Wealth from Wisdom

Think You’re Ready to Retire? Think Again! Here’s Your 60-Minute Retirement Crash Course!

July 15, 2017
Wealth from Wisdom
Think You’re Ready to Retire? Think Again! Here’s Your 60-Minute Retirement Crash Course!
Chapters
Wealth from Wisdom
Think You’re Ready to Retire? Think Again! Here’s Your 60-Minute Retirement Crash Course!
Jul 15, 2017
Carson Wealth
Show Notes Transcript

Think you’re ready to retire? Despite their confidence, 3 out of 4 Americans can’t pass a basic retirement quiz! Get a retirement crash course on this week’s episode of Wealth From Wisdom with hosts Ron and Paul.

Speaker 1:
0:00
Okay. And here's the legal Mumbo jumbo. The opinions voiced and wealth from wisdom with Ron Carson or for general information only and are not intended to provide specific advice or recommendations for any individual to determine what is appropriate for you. Consult a qualified professional. All indices are unmanaged. 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 LLC, an SEC registered investment advisor.
Speaker 2:
0:31
This Doug market hit another all time. Records as much as $10 billion in social security benefits go unclaimed every single year. Federal Reserve announced that they will raise interest rates by 250 skyrocketing cost of healthcare and retirement could now run 350,000 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. If you took a test today about planning for retirement, if you took a test on your investment,
Speaker 3:
1:16
no. How, how do you think you would fare? The statistics are staggering. They're scary. Matter of fact, the statistics say we don't like to hear this. You get a big fat f according to a recent study, three out of every four Americans failed a basic retirement planning quiz. And if you think that is bad and it is, it gets a lot worse. And you might be thinking, wow, that's other people, that's not me. But even the people who weren't convinced they would pass with flying colors. Most of them failed this basic quiz. And you know what? It's a classic case of you just don't know what you don't know. And that's a really dangerous place to be. It's okay not to know as long as you know you don't know. But having high confidence and not being able to pass some of these basic guidance.
Speaker 3:
2:20
We'll share some stats on today show that are just mind boggling and it really just highlights how important it is to take control and get rid of this disconnect. Saving for retirement does not mean you're ready for retirement. I think there's a common misconception that, hey, I've got plenty of money and don't get me wrong. Having enough wealth, having enough money is certainly important, but probably more important once you're there is are you ready for retirement? Achieving a certain savings goal feels good, but it's like swimming out to a buoy in the ocean. You've touched that buoy. You got to swim back. Matter of fact, the return is the most critical part because you're probably exhausted and you still got a long way to go. So really we're going to talk about some ideas, giving you a plan. You've heard us say many times, having no plan is an absolute recipe for I think at a total disaster and but there is a solution.
Speaker 3:
3:23
I think it's easier than a lot of people think. And Paul, there's some basic basic things and we're going to do a retirement crash course to net worth talking about eight actionable ideas. Now we're not going to cover it. You heard us talking about social security and fees and all of that stuff before, and hopefully if you're a regular listener, you're up to speed on how important that is. We're going to give you some others that maybe you haven't quite thought about and we're going to cover eight actionable ideas today on wealth from wisdom. So I want to welcome my cohost, Paul West, who is a here today full of information and as we're prepping for our show, a lot of great stories fall. Yeah, Ron, I'm looking forward to the show today. I think it's a lot of great content for our listeners that may maybe think about over the next 12 years, they're expecting 10,000 people every day to reach age 65 so think about all how hard these people work.
Speaker 3:
4:20
You think about that. So as you are potentially looking at your retirement and you're in that category, the next 12 years of hitting the age 65 there's 10,000 of you. I'm not. I'm wondering your room. All right, so I can say the next 13 years, probably even slightly around there as well. But there's a lot of things that you have to think about. So I will look forward to today's show of sharing some of these best stories with you and ideas that you can go make decisions on in your life. You can figure out how does this apply for you or are figuring out at minimum are you on the right track and figuring out how to get there. Well, it's number one on the list is having a diversified income strategy and we're going to talk about nine things you can do to diversify your income.
Speaker 3:
5:05
And today, Paul, this is especially a risky times, is it interest rates, even though the feds raised interest rates a little bit. By the way, it was interesting, Janet Yellen, you know, talking about the fact that that there is a cap on how much they're going to raise. So you're probably, if you're sitting around in certificates of deposit, you're probably not going to be rewarded. So you've got to do something with, with the money and we're going to run through nine on the diversified income in one. You know, nudies get, I think a bad rap. And by the way, you know, annuities are expensive, but they're very specific thing that they do. And especially if you're out there with some of the older annuities, well, some of the guaranteed income riders, you need to pay close attention to what your options are, what your rights are.
