Wealth from Wisdom

The Most Overlooked Risk in Retirement

June 30, 2018
Wealth from Wisdom
The Most Overlooked Risk in Retirement
Chapters
Wealth from Wisdom
The Most Overlooked Risk in Retirement
Jun 30, 2018
Carson Wealth
Show Notes Transcript

What are the risks that will threaten your financial security in retirement? You might be thinking stock market risk or investment risk, but you would just be scratching the surface. Today, there are far more significant risks that could cost you a small fortune in retirement. On this episode, learn the most overlooked risk that could crush you in retirement.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo, the opinions voiced and wealth and 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 sec registered investment advisor,
Speaker 2:
0:31
Doug Morgan hit another old time. Records as much as $10 billion in social security benefits go unclaimed every single year. 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 bear and 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. What are the risks that will print in your financial security in retirement? Do you really know what they are? You might be thinking stock market risk or investment risk, but I'm here to tell you, you're really just scratching the surface today. There are far more significant risks that could threaten your financial security in retirement and any single one of them who cost you a small fortune.
Speaker 2:
1:29
Hey, welcome to wealth and wisdom. I'll Paul West and today we're going to reveal the most overlooked risk that could crush you in retirement. Speaking of crushing, and I've got the one and only Jim Caldwell joining me today, so welcome Jim. Thank you Paul. You're crushing that shirt, man. You while you're working out so much, you're ripping it everywhere. I'm telling you I'm getting huge. Yeah, while good to see that. Hey Jim, so we know that it doesn't really matter if you've saved five hundred thousand five million, no matter what the number is for our listeners today, you are not exempt from risk. That is not a possibility in the more money you save. Guess what? That's just more money you could actually lose. So what are the risks that you could actually threaten you and your personal financial security? Oh, worse yet, your family's financial security. And on today's show, we're going to reveal how you can protect yourself from eight overlooked risks that could really damage your retirement, including one, how you could actually prevent a health issue from turning into financial disaster to why living longer poses this big new risk.
Speaker 2:
2:31
And how are we actually going to pay for it? Three, how? Underestimating taxes. And Jim, I've yet to meet somebody who likes paying taxes, then. No, I think we're on a role these days. I think the last five households I've met with taxes was a huge part of the conversation. And it wasn't in a positive way. No, it's, I've yet to find that. But by the way, if you are paying taxes and longterm capital gains, that means you made money. Correct? If I have a choice between making money and losing money, what do you think I'm going to choose? Make some money, pay
Speaker 3:
3:00
the tax and move on.
Speaker 2:
3:01
Yeah. But there's a lot of strategies we're gonna embark on today that can really help our listeners be most effective in their retirement or just making decisions overall. And really let's talk about these risks and how they affect them. And the one most people think of. So a let's not cut from the obvious. Let's start with the captain obvious choice here, which is stock market risk gym.
Speaker 3:
3:24
Sure. I mean the markets are at all time highs even though we've had a little pullback here lately, but I mean people that are in the game, they're not sure if they want to stay in the game. If they're not in the game for some reason they got out, they're not sure if they should get back in. So you're kind of, you've got a balance there. But what we've seen is people chasing returns, I mean conservative people are in aggressive portfolios because they feel like they've got to stay in and make more money and that's causing people a headache.
Speaker 2:
3:52
Yup, it is. And I mean we were on what a nine year run up in the market. Yeah. I mean, that's how long time. And if you think about that, the average bear market, Jim, so we're in a, we're in a bowl, we're in an upward moving market. Do you don't know the difference between Bulls and bears? Gotcha. Yeah, you're, you're tracking with me. So the bear side is, means you're going down. So the average bear market lasts 1.4 years, but we haven't had one in over nine years. But what? Here's what happens. The average bar bear market loses 41% ouch. Yeah. So everybody right now, think about your retirement account or think about an investment account you have, let's just say it has $1 million. So if the average bear market goes down, 41% your $1 million, $410,000 less. Ouch. That hurts. That's hurts. So we're talking 590,000 wow.
Speaker 2:
4:54
Now you may be listening. Say, Oh Paul, I'm going to figure it out. I'm going to sell out. I'm going to know the symbols that happen. But you know what? The history shows us. That doesn't happen. Here's why. It's going to go down to $900,000 and you're going to say, you know what? I can't sell now. I lost a hundred I can't let that happen. I'm going to wait till it gets back to a million, so what's going to happen? It's going to go up a little bit to like 910 and then what's going to say, Oh yeah, you know I'm just going to hold on a little bit longer so it till it goes up to a million. What happens and then it goes from nine 10 to eight 50 and you're saying, oh, I'm going to wait for it to get back to 900 and then I'm going to get out.
