there that that is your retirement age.
Speaker 3:
22:53
Yeah. That could happen to Jim. I talked about this the other day and I, and I still admit this by the way, that I actually get the physical newspaper. Oh, I loved that story. Producers, producers looking at me like, what's that? So he's never seen it before. Uh, that's okay. I get the online edition of omaha.com as well. I get both, but there's something I still enjoy on a Saturday and Sunday with my cup of Dunkin donuts coffee and reading the paper and just seeing a few things that happened. But what I will say with this annually, there's this section that comes out and it's showing all of these names that have unclaimed property from the state. So I think about that, Jim, when people get that notice, what's the first thing you do? We will look for your name or anybody, you know? Yeah, absolutely.
Speaker 3:
23:42
You go look for that. Why? Because you don't want something out there that you think is yours and not to get it. So how many people spend all this time and I've never actually, why have seen my name on their gym? Cause I have a pretty common name. Last name is West. Pretty common here. The city, Paul's not that unusual either. So I've seen my name on there. It actually wasn't me. However, when you talk to people that do this, they'll spend hours upon hours trying to find some of this unclaimed assets or an unclaimed what they think is money, lots of money, and they average what they find $38 and 50 cents or some other dollar amount, and yet they're going to spend all this time. Yet they had this immense amount of unexpected value that they can gain from doing tax planning. Yet they spend zero amount of time.
Speaker 3:
24:37
So because you get the newspaper, this shows unclaimed assets from the state of Nebraska, from Douglas County or wherever it may be. You're spent all this time searching for it, but you won't spend an hour doing tax planning either with yourself or with a trusted person or with a professional. That just doesn't make sense to me. And it's just chasing stuff. Stop chasing, start figuring out, hey, how are these things going to be most in fact full? And if you want help to reduce your taxes, give us a call. (888) 419-8513 we can help you look at your situation and provide you guidance and advice that can help you think about the future. Don't spend all your time searching for unclaimed assets. Look for unclaimed value that you have in your situation. Tax Avoidance is one of the ways that you can do that. (888) 419-8513 that's (888) 419-8513 you're listening
Speaker 6:
25:35
well for wisdom and we'll be back in a moment. He seems good times and bad times and he's got the gray hair to prove it. You're listening to wealth from wisdom with Erin's hall of Fame Advisor, Ron Carson. He's a published author and he's 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, you retirement is going smooth and then it hits,
Speaker 3:
26:20
so you're like a ton of bricks. You get one of those unintended retirement expenses. Air Conditioner goes caput or you severely underestimated how much money you're actually going to spend in retirement and you're really, you're now faced with this financial disaster of decisions that you have to figure out. Welcome back to often wisdom. I'm Paul West, my cohost today is Jim Caldwell and we're revealing these retirement blind that could cost you a small fortune. And we're gonna keep talking about this. Jim, you and I have been talking about taxes and one of the things that we talk about taxes is people have retirement plans that they now need to keep the same or they need to roll it over. And one of the most biggest tax mistakes we see in retirement is people that have company stock. And especially if it's publicly traded company stock. And I know you experienced this all the time, so what's some of the advice or things you're telling people that have ownership and almost think about Midwest places, Union Pacific or other, you know, company held stock.
Speaker 4:
27:18
Sure. We, we see this all the time and this is I think, valuable to our listeners, that if you're in that situation, let's say you've got some, you know, Berkshire be stock inside of your four o one k plan and you're nearing retirement and there's a, there's a special way that you can take that out and get a very positive tax treatment. And not to go into all the details, but you need to have a trusted professional to help you figure that out because it could be the difference between paying 15% long term capital gains Paul, or maybe 22 or 23% depending on what your ordinary income tax rate is.
Speaker 3:
27:54
So the simple way to call it is since we like acronyms is Nua for net unrealized appreciation. Again, we're not going to get an a technicalities on the phone and, and on throughout all of our listeners today. But I will tell you, this is one of the areas that I, it pains me. Do you have those things? You know, that happened. Uh, if you, when you see these happen and people make mistakes here and ended up paying ordinary income when they shouldn't, it just drives me crazy because they didn't get advice along the way and they just left thousands of dollars on the table that they shouldn't have. So remember how earlier Jim, you and I were talking about QC cds. Again, these are qualified charitable distributions that you can take out of your retirement account for your RMDs. Don't pay taxes on, give them money to your church or school or charity or however you were looking at there.