Speaker 3:
5:53
Uh, we had an example where someone had recommended to a client that they just cash in, um, their annuity and move it to their particular firm and they didn't know they, the, the, the client left 200 plus thousand dollars on the table that they lost and you couldn't go back and get it back. So be very careful if you've got some of these older annuities that carry some of these benefits. For the most part, they're nowhere close, but I want to get them today. But they can provide some certain income strategies for the rest of your life. I think in part think there Ron is, it is a strategy. It doesn't mean it's always v strategy for all of you. It is. You got to figure out what the right combination is for you. So second is, you know, dividend paying equities are dividend paying stocks or dividend paying ETFs.
Speaker 3:
6:41
So the strategies can help you gain a good income a bit. There's two traps here, so be careful of these traps. One is buying a stock just based purely on the dividend because what if that stock goes down in value? Significantly trap, right? Yeah, exactly right. You have to be careful of that. And so many people that we've talked to around the country have called in and asked this questions, have fallen into this trap and don't let that happen to you because yes, you're getting that nice dividend. But if ultimately you're gonna need to draw upon the principle of the money that was in there. And Ron, I can't believe the store, I don't know if I've shared this with one with you recently. Um, but what I was talking with an individual and I said, how are you making your income in retirement? And one of theirs of course will social security.
Speaker 3:
7:24
The other was said dividends they're getting. And I said, well where are you getting your dividends? And she named one stock. One stock is all, she had a portfolio and it's a high paying dividends stock and it's actually a very reputable, you know a company, most of us know and apple, but imagine if something goes down in there that was all she's drawing upon and the risk you take there is a man. So be careful of those traps that you can encounter of the value of your account going down a significantly, based on what I tell the story about family friends who had their father retired, rolled his money into a vanguard, it was going to do it yourself or was it an ets, wasn't getting enough income. And then rolled that portfolio into energy stocks that were paying dividend yields. And this goes back a few years ago.
Speaker 3:
8:10
Then the energy crisis hit and he concentrated in just a handful of high dividend paying stocks as a price kept going down. And then he was so convinced overconfidence that one in particular company was a sure thing. You know, reading all the stuff on the Internet, put it all in there a few months later that file bankruptcy. So he literally took his million dollar retirement to zero. I mean, that's the most egregious as just awful, but you can see how you get trapped in. You start down this road and all of a sudden some really crazy things happen. Real estate is a very, you know, today real estate prices are elevated because zero interest rate people were chasing a lot of things, but it's still viable, especially if you're out there and you're willing to go buy a rental fix of rental property up. Um, you know, we actually have a strategy here that we've done at the Carson group, but you can also do that on your own if you're not, if you're, especially if you're handy cause owning real estate property, you know, over the years that's what you spend all weekend and evenings doing as fixing up the property.
Speaker 3:
9:14
You get the calls but you get, but you get a pretty decent yield. I'm actually just this week was looking at um, a lodging strategy who would pay about a seven, seven and a half to 8% dividend yield. So real estate is still, I think one of the more viable and farm ground farm ground has come down in price and actually you can get an okay yield, uh, in farm ground today. And if your view is as mine is that we're going to have a lot more population we're going to have, we're going to food shortages in the future. You know, you can also get, I believe the farm girl actually appreciate and you get an okay yield in here and that's a great income opportunity for many people when they're getting ready for retirement or in retirement. So next, let's talk about number four bonds and especially municipal bonds.
Speaker 3:
9:57
So what is what drives people crazy? Ron is paying taxes and so many people forget about the opportunity to buy municipal bonds and is you're buying bonds. You need to look at the risk return trade off for yourself and looking at your taxes. So it was a corporate bond better for you and paying taxes on it or is a municipal bond better for you because of the real yield that you get with it from an after tax basis. And I, I heard a radio show just yesterday, matter of fact, that was touting buying bond funds, which is a huge mistake and not buy a bond fund because there is no dirt. They continue to replace them. You want to buy bonds at, they come, do you get your money back? Um, he was also talking about the fact that we get diversification. Well, you can do ladders and you can get diversified and you don't anymore.
Speaker 3:
10:45
You don't need to have the huge uh, portfolio in order to do this. And matter of fact, you don't even really care whether rates go up or go down. Cause you can structure a ladder today that maybe has a three or four year duration get a much higher yield than, than money market accounts. And if rates go up, you're going to get full maturity. You can roll that bond over. You always do have credit risks. I believe you want to stay in high quality bonds in the sink can be said for corporate ladders. It, it just depends on what your tax bracket is, which way you're actually gonna get to want to go. Yeah. And Ron, especially after hearing what Yellen and others are saying, it sounds like a much better option than using a CB. Are Their selection there? I agree. We're going to come back.