Speaker 2:
5:34
It goes to eight 70 you're like, okay, I'm getting closer. I'm not going to sell yet. Then what happens? It goes to eight 20 and then it goes to seven eight and you're like, all right, if it gets back to 800 I'm getting out and you're going to keep doing that the whole way, and I know many listeners right now, Jim, and you're smiling too. This is what happens, right? This is real world. This is behavioral is you say you're going to get out, but what the biggest bias we see people make is you get stuck on a number, so I'm going to get back to a million or I'm going to get back to 900 or I'm going to get back to 90,000 whatever the number is, you refuse to move in. The same way happens when people buy or sell houses too, right?
Speaker 2:
6:16
I'm only going to buy that house if they drop it from 400,000 to 380 what if they drop it to three 85 should you really buy it or not? I don't know. I give advice all day long, Jim, that if it's a house you're going to live in for a long period of time, if you start fretting about less than $10,000 you're making a huge choice because if you're going to live in it for that many days, divide that dollar amount by how many days you're going to live at. What's your cost per sale? You're talking pennies. You let those sit on the street longer, you don't even pick him up anymore.
Speaker 3:
6:47
You know, you've made a great, great point there Paul, about the number. People get fixated on numbers. What they need to have is really a buy strategy and they need to have a sell strategy and they need to stick with it through thick and thin. And when you hit those certain levels, then you pull the trigger, buy or sell and you know a measure of that is what we call the vix. And the vix basically measures price fluctuations with the options market. It's kind of a fear index. And here's the bad news right now, complacency has set in once again, you know, last year in November, it hit an all time low, about 9.14 right now it's sitting around 16 people are falling asleep, it's summer time, vacations, kids are out of school. There's a lot of distractions. And actually if you look at returns from May to October, the returns in that period of time or lower than November to April. So what does that tell you? You better be on your toes, right, right now.
Speaker 2:
7:42
Yeah, you definitely have to be. And so this is where people get in trouble. And by the way also Jim, this is where people get in trouble by listening to the news and the media and then they go make the bay knee jerk reactions. And I don't know what I was trying to say there. That was your father a all right. Uh, or they make greed based decisions and they don't need to. If they're in their businesses or you're making a decision in your personal career, you're not doing that. You're not fretting over 2% here or there. And so I challenge all of our listeners to make the same decisions they would make from a business perspective. Because while your life, you may not say as your business, but it is your only business you have because it controls your life, your decisions, your legacy, your family. And here's a question I'm going to ask Jim is if everybody out there right now, if you think about what you have invested in the stock market, and so we think about stock market risk, how much potential upside do you think there is at the moment versus how much potential downside?
Speaker 3:
8:48
No, I was just kicking that around last week a little bit because you know you have people that are asking you those questions of should I get in, should I stay in? You know, we've come a long way here in the market. I can remember when it was 18,000 and I was trying to think of a reason to, to stay in or to add more new money to it. Now look where we are. So I think it's a tough question. I, I think it's a matter of where people are in their life, their career, their age, how close to retirement are they. Cause I remember you said, you know 40% drop in the market, 41% that's going to take, you have five, six, six and a half years to recover that. If you're 62 and you want to retire at 66, you got to make some tough decisions right now or you could be in trouble.
Speaker 2:
9:29
And so here's something that happens too by the way. We talked about taxes and it's a pain point, but sometimes the tax laws are to our benefit. And of course Jim, uh, we had the new tax and jobs act that got passed and of last year, but it's something that's been in there but in prior enhancements for people. So how many of you listening have actually taken advantage of the age based provision that if you're in a retirement plan, you can actually add more money if you're above age 50 have you actually taken advantage of that? And if not, why not? If yes, I'm clapping for you, good job and I'm, I'm proud to see that, but I don't understand this gym all the time is people want to catch up. So something happened earlier in life. They weren't able to save as much as they could or they put too much into education planning or they put it into a business that wasn't successful, that the power of compounding is so critical. And if you can't do it earlier in your career, your ability inside of your current 401k or other retirement plan, if it allows it to add an additional up to $6,000 catch up provision, why wouldn't you take advantage of that? If you could afford to,
Speaker 3:
10:41
especially if inside that 401k you have a Roth opportunity, because I see a lot of people, they load up in the traditional side, they get a match, some do, some don't, and then all of a sudden that all becomes taxable down the road. So if you have an opportunity to go into a Roth, you could have a strategy of your normal contributions in the traditional side and you could put the extra ketchup in the, in the Roth bucket. And to me that would work out well tax planning wise down the road.