Speaker 3:
28:46
Here's another one that Nua that net unrealized appreciation. Make sure you code it correctly to avoid a significant mistake. I mean, you see it. I mean, we saw it well on Berkshire Bees, we've seen it on Union Pacific recently. We've seen it on a couple different things. So we just ask that you're all really careful. Don't make an assumption. I remember the assumption I made earlier, Jim, in a prior segment I told you about, we had a financial planner here who was, you know, out and about and another person introduced up, introduce themselves to the financial planner but didn't know what this person did. She was female and assume she stayed home and how much that [inaudible] well, don't make an assumption that just rolling your money directly or for your own 401k and IRA is the right decision because you can make, be making the wrong one
Speaker 4:
29:35
on the case. And in case we had most recently, Paul, I'm talking $35,000 that's a big number.
Speaker 3:
29:42
Okay. In taxes that we were able to save or help this person safe by just using a different strategy and seeking our advice. Yeah, $35,000 just by coming in and sit on it. And how long was the meeting? Shoot wasn't 30 minutes. 30 minutes at a time. So if I, if I'm doing the math, $35,000 they saved. So if they could do that for an eight hour workday, let's just call it for one hour work day, they be just made $70,000 in an hour. He was real pleased that it was definitely an Aha moment. Let me tell you, I'm sure walked out of here and went and grabbed a cocktail somewhere. Oh well yeah. Well whatever he wanted to grab but he didn't have to grab this pen and write a big check at that point. So one meeting and one 30 minute part of their life saved him $35,000 yes.
Speaker 3:
30:28
And it'd be curious like how long they were thinking about that before they actually came in to meet. He told me he's been, he's been what? Having anxiety attacks for a long time cause he didn't know how to handle this once he got to that October 1st deadline of I'm retiring now, what do I do? Yeah. What do people do? They kicked the can down the road. When you're not comfortable with the decision you do that I wish, I wish we could have seen or I wish I could have videotaped his face when he was walking the parking lot. You ever had that feeling when you're feeling so good, like you just had a great day, um, or the huskers won or the buckeyes want or whatever and you just, you feel like you're walking on air. You've had to have those days too. Once in a while.
Speaker 3:
31:06
I've had a few of those. You've more than every once in a while, so I bet. I bet that's how he felt walking from your office to the parking lot. Like he was walking on air that he now saved all this money. I'm not even sure it was the dollar amount matter that gym. I'd bet you if you track that person sleep, how well do you think they slept that night? He was probably out like a, like a light. Yeah, but here's what I need. Any melatonin or vodka or bourbon or anything like that. This guy when he left, was so engaged with, with what we had talked about. He went home and fired me five emails. As soon as he got home of additional information, I needed it for other things that showed me the energy level that he was at. I'm glad you said he fired you and kept going cause I thought it would like if you just gave him all that and he fired you.
Speaker 3:
31:54
Got Ya. And that's a problem. So Jim, let's move into the next one here is we're talking about these retirement blind spots is, well another one we see is tax diversification in your retirement. And you're like, what does that mean? Well there's three basic tax categories. One is that's always taxed. So this category means like your brokerage accounts, your checking, your savings, his towns, and you really pay taxes on dividends, interests, capital gains. Now there's different tax brackets and that's again way too complicated for what we want to talk about on today's show. Um, next tax later. So you're four. Okay. Your retirement plan, your IRA, four, three B real estate, your real estate can be taxed. Everyone don't think it's not going to be many occasions. It can. Now, there's techniques that are out there, and by the way, just want to share because we have gotten a few calls and I just actually had another group in the office earlier today.
Speaker 3:
32:49
People don't understand that real estate. There are light kind transfers called 10 30 ones. And most people think, oh, I need to go from one property to another. There's another, it's called a Delaware statutory trust. It's a DST for short. This is the way for you to roll and existing real estate asset into this Delaware statutory trust. Uh, it is an advanced technique. I will tell you, I am surprised how few attorneys and CPAS actually know about that, why the routine they're living in the past. However, they did their last tax return, or however they did their last, um, estate documents or however they did their last real estate documents is templates. And then they just do the same for the next one when really the differences is everybody's financial situation is different. So maybe a Delaware statutory trust is right for you. I don't know.
Speaker 3:
33:43
But Jim, you're a few do Sherry. I'm a fiduciary, so I have a legal and ethical obligation to show you all of the options, not the option that I think is best for me. So if I'm taxed always is my brokerage account, I'm tax later like my real estate or my Ira. The last category is called tax. Rarely. So think of your Roth Ira. Think of interest from your Muni bonds and even some types of life insurance. These are the things that may be taxed at different points time, but you gotta be having the right balance in all of these. I, I agree. And I think it takes the place, it goes back to the planning part. Start start early because it's, it's kind of like, what are you going to use these different buckets for? When are you going to need to take that paycheck from yourself, Paul versus taking it from an employer?