Speaker 3:
11:25
We're going to continue diversifying the portfolio and you know what? You're doing this, think about it. Do you have the right advisor to help you cover all of these basins? Just about diversifying your income and going back to the comments this advisor made as buying a bond fund. Lots of expenses, clearly not in your best interest. We'll trust me on this. If you're hanging your hat on the wrong advisor, they're not putting your interest first all the time. You owe it to yourself, to your, to really have someone else take a look at what you're doing. Because if it doesn't go well, you're going to be the one that suffers. We have a five step retirement master plan. It starts with a simple conversation. We give you information, will help you cover any ideas, opportunities, any holes that may help you make the most out of every dollar you've saved. And this doesn't cost you anything. So you've got absolutely nothing to lose. Our five separate tire master plant call is now (888) 419-8513 and if you don't know, we're the number two independent advisor in the country according to Barron's or select as one of America's top wealth advisors according to Forbes and were on CNBC, Fox, or out there. And of course we're fiduciary, which means we're put your interests ahead of our own. Give us a call now. The five separate tournament master plan, eight eight (841) 900-8513 that's (888) 419-8513
Speaker 4:
12:52
is it possible you could pay fewer taxes in retirement and keep this money for yourself? You could learn right here, right now on wealth and wisdom with baron. Taller boom advisor, Ron Carson. It happens every day.
Speaker 3:
13:08
We visit with a new client. They walk in and they're feeling pretty confident about what they've done and their ability to live, the kind of retirement that they've envisioned their whole life, but a lot of times we get 30 40 minutes into that first meeting and all of a sudden they realize there's a lot of work to do as a lot of wood to chop. It's, I was told on the farm and there's gaping holes that really need to be addressed. Welcome back. I'm Ron Carson with my cohost Paul West, and thank you for joining us. Unwell from wisdom. Saving for retirement doesn't mean you're necessarily ready for retirement. Can you have a great nest egg, but what you do with it really matters. Paul and I had been talking about the eight actionable ideas. The very first one have a diversified income stream. We've covered annuities, dividends, socks, rural state, municipal and corporate bond ladders, and then Paul, the next one, certificates of deposit.
Speaker 3:
14:01
I mean I almost think this was a nonstarter today because you're getting no return and what I would almost take that off the list. I put it on here just to discuss it, but why not go into a, you know, high quality bond ladders going to give you a higher yield, which I would view a municipal bonds going to pay you more than that and you're not going to pay taxes. So it's a, especially now with WWE direction, interest rates are moving, which is not as quickly up is now what people are anticipating. A, I think we should just move on wrong because that's not part of the major conversation anymore. Here's one that's going to surprise people and that's having part time earnings. I think that you need to really think about that, especially there is longevity risk. I think people are going to start living much longer than they anticipated. We actually had John Malden in today who prolific writer been around for a long time, 60 70. He looks like he's like 50 years old and he's big into biotechnology and one of his, uh, well just, he's on the cutting edge, let's say that. And, and so I think, you know, having a, having a job, staying engaged, giving you some optionality to have some additional income as important.
Speaker 5:
15:08
Well, I think Ron, it's not even just the money. Sometimes it's the enjoyment factor that comes with it. It's the social interaction. It's the also mental stimulation is you'd like to keep your mind fresh. And so this often for many of you in retirement is something you should consider and maybe it's not even part time earnings that helps you, but it could also be, um, philanthropy or giving your time to charities or people you enjoy work,
Speaker 3:
15:29
stay engaged. My Dad. Um, yeah, the more the mores engage happier he is. And I think most people get that you're number seven on here is irreplaceable capital strategies. And I'll go back to John Malden. I followed him for years. He was a great newsletter out there and you know, and he says, Hey, I just am not going to participate. Personally said in the great reset. He thinks we're up for a great reset in the market. You know, we've had two 50% draw downs in the last, you know, really since 2000 and you know, he's convinced that as some point he says, I can't time. It could be two years from now, it could be this month. Um, but having irreplaceable capital strategies protect the downside. One of my favorite sayings is if you protect your downside, the upside will take care of itself. So the amount of risk you're taking, we talk about diversifying income streams, but if you go into something by the dividend and then all of a sudden it loses 20 or 30% of your value, you know, you really haven't done anything right. You know, you're not, you know, even with the dividend, you really haven't gained very much.
Speaker 5:
16:27
Yeah. I wonder if we have one of those, which by the way, a downturns happen in the market even though people don't think they do because of the recency of fact of the last nine years is why let that happen, Ron. I mean is there's no need to stomach that. And so for a lot of you is, especially as you get in retirement, that feeling will be immensely double, triple, quadruple. I can't even quintuple it on how painful it would be emotionally if we have one of those drawn downs and you're not, yeah.