Speaker 2:
11:08
Yeah. I liked the way you say ketchup, like high end style, like French fries and onion rings. Yeah. Well it goes good with my colors. I mean, you name it. Actually, you're making me hungry now by doing that. Um, but think about it today because rebalancing your portfolio with the current moment because of stock market risk is one of the biggest financial security things you can do in a positive way or a negative way by avoiding it. So don't let those things happen because when you think about the time you put, pull the money out of the market, this is when you're going to make your biggest mistake. And they're really a bigger cost is actually just doing nothing. There's nothing wrong with three balancing taking a few chips off the table. Now most people walk through Jim, what we call a five step retirement action plan.
Speaker 2:
11:54
And this is a way for them to learn how they can get the most money, other dollar. But what we do is we help show people, here are the steps to avoid. And then you decide what are the best steps for you. You know your life best, you know how you behave. Last an advisors job is to help educate you. If your advisor isn't educating you, then you've got a problem because they're supposed to know more than you do and they're supposed to help guide you, but importantly, help protect you as well. And so there's sometimes ways to turn your savings and investments in a better workhorses for you, or there's actually unconventional strategies to get more money out of Medicare or those other things. If you want it, you've got a question for us. You know what? You can call us anytime. (888) 419-8513 just don't put off what we talked about. Avoid this stock market risk. Make those five steps or retirement action plan. You can call us if you want. Advice. (888) 419-8513 on Paul West with Jim Caldwell. You're listening.
Speaker 4:
12:50
Do out from wisdom. He seemed good times and bad times. Hands. He's got the gray hair to prove it. You're listening to wealth from wisdom with there until the same advisor. Yeah.
Speaker 2:
12:59
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, well from wisdom with Barron's hall of Fame Advisor, Ron Carson. If you think you don't need to worry about the cost of health care and retirement because you're going to have medicare. Think again. The latest estimates for the cost of healthcare for a typical 65 year old couple are north of a quarter of a million dollars a year and she's been out a year, a quarter of million dollars total in retirement way, way, way above and beyond Medicare. Let me about that. $250,000 to five zero comma zero zero zero wow. Hey, I'm Paul last unwelcome, the welfare wisdom and today we're talking about eight overlook risk that could really crush your retirement. My Co host today is one of our advisor Jim Caldwell. Jim, glad you're back. Hey, in this segment let's talk about how people continue to protect themselves.
Speaker 2:
13:56
So segment one, we talked about stock market risk. Let's go into another big risk. You know what it is? Healthcare. This is Jim something that people, unfortunately I call it, they look down, they, they, they avoid it. They avoid on eye contact until guess what? It's too late because now a healthcare issue is steering right in front of them. Whether it's their own personal, it's a spouse, it's a family member, but it, it creates a situation that we don't want to happen. And I'm sure there's listeners today that have a financial catastrophe due to health and there's some techniques you can use to avoid that. And our job is to help you think through this, but if you don't think it's going to happen to you, let me share this with you. If you are a 65 year old couple retiring today, on average, you are going to spend $400,000 in retirement on healthcare costs. We're talking medicare premiums are talking copays, deductibles, maybe you buy supplemental insurance. Have you saved that extra 400,000
Speaker 3:
15:06
Paul, that's a huge number, a huge number. And, and you know, you make a good point that people don't, don't worry about it too. It's sternum in the face. I mean, we've done a number of plans lately where we put on our technology people's assets all the way out to 95 and everything looks great in the bars are good. And you know, we toggle it up and make a few adjustments and then comes to real eyeopener and that's when we plug in a longterm care or negative health event and you watch those bars go decrease and that's when you finally get somebodies attention.
Speaker 2:
15:43
Yeah. Well and Jim I think a lot of times, and those of you are, you know, frequent listeners on welfare wisdom. We thank you for those new listening in today. Our job is to be great communicators and educators. So when most people think of financial advisor, what do they think of somebody to manage money, somebody to pick the stocks, the bonds, the ETFs. I hope you don't think of only buying insurance or index annuities. Those are salespeople and Muslim. By the way, Jim, I was actually going to talk about this a little bit, but I was doing some self education the last four days and really trying to get better for my personal development. So on, I would ask yourself, is your advisor trying to get better? What are they, what are they investing? I don't mean like dollars, but I mean time in their own personal self development to get better at helping you to make your client experience better.
Speaker 2:
16:38
Um, but one of the comments that was made, and I thought it was really interesting, so there was nine of us in this class working on some financial planning techniques from actually across the Midwest. There was Omaha, there was St Louis, there was Kansas City. And it made a comment, um, that someone did in my class to me that, hey, do you know about such and such insurance company? You know, they say their advisors, but they said this was their quote. They will sell you anything. They will absolutely try to sell you anything, anything you are going to bite on. So for listeners to the show, our job is to help educate you. And if your advisor can only sell you something specifically to their company or something specific that only handles one element of your financial plan, who is actually helping you with the entire picture. So I look at healthcare as an element of, you got to understand if there's going to be up to this $400,000 costs in retirement, do you have enough coming out of your monthly or your annual cashflow of your retirement plan projections from your financial planner to make that happen? So guess what, Jim, how many times do you think that actually is prepared for by people?