Speaker 3:
34:30
Start now. Don't procrastinate. Yeah, I mean, a great example is what we were talking about earlier, family that has 60,000 of total income, and if they have 20,000 social security and 40,000 Ira, are they better or worse off than a family that has 40,000 of security and 20,000 from their IRA? There's a huge taxable difference for these people. I mean, I'm talking a lot of money that people don't think about. So guess what happens to them? They're stuck and there's nothing they can do about it at that point in time, except pay the Piper, right? You got to pay your taxes. I mean, I'm talking on those two things. So 40,000 IRA distribution and 20,000 social security. You're talking, you can be paying 25 $2,559 in tax fit. You know, I'm talking about federal. And also though, if you had 20,000 Ira in 40,000 social security, you could actually netted out to zero here in 2018 Jim, $2,559 more in your pocket.
Speaker 3:
35:31
What are you going to do with that? Don't say you're going to Disney. I'm not waiting for that stereotypical phrase I treat. My wife says something really nice for Christmas. That'd be a starter. That's nice of you. Well that explains why you've been married for a long period of time. You think about those things. You talking about taxes real quick, Paul, if I can, you know with with Roth Ira's right now, Roth conversions, I want to throw that out there. That's a discussion though. I think maybe we need to have me. We'll move that in our next segment or something. Yeah, well I think Jim, I think as we think about Roth conversions, that's a personalized thing. If you want help on that, we can help you. (888) 419-8513 there's no cost or obligation if you want to Roth review. Glad to do it. (888) 419-8513 or if email's easier. Text Info. I Nfo. I know I had to spell it there at Carson, wealth.com c a r s o n wealth.com. We'd be glad to help you out. (888) 419-8513. I'm Paul West. And you're listening to well from wisdom.
Speaker 6:
36:29
How could you make your money go further in retirement? Learn how next unwell from wisdom with their install a 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, right now. Unwelcome wisdom with and Hall of Fame Advisor Ron Carson and am Paul last. Welcome back.
Speaker 3:
37:24
It was what my coast, today's Jim Caldwell. Jim, you know, we've been having a lot of fun today talking about a retirement plan, surprises and really these blind spots can happen. Uh, I think it was funny it if prior segment we were talking about how much time people spend on unclaimed assets and I was talking about getting the newspaper and since we talked about it several segments ago, our producers already been online making sure a, he didn't have any unclaimed acids. Bubby indirectly found money that his parents, uh, are do. So He's already sent them a note, texted them and found out you spent, now call it 30 minutes of time researching it, looking at it, and, but you're done, right? Essentially you're done and you found money, but people don't even spend 30 minutes on their tax situation or their retirement plan. And Jimmy, you're just talking about another one, Roth conversions.
Speaker 3:
38:13
It's amazing how people don't spend time on that besides, here's what I see people do. They go to Google and they search Roth conversion or Roth conversion calculator. What happens? Three things pull up and we show that people usually click on the first three. However, if you remember, if you look at the top of Google, the first two are paid ads. So this, these people that are paying money to go to the top so they can get your pocket book faster. So think about that. Are they looking out for your best interest or theirs? And then when you go on the calculator, you probably answer five to seven questions. Well, can five to seven questions really tell the story? I don't think so. I mean, Jim, you got to see this all day long. I mean, what's the analysis look like for you when you're sitting down face to face with a person and understanding what's important to them to make this big of a decision?
Speaker 3:
39:03
So it's more than just answering five questions. It's, it's a number of things. Number one, are you going to need this money in your lifetime? So maybe that ultra wealthy person might never need to dig into that Roth Ira. So why accelerate the tax liability, right? Number two, are you going to leave this as a legacy? Do you have children, grandchildren? How's that look? Right? It's not just from a tax standpoint. Paul, you got to look at the whole big picture and then you got to factor that in. Yeah, it's in, you have to talk about somebody's life, their dreams, their goals, and what's important to them. And I don't know how you measure that in five to seven questions, you can measure the quantitative data that you can't measure the qualitative and you certainly can't think through every single thing that could happen. So be careful of that.
Speaker 3:
39:53
Let's go next. And so one of those other blind spots people have besides Roth conversions is that our healthcare costs really going to increase as much as I think and I hate, I think we're foolish if we're ignoring the data and the trends. Now, it may not accelerate on a percentage basis as much as possible, however, it's still going to keep increasing. But remember, each percentage increases now based off of a larger number. So the Medicare data is now is showing us that people in their seventies spend $7,566 per person in healthcare annually. Ouch. That's a big number. 7,566 so if you, if you make it into your nineties look at this number. $16,145 double. Ouch it Jim. I mean how do you talk to people today about this? Because it's one of those things like, oh, well you know what? I was going to pay for it and we'll deal with it then.