Speaker 3:
16:53
Position for it. And finally, and I think this is one that people are a little afraid of because they don't understand, but if you already have a portfolio of, of investments, you can actually generate income from those investments without selling them. And of course that is a more defensive thing because he may have longterm capital gains tax. You don't want to realize that you can write covered calls against that. And a little bit of education here at working with someone that can help you with that could generate substantial income.
Speaker 5:
17:21
Yeah, you can run. I mean, I've talked to several, uh, you know, listeners and they say, Hey Paul, we do that type of strategy on her own. I'm like, well how many you do? Like, well, we do one or two a year. Well, that's not an income plan. That's a guess. And it's really is what it is. And many of them told me how they succeed with it and that's great. It's a little bit like when people go to the casino, you only hear about times they win, you know, and hear about times that they lose. That happens
Speaker 3:
17:46
passed away two years ago. She was 83 but in that 83 or she never once lost at the casino. Wow. She either broke even or she made money. Well, you know, it wasn't true, but she had a, she had a great memory for that. She had a memory to be an awesome gambler because he only one or broke even. There's a reason why you get free hotel rooms get to say in her view was because she broke Kima. She got a free brunch and free hotel room or a discounted rate and coupons. They actually wasn't even the head then. Hey, number two on the list, Paul and we hit on this a lot. It's, it's finding a good financial team. I know this sounds self serving because we're in the business, but not necessarily us, but find a team and I love the conversation you had at the barbecue this weekend.
Speaker 5:
18:29
Yeah, I was telling you a story. It was a, so sitting there with several families that I knew were actually several couples that we knew and then some of them that I didn't know very well, Ron and we were transitioning some a philanthropy that we're doing. We're stepping down from a committee. The new people were there, so it's a chance to meet and greet and a chance to transfer a lot of the knowledge. It was funny. It's probably not surprise. It's summer, so it's hot out. And what happens in the summer barbecues, I know many of you across the country are doing barbecues. So we're sitting out there talking, and as you're sitting out there talking, a couple of them asked me, you know, what do I do? And I explained what we do and how we help families across the country. And he said, well, Hey, I think that's great.
Speaker 5:
19:09
Um, what do you think about people that do it on their own? And I said, that can be very good and it can be a strategy, but you have to be disciplined in your strategy and you have to be always able to make the right decisions. I said, so who do you lean on when you have ideas or thoughts? Do you lean on Google? Is that your best friend? Would you want to get thoughts or helps or does the following happen to you? So I said, you've already asked me what I think about the market and I've given you just some high level thoughts and what I'm doing. So is this what happens? You go to a barbecue like this, you run into a professional or you just run into an uncle, a neighbor, whoever it is, and they say, hey, they think the market's cold right now, or they think it's going to be hot and do you go back and you log into your online account and you start making a trade based on what you heard at that barbecue.
Speaker 5:
19:57
And Ron, this person just started turning white because he said, that's exactly what I do. I hear something from somebody. I think it's a good idea. The recency effect hits in and I just said, who are you going to turn to when you have real questions? Who's going to help you think through that? And all you're trying to do is save a little bit of cost potentially, but you're actually hurting yourself. And I know we've shared this on the on well wisdom before, but I'd remiss if I didn't share it again, is there are so many studies out there that show working with a competent advisor helps you perform better. I know we've shared the ad advisor Alpha study that you add as a competent advisor, 2.92% net of fees, more value to your clients per annum by being competent and it's oil. I just share that with you because as you're getting advice, your backyard barbecues
Speaker 3:
20:48
across the country, be careful you do with it because it may not be the right advice for you. And I'll be the first to admit. I mean there are, there are some really good people that do it on their own that they work at it. So there's, you have the financial background to do it and do you have the emotional wherewithal to do it because of reacting to the recency effect is not an effective game plan. And I'll be the first to say I'd rather you have no advisor than a bad adviser, but there's tremendous value that can be added with a good financial team that's just an advisor or a financial advisor. But the rounds it out, the CPA of insurance attacks, a state planning, all of that. So Ron, we actually had one of our advisers act and mark who are part of our wealth from wisdom network.
Speaker 3:
21:33
Um, earlier this week actually we're with a family considering what they wanted to do and what this person said to them was exactly that. I don't know if I'm willing to spend the amount of time I really think it takes to do this on my own. And He, and so our answer was, is that worth it to you? And he said, no. That's why I need to find a trusted professional to help me out. So as part of your retirement plan, think about what options for you. It isn't, hey, just to do a retirement plan, I'm going to set up an online account with TD fidelity or whoever that is, and then just go make a trade once a year. That's not a plan. That's just a wish. You're throwing a hail Mary pass at that point in time hoping everything's gonna work out. So number three on the list, Paul is create a budget and stick to it.