Speaker 3:
17:50
I'd say less than 10%. I mean, we see it all the time. I mean, you're looking at at cost of health care, your family, let's say, could be almost a thousand dollars a month. Then you're talking about the deductibles, high deductible plans, but it's not the old people focus too much on investments and returns when we do our plans. That's just a small part of it. Yeah, we want to make people money. We get that. But it's the whole big picture of managing risk or minimizing risk as people look to go into those retirement years.
Speaker 2:
18:18
Well, I think about putting together game plans and I had the opportunity, Jim, um, a couple of weeks ago I was at an event. Got a chance to meet, uh, Duke's basketball coach, Mike Shashefski, fc, coach k, um, any talked a lot about them building a game plan, right. For, for their athletes. So what's, how are they training and training isn't just physical training, it's nutritional, it's academic. And how are they putting all of those things into place? So it's not, think about it. It's not like us as financial planners saying, hey, we're only going to do investment training and we need to do health training. We need to do training, we need to do tax training, we need to do a state training. And you got to work with people that have all of that together. I mean, why do you think coach k successful? He's figured out the entire package, but sometimes some of those things don't go right.
Speaker 2:
19:10
I actually bring up, I was just watching this the other day. There was a great, um, special on ESPN and who did I see on there? The special was about coach Scott Frost's for the University of Nebraska. I've heard of him. Yeah, you've heard of him. And it was fun. I don't know if you've seen this yet or not. Jim On ESPN it was, and it was an e 60 year, one of those 30 for 30 [inaudible] but it was a short segment, but he was doing the rim to rim hike in the Grand Canyon and he was doing it actually with Eric [inaudible] and Eric, by the way, he's actually spoke at one of our conferences before. So you probably don't know that Jim, he's been at a Carson conference and is really fascinating. It was fun to see Scott with Eric actually. That's probably how we got connected at some point.
Speaker 2:
19:52
But that's a story for another day. But Scott was talking about the journey of life and having a plan together. So he had a lot of decisions to make to come back from central Florida to Nebraska. But other parts of it is, you know, he's not been married that long. They just had his first child. And one of the things I found so fascinating about it is he's got all these priorities in life, right? He's got media, he's got the football team, he's got his players, he's got the administration, he's got his spouse, he's got his kid. And when you asked him at the end of the day, what is most important priority is, what do you think? He said family, family, hands down. He had all these other things that impact his life. But ultimately you have to decide what's the most important one and then how do you balance the rest of them.
Speaker 2:
20:41
And so I say this all the time or repeated again is my least favorite word in the vocabulary is dirty word, right? A busy, but I thought about here, Scott, here he is, he's doing a special for ESPN. He's got his family, he's got all the media stops he's doing for being Nebraska's coach, probably recruiting, doing all these things, summer workouts, summer workouts, which by the way, I heard they're doing awesome in there. The weight training and what's going on there. Uh, but he's figured out what I call work life integration. And that's a big deal because people that aren't able to figure that out, what happens? Their most important priorities fall through the cracks. So listeners today have you let your financial priorities fall through the cracks? Have you not done your will or have you not just updated your assurance? By the way, and this happens to me to think about like your property and casualty.
Speaker 2:
21:36
So think about your homeowner's insurance and your car insurance and you've had it for 10 years, 15 years. Have you actually priced it to make sure it's right or have you made, this is the one we see all the time, Jim. Actually if you made updates or upgrades to your home and is it insured properly and what and you, you, here's what happens is you're like, oh shoot, I need to call my agent or my advisor and my planner. What happens? You get the dreaded B word and you don't make it a priority on your list. So don't let that happen because otherwise those things are going to catch up to you in terms of longterm risk. So let's move into risk number three Jim. And that is increasing tax rates. And this is one that we don't have a crystal ball. We don't know if future tax rates are going to look like we do have more clarity than ever before because of the new tax plan that's out there. Um, but there's some rocks on the horizon that aren't stable. How long will social security state funded, uh, our medicare costs going to increase. And if you really don't have a tax efficient plan, you've, you can be costing yourself thousands and thousands of dollars.