Speaker 3:
40:57
I'm not sure that's the right decision. Here's what I do. Paul, I lay out a couple of questions. Number one, when they get ready to re enroll in their plan, don't just automatically punch a button and take the same benefits from last year. Number two, and I've just did this a few days ago, uh, we don't have any children at home. They're all grown. So it's just Debbie and I and we kind of look at who, you know, what is our number, what are we using healthcare for? She's already hit her deductible for the year. She's had a couple of things happen that that's the way it is. So now we're trying to say, okay, how much more can you get done before the end of the year to take advantage of that. Um, also don't just focus
Speaker 4:
41:34
on the low premiums, look at copays, coinsurance, that type of things. And then try to find out if there's anything free in there. Do you get a free flu shot? Do you maybe get some money to go to a gym to take care of yourself? So there's all whole lot of things you got to look at with health insurance. Did you get your flu shot this year? No, I've never gotten one because I'm, I'm worried the side effects of worth isn't getting sick. I'll come. I know.
Speaker 3:
42:00
No, you know what, for next week's show we're going to have a flu shot on the air. How's that sound? I like it. Yeah, we'll put it on video. We'll bring in Andrew's loving that. I get one every single year. Jim, let's preventative medicine, right? It's just for me. I'm looking forward and sure there may be some short term side effects. I, I rarely am I going to say never, but I rarely experienced them. Um, and I guess it brings for me health confidence that I'm going to avoid it because if you've ever had the flu, it's one of those things you don't want to get. Just like, you don't want to have to take a withdrawal from your retirement account in a bear market. You gotta be careful with it. Um, the other thing I would say is people have to realize that health care, let's throw another category here. Longterm care there is not going away either. I mean, it's costly. Costly Cossie so if you want a private room, the current data shows it's $97,455 per year, 8,000 a month plus $8,000 a month plus. So if you just want a semiprivate, oh well that's not as bad. That's only $85,775 a year. So you save $1,000 a month. So now it's only what, 7,000 plus a month to take advantage of the situation. You got an extra $7,000 sitting around per month.
Speaker 4:
43:24
No, definitely not for a longterm care either.
Speaker 3:
43:27
You want to, you want to use other things for it and you have to be careful in all of those things. So Jim, I love this phrase and we were very fortunate earlier this year. We got to hear a gentleman, his name is Colonel Arthur Ashe. Athens, by the way, you know, earlier this week was veteran's day. Just a huge slew down and thank you to all of you have served on behalf of this great country. Thank you. Thank you. Thank you colonel Athens though came in and spoke to many of us and one of the things he talks about his humility and being, you know, really having humility in all situations. But what do you, what really resonated with me, Jim, is, is his comment about being a humility and being a strong leader for your family. And he uses a phrase that I really like. It's called being selfish versus selflessness.
Speaker 3:
44:20
And what do I mean by that? So you're trying often to say, you know what, I'm going to manage my money on my own, or I'm not going to buy long term care because I don't, we really need it when the rowdy is, you're being selfish, you're thinking about the best decisions that you can make, but you're not thinking about the best decisions for your family. So think of this gym and we see this all the time. There's often somebody in a family relationship that tends to be the lead voice in financial decisions, but it's because they think they know more. So actually I think a lot of times they're being selfish because if they're not here or not around the person that's not the lead voice is going to have no clue what to do and wish that maybe some things would have been
Speaker 4:
45:06
done differently. You know, Paul a feel good story in that area. We had a household who for years and years, that topic came up multiple times throughout the year. We just couldn't seem to get that ball in the end zone. Okay. And and finally for something, the light bulb came on one day in the meeting where the wife said to her husband, I want to get more serious about this. I'm concerned. Yeah. Wow. That was powerful. Good news is we were able to qualify him. You some dollars from another insurance contract, move those over in a 10 35 exchange and everybody's going home happy. Well, that's a great story. I mean, if they wouldn't have come in and done that, then they would have been stuck but stuck with dollar sitting in something, making him nothing and doing nothing for them.
Speaker 3:
45:52
Yeah. I mean that's the beauty of Jim providing fiduciary advice to people and helping them. If you have scenarios like that or just you have a question for us, give us a call. (888) 419-8513 we love answering your questions. We're at (888) 419-8513 hey Jim, I'm Paul West and thanks again for joining me. We've really enjoyed the show today and I hope everyone gets something out of today. Make the most of it stopped. Elaine, do what's best for you and your family. Be Selfless or selfish if appropriate, but do the right decisions for your and your family. (888) 419-8513
Speaker 2:
46:28
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. Yeah.
Speaker 1:
46:41
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from 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 assures success or protects from loss. Past performance is no guarantee of future results. Advisory services offered through CW m L L C an SCC registered investment advisor.