Speaker 3:
22:14
In this, you're going, hey, I've got plenty of money. I don't want to bog myself down with a budget, but I'm going to hear it. I'm here to tell you I don't care how much you're worth, you can blow through it. I mean you just go look at all the NFL quarterbacks that have gone broke or professional players in general, didn't matter how much money they had. If you overspend the amount of money, it's going to lead to bad things. And I see this creep happen all the time, Paul. They'll come in and they'll say, well, this one time we're going to do this. And then every year they have three or four one time deals and all of a sudden it starts to have a real impact. And we want to be truth givers on truth receivers if you're on a on a bad collision.
Speaker 3:
22:50
So when you do your plan or if you're doing it yourself, do a budget, have the discipline to stick within the budget and you should have a contingency and emergency plans you can go to for the unexpected but don't make it the, the, the rule, the exception all the time that you're out there making an additional withdrawals from your plan. And we're not saying you have to go down to the penny every time. I mean some of you like to and if that's important to you, absolutely do it. But sticking to your budget is going to help make sure that you're comfortable in every piece and if for some reason you stray away, maybe it's time to tighten the reigns later down the road or check back in with your advisor to make sure that your budget still has you on the trajectory you want.
Speaker 3:
23:28
Cause there could be hidden things. You're not looking at inflation, healthcare costs rising and all those things. I'm sure we'll spend time with today, Ron. Yeah, I mean just on healthcare, we're going to, we're going to talk about that here later in the show, but it's big. But the big risk pod that we can both agree is just people that come become complacent. And if you show someone who's complacent, someone that really hasn't formulated this plan, I'm going to show you someone who's probably going to fail and it's going to be miserable in their retirement and that's the wrong thing to happen because it is a domino effect. You don't do some of the little things they start to add up and we have a five step retirement master plan. It will show you everything that's critical in order for you to optimize your wealth.
Speaker 3:
24:12
A lot of the strategies we're talking about today in a lot more. And we would love to do this for you. Give us a call for the five separate time at master plan at (888) 419-8513 that's (888) 419-8513. And by the way, if you don't know who we are, I'd say we're humbly confident. We're, I think we're really good at what we do. And others have said the same where the number two investment advisor in the country, according to parents, we were selected as one of the top wealth advisors according to Forbes. And we're, you're going to see us and you continue to see us on CNBC. We're on their advisory council. Um, as a group we, we give back to our profession. Of course we're a fiduciary is, which means we put your interests ahead of our own. So give us a call for the five separate tyrant. Master plan, eight (888) 419-8513. That's eight eight eight four nine 85 13. I'm Ron Carson with Paul West. And you're listening to wealth from women.
Speaker 4:
25:11
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 at a recent study, three out of every four Americans failed at basic retirement planning with Ah, with the news, it's
Speaker 3:
25:31
even worse. Most of the people were confident that they would pass in flying colors and they still failed this basic quiz. It's a classic case of you just don't know what you don't know and that's super dangerous place to be in, especially when you think about the kind of retirement that you want to live. Hey, welcome back. I'm Ron Carson from a cohost Paul West, and you're listening to wealth from wisdom. We've been talking about actionable strategies, eight of them that you can utilize today to set you up for a higher probability of success within your retirement. And Paul, the next one is such a biggie. And as getting your spouse, we talked about budgeting and [inaudible] how important that was, but getting your spouse on the same page as you know, what kind of life we're going to live, how much assets where I lived at the kids and we live in he to charities.
Speaker 3:
26:20
How much information we would want to share with the kids. Where are we going to live in retirement? We're going to have two houses, we're going to have one house. Are we going to willing to work part time? You know? So there's a lot of decisions that really need to be need to be made and you really need to make them together. Yeah. So I think about spousal decisions around, sometimes we can't even decide on what we want to have for dinner right here. Where do we want to go? Or where do you want to go on family trip? Or what
Speaker 5:
26:44
do you want to do? Those are simple. Those are one time decisions. The decisions on how you want to map out your retirement. That's not one time. That's your lifetime on how you approach it. So this is big and it's sometimes we avoid it. We go out to that dinner and we want to talk about it and then we start talking about all this other stuff that you need to sit down and have that conversation. Or you need to be able to work with a professional that can help maybe all of you bridge the gap because maybe one of you thinks that way and the other one doesn't. And you just, you know, um, my spouse, because as this whole thing taken care of, and I know personally my spouse, Courtney, trust me for everything because she's comfortable, but we talk about what's still relevant for our family.