Speaker 3:
22:45
So from a tax planning standpoint, I mean, we've talked about this on the show before, the, you know, just tax returns or something in the past. Tax Planning is in the future and you know, we have a case we're working on right now with a household they're looking to retire and how that's going to look. And so we've got it all mapped out in writing as a proposal that where will they take that money from? In other words, instead of getting a paycheck from an employer, they're going to take a paycheck from themselves. When did they start? So security, how does that look? When does RMDS come into play? And we were able to map it out where for about a five year period, they didn't quite have enough to live on, but we were able to reach into the qualified bucket. The IRAs take that early when they have a lower tax rate so that when they are required to take the RMDs after 70 and a half, adding that to social security and a pension, they don't get knocked into another income tax bracket.
Speaker 2:
23:39
Yeah, Jim. So I mean I told you I was doing some self development. I was down at down in Kansas City last weekend walking through and one of things we talked about was how little people know about Roth Iras. So they hear about it. Um, but it may not be the right decision for everyone, but it could be, and especially right now, if so, I'm gonna tell you right now, if your taxes right now look way lower for this year and you have a large ira converting to a Roth could make sense. But don't just go online. Google a Roth conversion calculator and do it yourself. Talk to a professional, talk to a fiduciary. Talk to someone who's going to tell you what's right or what's wrong. By the way, if you're ever interviewing advisers, if they don't tell you that, they're going to give you the answer, the right answer.
Speaker 2:
24:29
The many times people don't understand that the biggest risk you make is choosing your advisor. So you need to choose someone you're comfortable with and they have to be good at telling you what's right or what's wrong. And I think about what's right or it's wrong. You know, it's like with taxes, you want to pay as little mouse possible, but you've got to follow the letter of the law. And especially when you go to your retirement, Jim, you, you want to maximize the savings opportunities, whether your Ira, your Roth retirement, you should have a map the amount of tax deferred versus tax free as much as you possibly can. You don't want all things in every basket to figure that out. We can actually help you. It's (888) 419-8513 cause hey, remember Jim, right? It's not what you make. It's what you keep. So if you want to help on that, give us call (888) 419-8513 (888) 419-8513 you're listening to from wisdom.
Speaker 4:
25:22
How could you make your money go further in retirement? Learn how next unwell from wisdom with Barron's hall of Fame Advisor Ron Carson. Is it possible you could pick fewer taxes in retirement and keep this money for yourself? You could learn right here and right now. Unwelcome wisdom with Barron's hall of Fame Advisor Ron Carson.
Speaker 2:
25:42
According to the United Nations estimates, there were nearly half a million centenarians. That is people who are a hundred years or older in 2015 wow. Yeah. Crazy, Huh? That number is actually projected to go to 3.7 million people in the next 30 years. Think about that. 3.7 million over the age 100 hey, welcome back to wealth and wisdom. I'm Paul Weston. I'm joined by Jim Caldwell and Jim tell you, we're really talking about overlooked risks that could really crush your retirement. And in this segment we're going to talk about how lifelong risk posed as new risk that we really haven't thought about that much before and what happens with social security because I get to run out of funds. I don't know, but we'll talk about it on today's show. You know, I got to tell you a quick fun story though. Um, Jim and my family, one of our favorite desserts is cold, creamy ice cream, right?
Speaker 2:
26:35
Oh yeah. We love ice cream, ice cream cakes work, all of the above. And of course everybody's got their favorite of the, speaking of getting older, um, they were joking. So in the fridge the other day, uh, my kids opened it up and in the freezer was cherry nut ice cream. Oh Wow. That's great. You liked sharing that ice cream, ice cream, anything, anything, any flavor, you can only have one flavor. What would it be? A butter pecan butter. My favorite? Yes. Nice. Now say Pecan or Pecan. Depends on where you, Larry, I don't know exactly. So I liked cherry nut and I love it that my young children by the way said dead. Nobody eats that unless you're retired. And so their perception is [inaudible] Sherry nut ice cream. I actually enjoy it. I think it's really good. But I said, well you're going to be stuck with me cause I'm going to live way over age 100 and I'll be in this the next 60 plus years of my life.
Speaker 2:
27:31
I love that. Go with it. But how many people do we know that are thriving in their eighties and nineties you weren't on the show, Jim, but Ron and I talked about this when we met Charles Koch a couple months ago. Here he is low eighties he's got more energy than almost all of us combined. And he was fascinating to hear from how long do you think he's going to go and keep cooking along and doing well? And that's going to be the same with many of us. I, I love when I meet someone, they walk in and I'm sitting there saying to myself, wow, this person, you know, they're really sharp, 65 year old or seven year old, and I talked to him, they say they're 83 and you have no idea. And I love it. And it proves this too with that, that happens a lot more than somebody walking in and I think the opposite where they're 80 but they're actually only 62 because they look weathered or tired or I've had a tough life.