Speaker 5:
27:26
I'm sure you do the same thing with Jeannie, Ron and his, I think about this all across the country. There's many of you that have one person as part of a spousal relationship that has everything in your brain and your head and you maybe haven't translated it and you got to get on the same page, making sure you're comfortable. And just a very recent example, I was actually sitting with a family yesterday, Ron, and part of their income plan in retirement is they get a little bit investments. They've got some from social security, but most of it is from rental income. And so that's great. That's a source for them. But they're tired. They're tired of being the landlord and getting the calls from their rental properties and having to fix all those things that go with it. You know, that's frustrating. They're done with that.
Speaker 5:
28:09
But they also realize that converting from rental income to um, now investment income is a completely different mindset and the spouses weren't on the same page at all. And I sat there and I almost felt like my job was more to be a facilitator to make sure they both understood the consequences of their decisions. So get on the same page and you can disagree, but at least get on the same page of having that open dialogue and communication. And for all of you, it should be a two way street, right? Not a one way street but a two way street on how you and Paul and I've seen this time and time again where the spouses have not really talked about in a Biggie is right now I've got some clients that have, one of them wants to leave. Most of them are money to charity and the other one wants to leave it to their kids.
Speaker 5:
28:54
So guess what they've done what? Either just done nothing, which is, which is not a position to be in. Number five on the list is planned for living longer and this is one of those things that you don't want to run out of money before your life, especially when you want to be able to do things. And it is, you know, taking some measures today to say, how can I make this money last and really plan on living even a lot longer? Yeah. I always had clients say, well, I'll take care of that myself. Right? And it just doesn't work that way. And so you want to, you want to plan for at least 10 more years then whatever the mortality table say you're going to live today. Yeah. So around, I read it all the time. Um, I experienced it in action though over the last week since our last show.
Speaker 5:
29:42
So I actually went to, um, the veterans home here and I took my youngest son and every Monday night they play Bingo. And so they have people come in. And so my son was the color of all the Bingo numbers or our hour, first of all, life gratifying moment giving back and the salute to all of our veterans. So all they do, um, they were sharp. I mean the average age in this room probably was 88, 89 years old and they were sharp as tacks, you know, their, their, their bodies. I've actually had been put through a lot over 88 years of life and a lot of them being in the military, but it just was just seen all of them and communicating with them. People are living longer than expected and then you can go look at all the rates of mortality and life expectancy. But like for me being there in this veteran's home run and seeing in person just validates this one to me is we often run financial plans for people to age 95 we've actually now started running into age a hundred or even further for people because they're living longer and if that's going to happen, I'd rather feel comfortable that that last five years, what am I going to do? Or I've got to go to my kids and ask for money that lasts several years life because that's not something emotionally we'd want it
Speaker 3:
30:54
do there. Number six on the list, Paul is consistently assessing your diversification and risk tolerance level. I said earlier, planning for the worst, hope for the best. If you can accept the downside, the upside will take care of itself. And I think today too, people have gotten sucked into just doing this traditional splits of 60 40 equities versus bonds. I think you throw all that out the window. I mean you basically have fixed income paying you nothing and you look in the middle for alternative strategies, things that can protect the downside but be prepared mentally for what is your worst case scenario that you're going back to? The biggest risk always has been always will be you doing the wrong thing cause you weren't emotionally prepared for it. So can you accept the downside? If you can then build from that and figure out what kind of income, what kind of withdrawal your portfolio will sustain. Because more downside risk means you're going to have more upside potential, less downside risk lefts, upside potential lesson income that the portfolio can support. Yeah,
Speaker 5:
31:55
you're definitely right Ron. And I always think about what most people do when they're fearful. They go and complete avoidance mode. Um, or they go too far to the extreme, you know, and there's simple things on, you know, how many people have a fear of heights or our fear of snakes? Maybe looking at you there, Ron, but I know a lot of people do spiders, whatever it is. But we avoid it. We run away. Well, the same thing sometimes happens with our portfolio. We run away from risk or sometimes because we're not fearful enough, we take on too much risk. And, and this is a big trend we're seeing right now is people are taking on too much risk and lack of diversification. And the risks they're taking is, oh, I'm just going to put all my money in an ETF and they just set it, forget it, and everything is going to be fine.
Speaker 5:
32:46
Well, there's a lot of risk in that because what actually is going to happen, are you sure that ETF you're invested in? Are you sure? Whether it's the s and p 500 the Nasdaq fixed income, certain parts of the market, are you sure that's actually the best investment for the next 10 15 2030 40 years, whatever that time period is? You got to figure out how do you have the right amount of diversification over your lifetime to support what you're looking to do. And I think about risk and I think about what you've done in your lives. So for example, skydiving, I've never skydived. I think you have actually recently, Ron.
Speaker 3:
33:24
I did. Yes. I'm sure it's, and the last time all of this I did, I accomplished both of us at the same time.
Speaker 5:
33:30
Fear. I'm sure you had when you got up there. Maybe not. But I think most people I was terrified. Yeah. Well I don't know that people have that same level of fear about their portfolio. Uh, is this scary? And I, I'm not trying to say it's um, is dangerous is that, but it could be cause what is dangerous is what if you don't want to ever go back and have a part time job, just you don't want that as part of your earnings income plan. That to me is even more scary than jumping out of an airplane or going on the tallest floor of the Willis Tower in Chicago and staring down and looking and having that fear of heights.
Speaker 3:
34:05
Well, let me tell you what is scary and that's not having all the pieces of the retirement puzzle. And the Biggie is really social security benefits. The reason why is getting it right is so important cause it will have a domino impact on your income, your taxes, medicare premiums and a lot more, and this is complicated stuff with Paul now you've talked about it many times. There are so many different options and combinations on how you can claim your benefits, but there's only one right way for you to get it right. If you don't claim your benefits exactly right at the right time, it could cost you thousands of lucrative benefits and there's a lot more ramifications, negative ramifications. So getting it right really makes a lot of sense and it's really important. Learn how to get every nickel back in our customized social security analysis. It's quick, it won't cost you anything and literally can save you tens of thousands of dollars. Give us a call at (888) 419-8513 that's (888) 419-8513 do it today. The social security analysis, it's quick, it's easy, it won't cost you anything. (888) 419-8513 coming up on our next segment. Paul and I are going to continue through the eight actionable items we've got two more to cover. You're not going to want to miss them. I'm Ron Carson with Paul West and you're listening to wealth from wisdom.
Speaker 6:
35:31
He's a published author and he's been featured in Forbes Investment News, the Wall Street Journal,
Speaker 3:
35:36
VC more now back to wealth from wisdom with barons,
Speaker 6:
35:40
famebit advisor, Ron Carson, welcome
Speaker 3:
35:45
back. I'm Ron Carson and with my cohost Paul West Sydney. You're listening to wealth from wisdom saving for retirement. Does it mean your ready for retirement? And we've talked about that you can save a lot of money, but what you do with that money, what you do with that wealth, what you do with the plan is really critical and having no plan could be a recipe for complete disaster and not getting you anywhere close to living the kind of retirement that you dreamed of. And Paul, you and I were looking and doing some research on health care costs and I think both of you and I, we're, I mean we're in the business. It was staggering the stat on what is going to cost for health care. Yeah. So you're looking at this, and this is fascinating, so let's take it right now. If you're a 65 year old couple and you expect a 22 year retirement, which is average, how much do you think you're going to spend on healthcare over just healthcare alone over those 22 years?
Speaker 3:
36:43
$404,000 is what you're expected. And if you're, you just expecting social security alone to pay for that, and is that going to cover it? That's going to consume 59% of your social security proceeds. I didn't even include taxes that go along with it. You may just need that just for your pure healthcare costs, not for your living expenses. And this is all based on the thought process and the numbers that healthcare costs are going to continue to grow at 5.47% per year, which is certainly right in line with most of the estimates were on that. You and I see. Um, but it's also essentially are actually a little bit more than double the increase you're getting from your cost of living adjustment from social security, which is 2.6. So imagine this, if you're relying solely on social security to help you with your health care, you got a two to one deficit of that hill.
Speaker 3:
37:35
You're climbing up right now. And that's staggering. So you got to have other sources of income to help you in your retirement. And that is number seven, plan for the rise of healthcare costs of longterm care. And that's the other surprising stat is 82% of the people surveyed did, and this was the American college believe that they did not need, would not need longterm care at some point in their lives, 80 to 82%. So our theory is by insurance for the risk you can not afford on your own and softened. Sure those that you can afford. I mean, we don't think you should insure everything. It depends on what your net worth is, what your look is on an outlook, on insurance. Um, I'll never forget, I had a client one time who I said, well, we assumed you wouldn't want to ensure longterm care because he was, his net worth was fairly high and he said, Hey, I insure my house.
Speaker 3:
38:26
I'm sure this and y w if you either believe in insurance or you don't so point well taken. So you could either what your philosophy, but if you can't afford it, and this is a great example where getting longterm care is really important and that's an important piece of the overall plan. Yeah. I'm by underwriting it that way, Ron, you've got a chance to make it actually less costly for you. Then feeling like you've got handcuffs later in life where you have no choice. That's all you got to pay and that's where all your money's going to go or what you thought you were a new gift to your family or to a charity or whatever you want to do with it. Now you don't have a choice anymore because when health does deteriorate, you've got to take care of those expenses for yourself. Yeah, it is and it's expensive.