Speaker 2:
28:23
So we have to be prepared for this longevity effect. And if you're not, then making the right decision. And what we see by the way is, and we've shared with this on prior shows, so if you put your target to retire at age 65 number one you are now getting less from your social security. Then you waited it to your full retirement age Fra. So that's a big mistake. But to what we see on average, and don't let anybody who gives you projections tell you any different, is when people say they're going to teach at 65 they actually ended up retiring 18 to 36 months sooner than that. Why? It's a huge mistake. Life happens though Jim, but it's not always their mistake, right? You knew and I see it, they get laid off from a job or they have a health care situation, so they're forced into retirement earlier.
Speaker 2:
29:15
So if you're getting an annuity quote or an insurance quote from someone and they're projecting you working age 70 or 75 have them run it 10 years less that and see what the projection looks like. I think you will be pleasantly surprised or are probably worse. You're going to be disturbed on the outcome you see. And that's the job of a good financial planner to show you both. So don't somebody who's given you an insurance projection, just show you the one scenario, which is often the best case scenario. Because if you come back 10 years later, probably not happening the way you think it is there.
Speaker 3:
29:54
You know, you can always, you can always project numbers and make them look good, make them look pretty okay. But reality is we've had a couple of situations where people have come in here, we've, we've shown them their financial plan and we've connected all the dots and crossed all the t's, dotted all the i's and we've had to give them the news that hey, you can't retire here at the end of 2018 you need to wait another year and here's why a, B, and c and here's some things to consider. So you know, by having a personalized game plan, you're able to project out the real numbers and be able to see a couple of different scenarios. Just like
Speaker 2:
30:28
she said. Yeah, but what's a mistake? You're seeing their gem like I get billed in the plan. But what's a mistake that you're seeing?
Speaker 3:
30:34
I think people don't, don't get a good feel for what their expenses are actually going to be special. As we talked earlier, healthcare and all those things, the longterm care piece is huge. And when you listen to people say, yeah, my mom lived to be 105 or my dad died at 99 and you start thinking, wow, these people and they're 66 67 they get a long way to go.
Speaker 2:
30:59
Yeah. So here's another fun one. I don't know if it's while it is fun, uh, but this is, this is a creeper expense. You know what it is. You have no idea what I'm gonna say. You got that look on your face like, oh no, what is Paul going to say? Now here's what it is. Gym. And actually this was validated from Scott Kirby. The chief investment officer of the Carson Group shared this stat the other day. The percentage of time in meals now that people spend eating out versus staying at home continues to rise. So I call that the creeper expense in retirement is you go out to eat more than you expect. Why? A couple of reasons. One, you earned it right. You deserve it. You got that chance. You should go out and get that extra pizza meal or that steak dinner, whatever you want to do.
Speaker 2:
31:49
But all of a sudden you say, and you put a budget that you're going to do that once a month or twice a month or once a week or twice a week and then it creeps on you. I'm telling you, we see this all the time and it can creep on you in multiple ways. One is financially, but to be careful health wise it's, it's harder to eat well when you're going out. I'm not saying you gotta eat perfectly by any means, but this is a creeper cause then what does that do? It creates health issues and then it creates health issues. Whether they do creates additional cost. So domino effect. Yeah, you don't mean Domino's pizza. Dia, I can't get that. But that's, well people may like a gym, but it's not my preference. But be careful of the eat out in effect in retirement because that can really catch up to you.
Speaker 2:
32:35
I'm not saying don't do it because it's joyful. I love doing it too. It's fun for comradery and talking with people. Right. So let's move into another risk in that is a social security and Medicare. And I know we belabor this point on the show, Jim, and so we're not going to go into immense amount of detail. However, here's what I'm going to tell you about this is the amount of people that make irrational decisions related. This is exorbitant. It is. I can't believe. And by the way, again, when I was in Kansas City last week and doing the study program, reinvesting in my education so I can reinvest back in my clients and help give them better and better advice for the future. I hope your advisor and their team are doing the same.
Speaker 3:
33:19
And then I'm going to vouch for Paul. He actually was in class. He was not playing golf. For those of you that know Paul, he was actually a knee deep in and work and all those goods.
Speaker 2:
33:28
Thanks. Well, but at the gym, I may think when I think about this is our job is to help clients from making mistakes. Um, and I validated this theory from when I was in class with these other professionals is they encountered the same problem too is we talk about making the right social security decision, but then they still listen to a family member. They listened to their sister, their brother, their coworkers, their next door neighbor, and they go think that, oh, well since they filed at age 65, I should file it at age 65 and that is right
Speaker 3:
34:05
raw or the here, we're not going to have any money. Even though there are statistics out there that are projecting a short fall down the road, they just want to grab it now and go,
Speaker 2:
34:15
yeah. Now if this sister you work with, um, maybe she's a healthcare professional, absolutely should go off to her for healthcare advice, but if they're not a financial professional and specifically social security, it's as little bit, it's like your fingerprint, right? Your fingerprint is very unique to you. Why do we get to use it on my iPhone? Why did we have retinal sensors? Why do we have, those are things that are unique to you when you're getting a checkup on yourself. It's gotta be advice tailored for you. I don't want advice tailored anyone else. And I mean I think about it. If anybody's been diagnosed with a bad medical disease, cancer, anything. Yeah, you've heard what other people, but you're not going to figure out your diagnosis until what? You know, your specific challenge in front of you and how you're going to treat it.
Speaker 2:
35:02
And when I think about social security, I mean this could, here's what happens. This is Chris. This avalanche of tax problems. It could actually double, I mean double your medicare premiums or worse yet. What if you have to wipe out your spousal benefits? Yikes. I don't want to have that conversation with my spouse that I screwed something up because of that. So we can actually help everyone. If you want help on this, there's a five point social security analysis. Give us a ring, (888) 419-8513 this analysis, simple. We can run it. Get it back to you shortly. No obligation by the way. No cost gym for this for you. Get a second opinion on social 80884198513 (888) 419-8513 coming up next, Jim and I are going to keep talking about the major risks to avoid in retirement.
Speaker 4:
35:48
Trust, transparency, accountability. These are the values that drive Ron Carson and Carson wealth. You're listening to wealth from wisdom with Barron's hall of 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 well from wisdom with Barron's hall of Fame Advisor Ron Carson. According to Bloomberg, US inflation
Speaker 2:
36:14
has accelerate to a six year high eroding wages. And one of the biggest concerns of soon to be retirees is how do they actually maintain their lifestyle. And by the way, inflation is one of those threats that is hidden. And this could actually steal from you. Hey, welcome back. I'm Paul West. Join. Why the Jim Caldwell and we've been talking about eight overlooked risks that could really crush you in retirement. And in this final segment we're going to talk about how you stay one step added inflation, interest rates, and a few other things, Jim, before I do it. Um, so then it happens every year. It's one of my favorite times a year. It just won a big shout out to all of our listeners and wishing them all happy 4th of July. Hope you get to spend time with your family, uh, your friends. Enjoy what you're doing, a wish you all beautiful weather and enjoy the day.
Speaker 2:
37:00
It's such a great holiday celebrating our country's independents and plenty of ice cream. There'll be plenty of chairing that ice cream or the west household if to go over. There you go. All right. Actually, it's fun gym on my street here in Omaha, Nebraska. They've been having a parade for over 40 years down our street and it is fun actually to watch the multiple generations come down our street. There's actually banners that have been created. We even have photo albums of seeing the differences every year and these kids biking down the street and the dog's walking. It's good stuff. It's a lot of fun. But it's fun to sit, you know, with next door neighbor is one of the founders of it and several others are that have lived in the neighborhood for a while. Um, and just to hear their stories and just watch their kids and their grandkids now common participate.
Speaker 2:
37:53
I mean, and for me, that's what life's about. Uh, enjoying those things that happen. And so today I know we're talking about the risks and you want the biggest risk we have every year for 4th of July fireworks, a firework, dangerous one. Dogs do not like fireworks. No biggest risks we have for this parade and party, whether the rain, that's the rate. We have a range of brains in Omaha. Does it? Wow. Only during the college world series. I heard that that one hurts. All right, so let's talk about our next risk. And as we think about retirement, and that's inflation. So think about this. In 1930 if you bought a pound of hamburger, it's going to cost you 12 cents, 12 cents. However, today, plus of course, depending upon the fat content, you're talking $4 and 68 cents or more. Wow. So if you budgeted 12 cents versus $4 68 it's a big difference and I'm going to ask all of you, most of you, you say, oh, inflation is not really going to hit me, but you know where you're going to notice it the most frequently go to the gas station.
Speaker 2:
39:01
You know, I'm like, Oh, I'm paying over $3 now. Oh is it's way more expensive to fill the tank or fill the truck or fill the suburban, whatever those things are. But this going to hurt you in the long run if you don't have the right financial plan in place. So again, if you've got sold an annuity in the past and there was no inflation adjustment, guess what that is degrading it is. Every $100 you're getting is going down in value because the cost of everything else increases. So be careful, get a second opinion and have somebody look at a fixed payment amount because you could be creating a scenario where your future dollars are not what you thought they're going to be. It's a gem. The other risk we want to talk about is interest rate. Risk. And that is, so most of you are familiar with cds and saving accounts.