Speaker 3:
39:10
By the way, Paul, before we get into the last one, number eight, we had an email question last week and I thought this would be a great one to cover. So cause I bet there's a lot of confusion around how do I just figure out, you know, what I'm going to need for retirement income? Because last week we talked about retirement income readiness and how to generate income. And there's some basic steps here is to how much you're going to need. First of all, figure out what your realistic baseline is. I mean, what you know, what kind of center of living have you had up to this point? Um, and then from that, subtract your savings because once you go into distribution mode, you don't need to save anymore. Subtract any tax reductions. You should be in a lower lower income rage, subtract any anticipated house cost reductions.
Speaker 3:
40:04
Are you going to downsize? Or maybe you're going to upsize so there's not going to be a reduction. You're going to add to it and then factor in what kind of lifestyle you're going to have, right? You're going to live in an Rv. Actually some friends of ours, you know, they sold their home, they travel around the country, they're living out of their RV. So dramatically less than what it was. And those, we were just talking about it adding in higher healthcare costs. This is as we get older, it just costs more to live and then put in a fudge factor, something that says, well, could we may have gotten some of this often that we figured out how much you're going to need for retirement, those seven basic steps, um, and then you can get, you can get pretty close. And when we get it, when we do planning, we didn't do a lot of detail, but if you just want a rough estimate what that should be, I think that's, that's, that's a good formula.
Speaker 3:
40:52
I mean, a lot of people around and have heard the 10% rule for savings or the budget of 4% withdrawals throughout your lifetime. We actually think, you know, as your longevity increases, that 4% number isn't going to be up to par, uh, for what you need over your lifetime. And I'm really impressed around. I mean, lately we've met with a few callers and they've sent us the spreadsheets that they've calculated on their own, Ron and they've done a really nice job with it. Um, I would just point out that mistakes they've may be made or they're missing a few key assumptions, whether it's inflation or increasing living expenses or what happens if the market actually goes down. What's funny is, is every spreadsheet shows
Speaker 5:
41:34
a linear rise. So $1 million becomes 1.05 the next year and then 1.11 the next year and 1.12 they don't show the dip, which is natural in the market. And I think that's important for people to look at because that is the real world. We do not live in a linear world when it comes to life. We all know this, right? We have our bumps and bruises, athletic teams, you have wins and you have losses, but you make gains along the way.
Speaker 3:
42:00
Well, the other common one I see Paul, is they'll come in and say, I need x well before tax or after tax. And they're like, well what do you mean? This is just where the income comes from. What we've talked about that a wealth from wasn't a lot really, really matters. Let's cover number eight here and that is just review your circumstance and your portfolio and all the assumptions you made continuously. And one of the things we recommend and we tell our clients is, you know, once you get things set up and there you feel like they're on autopilot, you should be meeting with your financial team at least once a year or as often as necessary mean if there's some information your team has that they need to bring to you, it's important you meet or if there's circumstance or attitudinal change within your family, you should request a meeting with your financial advisor and this is a biggie. You need to pay continue. Someone needs to be paying continuous lead to overall holistic plan that you've put forth.
Speaker 5:
42:56
Yeah, I mean it really needs to be as much as needed. I mean that's the simplest way to look at it as much as you need to feel comfortable and whatever that timeframe is. And honestly when I think favorite things is we've said, you know questions you should ask your advisor and if you want that list we have it. You can call in and we can help provide it to you, but that's one of the most important things is how frequently are you going to communicate? Yeah,
Speaker 3:
43:17
the 10 questions is really important and the other is people need help creating a financial plan. It's not easy. You can do it on your own. I would recommend you use a team and you're going to need a good team. Having a bad team is not an option there because it's so important and I don't want this to be self serving, but it's important that you know this. We're good at what we do with a number two independent advisor in the country. According to Barron's, we were select as one of the top wealth advisors according to Forbes, and we've as an organization have published four books. Two of them are in New York Times best sellers are. Our team is constantly quoted in the financial press and we give back. We serve on many boards. We protect individual investors like you, including the Fiduciary Institute, CNBC Advisory Board, the American College. But aside from that, the most important thing you need to know is we care and we can help if you would need and like us to take a look, give you a second opinion. You've got absolutely nothing to lose. Give us a call. (888) 419-8513 let us show you how we can make your money go the furthest. Make the most of the retirement you've dreamed and you've worked so hard for. (888) 419-8513 that's (888) 419-8513 it's been a great show. Paul. I'm Ron Carson and you're listening to wealth from wisdom
Speaker 2:
44:46
risks, social security, income taxes, estate planning. Every week we talk about how to make your money go further in retirement right here on wealth from wisdom with Barron's hall of Fame Advisor Ron Carson.
Speaker 1:
44:59
Okay, good. 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 LLC, an SEC registered investment advisor.