Speaker 2:
39:53
And how much money do people make and savings accounts over the last few years? Jim? Negative. Yeah. Negative money dollars. So if inflation's growing by over 2%, which it is and I'm making less than 1% in a CD or money market. Um, let me, let's do the math here. One minus two is a negative number. Negative one. Yeah. I'm sorry. We're good at elementary math here. So you and I can handle this and our listeners can too. So if you're in that situation, you're declining now, it may make you feel safe. Um, and we're not in a declining stock market at the moment, but we already talked in other segments about um, you know, how much upside opportunity is. They're really left in this market here versus downside. But you have to figure out ways to protect yourself here. And one of the ways to do that is be careful with interest rate risk. And one of the things we share with people, our bond ladders and looking at can you create the right frequency of when to buy them so you can take the guessing game out of it for yourself.
Speaker 3:
41:01
And we just, we just discussed that in a meeting the other day where a client came in and we were talking about current situation and he had some bond funds. And my concern with bond funds is there's never a maturity in their you that you just are never guaranteed your principal back. And they become a very interest rate sensitive. So the conversation of the bond ladder came up and we're going to implement that in the next couple of weeks for him. But the good thing is,
Speaker 2:
41:30
well you made the recommendation to em and looked at it, but who had to make,
Speaker 3:
41:34
did I say he made the final call? He's the general manager. I was just a quarterback in that meeting. So you know, we Kinda, that's how we position it where it's, it's your money. I mean, you're gonna make the final call. But as a quarterback you got to let me change the play. At the line of scrimmage if, if I think there's a better way to go. And, and he liked that analogy and off we went.
Speaker 2:
41:53
Yeah, I'm not a gigantic baseball fan, Jim. I do really enjoy going to the college world series in Omaha. That's a lot of fun. But doesn't the, the, the, the coach makes the decision that reliever x comes and they game to save the game, right to pitch or middle lady and relief. Now I notice a lot but they called the pitch from the dugout. But for the good pitchers, what happens? They get the ability on the amount to shake it off, shake it off. Well, that same way with your financial life do, you may hire a coach and a financial planner. I'm like the Carson group or others and they're going to give you the best advice also, but it's still your decision to make. You just want to trust that you got the right coach helping give you signals and ideas or they've learned by the way, some of the best advisors that have made a mistake or or have gone through professional development to make sure that the advice they're giving you is current.
Speaker 2:
42:48
And right now we're in a rising interest rate environment. So anyone that's provided you advice on bonds and bond funds that isn't adopting current thinking. And if you want a question to ask them, just go ask him this right now. Is the yield curve pointing up or is it pointing down and just, and I'm just curious what their response is going to be back to you. Nothing complicated there. It's just a simple question. And if they don't know it right away, well they, that's going to tell you enough on the relationship they have with you.
Speaker 3:
43:20
And to expand on that, if you go to our website, you can download a lot of really valuable information and, and one of those would be 10 questions to ask a financial advisor and I, I would highly recommend people take the time to do that here in the next a couple of hours.
Speaker 2:
43:35
Yeah. One of the big thing is is Jim, I think that those are great questions, right? Because here's, here's a fear. All of you have his listeners and I shouldn't say all, I don't have put everybody together. I would say the majority, your biggest fear isn't that your advisor has competence. Your biggest fear is are you choosing the best one for you? It takes a lot of sense. Yeah. I mean, so think about this. You go to Nebraska furniture mart and you want to go buy a couch. How long do you spend looking at different couches and picking the best one for you? And then what do you do? You go worry and you negotiate the fees and then you worry about how do you deliver it. Like you had all these decision points, but you spend all this time and energy. Do you spend the same?
Speaker 2:
44:17
Making sure you have the right financial planner in place for you and if they're thinking through those things for you, and I challenge you to get a second opinion from the right person to really help you out because you've worked hard your entire life, right? Jim? You do? We all do. And you've made sacrifices whether time away from the family or travel or whatever those things are, and there's so many things you can do that are best for you. If you want us to help, just give you some ideas there. Give us a ring. Hey, we're at (888) 419-8513 here's what happens. Just like sports coaching, nobody gets through a 30 or 40 year by winging it. They have a game plan in place. They put the right things together. (888) 419-8513 (888) 419-8513 hey, I'm Paul last with Jim Caldwell today and just again on behalf of the entire Carson group in the entire wealth from wisdom radio network, we are wishing everyone a happy 4th of July. Make it safe, make it memorable, and enjoy the day.
Speaker 4:
45:16
Risk. Social Security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor Ron Carson.
Speaker 1:
45:29
Oh, 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 assures 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.